Eversense 365 Will Expand Patient Access With EU Launch

Key Takeaways

• U.S. launch and future EU expansion of Eversense 365 could drive revenue growth through increased adoption and international market presence.
  
• Integration with insulin pumps and enhanced systems aim to boost product appeal, market penetration, and net margins.
  
• Dependency on regulatory approval, reimbursement transitions, and partnership with Ascensia poses risks to Senseonics' revenue growth and margin improvements.

Catalysts

A commercial-stage medical technology company, focuses on development and manufacturing of continuous glucose monitoring (CGM) systems for people with diabetes in the United States and internationally.

• The recent U.S. approval and launch of the Eversense 365, the world's first once-yearly continuous glucose monitor, is anticipated to drive significant revenue growth due to increased adoption by patients and health systems.
  
• Plans to launch Eversense 365 in the European Union in the second half of 2025, pending CE Mark approval, are expected to expand Senseonics' market presence and boost international revenue streams.
  
• The development and future integration of the Gemini and Freedom systems, which aim to improve the patient's experience with features like a battery, Bluetooth technology, and direct phone communication, could enhance product appeal and potentially improve net margins with higher adoption rates.
  
• Ongoing efforts to integrate Eversense 365 with insulin pumps and expanding relationships with health systems and accountable care organizations could support revenue growth and margin stability by tapping into a wider patient base and offering unique integrated solutions.
  
• An increase in direct-to-consumer marketing and a focus on transitioning reimbursement to the full-year sensor, especially in the Medicare segment, is expected to drive sales growth and improve earnings through greater market penetration and streamlined reimbursement processes.

Senseonics Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Senseonics Holdings's revenue will grow by 41.1% annually over the next 3 years.
• Analysts are not forecasting that Senseonics Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Senseonics Holdings's profit margin will increase from -349.8% to the average US Medical Equipment industry of 12.9% in 3 years.
• If Senseonics Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $8.1 million (and earnings per share of $0.01) by about May 2028, up from $-78.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 204.9x on those 2028 earnings, up from -6.2x today. This future PE is greater than the current PE for the US Medical Equipment industry at 31.6x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.17%, as per the Simply Wall St company report.

Senseonics Holdings Future Earnings Per Share Growth

Risks

• Regulatory delays or failures in obtaining CE Mark approval for Eversense 365 in Europe could slow down international market expansion, impacting projected future revenue growth.
  
• Transitioning reimbursement from 180-day products to the 365-day product, especially within Medicare, may face delays impacting cash flow and revenue realization.
  
• Current losses and high operating costs, with a net loss of $78.6 million in 2024, combined with increased selling, general, and administrative expenses, could pressure the company’s net margins if revenue growth does not meet expectations.
  
• The company’s high dependence on its partner Ascensia for sales and distribution may present risks if the partnership faces challenges or fails to achieve target sales, impacting projected earnings.
  
• A potential lack of significant European sales of the 365-day product in the early stages could limit revenue growth and margin improvements, especially if anticipated patient base growth is slower than expected.

Valuation

• The analysts have a consensus price target of $1.7 for Senseonics Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $2.5, and the most bearish reporting a price target of just $0.3.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $63.1 million, earnings will come to $8.1 million, and it would be trading on a PE ratio of 204.9x, assuming you use a discount rate of 7.2%.
• Given the current share price of $0.75, the analyst price target of $1.7 is 55.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.