Senseonics Holdings, Inc. (SENS) Q3 2026 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to Senseonics Third Quarter 2026 Earnings Call. [Operator Instructions] Please note, today's call will be recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Jeremy Feffer from LifeSci Advisors. Please go ahead.

Thank you. This is Jeremy Feffer from LifeSci Advisors. Before we begin today, let me remind you that the company's remarks include forward-looking statements. These statements reflect management's expectations about future events, operating plans, regulatory matters, product enhancements, company performance and other matters and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under Risk Factors and elsewhere in our annual report on Form 10-K for the year ended December 31, 2025, our 10-Q for the period ended September 30, 2026, and our other reports filed with the SEC. These documents are available on the Investor Relations section of our website at www.senseonics.com. We undertake no obligation to update publicly or revise these forward-looking statements for any reason, except as required by law. Joining me today from Senseonics are Tim Goodnow, President and Chief Executive Officer; Brian Hansen, Chief Commercial Officer; and Rick Sullivan, Chief Financial Officer. Mukul Jain, Chief Operating Officer, will also be available during the Q&A. And now I'd like to turn the call over to Tim.

Thanks, Jeremy, and good afternoon, everyone. Q3 was a breakout quarter for Senseonics. Revenue reached $19.6 million, up about 140%, well more than double the prior year. It's the highest in our history and the second quarter in a row in which we have set a new mark. This is driven by a record number of new patient starts. In the U.S., revenue grew about 160% to $16.8 million. And outside the U.S., it rose about 65% to $2.8 million. Our sales are running ahead of our earlier expectations, and we are now raising full year revenue guidance for the third time this year, we are now projecting $68 million to $70 million of full year revenue from our prior range of $62 million to $66 million. What's driving this? First and foremost, the product. Eversense 365 is the only CGM that delivers a full year on a single sensor with exceptional accuracy throughout and a removable transmitter that is easy on the skin. Patients feel the difference and retention is exceeding our plan. Our execution is amplifying these advantages, and our commercial team is performing superbly. Together, we're making Eversense easier to get. Our insertion network keeps widening, reimbursement is improving and our integration partnerships are growing. Those are the priorities we set at the start of the year, and each one is delivering. Just as telling is where our new patients are coming from, the overwhelming majority are switching from other CGMs. Millions of people are on short-term sensors. And when they see what our year-long sensor can do, a growing number are choosing Eversense 365. This is a large opportunity, and we are only beginning to tap it. Pump compatibility is another accelerant. The twiist integration with Sequel shows what is possible. The first year with twiist has been fantastic. In September, we announced another partnership, this time with Beta Bionics, which will pair Eversense 365 with the iLet Bionic Pancreas. The teams are working closely and commercial launch is expected in the coming weeks, with first patients possible before year-end and an additional source of growth in 2027. Beyond the iLet, we plan to keep working side-by-side to have Eversense 365 integrated with the Mint system as it comes to market. Then there is Freedom. On October 26, we began human testing of what is designed to be the world's first CGM with no on-body component. Picture a full year of glucose data with nothing to wear, invisible monitoring. Eliminating the transmitter is one of the biggest differentiators in CGM and the improvement people ask for most. We're not just leading the race to deliver it. We are the only company with the technology, the experience and the reach to get it done. We know Freedom will be truly revolutionary product for our space. Freedom builds on the proven sensing technology behind Eversense 365, adding an integrated battery, which we have studied in our ongoing Gemini studies with embedded Bluetooth capability. Preclinical work guided our choice of antenna system design and architecture. And now we are learning how it performs in people. The first-in-human study is an early feasibility evaluation. It looks at the safety and device function, including the direct Bluetooth communication in the real world to inform our pivotal study, which we expect to start in 2027. We are targeting the potential launch of the Freedom system in 2028 and advancing this program is our top priority for our development efforts. Taken together, today, we have a business growing at a remarkable pace, another pump launch weeks away and a pipeline built to redefine what a CGM can be. We are well positioned to further this momentum into 2027. For more detail, Brian will speak to our commercial progress, and Rick will follow with the financials and our updated outlook. Brian?

Thanks, Tim, and good afternoon, everyone. At the beginning of the year, we identified patient access, reimbursement, pump partnerships and user retention as key priorities for our commercial program. We are making progress across each of these areas, and that execution is supporting our growth. Fueled by our initiatives in these areas, we reported record shipment volume and a record number of new patient starts in the third quarter. Driving this performance is our experienced commercial team. We've seen little change over the past year, and the team's experience and continuity are helping us strengthen relationships with prescribers and improve coordination with our patient support and insertion networks. As the business grows, we expect to gain further productivity from the team and the infrastructure that we have put in place while adding resources selectively to support this demand. Direct-to-consumer advertising remains our largest source of new patient starts. The majority of our DTC conversion metrics improved again in the third quarter with several reaching their best levels to date. We continue to invest in this channel and as our experience grows, refine how we move patients from initial interest to insertion. Our health care provider channel is also becoming more productive as our sales team deepens account relationships and awareness of Eversense 365 expands. Active prescribers also reached a new record, up over 90% year-over-year. Together, these channels are helping us reach more patients and convert that interest into more new starts. A couple of underlying metrics continue to give us confidence in the durability of the growth we have been seeing. First, our annual reorder rate remains ahead of where we expected it to be at this point in the product's life cycle. We also continue to see approximately 9 out of 10 new insertions come from patients switching from a competitive sensor. Both factors speak to just how differentiated the Eversense 365 experience is once patients and providers get to see it firsthand, which we believe bodes well for continued growth. Our partnership with Sequel and the integration with the twiist pump continues to perform well for us. We are encouraged by the uptake of the Eversense 365 alongside twiist and the positive feedback from patients, health care providers and our partner. This experience supports our view that pump compatibility can bring additional patients to Eversense, opening the door to those in the U.S. who want an AID solution. The Beta Bionics relationship Tim just described builds on that opportunity with initial adoption expected following launch this quarter. We expect this expansion of AID choice to support continued Eversense growth in 2027. Choice is important in diabetes care, and we remain focused on expanding the options available to patients and their health care providers. Turning to EON Care. The network continues to scale ahead of plan. During the third quarter, we already surpassed our year-end goal of 100 inserters and now expect to reach approximately 120 inserters by year-end. EON performed a record number of insertions in the quarter, accounting for over 40% of all Eversense insertions in the United States. We are pleased with how the network simplifies and expands access for interested patients. EON makes it easier for health care providers to prescribe Eversense without performing the insertion themselves and helps connect more patients coming through the DTC channel with a qualified insertion provider. The network also supports our geographic expansion. As we add inserters in previously unserved areas, we can extend our advertising and commercial efforts into those markets with an insertion option already in place. Briefly on Europe. Revenue outside the United States was $2.8 million in the quarter, up approximately 65% year-over-year. The transition of the commercial teams from Ascensia is complete, and our dedicated teams are leading the Eversense 365 launches in Germany, Italy, Spain and Sweden. With our commercial operations now fully integrated into Senseonics globally, we are focused on building adoption and expanding patient access across these markets. With that, I will turn it over to Rick to walk through our financial results.

Thanks, Brian, and thanks, everyone, for joining us this afternoon. I'll walk you through our financial results for the third quarter and provide an update to our full year guidance. Net revenue for the third quarter was $19.6 million, an increase of approximately 140% compared to $8.1 million in the third quarter of 2025. U.S. revenue was $16.8 million, up approximately 160% from $6.4 million in the prior year period. And revenue outside the U.S. was $2.8 million, up approximately 65% from $1.7 million in the third quarter of 2025. Through the first 9 months of the year, total revenue was $45.8 million, up approximately 118% from $21 million in the same period last year. Gross profit for the third quarter of 2026 was $12.1 million, representing a gross margin of approximately 62% compared to gross profit of $3.5 million or approximately 43% gross margin for the third quarter of 2025. This improvement reflects a small shift toward our bundled pay channel this quarter, the initial sales of Eversense 365 in Europe and are bringing all of the commercial operations in-house. As a reminder, we recognize revenue in our DME channel when we ship inventory to distributors and in our bundled pay channel upon insertion. These are our 2 primary reimbursement channels and bundled pay carries meaningfully higher average selling prices than DME. This quarter, bundled pay represented approximately 65% of volume, a small shift from the roughly 60-40 split we've generally seen, and we expect only small shifts in that mix going forward. Research and development expenses for the third quarter of 2026 were $11.7 million compared with $7.8 million for the prior year period, primarily reflecting continued clinical trial activity for Gemini, development work on Freedom, including the preparation for our first in-human trial and continued development on Eversense 365. Selling, general and administrative expenses for the third quarter of 2026 were $32.3 million compared with $15.3 million for the prior year period, reflecting the ongoing cost of our commercial organization in the U.S. and Europe. SG&A was down slightly from the second quarter, reflecting significantly lower transition service agreement costs during the quarter with the Ascensia transition service agreement now wound down as of quarter end. Net loss was $32.7 million or $0.50 per share compared to a net loss of $19.5 million or $0.43 per share in the third quarter of 2025. As of September 30, 2026, cash, cash equivalents, restricted cash and short-term investments totaled $126.6 million and the carrying value of our debt under the Hercules Capital facility was approximately $56.2 million with $55 million in principal borrowings outstanding, consistent with the second quarter. Given the strength we saw in our sales again this quarter, we're raising our full year 2026 revenue guidance to $68 million to $70 million from our prior range of $62 million to $66 million. We're also updating our full year gross margin guidance to north of 60%. Given how much faster our U.S. business has grown, we now expect Europe to represent approximately 15% of our full year revenue, down from the 20% we had previously discussed. That shift is a function of U.S. outperformance. We continue to believe the 60-40 split between bundled pay and DME is the right expectation for the full year. We now expect full year operating expenses to come in slightly above the high end of our previously guided range of $150 million to $160 million due to transition service agreement costs earlier in the year that continued into the third quarter and continued investment in our commercial organization to support our revenue growth. We expect full year cash utilization to come in at the high end of our previously guided range or approximately $120 million. I want to spend a moment framing how we think about the path in front of us because I think it's the most important context for understanding our balance sheet. Our business is generating substantially more gross profit dollars every quarter. That's true this quarter. It was true last quarter, and it's been true every quarter this year. Those gross profit dollars would fund the continued investment in our commercial organization and our pipeline. And as revenue and margin continue to scale the way that they have, a greater share of our operating expenses get covered by our own gross profit, which is exactly the kind of operating leverage we set out to build when we brought the commercialization in-house. Based on our current plan, we expect to reach cash flow breakeven shortly after the launch of Freedom with Freedom's planned margin profile acting as a major catalyst. We feel good about our ability to execute this plan with the balance sheet we have today and the additional capacity we have under our Hercules facility, giving us real flexibility as we move forward. With that, I'll turn it back to Tim for a few closing remarks.

Thanks, Rick. It all starts with the product, a full year on a single sensor with exceptional accuracy and convenience. When people experience that, growth follows. And this quarter, more than doubling sales year-over-year, all while expanding margin, it shows it. We look forward to what is ahead. In the coming weeks, the iLet integration is expected to launch. In 2027, we plan to begin the Freedom pivotal study. And in 2028, we are targeting its potential launch. Freedom is the headline, but it's not the whole story. As we advance our innovation pipeline, our R&D teams keep pushing the boundaries of sensing technology with the goal of improving the lives of people with diabetes. We're not interested in incremental innovation, and we're just getting started. To the Senseonics team, thank you. Your dedication to the people we serve is behind every number we shared today. And to our shareholders, thank you for your continued support. With that, we'll now open up the call for questions.

[Operator Instructions] We'll take our first question from Josh Jennings with TD Cowen.

Congratulations on the breakout quarter and the progress on Gemini and Freedom. I was hoping to just ask about the momentum in 3Q guidance suggest is continuing in 4Q. Maybe just talk about anything you can -- share anything you can about the DTC conversion trends, the sales force productivity opportunity as we move through these last weeks of 2026.

Sure, Josh. Thanks. I'll let Brian speak to it. But as you mentioned, we continue to be very excited about the progress we're making on both the DTC front and the HCP.

Yes, Josh, if you remember, we put 40% of our sales first half, 60% in the second half, commensurately the same on our DTC spend. Historically, this time of the year, fourth quarter is fairly heavy as people have met their deductibles and their health care plans. So we're seeing that build as we close out the year. We start to see in September, really grow in October, November, December. So the trends, quite frankly, are how we saw them coming. Hence, our raise, we feel good about the fourth quarter.

And then just, Rick, I wanted to ask about the gross margin commentary that you put on the tape there. Maybe just help us think through any of the puts and takes investors should keep in mind for gross margins entering 2027 and just -- and details on any operating spend metrics you can and the outlook for profitability as we move through these next 12 to 18 months.

Yes. I think gross margins for the full year are just north of 60%. So pretty happy with where we are. We guided to approximately more than 60% for the full year. So we expect Q4 to come in pretty close to where Q3 was. We'll see some modest improvement next year as we continue to expand from a scale perspective and then have 365 for a full year in Europe. And then as we've talked in the past that the Freedom products, really, we expect those gross margins to be north of 70%, which certainly will help us with increased operating leverage in that path to cash flow positive.

Our next question comes from Anthony Petrone with Mizuho Group.

Congrats on a breakout quarter here. Maybe I'll go and jump into some of the collaborations and just to get a little bit more detail there. Maybe, a, just on the Sequel collaboration, just wondering what is in numbers in 3Q just from mining that relationship with Sequel and twiist? And then maybe what do you have there baked in for 4Q? And then as a follow-up, as we look to Beta Bionics, maybe just what are the mechanics, if you can review, who's in charge of that integrated sale? I believe it's almost a co-marketing arrangement. And as we get into 2027, what can we expect from Beta Bionics in the way of mining opportunities out of the Beta installed base versus just new patient adds as both companies go out there and get after the opportunity?

Thanks, Anthony. And I'll reiterate choice has always been our goal here and the opportunity to add a second pump to the portfolio is exciting. But we've been very happy with now almost a year into our relationship with Sequel twiist offering. It's been benefiting both companies and the pump compatibility was always one of the reasons why people have decided to discontinue using our sensors. So having one was great in the first place, having the second one is very exciting for us. And while we haven't shared the exact numbers, it certainly helps, and it helps with retention. The second launch is going to be easier than the first as we launch that here in the coming week or so, we think we have a fairly good blueprint for it. Very happy with the performance of the 2. And as you said, they have a very solid installed base and already some excitement around that. So it gives us great content for our marketing activities, especially on the DTC side. So my team in the field is excited. The team that's internal marketing is excited. I think the folks at Beta are excited to offer choice. And certainly, the performance of our product has continued to be very strong with the Sequel pump, and we expect nothing different when we launch Beta. And then as we roll that into 2027, 2 pump partners behind us certainly helps us continue our growth.

That's helpful. If I could stick one more in there, just kind of staying on this theme. There's other, obviously, pump companies out there, have a larger installed base than both Sequel and Beta. Just wondering where conversations are with some of the larger pump companies? And is it the goal for Senseonics to have one of these collaborations with each pump company out there, let's say, over the next 2 to 3 years? Congratulations.

I think Tim has said multiple times that the conversations continue, and I think having strength with our Sequel relationship certainly helps that. Having strength and now a second partner will continue to help that. It's still our goal to offer choice with multiple pump companies. Tim, anything you want to add to that?

No, I think you said it well. We very much want to have choice for our patients, right? We don't want people to not select the Eversense product because they don't like a particular pump that we work with. So we're excited, getting the Freedom news out there is certainly of interest, not only to us, but of course, to the pump companies as well. So I think that's been a positive indication for us as well. So we're excited. I do anticipate that we -- we're definitely continuing to be in conversation with the additional pump companies. We're not ready to announce anything. But much like we did with Beta, we'll work and then announce it when we get close enough to set a date.

Our next question comes from Chris Pasquale with Barclays.

Congrats on nice quarter. You talked about retention rates exceeding expectations. Can you give us an updated estimate for how many users are making it to their second and third implant?

Yes, that's been pretty consistent. We see about 94% of the folks go all the way to the full term. As we've said in the past, we don't particularly put out the specific retention rates, but what has been very typical for us is people on their first sensor about 75% of the time go on to the second. Second to third is about 85% of the time. And by the time we're in the third sensor, it's well into the 90s. So we're continuing to see that general trend. And of course, it mixes as we mature and get more and more of a patient population that have been with us for a long time.

Okay. And then, Rick, it sounded like you were chalking up the 3Q outperformance on gross margin to channel mix, which you did not expect to be the norm and you expect that to go back to where it had been in future quarters. But then you also said 4Q gross margin would still be close to 3Q levels. So I just want to make sure I heard both those points right and maybe flesh out why gross margin doesn't tick back down again to close out the year.

Yes, sure. So we saw the bundled pay DME split 65-35 for the quarter, which was a little bit higher than our 60-40. We've talked about the ASP being in bundled pay being noticeably higher. And so that did help support some of the gross margin improvement. We expect that bundled pay DME split to be back to 60-40. That's what we're forecasting for the fourth quarter. We don't think it's going to have any impact on our margins because at the same time, we'll have our 365 in Europe for the full quarter. So there shouldn't be any offset there. That's why I think margins will be fairly consistent quarter-over-quarter even if the reimbursement mix gets back to what we expect. And we do see less utilization of any patient assistance in the fourth quarter because deductibles are met. So that dynamic rolls in. That, of course, will come back in Q1 as the deductibles start over again. So a lot of the dynamic, Chris, as you know, go on quarter-by-quarter.

We will move next with John Block with Stifel.

Nice quarter. I'm just curious, any early thoughts or building blocks for 2027 when we think about the top line, really any revenue comments or maybe just high level, consensus is sitting out there just south of $100 million, which was a little bit below 50% growth off your old number. Any framework or structure you want to give us when thinking about those types of numbers?

Yes. We're going to give more formal guidance at the beginning of 2027, but we'll certainly be a $100 million company next year.

Great. That's helpful. And then not a lot to nitpick on, but I'll try to find something. So if I'm running the implied math correctly, it looks like international sales before it was 20% of the 64 midpoint. So before you were expecting about $13 million in international sales. Now maybe it's closer to $10 million or $11 million. It's not just a lower percentage. It seems to be a slightly lower absolute. I know, obviously, you brought that in-house later than the U.S. Maybe just talk to us about what you're seeing, what you're experiencing and just thoughts about that trajectory as we head into next year.

Brian here. Obviously, we're very happy with the transition on the OUS side. It just took a little longer than we expected, and it took a little longer because of that to launch 365-day product. So not at all disappointed with the launch, not at all disappointed with the team and where it's heading. Ultimately, I think that sets a very solid foundation for 2027. And as we said in the prepared remarks, the success of the U.S. just simply outstripped the success that we've seen so far OUS, but we're just getting started with 365, and we expect to see the same excitement and transition point that we saw here in the U.S. when we launched 365. So they're just getting started.

[Operator Instructions] We will move next with Sam Knapp with Lake Street Capital Markets.

This is Sam Knapp on for Ben Haynor. Congrats on the quarter, Tim, Rick and Brian. My first question is now that you have 2 pump partnerships, should folks expect additional partnerships to come quicker than prior assumptions?

Thanks, Sam. We continue to be on the plan that we've described. We did say that we expected to have one additional pump by '27, which Beta now fulfilled. And we continue to be in conversation with the other majors. But I'm going to stick to what we've guided in the past, I would expect to have those in the '28 time period.

Got it. And then one other. How do you see different pump providers and the users they target? Do any line up more closely to your existing Eversense users? And are others better for expanding your prescribers?

It's a good question. Obviously, we've got a little bit of a bifurcation in general, right? We have very active users. They really appreciate the ability to take the transmitter on and off. Obviously, we've got the super advantage with the adhesives, especially when you talk about swimming and sweating and showering. But we also have a great product for the Medicare population, right? People with dexterity issues don't have to keep redoing the insertion, don't have to worry about it falling off early. So from a pumping perspective, obviously, active patients, which many have type 1s are interested in it. But it really does come down to, one, the quality result. Eversense is very, very accurate, especially in the low range, which is really critical for people with type 1 diabetes. And also just that very gentle adhesive on-body vibration. So we've seen folks come over. I think this was encouraging on the twiist side as well in regards to the response and receptiveness that they've seen. And clearly, it was motivating for the Beta folks as well, for them to have access to Eversense too.

Our next question comes from Jayson Bedford with Raymond James.

Congrats on the progress. Maybe just a few. In terms of 3Q U.S. revenue, is there a way you could break out the percent generated from reinsertions versus new to therapy?

Yes. We haven't been giving out the breakout, Jayson, of our reorders versus new patients from DME or bundled pay. Now reorders will continue to be a meaningful portion of the business each and every year.

I think, Jayson, the one thing that we have talked about is we are on track to double our installed base in the U.S., and we continue to make progress towards that. So I think you can kind of triangulate from that.

Right. Okay. Rick, maybe just on the OpEx side. I think you said $160 million for the year that implies a step down, a pretty big step down in 4Q. I wasn't clear as to the level of TSAs that were involved there. Can you just reorient us on, I guess, maybe what is the OpEx expectation for 4Q?

Yes. I mean we gave total year should be about $160 million, maybe a little bit north of that. So you can back into the fourth quarter. We do expect a step down in the fourth quarter, and it's primarily because of the TSAs that have been reduced over the course of the year. Those were mostly in Q1 and Q2 with a little bit in Q3. Most of the cash outlay for those TSAs was in the third quarter. So we'll see some improvement in the fourth quarter.

Okay. And maybe my model is wrong, but year-to-date OpEx is $125 million, $130 million. Is that right?

I think that seems a little high.

Okay. Okay. I can check my model. I guess maybe last one, EON has done quite well in the U.S. I'm wondering if there's a similar structure that you can pursue in Europe.

Looking at it, Jayson, that's a great question, literally very timely as we've talked about the last couple of weeks after I got back from Europe a week or so ago. We also have to follow the money and the economics and where they're performed and who pays for it. It's slightly different in the U.S. than it is in our 4 European markets. But the answer is yes, certainly something we're looking to figure out how to add that functionality to the business, that optionality.

And at this time, there are no further questions in queue. I will now turn the meeting back to Tim Goodnow.

Great. Once again, I want to thank everyone for their participation. We're very excited to be here today. The progress that we made, I think, is incredibly telling. I want to thank everybody who's been part of that. So look forward to updating you at the next quarterly report. Good day.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.