CG MEDTECH, DIAGNOSTICS AND DIGITAL HEALTH & SERVICES FORUM - SENSEONICS HOLDINGS INC

Financial Performance:

• Reported Q3 revenue of $19.6 million, representing 140% year-over-year growth and strong quarter-over-quarter momentum.
• Achieved a 62% gross margin for the quarter, with full-year guidance raised to a range of $68–$70 million in revenue.
• Projected full-year gross margin to be at least 60%, with long-term aspirations to reach 70% gross margins as the 365-day consumable model scales.
• Maintains a strong liquidity position with approximately $127 million in cash and restricted cash, supplemented by a growth capital raise earlier in 2026.
• Revenue is driven by a 100% revenue growth trajectory this year, fueled by high patient retention rates (75% from first to second sensor, >90% by the third).
• Approximately 60% of patients are acquired via Direct-to-Consumer (DTC) channels, while 40% come through Healthcare Professional (HCP) referrals.
• Revenue mix is 85% from the United States and 15% from European markets.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance raised to $68–$70 million with a gross margin floor of 60%.
• Anticipates 2027 revenue growth approaching the current year's 100% rate.
• Targets EBITDA break-even and profitability around 2028, coinciding with the commercial launch of the "Freedom" product.
• "Freedom" product timeline: First-in-man trials initiated; IDE submission expected in H1 2027; Pivotal trial enrollment expected mid-2027; 510k submission anticipated mid-2028; commercial launch targeted for mid-2028.
• Plans to expand the EON nurse insertion network from ~100 to 120 nurses in the near term, with future scaling to hundreds to cover US zip codes.
• Aims to have at least two additional pump partnerships established by 2028, following the current partnerships with Tandem (via 3rd party) and Beta Bionics.

Business Segments and Product Lines:

• Core product is Eversense, a fully implantable continuous glucose monitor (CGM) with a 365-day sensor duration, differentiating it from 10-14 day transcutaneous competitors.
• Pipeline includes "Gemini" (implantable battery, Type 2 focused) and "Freedom" (fully implantable, invisible sensor with integrated Bluetooth and power, Type 1 and 2 focused).
• Expanded Automated Insulin Delivery (AID) integrations: Currently partnered with Tandem (via its T-SQL MedTech division) and Beta Bionics (launching in one week).
• Real-world data indicates 66% Time in Range (TIR) with Eversense alone, jumping to 76% TIR when combined with the Tandem pump system—the highest published TIR for integrated systems.
• 90% of new patients are switching from existing CGM competitors (Dexcom G7, Abbott Libre 3), primarily due to superior sensor survivability (vs. 15-20% failure rate of competitors).
• EON network of independent contractors performs insertions/removals using specific CPT codes, facilitating access in primary care and aesthetic clinics.
• Market expansion strategy includes targeting Type 2 diabetes patients not yet on insulin, pending CMS reimbursement decisions.

Market and Competitive Landscape:

• Operates in a $15 billion diabetes glucose market with 11 million CGM users globally.
• Competes against Dexcom and Abbott but differentiates via a 1-year sensor lifespan versus the industry standard of 10-14 days, reducing skin irritation and "compression lows."
• Faces competition from competitors attempting to reduce transmitter size, but plans to "leapfrog" by offering a fully invisible implant.
• Market share strategy relies on high conversion rates from DTC (driven by social media and digital marketing) and HCP channels.
• Reimbursement structure favors the medical benefit (60% of sales) over DME channels, avoiding pharmacy benefit "haircuts" and DME distributor margins.

Risks and Challenges:

• Dependence on the procedural requirement for office-based insertion remains a barrier compared to over-the-counter transcutaneous sensors.
• Potential delays in CMS reimbursement decisions for non-insulin-treated Type 2 patients could slow DTC channel efficiency and market expansion.
• Regulatory execution risks associated with the timeline for the "Freedom" product (IDE submission, pivotal trial, and 510k clearance).
• Integration complexity with pump partners, which requires external hardware adjustments that may slow down partnership rollouts compared to sensor-side innovations.
• Sensitivity to the "workable lead" filtering process in DTC, as non-insulin patients currently face reimbursement hurdles.

Management Commentary and Tone:

• Management tone is highly confident and optimistic, describing the business as transitioning from a partnership model to a high-growth standalone entity.
• CEO Tim Goodenow emphasized "strong commercial momentum," "encouraging results," and a "revolutionary" product pipeline.
• Highlighted a "razor blade" business model driven by high renewal rates and the recurring nature of the 365-day consumable.
• Expressed confidence that the "Freedom" product will be the first fully invisible CGM on the market, addressing a top consumer request.
• Management is actively managing the transition from the Essentia partnership to a fully consolidated standalone financial report.

Analyst Questions and Answers:

• Pump Partnerships: Confirmed current partnerships with Tandem and Beta Bionics; stated that new partners will likely be secured by 2027, with full integration timelines extending to 2028 due to R&D requirements on the pump side.
• Retention Metrics: Detailed retention progression: ~75% for first-to-second sensor, ~85% for second-to-third, and >90% for long-term patients.
• Reimbursement Economics: Clarified that the medical benefit channel (CPT codes for insertion) yields higher reimbursement (40-50% higher than DME) and better unit economics due to lack of distributor margins.
• Non-Insulin Reimbursement: Anticipates CMS may time the expansion of coverage for non-insulin patients in conjunction with competitive bidding decisions; removing this barrier would significantly improve DTC efficiency.
• Growth Trajectory: Confirmed the near-linear 100% growth trajectory is expected to continue into 2027, supported by the expanded EON network and digital marketing spend.

Other Key Points:

• The company is transitioning from a shared-revenue model (2025) to a standalone revenue model (starting Jan 1, 2026), which is driving the current year's reported growth.
• The EON network leverages a white-glove insertion experience, utilizing 1099 nurses to expand access into primary care and aesthetic clinics, reducing patient barriers.
• The "Freedom" product utilizes implant-grade battery technology similar to cardiac pacemakers to ensure a 1-year power source without external components.
• Approximately 11 million people are currently on CGM, with the market expected to continue growing in the high double digits.