STIFEL 2026 HEALTHCARE CONFERENCE - SENSEONICS HOLDINGS INC

Financial Performance:

• Third quarter revenue and gross margins exceeded expectations; revenue growth driven by strong Eversense 365 adoption.
• Year-end 2026 burn rate projected at ~$120 million ($10 million/month).
• Cash on hand stands at $127 million; total liquidity (including $85 million available under Hercules facility) exceeds $200 million.
• Current gross margins are ~60%, with a target to exceed 65% in 2027 and surpass 70% upon the 2028 launch of the "Freedom" product.
• International revenue currently anticipated to be ~15% of total, down from an initial 20% forecast, due to U.S. growth outpacing European rollout.
• Eon Network (insertion services) is self-funding via CPT reimbursement codes and reached $40M annualized run-rate by Q3, with 40% of Q3 insertions executed via this network.

Guidance and Future Outlook:

• Raised guidance for the third quarter for the third time in 2025; fourth quarter performance is expected to remain strong.
• 2026 revenue guidance maintained at ~$100 million+; DTC marketing spend for 2026 set at $13–14 million, spread 40% H1 and 60% H2 for efficiency.
• Long-term outlook targets cash flow break-even shortly after the 2028 launch of "Freedom."
• 2027 outlook includes continued DTC investment, potential SG&A increase to fund revenue growth (inside sales, expanded territories), and realization of operating leverage.
• Management projects Q4 2026 revenue at ~$23 million, with a long-term trajectory aiming for ~$60 million per quarter by late 2028.

Business Segments and Product Lines:

• Eversense 365: Core revenue driver; recognized as a turning point for commercial operations with significant growth in prescriber base (5,000+ physicians).
• Commercial Integration: Successfully brought commercial operations in-house from partner Ascensia, reducing complexity and improving efficiency; US team retention confirmed as high.
• Eon Network: Internal insertion subsidiary scaling to ~120,000 insertions by year-end; critical for serving Type 2 diabetes patients who require medical insertion.
• Pump Integrations: Active partnerships with Tandem (iLet) and Omnipod (Twist); Beta Bionic integration expected to launch in Q1 2027; iLot integration planned; discussions ongoing with other manufacturers (e.g., Medtronic) for future slots.
• Pipeline (Gemini & Freedom):
  • Gemini: Self-powered sensor (no transmitter); targeted for launch in H2 2027; regulatory filing pushed to Q1 2026 to prioritize Freedom clinical trials.
  • Freedom: Ultimate sensor with integrated Bluetooth and battery for pump connectivity; targeted for 2028 launch; clinical trials initiated in Q1 2026.
• International: CE marking for 365 delayed by >12 months relative to US approval; European rollout ramping up with US best practices being adapted.

Market and Competitive Landscape:

• Market size estimated at $15 billion; Senseonics holding a niche position heavily weighted toward Type 2 (80–85% of starts) compared to competitors focused on Type 1.
• Competitive advantage in Type 2 segment due to 1-year wear time (reducing insertion burden) and medical insertion model via Eon Network.
• Direct-to-Consumer (DTC) advertising effectively generating "workable leads" from Type 2 patients not on insulin, creating a pipeline for primary care referrals.
• European Type 1 market remains the primary target in OUS due to hospital-centric care models, though Type 2 access is expected to grow.

Risks and Challenges:

• Regulatory Delays: European CE marking for 365 and subsequent regulatory approvals for Gemini/Freedom face timeline slippage; Freedom trial prioritized over Gemini submission.
• CMS Policy: Uncertainty regarding timing (1–4 quarters) and specifics of coverage changes for Non-Insulin Dependent Type 2 (NIT) patients; potential impact on pricing due to competitive bidding.
• Execution Complexity: European integration required more decoupling time than US; pump partner integration faces technical and capacity bottlenecks at external manufacturers.
• Burn Rate Management: Reliance on current cash burn and debt facility capacity to fund operations through 2027 without profitability.

Management Commentary and Tone:

• Tone is confident and optimistic, citing a "culmination" of 2025 transition strategies and successful in-house execution.
• Management emphasizes "complexity down, efficiency up" following the separation from Ascensia.
• Tim Goodnow (CEO) expressed high confidence in the 2027+ revenue trajectory, dismissing $60M quarterly revenue as "not a scary number" given the $15B market opportunity.
• Rick Sullivan (CFO) highlighted the robust balance sheet, noting that the Hercules facility and cash on hand provide full funding to the Freedom product launch.

Analyst Questions and Answers:

• Prescriber Base: Confirmed >5,000 physicians prescribing Eversense 365; growth driven by DTC leads and direct sales rep penetration in large accounts.
• DTC Efficiency: In-house control allows for more efficient spend allocation compared to the previous shared-economics model with Ascensia.
• Revenue Mix: International revenue percentage expected to remain near current 15% levels initially, growing slowly as European traction builds.
• Cash Flow Break-even: Linked directly to the 70% gross margin profile of the 2028 "Freedom" product.
• Type 2 vs. Type 1: Addressed skepticism on Type 2 usage; clarified that Eversense's low-interaction model is a distinct advantage for Type 2 patients over sporadic-use competitors.
• Territory Expansion: US sales force steady at ~45 reps with minor tuck-in additions; international commercial team (60 total) fully staffed and ready for 2027.

Other Key Points:

• The "Gemini" product removes the need for a transmitter by using an internal battery, ideal for patients desiring zero skin interface.
• The "Freedom" product adds Bluetooth to the Gemini base, enabling full automated insulin delivery (AID) integration.
• Regulatory strategy relies on ICGM designation to classify these as Class 2 devices, requiring proof of equivalence to existing 365 sensors rather than new de novo submissions.
• Eon Network handles 40% of Q3 insertions, proving the viability of the medical insertion model for scaling Type 2 adoption.