Q1 2024 Senseonics Holdings Inc Earnings Call

Operator: Good afternoon everyone, and welcome to the Senseonics first quarter 2024 news conference call. All participants will be in a listen-only mode.

Good afternoon, everyone and welcome to the first quarter of 2024 earnings Conference call.

All participants will be in a listen only mode should you need assistance. Please.

Operator: Should you need assistance, please email a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your question, you may press star and two. Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to Tripp Taylor. Please go ahead.

Still a conference specialist by pressing the Starkey followed by zero.

After todays presentation, there will be an opportunity to ask questions.

A question you May press Star then one.

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It's also note todays ability all caught it.

Philip Taylor: Thank you. This is Tripp Taylor from the Gilmartin Group.

With that I'd like to turn the floor over to Kip. Please go ahead.

Philip Taylor: 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, 2023, our quarterly report on Form 10-Q for the quarter ended March 31, 2024, and other reports filed with the SEC. These documents are available in 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.

Kip: Thank you. This is trip Taylor from the Gilmartin group 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.

Philip Taylor: Matters and speak only as of the date hereof.

Philip Taylor: Forward looking statements involve a number of risks and uncertainties.

Philip Taylor: 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, 2023, our quarterly report on Form 10-Q for the quarter ended March 30 <unk>.

Philip Taylor: <unk> 2024, and other reports filed with the SEC. These documents are available in the Investor Relations section of our website at Www dot since the Onyx Dotcom, we undertake no obligation to update publicly or revise these forward looking statements for any reason, except as required by law.

Philip Taylor: Joining me from Senseonics are Tim Goodnow, President and Chief Executive Officer, and Rick Sullivan, Chief Financial Officer. With that, I'd like to turn the call over to Tim Goodnow, President and CEO.

Philip Taylor: Joining me from Cynthia Alex are Tim Goodnow, President and Chief Executive Officer, and Rick Sullivan, Chief Financial Officer.

Philip Taylor: With that I'd like to turn the call over to Tim Goodnow, President and CEO Jim.

Philip Taylor: Yeah.

Timothy T. Goodnow: Thank you, Tripp, and thank you all for joining us this afternoon. We'll begin today by providing an update on our performance during the first quarter and then transition to the several important milestones recently achieved by the company that represent critical growth catalysts for the future of Senseonics. Then, our Chief Financial Officer, Rick Sullivan, will discuss the first quarter financials in detail and will open up the call for questions. We've had a very successful start to the year at Senseonics.

Thank you trip and thank you all for joining US this afternoon will.

Philip Taylor: We will begin today by providing an update on our performance during the first quarter and then transition to the several important milestones recently achieved by the company it represent critical growth catalyst for the future since Alex.

Philip Taylor: Dan Hart, Chief Financial Officer, Rick Sullivan will discuss the first quarter financials in detail and we'll open up the call for questions.

Philip Taylor: We've had a very successful start to the year at Cincy Onyx.

Timothy T. Goodnow: We've advanced key strategic initiatives intended to amplify the benefits of our long-term and plannable CGM to appeal to more patients. We are making commercial progress, both with our quarter over quarter growth in new patient additions and by advancing a transformational collaboration with one of the 20 largest health systems in the country. Mercy has chosen to use Eversense as the foundational technology to facilitate a broad-based diabetes population management program intended to optimize care in a large targeted patient population.

Philip Taylor: We've advanced key strategic initiatives intended to amplify the benefits of our long term implantable CGM to appeal to more patients.

We are making commercial progress both with our quarter over quarter growth in new patient additions.

Philip Taylor: And by advancing a transformational collaboration with one of the 20 largest health systems in the country.

Philip Taylor: Mercy has chosen to use ever since as the foundational technology.

Philip Taylor: To facilitate a broad based diabetes population management program Intel.

Philip Taylor: Intended to optimize care and a large targeted patient population.

Timothy T. Goodnow: Importantly, we have significantly progressed our product pipeline by establishing the new Eversense remote patient monitoring solution and achieving ICGM designation from the recent FDA approval, as well as filing the 510K submission for our next generation 365-day product. With the advancement of the product pipeline and the development of new commercial initiatives, we believe the Eversense platform sits in its strongest position ever. We anticipate continuing to build on these accomplishments throughout the remainder of 2024.

Philip Taylor: Importantly, we have significantly progressed, our product pipeline by establishing the new ever since remote patient monitoring solution and achieving I CGM designation from the recent FDA approval.

Philip Taylor: As well as filing the five 10-K submission for our next generation 365 day product.

Philip Taylor: With the advancement of the product pipeline and the development of new commercial initiatives, we believe the ever since platform sits in its strongest position ever.

Philip Taylor: We anticipate continuing to build these accomplishments throughout the remainder of 2024.

Timothy T. Goodnow: On the financial front, in the first quarter, Senseonics generated total revenue of $5.1 million, representing 22% growth compared to the prior year period. In the U.S., first quarter sales totaled $3.7 million, and sales outside the U.S. totaled $1.4 million.

Philip Taylor: On the financial front in the first quarter since the Onyx generated total revenue of $5 $1 million, representing 22% growth compared to the prior year period.

In the U S first quarter sales totaled $3 7 million in sales outside the U S totaled $1 4 million.

Timothy T. Goodnow: On the commercial front, with Essentia Diabetes Care, their main objectives remain rooted in driving expanded awareness and access to Eversense within the diabetes population. They continue to drive quarter over quarter patient growth, both via DTC and professional sales efforts. Additionally, as we have previously announced, industry veteran Brian Hanson was appointed president of the ABCCGM business, and has also been recently appointed to the Senseonics Board.

Philip Taylor: On the commercial front with a sense of your diabetes care their main objectives remain rooted in driving expanded awareness and access to ever sense within the diabetes population.

Philip Taylor: They continue to drive quarter over quarter patient growth.

Philip Taylor: Both via DTC and professional sales efforts.

Philip Taylor: Additionally, as we have previously announced industry veteran Brian Hansen was appointed President of E. D. C. C. G M business.

Philip Taylor: And has also been recently appointed to the Cynthia unexplored.

Timothy T. Goodnow: We are working closely together as he ramps into this role and formalizes plans to improve Everson's commercial strategy and execution. Importantly, we continue to explore additional growth avenues for Everson. Notably, with the expansion by Medicare to cover CGM for all patients on insulin, as well as diabetes patients not on insulin with a history of hyperglycemia, and now with similar adoption by many commercial payers, we estimate that less than one-quarter of patients eligible for CGM are using it. Given both the clinical and health care economic benefits for people using CGM, there remains substantial opportunity to reduce the health care cost of diabetes while helping patients live healthier lives.

Philip Taylor: We are working closely together as he ramps into this role and formalizes plans to improve ever since commercial strategy and execution.

Philip Taylor: Importantly, we continue to explore additional growth avenues forever since notably when the expansion by Medicare to cover CGM for all patients on insulin.

Philip Taylor: As well as diabetes patients not on insulin with a history of hyperglycemia.

Philip Taylor: And now with similar adoption by many commercial payers.

Philip Taylor: We estimate that less than one quarter of patients eligible for CGM are using one.

Philip Taylor: Given both the clinical and health care economic benefits for people using CGM, there remains substantial opportunity to reduce the health care cost of diabetes, while helping patients lead healthier lives.

Timothy T. Goodnow: To that end, we believe Eversense is ideally suited for integration across large health systems and Accountable Care Organizations who are facing increased pressures to improve patient outcomes and their quality of care, all while driving down costs resulting from sub-optimally managed diabetes, with their ability to influence care pathways and the breadth of providers in their system, including those who would regularly conduct office-based procedures, such as interventional cardiologists, together with the professionals who care for We believe these health systems could certainly benefit from Eversense and manage efficient patient workflows to enable the broad adoption of our implantable CGM.

Did that and we believe ever since its ideally suited for integration across large health systems and accountable care organizations, we're facing increased pressures to improve patient outcomes and their quality of care.

Philip Taylor: All while driving down costs, resulting from sub optimally manage diabetes.

Philip Taylor: With their ability to influence care pathways and the breadth of providers in their system, including those who would regularly conduct office based procedures such as interventional cardiologist.

Philip Taylor: Together with the professionals, who care for people with diabetes, specifically endocrinologists and primary care physicians.

Philip Taylor: We believe these health systems could certainly benefit from ever sent manage the efficient patient workflows to enable the broad adoption of our implantable CGM.

Timothy T. Goodnow: On this front, today we announced our innovative collaboration with Mercy, a leading healthcare system and accountable care organization based in St. Louis, Missouri, that spans across four states and is consistently recognized for their innovative breakthroughs in healthcare.

Philip Taylor: For this front today, we announced our innovative collaboration with Mercy, a leading health care system and accountable care organization based in St. Louis, Missouri that spans across four states and is consistently recognized for their innovative breakthroughs in health care.

Timothy T. Goodnow: Mercy clearly recognizes the potential value Eversense can bring to its diabetes population health management program. Together, we are working to build an innovative approach that combines ever-since CGM, Advanced Data Analytics with Mercy's Artificial Intelligence Capabilities, and our new EverSense RPM program to systemically monitor patients at risk. Mercy has identified up to an estimated 30,000 patients across their system who could benefit from CGM.

Philip Taylor: Immersing clearly recognizes the potential value ever since can bring to its diabetes population health management program.

Philip Taylor: Together, we're working to build an innovative approach that combines ever since CGM.

Philip Taylor: Advanced data analytics with Mercy artificial intelligence capabilities.

Philip Taylor: And our new ever since RPM program.

Philip Taylor: Two systemically monitor patients at risk.

Philip Taylor: Mercy as identified up to an estimated 30000 patients across their system, who could benefit from CGM.

Timothy T. Goodnow: We believe this represents a substantial opportunity to help these patients better manage their diabetes and avoid costly, short- and long-term expenditures. We look forward to working with Ascensia to bring as many of these patients to Eversense as we can in the coming quarters and years as we roll out this multi-state collaboration with Mercy. We are working with Mercy's executives and operational teams to design and implement the program. Mercy plans to begin a controlled launch focused on making Eversense initially available to a cohort of patients in the St. Louis metro area in July.

Philip Taylor: We believe this represents a substantial opportunity to help these patients better manage their diabetes and avoid costly short and long term expenditures.

Philip Taylor: We look forward to working with Cynthia to bring as many of these patients to ever since as we can in the coming quarters and years as we rollout this multistate collaboration with Mercy.

Philip Taylor: We are working with mercy as executives and operational teams to design and implement the program.

Philip Taylor: Merci plans to begin a controlled launch focused on making ever since initially available to a cohort of patients in the St. Louis Metro area in July.

Timothy T. Goodnow: And we'll then look to further ramp operations in conjunction with the planned 365-day product launch targeted for Q4. Together, we see the opportunity to place an emphasis on type 2 patients on basal insulin, who historically trail in the adoption of advanced technology. Our perspective is that access to advanced technologies and personalized remote patient monitoring can reduce risk for both the patient and the healthcare system. A shared goal with Mercy is to use their innovation leadership to develop this comprehensive diabetes management approach so that it can be replicated for other healthcare organizations, with an estimated 1,300 health systems in the U.S. We are excited to develop this strategic approach to enhance the value Eversense could bring. An important component of this collaboration includes our newly announced EverSense RPM program, which we believe will further differentiate Eversense by providing a comprehensive solution for patients, providers, and healthcare

Philip Taylor: And we will then look to further ramp operations in conjunction with the planned 365 day product launch targeted for Q4.

Philip Taylor: Together, we see the opportunity to place an emphasis on type two patients on basal insulin, who historically trail and the adoption of advanced technologies.

Philip Taylor: Our perspective is that access to advanced technologies and personalized remote patient monitoring can reduce risk to both the patient and the health care system.

Philip Taylor: Our shared goal with Mercy is to use their innovation leadership to develop a comprehensive diabetes management approach so that can be replicated for other health care organizations.

Philip Taylor: With an estimated 1300 health systems in the U S. We're excited to develop this strategic approach to enhance the value ever sense could bring to health systems.

Philip Taylor: An important component of this collaboration includes our newly announced ever since RPM program.

Philip Taylor: Which we believe will further differentiate ever sense by providing a comprehensive solution for patients providers and the health care systems.

Timothy T. Goodnow: While it has been well-established that CGM alone produces better outcomes for people with diabetes, we're confident there is an opportunity to deliver even more. Today, patients are simply provided with a CGM device, but we feel there is often limited ongoing support for understanding and utilizing the data for personal optimization, particularly between offices. Our RPM program aims to fill these key gaps. First, it is designed with the intent to provide patients with a strong foundation through better understanding of their CGM data and how to use it for optimal glucose control.

Philip Taylor: Well it has been well established that CGM alone produces better outcomes for people with diabetes.

Philip Taylor: Confident there is an opportunity to deliver even more today patients are simply provided a CGM device, but we feel there is often limited ongoing support or understanding and utilizing the data for personal optimization, particularly in between offices.

Philip Taylor: Our RPM program aims to fill in these key gaps.

Philip Taylor: First it is designed with the intent to provide patients with a strong foundation through better understanding of their CGM data and how to use it for optimal glucose control.

Timothy T. Goodnow: Supported by diabetes counseling. These counselors are intended to provide coaching and insight into things impacting their glucose levels, such as medication, food, and exercise, and to enable participants in the program to make better informed choices about managing their diabetes.

Philip Taylor: Courted by diabetes counselors.

Philip Taylor: These counselors are intended to provide coaching and insight into things impacting their glucose levels, such as medications food and exercise.

Philip Taylor: And to enable participants in the program to make better informed choices about managing their diabetes.

Timothy T. Goodnow: The program, Device Mercy and Remedy, is designed to meet the requirements for Medicare and commercial RPM reimbursement. In addition, we also see the program as providing an invaluable communication loop between our RPM counselors and the patient's healthcare provider, enabling key interventions. By engaging with patients on a monthly basis, we aim to improve this optimization loop. The goal is that identifying corrective actions and making appropriate improvement changes which previously occurred during office visits will now be able to be done between visits, accelerating progress, and bridging the gap between traditional in-person visits.

Philip Taylor: The program device Mercy and remedy is designed to meet the requirements for Medicare and commercial RPM reimbursement.

Philip Taylor: In addition, we also see the program is providing an invaluable communication loop between our RPM counselors, and the patient's health care provider, enabling key interventions.

Philip Taylor: By engaging with patients on a monthly basis, we aim to improve this optimization loop.

Philip Taylor: The goal is that identifying corrective actions and making appropriate improvement changes, which previously occurred during office business will now be able to be done in between visits accelerating progress and bridging the gap between traditional in person visits.

Timothy T. Goodnow: After we have finalized the development and implementation of the program and rolled it out with Mercy, we intend to make Eversense's RPM system available to patients and clinicians who use Eversense generally. We see the Eversense CGM and RPM combination as providing more reasons for clinicians to make Eversense their CGM of choice. We believe our partnership with Mercy is an important testament to the need for this more comprehensive care solution, and they're excited to build this program further.

Philip Taylor: After we have finalized the development and implementation of the program and rolled it out with Mercy, we intend to make ever since rpms system available to patients and clinicians who use ever central generally.

Philip Taylor: We see the ever since CGM and RPM combination is providing more reasons for clinicians to make ever sent their CGM choice.

Philip Taylor: We believe our partnership with Mercy is an important testament of the need for this more comprehensive care solution.

Philip Taylor: And they are excited to build this program further.

Timothy T. Goodnow: As we finalize the plans for these opportunities, which are expected to occur in the second half of the year, we are developing our full-year financial outlook. We plan to provide our full-year guidance in June at the upcoming ADA conference. As for the first half of 2024, we continue to expect global net revenue for Senseonics to be $10 million, representing growth of approximately 16% over the first half of 2023. Second quarter revenue is expected to be consistent with revenue in the first quarter, and assumes continued new patient growth as Ascensia manages inventory towards normalizing levels.

Philip Taylor: As we finalize our plans for these opportunities which are expected to occur in the second half of the year.

Philip Taylor: We are developing our full year financial outlook.

Philip Taylor: We plan to provide our full year guidance in June at the upcoming 88 conference.

Philip Taylor: As for the first half of 'twenty 'twenty four we continue to expect global net revenue for <unk> to be $10 million representing growth of approximately 16% over the first half of 2023.

Second quarter revenue is expected to be consistent with revenue in the first quarter and assumes continued new patient growth as the Cynthia manages inventory towards normalizing levels.

Timothy T. Goodnow: Now I'll turn to our pipeline, where continuing to advance innovation in CGM technology remains a key strategic imperative for Senseon and the focus of our product development team. I'm pleased today to highlight important progress with two key milestones in our broader pipeline plan. First, we recently announced that the Eversense CGM system received iCGM designation from the FDA. The iCGM designation indicates that the Eversense CGM product can integrate with compatible medical devices, including insulin pumps, part of an automated insulin delivery system.

Speaker Change: Now I'll turn to our pipeline, we are continuing to advance innovation and CGM technology remains a key strategic imperative percent C&I.

Speaker Change: And the focus of our product development teams.

Speaker Change: I am pleased today to highlight important progress with two key milestones in our broader pipeline plan.

Speaker Change: First we recently announced he ever sent CGM system received I CGM designation from the F D. A.

Speaker Change: C. G M designation indicates that the ever since I CGM product can integrate with a compatible medical devices, including insulin pumps as part of an automated insulin delivery system.

Timothy T. Goodnow: As the first fully implanted device in the category, Eversense has been authorized to be marketed as an ICGM through the FDA's de novo pathway. This authorization demonstrates that Eversense meets the high bar set by the FDA for analytical performance and accuracy. And our intent is for all future Substantially Equivalent Devices of similar type to be submitted as Class II devices as 510K submissions.

Speaker Change: As the first fully implanted device in the category ever sent has been authorized to be marketed as an IC G M through the Fda's de Novo pathway.

Speaker Change: This authorization demonstrates that ever since meets the high bar set by the FDA for analytical performance and accuracy and our intent is for all future substantially equivalent devices of similar type to be submitted as class II devices has five 10-K submissions.

Timothy T. Goodnow: The ICGM designation has been a core component of our strategic initiatives to advance our pipeline, and we're excited to move forward with the next step to advance integration partnership discussions with leading insulin delivery device companies. At this point, we are in the discussion stages with various manufacturers and aim to offer people a new interoperable CGM option that we believe is exceptionally well-suited for automated insulin delivery. Both Senseonics and pump manufacturers recognize the opportunity to positively impact the lives of more people with diabetes with an integrated Eversense system.

Speaker Change: The ice CGM designation has been a core component of our strategic initiatives to advance our pipeline.

Speaker Change: We're excited to move forward with the next step to advance integration partnership discussions with leading insulin delivery device companies.

Speaker Change: At this point, we are in discussion stages with various manufacturers and aim to offer people a new interoperable CGM option that we believe is exceptionally well suited for automated insulin delivery systems.

Speaker Change: Both Cynthia on accident pump manufacturers recognize the opportunity to positively impact the lives of more people with diabetes with an ever since integrated system and we are excited by the potential to further these discussions.

Timothy T. Goodnow: And we are excited by the potential to further these discussions, and plan to provide more updates as they develop. Now for our second exciting key pipeline development. Following our ICGM approval, today we are pleased to report that last week, we filed our FDA submission for our next-generation, 365-day system as a 510k pre-market notification. This de novo ICGM designation facilitated this down-regulation of submissions for devices of the same type.

Speaker Change: We plan to provide more updates as they develop.

Speaker Change: Now for our second exciting key pipeline development.

Speaker Change: Following our IC G. M approval today, we are pleased to report.

Speaker Change: This last week, we filed our FDA submission for our next generation 365 days system.

Speaker Change: A five 10-K premarket notification.

Speaker Change: This de Novo ICM designation facilitated this downregulation of submission for devices of the same type.

Timothy T. Goodnow: I would like to note that despite now being on a 510k pathway, we have generated high-quality clinical data and worked to put together a submission with the same rigor as a PMA submission, relying on the confidence in our technology and high quality submission. We continue to work towards our goal of a fourth quarter launch this year. The 365-day system is unique in that it offers several differentiators. First, an anticipated full year of protection from a single sensor and a significant reduction in planned calibration frequency.

Speaker Change: I would like to note that despite now being on a five 10-K pathway.

Speaker Change: We have generated high quality clinical data and work to put together a submission with the same rigor as a PMA submission.

Relying on the confidence in our technology and high quality submission, we continue to work towards our goal of a fourth quarter launch this year.

The $3 65 day system is unique in that it offers several differentiators first an anticipated full year protection from a single sensor.

Speaker Change: And a significant reduction in planned calibration frequency.

Timothy T. Goodnow: We are confident that a one-year sensor with reduced calibration will be a compelling combination, and are excited that this submission moves us one important step closer to that goal. Importantly, the 365-day system platform with redundant sensing capability for longer life and retained accuracy is also the basis for further development within our pipeline. Both of our subsequent generation Gemini and Freedom self-powered products are designed to leverage this technology and FDA approval as we work towards the now-approaching goal of removing the need for any on-body transmitter.

Speaker Change: We are confident that a one year sensor with reduced calibration will be a compelling combination.

Speaker Change: And are excited that this submission moves us one important step closer to that goal.

Speaker Change: Importantly, the $3 65 days system platform with redundant sensing capability for longer life.

Speaker Change: And retained accuracy is also the basis for further development within our pipeline.

Speaker Change: Both of our subsequent generation Gemini and freedom self powered products are designed to leverage this technology and FDA approval as we work towards the now approaching goal of removing the need for any on body transmitter.

Timothy T. Goodnow: We're excited to continue to be on plan for the first human testing of Gemini in the second half of this year, and to continue to innovate and prioritize our pipeline progression to continue to move our CGM technology forward. With this exciting news, I'll now turn the call over to Rick for a review of our financials.

Speaker Change: We're excited to continue to be on plan for the first in human testing of Gemini the second half of this year.

We continue to innovate prioritize our pipeline progression to continue to move our CGM technology forward.

Speaker Change: With this exciting news I'll now turn the call over to Rick for a review of our financials.

Frederick T. Sullivan: Thank you, Tim. And good afternoon, everyone.

Frederick T. Sullivan: Thank you Tim and good afternoon, everyone.

Frederick T. Sullivan: We appreciate the opportunity today to update you on our business.

Frederick T. Sullivan: We appreciate the opportunity today to update you on our business. In the first quarter of 2024, net revenue was $5.1 million, compared to $4.1 million in the prior year period. U.S. revenue for the first quarter was $3.7 million, and revenue outside the U.S. was $1.4 million.

Frederick T. Sullivan: In the first quarter of 2024, net revenue was $5 1 million compared to $4 1 million in the prior year period.

Frederick T. Sullivan: U S revenue for the first quarter was $3 7 million and revenue outside the U S was $1 4 million.

Frederick T. Sullivan: As a reminder, our collaboration agreement with Essentia is for revenue sharing, with the percentage of revenue to Essentia increasing based on the duration of the contract and annual revenue levels. We recognize our portion of revenue when shipments are delivered to Essentia, and they take title to and ownership of the inventory. This begins the multi-step distribution to patients via Essentia and their distributors.

Frederick T. Sullivan: As a reminder, our collaboration agreement with a sense yet as for revenue sharing with the percentage of revenue to a sense, yet increasing based on duration of the contract.

Frederick T. Sullivan: Annual revenue levels we.

Frederick T. Sullivan: We recognize our portion of revenue when shipments are delivered to our Cynthia and they take title and ownership of the inventory.

Frederick T. Sullivan: Begins the multi step distribution to patients via Cynthia and their distributors.

Frederick T. Sullivan: We manage our manufacturing based on patient demand generated from commercial activities targeting 60 to 90 days of inventory across the various channels. Therefore, our shipments to Essentia during the quarter are largely intended to support future demand for Eversense. We are monitoring inventory levels closely based on Essentia's prior purchases and sales and with consideration of the approach for the currently planned transition to the 365-day product later this year.

Frederick T. Sullivan: We manage our manufacturing based on patient demand generated from commercial activities.

Frederick T. Sullivan: Getting 60 to 90 days of inventory across the various channels.

Therefore, our shipments to our sense yet during the quarter are largely intended to support future demand for ever since we.

Frederick T. Sullivan: We are monitoring inventory levels closely based on the census, prior purchases and sales and with consideration of the approach for the currently planned transition to the 365 day product later this year.

Frederick T. Sullivan: Gross profit in Q1 2024 was $0.3 million, a decrease of $0.1 million from a gross profit of $0.4 million in the prior year period. The decrease in gross margin was primarily driven by higher fixed manufacturing costs. Research and development expenses in Q1 2024 were $10.4 million, a decrease of $2 million compared to $12.4 million in the prior year period. The decrease was primarily due to reductions in clinical trial expenses associated with the enhanced pivotal trial as patients completed the study.

Frederick T. Sullivan: Gross profit in Q1, 2024 was <unk> 3 million a decrease of <unk> 1 million from a gross profit of <unk> 4 million in the prior year period.

Frederick T. Sullivan: The decrease in gross margin was primarily driven by higher fixed manufacturing costs.

Frederick T. Sullivan: Research and development expenses in Q1, 2024 were $10 4 million, a decrease of $2 million compared to $12 4 million in the prior year period.

Frederick T. Sullivan: The decrease was primarily due to reductions in clinical trial expenses associated with the enhanced pivotal trial as patients completed the study.

Frederick T. Sullivan: These decreases were slightly offset by planned continued investments in our product pipeline for the development of next-generation technology. First quarter 2024 selling general and administrative expenses were $8.1 million, an increase of $0.4 million compared to $7.7 million in the prior year period, primarily driven by increases in corporate legal and patent expenses. For the three months ended March 2024, its operating loss was $18.2 million compared to $19.7 million in the first quarter of 2023 due to decreases in R&D expenses.

Frederick T. Sullivan: These decreases were slightly offset by planned continued investments in our product pipeline for development of next generation technologies.

Frederick T. Sullivan: First quarter 2020 for selling general and administrative expenses were $8 1 million, an increase of <unk> 4 million compared to $7 7 million in the prior year period.

Frederick T. Sullivan: Merrily driven by increases in corporate legal and patent expenses.

Frederick T. Sullivan: For the three months ended March 2020 for operating loss was $18 2 million compared to $19 7 million in the first quarter of 2023 due to decreases in R&D expenses.

Frederick T. Sullivan: For the three months ended March 2024, total net loss was $18.9 million, or a $0.03 loss per share, compared to a net income of $1.3 million, or a $0.0 gain per share, in the first quarter of 2020. Net income decreased by $20.2 million due to the accounting for embedded derivatives, fair value adjustments, and the exchange of a portion of the 2025 note.

Frederick T. Sullivan: For the three months ended March 2024, total net loss was $18 9 million or a 3% loss per share compared to a net income of $1 3 million or zero cents gain per share in the first quarter of 2023.

Frederick T. Sullivan: Net income decreased by $20 2 million due to the accounting for embedded derivatives.

Frederick T. Sullivan: Fair value adjustments and the exchange of a portion of the 2025 notes.

Frederick T. Sullivan: As of March 31st, 2024, cash, cash equivalents, and short-term investments totaled $99.1 million, and debt and accrued interest was $55.9 million. Turning to our outlook for 2024, we continue to expect first half 2024 global net revenue to be $10 million and second quarter revenue to be consistent with the first quarter. At the upcoming ADA meeting, we plan to provide second half and full year revenue guidance, along with the expectations for 2024 revenue share percentages, taking into consideration greater visibility on the status of the review of our 365-day filing and the progress of our various commercial initiatives. For full year 2024, operating expenses are expected to be similar to 2023, at approximately $80 million. With that, I'll turn it back to Tim. Thanks.

Frederick T. Sullivan: As of March 31, 2024, cash cash equivalents and short term investments totaled $99 1 million and debt and accrued interest was $55 9 million.

Frederick T. Sullivan: Yeah.

Frederick T. Sullivan: Turning to our outlook for 2024, we continue to expect first half 2024 global net revenue to be $10 million and second quarter revenue to be consistent with the first quarter.

Frederick T. Sullivan: At the upcoming Ada meeting, we plan to provide second half and full year revenue guidance, along with the expectations for 2020 for revenue share percentages, taking into consideration greater visibility on the status of the review of our 365 day filing and the progress of our various commercial initiatives.

Frederick T. Sullivan: For full year 2024 operating expenses are expected to be similar to 2023 at approximately $80 million.

Frederick T. Sullivan: With that I'll turn it back to Tim.

Timothy T. Goodnow: Thanks Rick. The recent progress made by Senseonics includes pivotal milestones that we believe will propel the company to its next phase of growth. We expanded the Futures of Eversense to make it appealing to more patients, and with optimized commercial execution, we aim to drive increased adoption. Innovative capabilities lend to it being uniquely suited for a strategic partnership within the diabetes management environment. Mercy's collaboration and future healthcare system strategy represents an opportunity that could drive an inflection in our growth over the years to come.

Timothy T. Goodnow: Thanks, Rick the recent progress made by Cynthia Onyx includes pivotal milestones that we believe will help the company to its next phase of growth.

Timothy T. Goodnow: We expanded the futures of ever since to make it appealing to more patients and with optimized commercial execution, we aimed to drive increased adoption.

Timothy T. Goodnow: Innovative capabilities Lynn to it to be uniquely suited for a strategic partnership within the diabetes management environment.

Timothy T. Goodnow: <unk> collaboration future health care system strategy represents an opportunity that could drive an inflection in our growth over the years to come.

Timothy T. Goodnow: With the ICGM designation secured, the upcoming 365-day product filed, and our RPM program progressing, the Eversense platform is in its strongest competitive position of all time. We're excited to build on this momentum and provide more updates as the year unfolds. I'd like to take this opportunity to thank all of the Senseonics employees for their hard and tenacious work to bring all of this together. Thank you all for your time today. Also joining us for questions is Mukul Jain, our Chief Operating Officer, and Jeff Ruiz, our Head of Strategy and Business Development. Operator, let's go ahead and open up the call for questions.

Timothy T. Goodnow: So the ICM designation secured the upcoming 365 D product filed and our RPM program progressing the ever since platform is in its strongest competitive position of all time.

Timothy T. Goodnow: We're excited to build on this momentum and provide more updates as the year unfolds.

Speaker Change: To take this opportunity to thank all of the same Phoenix employees for their hard and tenacious work to bring all of this together.

Speaker Change: Thank you all for your time today.

Speaker Change: Also joining us for questions as mutual Jain, our chief operating officer, and Jeff Ruiz, our head of strategy and business development opt.

Speaker Change: Operator, let's go ahead and open up the call for questions.

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. To ask a question, you may press star and then 1 on your touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Ladies and gentlemen at this time, we will begin the question and answer session.

Operator: To withdraw your questions, you may press star. Once again, that is star and then one to join the question queue; please wait momentarily for the roster to be assembled. And our first question today comes from Marie Thibault from BTIG. Please go ahead with your question.

Speaker Change: To ask a question you May press Star and then one on your Touchtone telephone.

Speaker Change: If you are using a speakerphone you ask do you pick up the handset prior depressing the keys to ensure the best sound quality.

Speaker Change: So withdraw your question you May press Star two.

Speaker Change: But again that is star and wanted to join the question queue.

Speaker Change: We'll pause momentarily to assemble the roster.

Speaker Change: And our first question today comes from really a tivo from B T. I D. Please go ahead with your question.

Marie Yoko Thibault: Good afternoon, Tim, Rick, and Mukul. Thanks for taking the questions. I wanted to ask a high-level question here to start. You know, on the last quarterly call, you mentioned that, you know, Essentia had built up some inventory as they were trying to work through the high volume of leads that were generated and turn those into new starts, new ever-since starts. Can you give us an update on how that has been going, how much of that backlog has been worked through, whether we're a bit ahead of your own expectations, just ways to kind of understand how that process is going?

Raelene Tivo: Good afternoon, Tim Rick Michael Thanks for taking the questions I wanted to ask a high level one here to start.

Tivo: You know on the last quarter call. You mentioned that you know Cynthia had built up some inventory as they were trying to work through the high volume of leads that were generated and turn those into new starts new ever since start can you give us an update on how that has been going how much of that backlog has been worked through whether we're a bit ahead of.

Tivo: Of your own expectations, just just ways to kind of understand how that process is going.

Timothy T. Goodnow: Thanks, Marie. ADC continues to make good progress with working through their inventory. We are certainly seeing quarter-on-quarter patient growth. I think at our last update, we're seeing over 80% growth in the first portion of this year compared to last year, so we're certainly excited about that. The reality of the 365-day product and the opportunity to have that approved under the... 510k pathway gives us a further opportunity there. So we're anticipating that we'll be fully working through that inventory over the next quarter, plus the time that it takes for us to transition to the 365 product as we bring that along in the Hopefully, they will release that at the very beginning of the fourth quarter.

Speaker Change: Thanks Marie.

Speaker Change: ADC continues to make good progress working through their inventory, we do we are certainly seeing quarter on quarter patient growth.

Speaker Change: At our last update we're seeing over 80% growth in the.

Speaker Change: The first portion of this year compared to last year. So we're certainly excited about that.

The reality of the $3 65 day product and the opportunity to have that approved under the.

Speaker Change:

Speaker Change: 500, K pathway. It gives us a further opportunity there. So we're anticipating that will be fully working through that inventory over the next quarter plus the time that it takes for us to transition with the with the 365 product as we bring that alone and the.

Speaker Change: Hopefully really sat in the very beginning of the fourth quarter.

Timothy T. Goodnow: Okay, that makes sense. And just to clarify, I think there were some metrics last quarter you'd given, you know, hopes that first half new patients would grow 150% year-over-year and perhaps exceed new patient sales. I'm not sure if I got that right, new patient sales in 2023. Are you still able to kind of confirm that that's on track?

Speaker Change: Okay that makes sense and just to clarify I think there was some metrics last quarter you'd given helps.

Speaker Change: I hope that first half and their patients.

Speaker Change: Grow 150% year over year, and perhaps exceed new patient sales I'm not sure if I got that new patient sales in 2023.

Speaker Change: Are you still able to kind of confirm that that's on track.

Timothy T. Goodnow: Yeah, we still believe we are on track, as I said at this point. We're well over 80% at this point in the year, so we certainly expect we're going to continue the same level of growth and more

Speaker Change: We still believe we're on track as I said at this point, we are well over 80% at this point in the year. So we certainly expect we're going to continue.

Speaker Change: Logo growth anymore, Okay, great to hear and then my follow up here certainly it sounds intriguing the mercy collaboration and your RPM program can.

Marie Yoko Thibault: Okay, great to hear. And then my follow-up here certainly sounds intriguing, the MERCI collaboration and your RPM program. Can you give us a way to think about how meaningful this could become if it does become successful? And then what investments are needed from Senseonics' side in those RPM programs? We've talked with doctors in the past who've run very effective RPM programs, but I know it does require some focus and time and perhaps some hand-holding. So any more details on the investments you need to make there? Thanks for taking the questions.

Speaker Change: Can you give us a way to think about how meaningful this could become a if it does become successful and then what investments are needed from <unk> side in the RPM programs, we've talked with doctors in the past as you know.

Speaker Change: Run very effective RPM programs, but I know it does require some focus on time and perhaps some handholding. So any more details on investments you need to make there. Thanks for taking the question sure well, we certainly recognize that this is a unique opportunity and blends very well with the long term nature of the ever since product.

Timothy T. Goodnow: Sure, well, we certainly recognize that this is a unique opportunity and blends very well with the long-term nature of Iverson's product. Mercy really recognized this very early on when they reached out to us, and they really are looking for a proactive way that they can monitor their at-risk patients. As you said, they've identified about 30,000 right now that are candidates that we're gonna be jointly working on. So it's a very significant opportunity for us and for Mercy as well. Jeff, I'll ask you to speak a little bit about the operational parts of it. Jeff Ruiz has been leading this activity for us and is living it day by day.

Speaker Change: We really recognize this very early on when they when they reached out to us.

Speaker Change: And they really are looking for a proactive way that they can monitor their at risk patients as we've said they've identified about 30000.

Speaker Change: Right now that are candidates that are we're gonna be a jointly working on so it's a very significant opportunity for us and for mercy as well, Jeff I'll ask you to speak to a little bit about the operational parts of the Jeffrey Wiese has been leading this activity for us and is a living it day by day.

Jeff Ruiz: Yeah, and I'll just elaborate a little bit more on what Tim had kind of mentioned in the first part of your question about, you know, the opportunity, the size, etc. And certainly, an account such as Mercy represents a big opportunity for us, of course. What we know and through our assessment and the strategy that, you know, we have been developing now in concert with Mercy is that, you know, the vast majority of patients that could be benefiting from CGM are not on it. And Mercy recognizes that.

Jeffrey Wiese: Yeah, and I'll, just elaborate a little bit more on what Tim has kind of mentioned in the first part of your question around.

Jeffrey Wiese: Kind of the opportunity the size et cetera, and certainly in an account such as Mercy Rep.

Jeffrey Wiese: It represents a large opportunity for us of course.

Jeffrey Wiese: What we know and through our assessment then the strategy that we've been developing now in concert with Mercy is that the.

Jeffrey Wiese: The vast majority of patients that could be benefiting from CGM or not on it and Murphy recognizes that and we've heard that from other health systems.

Jeff Ruiz: And we've heard that from other health systems. As we look at that, the opportunity then becomes, you know, how can we collectively get the right care to the right patient, in this case, CGM therapy? And Mercy sees that opportunity right within their own ranks because of their own provider network and their ability to easily facilitate the process from prescription to insertion with their extensive network of proceduralists. They'll be starting with their interventional cardiologists and expanding that to other proceduralists who can easily facilitate the insertion for these patients.

Jeffrey Wiese: As we look at that the opportunity then becomes.

Jeffrey Wiese: How can how can we collectively get the right care to the right patient in this case, a CGM therapy, and mercy seize that opportunity bright within their own ranks because of their own provider network and their ability to easily facilitate the the process from prescription to insertion.

Jeffrey Wiese: With her extensive network of procedure list there'll be starting with their interventional cardiologists and expanding that to other procedure list that could easily facilitate the insertion for these patients in terms of the RPM program and I. Appreciate the question because it's a very integral part to the health system strategy that we.

Jeff Ruiz: In terms of the RPM program, and I appreciate the question, because it's a very integral part of the health system strategy that we have. It's the way that health systems can even further attempt to optimize the outcomes that they're looking for from patients. And so, the RPM solution is key to the success of that.

Jeffrey Wiese: Yeah.

Jeffrey Wiese: It's it's the way that health systems can even further our attempt to optimize the outcomes that they're looking for for patients.

Jeff Ruiz: And it's also, from our perspective, we believe it's a very sustainable and scalable program as the costs and the fees that we are paid to do it are known up front, which allows us to scale that. Mercy will be doing the reimbursement for the services, and they'll file for the reimbursement. They'll pay us the fee, and we know we have our fixed costs on a per patient basis pretty clearly identified as we go forward.

Jeffrey Wiese: And so the RPM solution.

Jeffrey Wiese: Is it is key to the success of that.

Jeffrey Wiese: And it's also a very from our perspective, we believe it's very sustainable and scalable program.

Jeffrey Wiese: As the cost and the the fees that were paid to do it or known upfront and allows us to scale that Murphy will be doing the reimbursement for the surfaces and no file for the reimbursement they'll pay us a fee and we know we have our or fixed cost on a per patient basis pretty.

Jeffrey Wiese: Clearly identified as we go forward.

Jeff Ruiz: So the investments from our side are not overly significant, and we feel like we've got a good model here that we can scale going forward. It's important to note that the financial side of the program, in and of itself, is really kind of lower on the tier in terms of our goals and objectives. Goal number one is to improve the clinical outcomes of the patient. Goal number two is to improve the cost of care overall for the patient. If we do that, we win, and we're fortunate that the reimbursement of the existing healthcare system allows us to do that in a way that is financially viable for us along the way.

Jeffrey Wiese: So the investment from our side or.

Jeffrey Wiese: We're not overly significant.

Jeffrey Wiese: Feel like we've got a good model here that we can scale going forward, it's important to note that.

Jeffrey Wiese: The financial side of the program in and of itself is is really kind of the lower on the tier in terms of our goals and objectives goal number one is to improve the clinical outcomes of the patient goal number two is to improve the cost of care overall for the health system, we do that we win.

Jeffrey Wiese: And then we're fortunate that the reimbursement of the existing health care system allows us to do that in a way that is a financially viable for us along the way.

Marie Yoko Thibault: That's very helpful. Thanks so much.

Speaker Change: That's very helpful. Thanks, so much.

Operator: Our next question comes from Matthew Blackman from Steeple. Please go ahead with your question.

Speaker Change: Our next question comes from Matthew Blackman from Stifel. Please go ahead with your question.

Colin Michael Clark: Hi, this is Colin on Format. I guess I wanted to come at the Mercy collaboration from a slightly different angle and kind of ask what your sense of the potential penetration ceiling is for this 30,000 patient opportunity and any early color on the economics, whether they're driven by outcomes. You talked about how it's a relatively set cost up front for the patient. What does revenue recognition look like in this channel? And does the RMG partnership allow you to more easily add other system partnerships to the business? Thank you.

Speaker Change: Hi, This is Colin on for Matt I guess I wanted to come at the Mercy collaboration from a slightly different angle on kind of ask what your sense of the potential penetration ceiling is for this 30000 patient opportunity and any early color on the economics, whether they're driven by outcomes you've talked about how it's a relatively.

Colin: Sac cost upfront for the patient, but what does the revenue recognition look like in this channel and does the RMG partnership allow you to more easily add other system partnerships.

Speaker Change: To the business. Thank you.

Timothy T. Goodnow: Well, certainly, we do recognize that this is going to be the first system implementation, but we expect that it's, quite frankly, the basis from which we will be designing others from. And that, quite frankly, is an objective of Mercy as well.

Speaker Change: Well certainly we do recognize that this is going to be the first system implementation, but we expect that it's quite frankly, the basis, which we will we will be designing others from and that quite frankly is an.

An objective of mercy as well they want to lead here get it established and be able to replicate it out to two other hospital systems. So the 30000 patient opportunity is in front of US right now and we're going to continue to work very hard in partnership with a Cynthia. So this is part of our current commercialization.

Timothy T. Goodnow: They want to lead here, get it established, and be able to replicate it to other hospital systems. So the 30,000 patient opportunity is in front of us right now, and we're going to continue to work very hard in partnership with Essentia. So this is part of our current commercialization agreement with Essentia, and the economics will be considered as such. So it's business as usual from that financial perspective. It's just a very large opportunity for us, and we're looking forward to the future, the folks at Mercy, through their systems, you know, driving patients towards the Eversense product.

Speaker Change: <unk>.

Speaker Change: Agreement with with SNCF economics, what we considered as such so.

Speaker Change:

Speaker Change: It's business as usual from that financial perspective, it's just a very large opportunity for us and we're looking forward to.

Speaker Change: The folks at mercy through their systems.

Speaker Change: Diving patients towards the ever since product.

Timothy T. Goodnow: And where are most of these patients found in this Mercy system? Is it PCP-weighted, where you've had some success with NPGs recently, or is it more endo-focused? I guess you're having interventional cardiologists as the proceduralists, so is there a learning curve in that set of offices that needs to be worked through?

Speaker Change: And where where are most of these patients found in this mercy system is it is it PCP weighted where you've had some success with Mpg's recently or is it is it more focused I guess youre, having interventional cardiologists is the procedural is so is there a is there a learning curve.

Speaker Change: In that set of offices.

Speaker Change: That that needs to be worked through.

Timothy T. Goodnow: This is predominantly their highest risk population is predominantly type 2, so yes, it is primary care treatment. Jeff, do you want to go ahead and speak through how we look at this? Systemically with mercy to reach these patients.

This is predominantly their highest risk population is predominantly a type two so yes. It is primary care treatment.

Speaker Change: Jeff do you want to go ahead and speak through how we look at this systemically with with mercy to to reach these patients.

Jeff Ruiz: I'll say this, the reason they're starting with their interventional cardiologist is because this is what they do; they are a proceduralists, they are accustomed to doing procedures in the office, in the cath labs, etc. Our procedure is rather straightforward for them, and so it seems from their perspective that it makes a lot of sense for them to go ahead and just have the cardiologist begin doing this, and they'll extend their reach beyond as needed throughout their mid-level practitioners, etc., throughout some of their community clinics, throughout the four states that they serve.

Jeff Ruiz: Sure sure the reason there.

Jeff Ruiz: Hey, this is the reason that we're starting with our interventional cardiologist is because they are.

Jeff Ruiz: This is what they do they're a procedure list they are accustomed to doing procedures in the office and the Cath labs et cetera.

Jeff Ruiz: Our procedure is rather straightforward for them.

Jeff Ruiz: So it seems it seems from their perspective.

Jeff Ruiz: It makes a lot of sense for them to go ahead and just.

Jeff Ruiz: Have the cardiologist began doing this in no extend there.

Jeff Ruiz: Reach beyond as needed throughout their mid level practitioners et cetera throughout some of their community clinics throughout the four states that they serve.

Jeff Ruiz: Yep, as it relates to where are the patients coming from? You know, the majority of patients today that are at risk of some of these, you know, immediate complications on the patient side and then the cost complications on the hospital side. The biggest unserved population, as they recognize, is in their type 2 patient population. So, they're excited about the opportunity to really reach the three-quarters of patients today that are being underserved in a way, if you will, by not having CGM and are presenting a risk to themselves as patients, as well as to the health system from a financial perspective. So we'll be working closely with the primary care teams as well as the endocrinologists, who are a very important instrumental part of the overall program.

Jeff Ruiz: Yes.

Jeff Ruiz: As it relates to where the patients coming from.

Jeff Ruiz: A majority of patients today that are at risk of.

Jeff Ruiz: Some of these <unk>.

Jeff Ruiz: Media complications on the patient side and then the and then the cost complications on the hospital side.

Jeff Ruiz: The biggest center population as they recognize in their type two patient population. So they're excited about the opportunity to really reach the three quarters of patients today that are.

Jeff Ruiz: Being underserved in a way if you will by not having CGM and.

Jeff Ruiz: Presenting risk to themselves as patients as well as to the health system from a financial perspective until we will be working closely with the primary care teams as well as the endocrinologist, who are very important and instrumental part of the overall program.

Colin Michael Clark: I'm encouraged to hear about the 365-day approval timeline being still for Q. Just a quick question about your confidence in being able to have that approved and possibly launched in time for the annual Medicare process around December. Yeah, so we're

Speaker Change: Understood and one last question from me I'm encouraged to hear about the 60.

65 day approval timeline being still for Q just quick question about.

Speaker Change: Your confidence in being able to have that approved impossibly launched in time for the annual Medicare process around December.

Timothy T. Goodnow: So we're actually working with Medicare here in the next few days, now that we've submitted our request for it. Obviously, the transition to 365 in government pay and in commercial pay is a process that we do need to go through. Recall that we did, with pretty good success, go through that when we went from our 90-day product to 180. So we feel pretty good about it, but we will begin meeting with Medicare literally within the next week, and commercial pay shortly after that.

Speaker Change: Yes, so we're actually working with Medicare here in the next few days that now that we've submitted with it. So obviously the transition to the $3 65 in government pay and in commercial pay is a process that we do need to go through.

Call that we did with pretty good success go through that when we.

Speaker Change: Went from our 90 day product to 180.

Speaker Change: So we feel pretty good about it but we will we will begin meeting with.

Speaker Change: Medicare literally within the next week and commercial pay shortly right. After that so the confidence is is quite good as you know the <unk> timeline is notably quicker than than the PMA supplement process that we've been in.

Timothy T. Goodnow: So the confidence is quite good. As you know, the 510k timeline is notably quicker than the PMA supplement process that we've been in. But that said, there are always variations, and we'll continue to work very closely with the agency to make sure that we've provided everything they'll need for as quick a review as they can provide.

Speaker Change: But that said there are always variations and we'll continue to work very closely with the agency to make sure that we've provided everything you'll need for a quick review as they can provide.

Speaker Change: Okay. Thank you.

Operator: Our next question comes from Jason Bedford from Raymond James. Please go ahead with your question.

Speaker Change: Our next question comes from Jayson Bedford from Raymond James. Please go ahead with your question.

Glenn: Oh great, thanks. This is Glenn on behalf of Jason. Just on the economics, Jeff, you mentioned that Senseonics will receive a fixed price on a per patient basis. How does this compare to selling into an office that is not part of the Mercy System?

Speaker Change: Oh, great. Thanks, This is Glenn on for Jason.

Glenn: Just on the economics, Jeff you mentioned that <unk> will receive a fixed price on a per patient basis. How does this compare to selling into an office that is not part of the mercy system.

Jeff Ruiz: Yeah, let me just make sure to clarify here. The sensor itself will go through its normal processing channels, just as we do today, so there's no risk sharing or any other alternate type model when it comes to the device side. The RPM side is simply following the healthcare reimbursement that exists today, where, according to the Accountable Care Act, allows for a physician to prescribe the services of remote patient monitoring and, obviously, pay a fee for that service to be provided.

Jeff Ruiz: Yeah, Let me let me let me just make sure I clarify here B. The sensor itself will go through its normal process in channels.

Jeff Ruiz: Just as we do today, so there's no there's no risk sharing or.

Jeff Ruiz: Any other kind of ultimate type model when it comes to the device side. The RPM side is simply following the RPM health care reimbursement that exists today.

Jeff Ruiz: Where accordingly.

Accordingly, According to the combo of care Act allows for a physician to prescribe the services of I don't know.

Jeff Ruiz: Remote patient monitoring.

Jeff Ruiz: And Oh.

Jeff Ruiz: Obviously pay a fee for that service to be provided.

Jeff Ruiz: That will go to us. Our fixed costs on our side will come out of that payment that will be made to us from Mercy. Mercy, in turn, will file for the appropriate reimbursement and receive the reimbursement.

Jeff Ruiz: That will go to us our fixed cost on our side come out of that payment.

Jeff Ruiz: He made to us from Mercy.

Jeff Ruiz: Mercy and return, we'll we'll file for the appropriate reimbursement and received the reimbursement accordingly.

Timothy T. Goodnow: Yeah, yeah, Glenn, thanks for the question. So just again to reiterate, Sensor Economics will be as usual. We'll continue to commercialize with our partnership with Sensea as we have always done, you know, into the Mercy Hospital system. The economics for the RPM are as Jeff referred.

Speaker Change: Yes, so glen Thanks for the question. So just again to reiterate so center economics will be as usual, we'll continue to commercialize.

Glen: With our partnership with a sense of as we have always done.

Glen: Into the Mercy Hospital system.

Glen: The economics for the for the RPM are as Jeff referred to.

Glenn: Okay, thank you. And then just quickly on ICD-M, what does this mean commercially, and when should you expect some commercial integration with POM? So obviously,

Speaker Change: Okay. Thank you and then just quickly on <unk>.

Speaker Change: What does this mean commercially and when should you expect some commercial integration with pumps.

Timothy T. Goodnow: So, obviously, the ICGM gives us the opportunity, as we shared earlier, we are in conversations with the pump manufacturers. We're not ready to put timelines on it or to communicate timelines on it here, at least out in the public domain.

Speaker Change: So obviously the ICM gives us the opportunity as we as we shared earlier we are in conversations.

Speaker Change: With the pump manufacturers were not ready to put a timeline on it.

Speaker Change: Or to communicate timelines on it here.

Speaker Change: Here at least out in the public domain, we will certainly keep you updated as that goes on recall that it does take some time, it's typically been 18 months or so for the integration to occur at least that's been the history from the other CGM manufacturers will do all we can to work to accelerate that where we can.

Timothy T. Goodnow: We'll certainly keep you updated as that goes on. Recall that it does take some time. It's typically been 18 months or so for the integration to occur, at least that's been the history with the other CGM manufacturers. We'll do all we can to work to accelerate that where we can.

Speaker Change: Okay. Thank you very much.

Operator: Our next question comes from Matt Taylor from Jefferies. Please go ahead with your question.

Speaker Change: Our next question comes from Matt Taylor from Jefferies. Please go ahead with your question.

Philip Taylor: Hi, thank you for taking the question. I guess I wanted to ask a couple detailed questions on the Mercy collaboration. So just to clarify, you mentioned the 30,000 patients that are eligible in their system. How do you define those patients? Are those patients who are CGM eligible but not currently on CGM? Or what makes them fall into the 30,000 bucket?

Philip Taylor: Hi, Thank you for taking the question.

Philip Taylor: I guess I wanted to ask a couple of detailed questions on the on the Mercy collaboration.

Philip Taylor: So just to clarify you mentioned the 30000 patients that are eligible in their system.

Philip Taylor: How do you define those patients are those patients who are <unk> eligible, but not currently on CGM or what what makes them fall into the 30000 bucket.

Timothy T. Goodnow: Jeff, I'll go ahead and let you expand on it, but yes, these are CGM eligible, so they're either on insulin or have episodes of hypoglycemia. These are the ones that are identified as the highest risk by Mercy as an ACO, and because of their risk sharing agreements, they are very much looking to keep those folks out of the ED. They'd like to reduce the total cost of care, and there's a gap right now in their system and their ability to monitor those patients. So predominantly type two and focused, you know, of course, they are insulin-using type twos or those with hypoglycemia. Jeff, anything else?

Speaker Change: Jeff I'll go ahead, and let you expand on it but yes. These are CGM eligible so there they're either on insulin or have episodes of hypoglycemia.

Jeff Ruiz: These are the ones that are identified as the highest risk by mercy as an ACO.

Jeff Ruiz: That they are because of their risk risk sharing agreements, they're very much looking to keep those folks out of the EDI they'd like to reduce the total cost of care and Theres a gap right now in their system and their ability to do monitoring of those patients so predominantly type two.

Jeff Ruiz: And focused.

Jeff Ruiz: Of course they are.

Jeff Ruiz: Insulin using type twos or those with hyperglycemia, Jeff anything else.

Jeff Ruiz: Do you think that summarizes the question, sir?

Jeff Ruiz: Okay.

Speaker Change: And the rest of the business.

Speaker Change: Sure.

Philip Taylor: And I guess with this partnership and just understanding how it may develop with other systems, what does that mean for other CGMs? Are they still being used in Mercy's system, or are yours used preferentially? Presumably, some of these patients are already on another CGM, or they're being asked to switch. How does it work with the competitive set?

Jeff Ruiz: And I guess does this partnership and just understanding how it would develop with other systems. What does that mean for other CGM or are they still being used in mercies system or <unk> preferentially.

Jeff Ruiz: Presumably some of these patients are already on another CGM or they're being asked to switch how does it how does it work with the competitive set.

Jeff Ruiz: Jeff, you want to step through that? Yeah, I got it.

Jeff Ruiz: Jeff you want to step through that.

Jeff Ruiz: This is not an exclusive agreement with Mercy. I want to make sure we're clear on that. And Mercy doesn't intend to switch any active CGM users that they currently have, say, on a competitive product. That said, the big opportunity for a health system right now, and this is really important, are the patients that are not on CGM. Those patients are at risk and have their own suboptimal clinical outcomes. That's detrimental to the patient, first and foremost.

Jeff Ruiz: Yep, I got them. I'm happy to.

Jeff Ruiz: No happy to.

Jeff Ruiz: Mark This is not an exclusive agreement with mercy and we want to make sure.

Jeff Ruiz: Sure we're clear on that.

And Mercury doesn't tend to switch any active CGM users that they currently have say on a competitive product.

Jeff Ruiz: That said the big opportunity for our health system right. Now this is really important.

Jeff Ruiz: Patients that are not on CGM those patients are at risk having their own.

Sub optimal clinical outcomes, that's detrimental to the patient first and foremost secondarily those patients are highest risk to mercy.

Jeff Ruiz: Secondarily, those patients are the highest risk to Mercy. In particular, in this day and age, when health systems are contracting in their risk-based and value-based agreements with payers, this can be very costly to these healthcare systems. So that's priority number one, of course. Mercy will offer Eversense to all patients throughout their system in the event that patients want to switch over to Eversense, particularly as we move into the 365 era. So they're not excluding existing patients on CGM, but they recognize that the majority of patients are not on CGM, and they're looking to fill that gap and solve that proactively by using CGM and their existing network to get CGM ever since into the hands of these patients.

Jeff Ruiz: In particular in this day and age where health systems are contracting and there are.

Jeff Ruiz: Risk based value based agreements with payers. This can be very costly to the health care systems. So that's priority number one.

Jeff Ruiz: Of course.

Murphy will offer ever since to all patients throughout the throughout their system.

Jeff Ruiz: In the event that patients want to switch over to ever sense, particularly as we move.

Jeff Ruiz: Into the 365 era, so they're not they're not excluding the existing patients on CGM.

Jeff Ruiz: But they recognize that the majority of patients are not on CGM.

Jeff Ruiz: And they are looking to fill that gap and solve that proactively.

Jeff Ruiz: By using CGM and their existing network.

Jeff Ruiz: CGM ever since it into the hands of these patients.

Philip Taylor: Okay, great. Thanks for the call.

Speaker Change: Okay, great. Thanks for the color.

Operator: And ladies and gentlemen, if there are no additional questions, I'd like to turn the floor back over to management for any closing remarks. Oh, great.

Speaker Change: And ladies and gentlemen, and showing no additional questions I'd like to turn the floor back over to management for any closing remarks, great. Thank you for the opportunity to speak today, we very much appreciate your time and look forward to updating you on these continuing exciting developments here at Cynthia Alex with that have a good day.

Timothy T. Goodnow: Well, great. Thank you for the opportunity to speak today. We very much appreciate your time and look forward to updating you on these continuing exciting developments here. With that, have a good day.

Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining us. You may now disconnect your lines.

Speaker Change: Ladies and gentlemen, with that we'll conclude today's conference call and presentation. We thank you for joining you may now disconnect your lines.

Speaker Change: Okay.