Q2 2025 Beta Bionics Inc Earnings Call

Presentation there'll be a question and answer session and instructions will follow at that time as a reminder, please be advised that today's conference is being recorded.

Stephen Feider: Allow me to remind you what the increase in pharmacy guidance means for revenue over the next four years. The raise from 23.5% to 26.5% new patients starts through pharmacy, which are the midpoints of our previous and updated guidance, are expected to generate a roughly $1 million headwind to 2025 revenue. This roughly $1 million headwind is baked into our updated 2025 annual guidance of $88 to $93 million. From 2026 through 2028, we expect that same increase in pharmacy guidance to result in up to a $9 million tailwind to cumulative revenue, assuming no attrition. Said a different way, a $1 million headwind in year one flips into a potential $9 million cumulative tailwind in years two through four.

I would now like to turn the conference over to Mike Bieber head of Investor Relations. Please go ahead.

Thank you good afternoon, and thank you for tuning in to beta Bionics second quarter 2025 earnings call. Joining me for today's call are Chief Executive Officer, Sean <unk>, and Chief Financial Officer, Stephen Fighter. Both the replay of this call in the press release discussing our second quarter 2025 results will be.

Speaker #2: Good afternoon, and welcome to the Beta Bionics second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session, and instructions will follow at that time.

Speaker #2: As a reminder, please be advised that today's conference is being recorded. I would now like turn the conference over to Blake Beber, Head of Investor Relations.

Available on the Investor Relations section of our website, a replay will be available for approximately one year. Following the conclusion of this call information recorded on this call speaks only as of today July 29, 2025. Therefore, if you are listening to the replay at any time sensitive information may no longer be accurate.

Stephen Feider: We accept that tradeoff.

Speaker #2: Please go ahead.

Stephen Feider: In terms of how to think about the revenue cadence for the remainder of the year, we anticipate revenue in Q3 to be slightly higher than Q2, and revenue in Q4 to increase relative to Q3, which is seasonally typical in the diabetes industry. For new patient starts, we expect Q3 new patient starts to be similar in Q2 and Q4 to increase relative to Q3. We expect the percentage of new patient starts reimbursed at the pharmacy in the second half of the year to increase relative to the high 20s percentage we saw in Q1.

Speaker #3: Thank you. Good afternoon, and thank you for tuning in to Beta Bionics second quarter 2025 earnings call. Joining me for today's call are Chief Executive Officer Sean Saint and Chief Financial Officer Stephen Feider.

Also on our website is our supplemental second quarter 2025 earnings presentation, an updated corporate presentation. We encourage you to refer to those documents for a summary of key metrics and business updates.

Speaker #3: Both the replay of this call and press release discussing our second quarter 2025 results will be available on the Investor Relations section our website.

Before we begin we'd like to remind you that today's discussion will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095. These statements reflect management's expectations about future events, our product pipeline development timelines and financial performance and operating plans.

Speaker #3: The replay will be available for approximately one year following the conclusion of this call. Information recorded on this call speaks only as of today, July 29, 2025.

Stephen Feider: That said, we expect the rate of pharmacy mix increase in the second half of the year won't be as pronounced as the large increases we saw in both Q1 and Q2, which were fueled in large part by the formulary agreement with Prime Therapeutics that went into effect on February 1st, and the strong adoption we saw from the underlying health plans that partnered with Prime as their PBC. While we now have an effective formula agreement in place with all the major PBMs that operate in the U.S. as of July 1st, sales cycles with the underlying health plans that partner with each PBM are highly variable depending on the specific PBM and the specific health plan that partners with that PBM.

Speaker #3: Therefore, if you are listening to the replay, any time sensitive information may no longer be accurate. Also, on our website is our supplemental second quarter 2025 earnings presentation and updated corporate presentation.

Please refer to the cautionary statements in the press release, we issued earlier today as well as our SEC filings, including our Form 10-Q filed today for a detailed explanation of the inherent limitations of such forward looking statements. These documents contain and identify important factors that may cause actual results to differ materially from current expectations expressed or implied by our four.

Speaker #3: We encourage you to refer to those documents for a summary of key metrics and business updates. Before we begin, we'd like to remind you that today's discussion will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Looking statements. Please note that the forward looking statements made during this call speak only as of today's date and we undertake no obligation to update them to reflect subsequent events or circumstances, except to the extent required by law.

Speaker #3: These statements reflect management's expectations about future events, our product pipeline, development timelines, financial performance, and operating plans. Please refer to the cautionary statements in the press release we issued earlier today, as well as our SEC filings, including our Form 10-Q filed today, for a detailed explanation of the inherent limitations of such forward-looking statements.

Stephen Feider: In the case of Prime, we saw immediate pull-through of the formula agreement at the health plan For our more recent PBM agreement that became effective on July 1st, we don't expect to see the immediate pull-through by the health plans that we saw with PRIDE.

Today's discussion will also include references to non-GAAP financial measures with respect to our performance, namely adjusted EBITDA non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core performance and reflects our ongoing business operations. We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting period.

Speaker #3: These documents contain and identify important factors that may cause actual results to differ materially from current expectations expressed or implied by our forward-looking statements.

Stephen Feider: Moving on to gross margins. We are raising our outlook to 52 to 55% gross margin for the full year 2025 versus our prior guidance of 50 to 53%.

Speaker #3: Please note that the forward-looking statements made during this call speak only as of today's date, and we undertake no obligation to update them to reflect subsequent events or circumstances, except to the extent required by law.

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Any non-GAAP information presented should not be considered as a substitution independently or superior to results prepared in accordance with GAAP. Please refer to our earnings press release and supplemental earnings presentation on the Investor Relations section of our website for reconciliation of non-GAAP measures to their most directly comparable GAAP financial measure.

Stephen Feider: We are increasing guidance for a couple of... Number one, embedded in our revenue guidance raise and pharmacy mix guidance raise is a raise in our expectation for new patient starts, and that increased scale should generate a lower per unit cost through manufacturing volume leverage. And number two, we expect to benefit from our growing pharmacy install base, with a large bolus of new pharmacy users we onboarded in Q1 and Q2, produces high margin, recurring revenue for the balance. So the takeaway here is that while the outperformance in pharmacy adoption is a headwind to our gross margin outlook for the year, we expect to be able to more than offset that headwind, and we are raising guidance as a result.

Speaker #3: Today's discussion will also include references to non-GAAP financial measures with respect to our performance, namely Adjusted EBITDA. Non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core performance and reflects our ongoing business operations.

Now I'd like to turn the call over to Sean for some opening remarks.

Thanks, Blake good afternoon, everyone and thank you for joining us for our second quarter 2025 earnings call. We're excited to share with you all today, our financial results for the second quarter as well as positive updates to our full year guidance for 2025.

Speaker #3: We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting periods. Any non-GAAP information presented should not be considered as a substitution independently or superior to results prepared in accordance with GAAP.

Starting with our performance in the second quarter. Our team continues to execute at the highest level across all aspects of our business and we made key advances commercially clinically and in our innovation pipeline. We continue to see robust demand for the island and our efforts to expand the islands commercial reach resulted in a record number of new patient starts in the quarter in both the <unk>.

Speaker #3: Please refer to our earnings press release and supplemental earnings presentation on the Investor Relations section of our website for reconciliation of non-GAAP measures to their most directly comparable GAAP financial measure.

Stephen Feider: In terms of how to think about the gross margin cadence for the remainder of the year, we expect gross margin to increase slightly from Q2 to Q3 and again from Q3 to Q4.

Speaker #3: Now, I'd like to turn the call over to Sean for some opening remarks.

Stephen Feider: Regarding tariffs, I want to reiterate our prior commentary that custom components for the islet and its consumables are exempt from tariffs under the Nairobi Protocol. Overall, we expect the impact of tariffs on our business to be minimal, and their impact is contemplated in our updated Gross Margin Guidance.

Speaker #4: Thanks, Blake. Good afternoon, everyone, and thank you for joining us for our second quarter 2025 earnings call. We're excited to share with you all today our financial results for the second quarter, as well as positive updates to our full-year guidance for 2025.

<unk> and pharmacy channels and a record percentage of those new patient starts going through the pharmacy channel.

In late June we hosted our first Investor and Analyst day, where we talked about the islands placed on the continuum of user engagement from hybrid to fully closed loop and the continuum of system adaptation from static to adapt to the algorithms the.

Sean Saint: With that said, I'll hand the call now back to Sean to discuss the recent CMS proposal and our innovation pipeline. Thanks, Steven. On June 30th, CMS released a proposed rule for the 2026 Durable Medical Equipment Payment which includes provisions that may impact insulin pumps supplied to Medicare fee-for-service This proposal only applies directly to traditional Medicare fee-for-service, not Medicare Advantage.

Speaker #4: Starting with our performance in the second quarter, our team continues to execute at the highest level across all aspects of our business, and we made key advances commercially, clinically, and in our innovation pipeline.

The island demands the least engagement from the user and delivers the most automated adaptation of any AAV system setting a new standard for our industry.

Speaker #4: We continue to see robust demand for the islet, and our efforts to expand the islet's commercial reach resulted in a record number of new patient starts in the quarter in both the DME and pharmacy channels, as well as a record percentage of those new patient starts going through the pharmacy channel.

We also highlighted the superior clinical outcomes of the island with our real World data to the first two years of Eyelets launch we demonstrated that the Iowa drove meaningful changes from baseline HBA when C to follow up glucose management indicator or GMI, which is a proxy for a one seat regardless of our users baseline agency group prior <unk>.

Sean Saint: is managed by. Approximately 10-15% of our users are Medicare Fee-for-Service beneficiaries.

Speaker #4: In late June, we hosted our first Investor and Analyst Day, where we talked about the islet's place on the continuum of user engagement from hybrid to fully closed loop, and the continuum of system adaptation from static to adapted algorithms.

Sean Saint: So let's walk through the key components of the proposed rule in our perspective. There are two major elements. First, CMS is proposing to implement a competitive bidding program. Under this program, DMEs would submit bids to supply and CMS would set the reimbursement rate at the 75th percentile of the accepted rate. DMEs that bid above the price threshold set by CMS may be excluded from supplying pumps to Medicare fee-for-service beneficiaries in the bid geographic area.

RFP or level of engagement with the island.

Speaker #4: The islet demands the least engagement from the user and delivers the most automated adaptation of any AAD system, setting a new standard for our industry.

<unk> also shared outcomes for users treated by endocrinologists or primary care practices and the outcomes were virtually the same.

We're extremely proud of those data and believed that Ireland is the only pump on the market that's capable of producing those results across such a wide range of users and clinicians.

Speaker #4: We also highlighted the superior clinical outcomes of the islet with our real-world data through the first two years of islet's launch. We demonstrated that the islet drove meaningful changes from baseline HbA1c to follow-up glucose management indicator, or GMI, which is a proxy for A1c.

It is important to remind you all that if we had a user's baseline even see and at least three weeks of CGM data uploaded to our cloud. They were included in a real world results. We've noticed a trend in our industry of sub segmented data in ways that make it appear more favorable sometimes in dramatic fashion and we encourage everyone to read the fine print on these data.

Sean Saint: This is new for pumps and is designed to reduce overall cost. Second, CMS is proposing a shift to a pay-as-you-go rental model. Placing the current model where CMS pays the DME supplier for the POMPORP13. after which the patient owns the pump and CMS no longer pays. Under the new model, CMS would pay DMEs a fixed amount each month to the pump for up to six months. Instead of just paying for the pump over the first 13 This is designed to allow patients to switch pumps more easily and to shift attrition risk from CMS to the...

Speaker #4: Regardless of our users' baseline A1c group, prior therapy, or level of engagement with the let, we also shared outcomes for users treated by endocrinologists or primary care practices, and the outcomes were virtually the same.

Sets to get a better sense of how populations are being sub segmented in a way that skews. The results beta bionics is committed to providing fair and honest representations of our real world data and when we do sub segment. Our data we do it to highlight the performance of our system and our hardest users not our easiest ones in this way we are not.

Speaker #4: We're extremely proud of those data and believe that Islet is the only pump in the market that's capable of producing those results across such a wide range of users and clinicians.

Speaker #4: It's important to remind you all that if we had a user's baseline A1c and at least three weeks of CGM data uploaded to our cloud, they were included in our real-world results.

Sean Saint: In the new model, if a patient stops using the pump any time during the 60-month period, CMS...

Setting a new standard with our technology, but also with our approach to sharing real world results.

Speaker #4: We've noticed a trend in our industry of sub-segmented data in ways that make it appear more favorable, sometimes in dramatic fashion. We encourage everyone to read the fine print on these data sets to get a better sense of how populations are being sub-segmented in a way that skews the results.

In Q2, we also made some key strides in our innovation pipeline, which I'll dive into in more detail on later in the call.

Sean Saint: Here's our view on the. We support CMS's intent to modernize payment models in a way that better supports people living with diabetes. We believe that competitive bidding may undermine. The Medicare Fee-for-Service Channel is already the most financially challenging for both pump manufacturers who sell and sell. Supplies to DMEs, and the DMEs who distribute those pumps and supplies to patients and collect reimbursement. That reimbursement amount from CMS is what DMEs would be bidding on if competitive bidding.

I've never been more confident that we're building a highly differentiated business that is poised to achieve success over the short medium and long term our team's dedication to our mission of delivering life changing solutions that simplify and alleviate the burden of managing diabetes is stronger than ever and we want to thank our community of users health care providers.

Speaker #4: Beta Bionics is committed to providing fair and honest representations of our real-world data. When we do sub-segment our data, we do it to highlight the performance of our system in our hardest users, not our easiest ones.

Speaker #4: In this way, we are not only setting a new standard with our technology, but also with our approach to sharing real-world results. In Q2, we also made some key strides in our novation pipeline, which I'll ive into in more detail on later in the call.

And caregivers in our biotech universe that inspire us every day to achieve our mission.

Sean Saint: In the proposal, CMS is capping the maximum allowable bid at approximately $226 For more information visit www.fema.gov We believe this cap represents a single-digit percentage reimbursement cut relative to what DMEs currently receive from CMS today, on a normalized basis across We believe that cap was calculated using lower monthly infusion set and cartridge usage assumptions than what users actually require each month, and we encourage CMS to correct this in the final Whether or not the proposed cap stands, we do not anticipate any material financial impact on our business as we are not directly affected by it.

For today's call I'll cover our Q2 results, which exceeded our expectations across the board Stephen will provide some additional color on our performance in the quarter, while highlighting positive updates to our annual guidance for the full year 2025.

Speaker #4: I've never been more confident that we're building a highly differentiated business that is poised to achieve success over the short, medium, and long term.

I'll discuss the recent CMS proposal for the 2026 durable medical equipment payment system, which has implications for durable insulin pumps and beta bionics Lastly, I'll wrap up the call with key updates across our innovation pipeline, including Mint, which is our patch pump program and then our bio hormonal system.

Speaker #4: Our team's dedication to our mission of delivering life-changing solutions that simplify and alleviate the burden of managing diabetes is stronger than ever. We want to thank our community of users, healthcare providers, and caregivers in our bionic universe who inspire us every day to achieve our mission.

Starting with a brief overview of our Q2 2025 financial performance I'm proud to announce that we delivered $23 $2 million in net sales, which grew 54% year over year.

Speaker #4: For today's call, I'll cover our Q2 results, which exceeded our expectations across the board. Stephen Feider will provide some additional color on our performance in the quarter, while highlighting positive updates to our annual guidance for the full year of 2025.

Sean Saint: In the unlikely scenario that DMEs face price compression at or beyond the proposed cap, that could force manufacturers or DMEs to withdraw from the Medicare fee-for-service channel in certain regions, thereby limiting patient access and choice, which is not what CMS intended with the proposed cap.

In Q2, we saw 4934, new patients adopt the island growing 57% versus the prior year, a high twenties percentage of those new patient starts were reimbursed through the pharmacy channel, which is substantially higher than the mid single digit percentage. We saw in Q2 of the prior year and increasing relative to the low twenty's person.

Speaker #4: I'll discuss the recent CMS proposal for the 2026 durable medical equipment payment system, which has implications for durable insulin pumps and Beta Bionics. Lastly, I'll wrap up the call with key updates across our innovation pipeline, including Mint, which is our patch pump program, and then our biohormonal system.

Sean Saint: Regarding the proposed shift to a pay-as-you-go rental model for We agree with CMS's intent to align reimbursement with the actual therapy. We were the first durable pump company to implement a pay-as-you-go model to the pharmacy channel. That said, applying this model to the DME channel introduces significant logistical complexity. Insulin pumps are personalized medical devices that are not designed for refurbishment and reuse in the way other DME categories might.

<unk>, we saw in Q1 of this year.

Speaker #4: Starting with a brief overview of our Q2 2025 financial performance, I'm proud to announce that we delivered $23.2 million in net sales, which grew 54% year over year.

As a reminder, we believe the best metric to measure pharmacy coverage as a percentage of total new patient starts that were reimbursed through pharmacy as opposed to percent of lives covered under formulary arrangements with pharmacy benefit managers or pbms, which doesn't account for adoption by the underlying health plans or the underlying logistics required to utilize this channel.

Speaker #4: In Q2, we saw 4,934 new patients adopt the islet, growing 57% versus the prior year. A high 20th percentage of those new patient starts were reimbursed through the pharmacy channel, which is substantially higher than the mid-single-digit percentage we saw in Q2 of the prior year, and increasing relative to the low 20th percentage we saw in Q1 of this year.

Sean Saint: CMS decides to finalize. We'll work with our DME partners to explore safe refurbishment arrangements for our customers and find a path forward financially that ensures our DME partners can continue to supply the www.dme.gov Well, it's too early to say what that arrangement will look like. We see the shift to pay as you go is a net tailwind.

As of July one beta bionics is effective formulary agreements in place with all the major pbms that operate in the U S. While we're proud of that accomplishment. It does not yet mean that all of those patients are benefiting from the pharmacy channel will continue to work with the health plans that partner with those pbms to expand adoption of the eyelet under the pharmacy benefit as we've been.

Speaker #4: As a reminder, we believe the best metric to measure pharmacy coverage is the percentage of total new patient starts that were reimbursed through pharmacy, as opposed to the percent of lives covered under formulary arrangements with pharmacy benefit managers (PBMs), which doesn't account for adoption by the underlying health plans or the underlying logistics required to utilize this channel.

Sean Saint: Let me walk you through that. This would be a pretty extreme scenario, but if we hypothetically align the way we receive payments from DMEs to the way DMEs would receive payments from CMS in a pay-as-you-go model, we would expect that change in revenue recognition to result in a single-digit percentage headwind to our overall revenue in year-on-year. followed by a single-digit percentage tailwind to our revenue in each of years two, three, Cumulatively, no material impact the amount of revenue we recognize over that five-year period.

Excessively doing over the last two years.

Shifting now to gross margin our gross margin in the quarter was 53, 8% up slightly relative to 53, 7% in Q2 of 2024 there.

Speaker #4: As of July 1st, Beta Bionics has effective formulary agreements in place with all the major PBMs that operate in the U.S. While we're proud of that accomplishment, it does not yet mean that all of those patients are benefiting from the pharmacy channel.

There are a few moving pieces that impacted our gross margin in Q2 that Steven will address in detail shortly but overall our gross margin in Q2 is indicative of our continued cost discipline across the business as well as our ability to extract leverage from our fixed manufacturing overhead as we continue to build scale.

Speaker #4: We'll continue to work with the health plans that partner with those PBMs to expand adoption of the islet under the pharmacy benefit, as we've been successfully doing over the last two years.

Sean Saint: How does that become a... Two reasons. Number one, in the same way we see the pharmacy pay-as-you-go model reduce upfront out-of-pocket costs that patients spend on... pay-as-you-go model on the DME channel could have that This could increase overall pump adoption by Medicare fee-per-service. Number two, by enabling patients to switch more easily between pumps, we believe that benefits a market newcomer with a smaller installed. rather than incumbents who have more to lose. Plus, easier ability to switch pumps would help a differentiated product like Islet gain more share.

As I mentioned earlier these Q2 results exceeded our expectations across the board and I'm proud of what our teams accomplished there are a number of drivers to point to when it comes to our strong performance and we expect all of them to continue to contribute to our performance going forward.

Speaker #4: Shifting now to gross margin. Our gross margin in the quarter was 53.8%, up slightly relative to 53.7% in Q2 of 2024. There are a few moving pieces that impacted our gross margin in Q2 that Stephen will address in a moment.

The first driver to call out is the markets deepening appreciation for our highly differentiated fully adaptive closed loop algorithm.

Speaker #4: But overall, our gross margin in Q2 is indicative of our continued cost discipline across the business, as well as our ability to extract leverage from our fixed manufacturing overhead as we continue to build scale.

At the Investor and Analyst day, we showed that the island delivered an average baseline <unk> to follow of GMI decline of one 6% in the real World. A result that we believe is unique in the history of insulin pumping and even diabetes management more broadly and we're generating those results in our true real world population, meaning our entire user.

Speaker #4: As I mentioned earlier, these Q2 results exceeded our expectations across the board, and I'm proud of what our team has accomplished. There are a number of drivers to point to when it comes to our strong performance, and we expect all of them to continue to contribute to our performance going forward.

Sean Saint: So to summarize our view of the CMS proposal, we don't expect to see any material revenue impact from competitive bidding. We expect the potential shift to pay-as-you-go will create tailwinds.

<unk> for whom we have baseline ANC and at least three weeks of CGM data.

Sean Saint: And we're ready to adapt with our DME partners to ensure our customers We'll keep you updated as the rule progresses. We anticipate the comment period to close in early September with a final ruling from CMS in early November.

Speaker #4: The first driver to call out is the market's deepening appreciation for our highly differentiated, fully adaptive, closed-loop algorithm. At the Investor and Analyst Day, we showed that the islet delivered an average baseline A1c to follow-up GMI decline of 1.6% in the real world—a result that we believe is unique in the history of insulin pumping and even diabetes management more broadly.

This isn't a fractional advantage subsegment of our data. This is a representative of a real world population with each quarter, we see the eyelet growing into new accounts and penetrating deeper into existing accounts and there is still substantial runway.

Sean Saint: Now, let's dig into our innovation.

Sean Saint: Our goal with our pipeline program disrupt the industry and disrupt At our recent investor and analyst day in June, we unveiled Mint, our patch pump in development, and provided a live demonstration of its features and the patch. Mint is being designed to marry the best aspects of fully disposable and partially disposable patch Every decision we made in the design of the product is centered around the user experience. We believe the Mintware experience will fit well into a user's everyday life. Mint is being designed so that users won't need their phone to change Users won't ever need it to charge a Mint, and users won't need to remove a Mint when they swim or...

In Q2, we launched an update for the bionic portal or health care provider portal, which now allows providers to access real time clinical outcomes for their patients that are using the island. The updated portal facilitates collaboration between providers in the clinic enhances the connection that providers have with Ireland patients between visits and enriches communications between pre.

Speaker #4: And we're generating those results in our true real-world population, meaning our entire user base for whom we have baseline A1c and at least three weeks of CGM data.

Speaker #4: This isn't a fractional advantaged sub-segment of our data. This is a representative real-world population. With each quarter, we are growing into new accounts and penetrating deeper into existing accounts.

<unk> and their patients during visits to the clinic.

Initial feedback from Ireland prescribers has been overwhelmingly positive and we're already seeing the bionic portal drive more rapid adoption of the island as a provider and clinic level as.

Speaker #4: And there's still substantial runway. In Q2, we launched an update for the Bionic Portal, our healthcare provider portal, which now allows providers to access real-time clinical outcomes for their patients who are using the islet.

As you may recall in the second half of 2024, we launched three new products, including integration with Abbott freestyle Libre III, plus CGM color islet antibiotic circle remote monitoring App. These product launches continued to gain traction in Q2, and we expect their contribution to continue to grow in the second half of the year.

Sean Saint: The 4.5mm steel cannula is being designed to feel very similar to an insulin pen, which we expect will minimize discomfort during cannula insertion. said differently, we're seeking to provide a patch experience that aligns well with what patch wearers are already used to and love, while also improving upon that experience where we see opportunity. Another great feature is that we expect to be able to roll out firmware over-the-air updates to the reusable controller. So if a Mint user wants to switch to the latest and greatest CGM and we're integrated with that CGM, that can happen. These expected features are what we believe will separate Mint from every other fully disposable or partially disposable patch, whether they're already on the market or still in development.

Speaker #4: The updated portal facilitates collaboration between providers in the clinic, enhances the connection that providers have with their islet patients between visits, and enriches communications between providers and their patients during visits to the clinic.

In Q1, we expanded our sales force by 20 territories to bring our total territory count to 63, those 20 incremental territories began selling in earnest in Q2.

Speaker #4: Initial feedback from islet prescribers has been overwhelmingly positive. And we're ready seeing the bionic portal drive more rapid adoption of the islet at provider and clinic level.

The last driver I'll mentioned is we're continuing to expand our pharmacy channel presence, enabling more people with diabetes to access insulin pump therapy with minimal to no upfront out of pocket costs.

Speaker #4: As you may recall, in the second half of 2024, we launched three new products, including integration with Abbott's Freestyle Libre 3 Plus CGM, Color Islet, and the Bionic Circle remote monitoring app.

What I hope you all take away from this is that we're positioning beta bionics core business for success today and tomorrow, all while making key advances in our innovation pipeline, which I'm excited to share with you in more detail later on during the call, but for now I'll hand, the call over to Stephen to provide some additional color on our second quarter results and discuss our increased full year guide.

Speaker #4: These product launches continue to gain traction in Q2, and we expect their contribution to continue to grow in the second half of the year. In Q1, we expanded our sales force by 20 territories to bring our total territory count to 63. Those 20 incremental territories began selling in earnest in Q2.

Sean Saint: This is what we mean when we say our architecture is intended to be the best of both worlds. We strongly believe that we've harnessed the best aspects of both one-piece and two-piece architectures, all in the name of user experience. Add this to our industry-leading algorithm, and we believe Mint will be a game-changer.

Speaker #4: The last driver I'll mention is that we're continuing to expand our pharmacy channel presence, enabling more people with diabetes to access insulin pump therapy with minimal to no upfront out-of-pocket costs.

For 2025 Steven.

Thanks, Sean.

Actually 71% of our 4934, new patient starts in Q2 came from people with diabetes that use multiple daily injections prior to starting the island.

Sean Saint: Q2, we continue to advance Mint rapidly towards our goal of commercialization by the end of 2016. which we are reiterating as our target, and we remain highly confident.

Speaker #4: What I hope you all take away from this is that we're positioning Beta Bionics' core business for success today and tomorrow, all while making key advances in our innovation pipeline, which I'm excited to share with you in more detail later on during the call.

Look at this metric because it's an important representation of how much the island is expanding the market for insulin pumps and the results we're seeing reinforce our confidence that the island is addressing an unmet need in the market.

Sean Saint: Shifting to our bi-hormonal pump program, in July, we completed dosing for our shelf-stable, pump-compatible glucagon candidates, pharmacokinetic and pharmacodynamic, or PKPD, bridging. As a reminder, the trial is intended to enable us to bridge all of our previous bihormonal clinical data, including three pre-pivotal inpatient and six pre-pivotal outpatient trials, to our new formulation. We expect to have full results from the PK PD study in the second half of 2020. will inform our go-forward development strategy for our glucose. preliminary PD results are in line with our expectations and supportive of continued development of our glucagon candidate per our previously communicated development.

Speaker #4: But for now, I'll hand the call over to Stephen Feider to provide some additional color on our second quarter results and discuss our increased full-year guidance for 2025.

Let's talk about pharmacy.

In Q2, a high twenties percentage of our new patient starts were reimbursed through the pharmacy channel.

Speaker #4: Stephen? Thanks, Sean. Approximately 71% of our 4,934 new patient starts in Q2 came from people with diabetes who used multiple daily injections prior to starting the islet.

We're continuing to see great traction from our pay as you go model from Pbms and the underlying health plans that partner with those pbms.

Turning now to gross margin.

In Q2, our gross margin was 53, 8% up slightly compared to 53, 7% in the second quarter of 2024.

Speaker #4: We look at this metric because it's an important representation of how much the Islet is expanding the market for insulin pumps, and the results we're seeing reinforce our confidence that the Islet is addressing an unmet need in the market.

While gross margin May look very similar between Q2 of this year in Q2 of the prior year. There are two points I'd like to highlight that are indicative of healthy underlying gross margin dynamics.

Speaker #4: Let's talk pharmacy. In Q2, a high 20th percentage of our new patient starts were reimbursed through the pharmacy channel. We're continuing to see great traction from our pay-as-you-go model from PBMs and the underlying health plans that partner those PBMs.

Sean Saint: While the full PK PD data won't be publicly available, we expect to provide additional updates on the program and our development strategy during our Q3 webinar. As of now, there is no change to the expectations that we'll conduct concurrent pivotal trials to fulfill the requirements for a 505B2 NDA with a chronic drug indication for glucagon and the ACE and IAGC 510Ks, the pump and algorithm.

First I'll highlight is related to pharmacy.

As we've just discussed extensively in prior earnings calls increasing our pharmacy mix is financially accretive over the medium and long term because we are reimbursed for the monthly supplies at a higher rate than in the Dnb channel. However, in the pharmacy channel, we forgo the upfront payment for the pump itself that we would've received at the pump went through the Dnb channel.

Speaker #4: Turning now to gross margin. In Q2, our gross margin was 53.8%, up slightly compared to 53.7% in the second quarter of 2024. While gross margin may look very similar between Q2 of this year and Q2 of the prior year, there are two points I'd like to highlight that are indicative of healthy underlying gross margin dynamics.

This creates two dynamics number one when we increase the percentage of new patient starts going through the pharmacy in any given quarter. The upfront revenue for the pump that we forgo creates a transitory headwind for our revenue and gross margin in that quarter.

Sean Saint: I want to share a quick thought on the potential form factors for a biohormone. In the past, our bihormonal form factor has been a durable pump with two channels. One for insulin and one for... That form factor seems very acceptable to users who have used it in formative It's very similar in size to our insulin-only islet commercial. However, with the addition of Mint technology to our pipeline, that opens up several doors The Bihormonal Form Factor could be a durable pump. It could also be the color islet plus. or it could be two. One dispensing insulin, and the other...

Speaker #4: The first to highlight is related to pharmacy. As we've discussed extensively in prior earnings calls, increasing our pharmacy mix is financially accretive over the medium and long term, because we are reimbursed for the monthly supplies at a higher rate than in the DME channel.

Number two is our existing pharmacy installed base generate substantially more revenue per month versus the <unk> channel.

Coming back now to Q2's gross margin, we saw a substantial uptick in percentage of new patient starts going through the pharmacy in Q2 of this year relative to the prior year that creates a headwind for revenue and gross margin this quarter, but it is great for the business over the medium and long term.

Speaker #4: However, in the pharmacy channel, we forgo the upfront payment for the pump itself that we would have received if the pump went through the DME channel.

Speaker #4: This creates two dynamics. Number one, when we increase the percentage of new patient starts going through the pharmacy in any given quarter, the upfront revenue for the pump that we forgo creates a transitory headwind for our revenue and gross margin in that quarter.

In parallel to that our pharmacy installed base at the end of Q2 2025 was over seven times the size of our pharmacy installed base at the end of Q2 2024.

Sean Saint: We have the flexibility to choose. And while we won't call our shot today, we will spend significant time between now and launch investigating our users' preference so we maximize the user experience of the Bioharmonics. However, that plays out. We continue to be extremely excited by the Biohormonal Program's ability to transform clinical outcomes for people with diabetes. but more importantly, the ability to transform the way people think about managing their diabetes, as well as producing a larger lifetime test of value to Beta Bionics.

Speaker #4: Number two is our existing pharmacy install base generates substantially more revenue per month versus the DME channel. Coming back now to Q2's gross margin.

Over time as our mix of new patient starts continues to shift to the pharmacy. We believe the high gross margin recurring revenue generated from our existing pharmacy installed base will overpower the near term headwind, we experienced from new patient starts going through the pharmacy channel.

Speaker #4: We saw a substantial uptick in the percentage of new patient starts through the pharmacy in Q2 of this year relative to the prior year.

Stated differently in the near future, we expect the pharmacy channels gross margin will consistently outperformed the dnb channels gross margin.

Speaker #4: That creates a headwind for revenue and gross margin this quarter, but is great for the business over the medium and long term. In parallel to that, our pharmacy install base at the end of Q2 2025 was over seven times the size of our pharmacy install base at the end of Q2 2024.

The second point that is indicative of healthy underlying gross margin dynamics as manufacturing volume leverage.

Sean Saint: to briefly touch on the type 2 diabetes label expansion. In Q2, we continued to see some health care providers prescribe islet to their type 2 patients. We estimate that over 25% of our new patients starts in the quarter. While we're not committing to a specific timeline, we look forward to pursuing the type 2 diabetes label.

As production volumes increased in Q2 of the prior year.

Speaker #4: Over time, as our mix of new patient starts continues to shift to the pharmacy, we believe the high gross margin recurring revenue generated from our existing pharmacy install base will overpower the near-term headwind we experience from new patient starts going through the pharmacy channel.

We benefited from lower per unit costs, driven by our reduced bill of materials and improved absorption of fixed manufacturing overhead and.

So in summary growth in new patient starts to the pharmacy channel cause year over year margin compression, which was offset by high margin recurring revenue.

Speaker #4: Stated differently, in the near future, we expect the pharmacy channel's gross margin will consistently outperform the DME channel's gross margin. The second point that is indicative of healthy underlying gross margin dynamics is manufacturing volume leverage.

Sean Saint: You covered lots of ground on today's call, so I want to leave you all with a few of the key points that we hope you take away from today's call. The islet is continuing to see excellent traction in the market, and we're building the right team and the right tools around it to expand its... Transformed the Way People with Diabetes, Their Loved Ones, and Their Health Care Providers Manage Diabetes. Q2 was an excellent quarter for our business, and we're proud of the results we delivered that also enable us to raise our full year 2025 guide.

From a substantially larger pharmacy installed base and lower per unit costs for manufacturing volume leverage the.

The pharmacy installed base and lower per unit costs are both durable gross margin tailwind going forward.

Speaker #4: As production volumes increased in Q2 of the prior year, we benefited from lower per unit costs driven by a reduced bill of materials and improved absorption of fixed manufacturing overhead.

Shifting now to operating expenses.

Total operating expenses in the second quarter were $32 4 million, an increase of 63% compared to $19 9 million in the second quarter of 2024.

Speaker #4: So in summary, growth in new patient starts through the pharmacy channel caused year-over-year margin compression, which was offset by high margin recurring revenue from a substantially larger pharmacy install base and lower per unit costs from manufacturing volume leverage.

The increase in sales and marketing expenses relative to the prior year is driven by expansion of our field sales team, which now stands at 63 sales territories exiting Q2.

Sean Saint: And I'm confident that our business can overcome any challenges thrown its way, whether that's tariffs, policy changes that impact our partners, or new entrants into the world. We're building the most innovative pipeline in the industry with the aim of disrupting the industry and ourselves. and remain as confident as ever in our ability to deliver those innovations to the people with diabetes. This is a business that is set up for sustainable success today and And we're excited to continue sharing updates with you all as we continue to...

The increase in R&D expenses relative to the prior year is driven by the mint and by hormonal projects.

Speaker #4: The pharmacy install base and lower per-unit costs are both durable gross margin tailwinds going forward. Shifting now to operating expenses. Total operating expenses in the second quarter were $32.4 million, an increase of 63% compared to $19.9 million in the second quarter of 2024.

G&A expense increases relative to the prior year, driven by new costs related to operating as a public company.

Let's move on to cash.

As of June 32025, we have approximately $281 million in cash cash equivalents and short and long term investments.

Speaker #4: The increase in sales and marketing expenses relative to the prior year is driven by the expansion of our field sales team, which now stands at 63 sales territories exiting Q2.

We remain confident in our ability to generate positive free cash flow at an earlier stage relative to our peer groups historical precedent.

Unknown Executive: With that, Operator, please open the call for Q&A. Thank you. If you would like to ask a question, please press star 1 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, press star one one again. We also ask that you wait for your name and company to be announced before proceeding with your question.

Here are a few reasons why.

Number one our devices designed to be manufactured efficiently evidenced by our current gross margin profile.

Speaker #4: The increase in R&D expenses relative to the prior year is driven by the Mint and biohormonal projects. G&A expense increases relative to the prior year are driven by new costs related to operating as a public company.

Number two our revenue model is shifting towards the pharmacy, which we're confident is financially accretive versus the dnb channel over the medium and long term.

Speaker #4: Let's move on to cash. As of June 30, 2025, we have approximately $281 million in cash, cash equivalents, and short- and long-term investments.

And number three is our management team's track record of operational efficiency, which is evident in our operating margin at our scale relative to competitive precedence at a similar scale.

Matthew O'brien: Our first question. will be coming from the line of Matthew O'Brien of Piper Sandler. Your line is open. Great. Thanks so much for taking the questions. And really nice quarter across the board here, everyone. So, congrats on that. I did want to ask about a couple of things that might get a little bit of attention here from investors. The first thing on the pricing side, it looks like the DME ASPs are quite strong in the quarter, but the pharmacy looked like it's a little bit below what I might have been modeling. So, is there anything going on in the pharmacy channel specifically on the pricing side of note that we should really be thinking about?

Speaker #4: We remain confident in our ability to generate positive free cash flow at an earlier stage relative to our peer group's historical precedent. Here are a few reasons why.

We know that an efficient operator title as urns, not given and we intend to earn the public's trust on that with each passing quarter.

Speaker #4: Number one, our device is designed to be manufactured efficiently. Evidenced by our current gross margin profile. Number two, our revenue model is shifting towards the pharmacy, which we are confident is financially accretive versus the DME channel over the medium and long term.

Now turning to our 2025 annual guidance.

We are raising guidance across the board.

We now project our net sales for the full year of 2025 will be $88 million to $93 million up from our prior guidance of $82 million to $87 million. We now expect 25% to 28% of our new patient starts to be reimbursed through the pharmacy channel versus our prior guidance of 22% to 25%.

Speaker #4: And number three is our management team's track record of operational efficiency, which is evident in our operating margin at our scale relative to competitive precedents at a similar scale.

Speaker #4: We know that an efficient operator title is earned, not given, and we intend to earn the public's trust on that with each passing quarter.

Sean Saint: And then I do have a follow-up. Yeah, so Matt, are you talking specifically about the islet pharmacy price or the monthly supply kit, or ASP, or both? Both, but more so on the supply kit side. Yeah, okay. So on the islet in the pharmacy channel, you did see a downtick. So I'm going to comment on both, and the first one is on the islet in the pharmacy channel. You did see a downtick in the ASP for that particular channel because we're seeing more adoption from PBMs, which is evidenced by the uptick in the pharmacy percentage of new patient starts.

Allow me to remind you what the increase in pharmacy guidance means for revenue over the next four years.

The raised from 23, 5% to 26, 5% new patient starts to pharmacy, which are the mid points of our previous and updated guidance are expected to generate roughly $1 million headwind to 2025 revenue.

Speaker #4: Now turning to our 2025 annual guidance, we are raising guidance across the board. We now project that net sales for the full year of 2025 will be $88 to $93 million, up from our prior guidance of $82 to $87 million.

This roughly $1 million headwind is baked into our updated 2025 annual guidance of $88 million to $93 million.

Speaker #4: We now expect 25% to 28% of our new patient starts to be reimbursed through the pharmacy channel, versus our prior guidance of 22% to 25%.

From 2026 through 2028, we'd expect that same increase in pharmacy guidance to result in up to a $9 million tailwind to Cumulus cumulative revenue assuming no attrition.

Speaker #4: Allow me to remind you what the increase in pharmacy guidance means for revenue over the next four years. The raise from 23.5% to 26.5% in new patient starts through pharmacy, which are the midpoints of our previous and updated guidance, are expected to generate a roughly $1 million headwind to 2025 revenue.

Sean Saint: And when that happens, we no longer rebate the, or sorry, we then issue a rebate for the islet, and the ASP in that particular channel then goes down over time. And so you have seen that that again is indicative of the success that we're having in winning new patient starts and getting more traction in the pharmacy channel with, again, more PBM adoption and more underlying health plan adoption. There actually isn't anything, and moving to the pharmacy supply kits, there's actually nothing about the ASP changing from Q1 to Q2, or nothing of no changing to ASP from Q1 to Q2.

Set a different way of $1 million headwind in year, one flips to into a potential 9 million cumulative tailwind in years two through four we accept that tradeoff.

In terms of how to think about the revenue cadence for the remainder of the year. We anticipate revenue in Q3 to be slightly higher than Q2 and revenue in Q4 to increase relative to Q3, which is seasonally typical in the diabetes industry.

Speaker #4: This roughly $1 million headwind is baked into our updated 2025 annual guidance of $88 million to $93 million. From 2026 through 2028, we'd expect that same increase in pharmacy guidance to result in up to a $9 million tailwind to cumulative revenue, assuming no attrition.

For new patient starts we expect Q3, new patient starts to be similar in Q2, and Q4 to increase relative to Q3.

Speaker #4: Said a way, a $1 million headwind in year one flips to a potential $9 million cumulative tailwind in years two through four. We accept that trade-off.

We expect the percentage of new patient starts reimburses the pharmacy in the second half of the year to increase relative to the high twenties percentage we saw in Q2.

Sean Saint: There is some stocking dynamic that was present in Q2 relative to Q1, and what you saw was some headwind or unfavorability in Q2 relative to Q1 from stocking. So that dynamic is probably what's contributing to your numbers. Got it. Okay, that's good to hear.

That said, we expect the rate of pharmacy mix increase in the second half of the year won't be as pronounced as the large increases we saw in both Q1 and Q2, which were fueled in large part by the formulary agreement with Prime Therapeutics that went into effect on February one and the strong adoption. We saw from the underlying health plans that partner with prime as their PVM.

Speaker #4: In terms of how to think about the revenue cadence for the remainder of the year, we anticipate revenue in Q3 to be slightly higher than Q2, and revenue in Q4 to increase relative to Q3, which is seasonally typical in the diabetes industry.

Matthew O'brien: And then the other piece is just on the churn rate. Looks like it was about 5% in the quarter based on my math, which God knows that could be wrong. But I just want to make sure, you know, the numbers are about right there.

Speaker #4: For new patient starts, we expect Q3 new patient starts to be similar to Q2 and Q4, with an increase relative to Q3. We expect the percentage of new patient starts reimbursed to the pharmacy in the second half of the year to increase relative to the high 20% that we saw in Q2.

While we now have an effective formulary agreement in place with all the major pbms that operate in the U S is to drill as of July one sales cycles at the underlying health plans that partner with each pbms are highly variable depending on the specific TBM and a specific health plan that partners with that Pbms.

Sean Saint: And then, you know, just anything you would call out on the churn side that might be a little higher or lower DME or pharmacy and specifically pharmacy, are you seeing a little higher churn rate through that channel? Thanks. Yeah, so while I can appreciate that churn rate or the attrition rate that we have in the pharmacy channel in particular, has a ton of impact on your model. And by the way, it's something that we monitor very closely at Beta Bionics. For reasons that are as simple as the industry doesn't, or the diabetes industry doesn't report on attrition rates, Beta Bionics is not going to be the first pump company that does.

Speaker #4: That said, we expect the rate of pharmacy mix increase in the second half of the year won't be as pronounced as the large increases we saw in both Q1 and Q2, which were fueled in large part by the formulary agreement with Prime Therapeutics that went into effect on February 1st and the strong adoption we saw from the underlying health plans partnered with Prime as their PBM.

In the case of Prime we saw immediate pull through of the formulary agreement at the health plan level.

For our more recent <unk> agreement that became effective on July one we don't expect to see the immediate pull through by the health plans that we saw with prime.

Moving on to gross margin.

Speaker #4: While we now have an active formulary agreement in place with all the major PBMs that operate in the U.S. as of July 1st, sales cycles with the underlying health plans that partner with each PBM are highly variable, depending on the specific PBM and the specific health plan that partners with that PBM.

We are raising our outlook to 52% to 55% gross margin for the full year 2025 versus our prior guidance of $50 to 53%.

Sean Saint: So again, I understand that it's an important metric that you have in your model, but it's not something that we're commenting on. Here's what I will say in principle, though, that I think highlights why we have a lot of confidence in our attrition rate, or in our retention rate, I guess, to use a more positive connotation. Every single patient that we can send to the pharmacy channel, we do. So how this works logistically is when Beta Bionics gets a prescription for the islet, we check to see if the patient is covered in pharmacy, we check to see if the patient is, and if they are, we send that patient in pharmacy.

Increasing guidance for a couple of reasons.

Number one embedded in our revenue guidance raise in pharmacy mix guidance raise is of raising our expectation for new patient starts and that increased scale should generate a lower per unit cost through manufacturing volume leverage.

Speaker #4: In the case of Prime, we saw immediate pull-through of the formulary agreement at the health plan level. For our more recent PBM agreement that became effective on July 1st, we don't expect to see the mediate pull-through by the health plans that saw with Prime.

And number two we expect to benefit from our growing pharmacy installed base with a large bolus of new pharmacy users. We on boarded in Q1 and Q2 produces high margin recurring revenue for the balance of the year.

Speaker #4: Moving on to gross margin, we are raising our outlook to 52% to 55% gross margin for the full year 2025 versus our prior guidance of 50% to 53%.

So the takeaway here is that while the outperformance in pharmacy adoption as a headwind to our gross margin outlook for the year, we expect to be able to more than offset that headwind and we are raising guidance as a result.

Speaker #4: We are increasing guidance for a couple of reasons. Number one, embedded in our revenue guidance raise in pharmacy mix is a raise in our expectation for new patient starts, and that increased scale should generate a lower per unit cost through manufacturing volume leverage.

Matthew O'brien: If they're not, we send them through DME. What that's really indicative of is that we now, because we know what our retention rate is in the pharmacy channel, we know that is the most advantaged channel for us financially, which is why we send every patient there that we can. So I'll just, again, make that point to emphasize that despite us not communicating our retention or attrition rates numerically, they're very good, and it's why we continue to prioritize pharmacy over DME. Got it, makes sense. Thanks so much. Thanks, Matt.

In terms of how to think about the gross margin cadence for the remainder of the year. We expect gross margin to increase slightly from Q2 to Q3 and again from Q3 to Q4.

Speaker #4: And number two, we expect to benefit from our growing pharmacy install base, with a large bolus of new pharmacy users we onboarded in Q1 and Q2 produces high margin recurring revenue for the balance of the year.

Regarding tariffs I want to reiterate our prior commentary that custom components for the island and it's consumables are exempt from tariffs under the Nairobi protocol.

Overall, we expect the impact of tariffs on our business to be minimal and their impact is contemplated in our updated gross margin guidance for the year.

Speaker #4: So the takeaway here is that while the outperformance in pharmacy adoption is a headwind to our gross margin outlook for the year, we expect to be able to more than offset that headwind, and we are raising guidance as a result.

With that said I'll hand, the call now back to Sean to discuss the recent CMS proposal and our innovation pipeline Sean.

Travis Steed: And our next question. will be coming from the line of Travis Steed. of Bank of America, your line is open.

Speaker #4: In terms of how we think about the gross margin cadence for the remainder of the year, we expect gross margin to increase slightly from Q2 to Q3 and again from Q3 to Q4.

Thanks, Steven on June 30th CMS released the proposed rule for the 2026th durable medical equipment payment system, which includes provisions that may impact insulin pumps supplied to Medicare fee for service beneficiaries.

Stephanie Piazzolla: Hey, this is Stephanie Piazzolla on for Travis. Thanks for taking the question and congrats on a good quarter. Maybe just wanted to start out by asking about the guidance. You beat Q2 by almost 4 million and are raising the guide by 6 million at the midpoint. So maybe just talk about some of the drivers of that increased outlook in the back half of the year and the confidence in those. And then you gave some quarterly cadence commentary, which was helpful. But maybe if you could elaborate a little bit on the underlying assumptions of the Q3 revenue being higher than Q2 and the Q3 new patients start similar to Q2.

Speaker #4: Regarding tariffs, I want to reiterate our prior commentary that custom components for the islet and its consumables are exempt from tariffs under the Nairobi Protocol.

To be clear this proposal only applies directly to traditional Medicare fee for service not Medicare advantage, which is managed by private plans approximately 10% to 15% of our users are Medicare fee for service beneficiaries. So let's walk through the key components of the proposed rule and our perspective on them.

Speaker #4: Overall, we expect the impact of tariffs on our business to be minimal, and their impact is contemplated in our updated gross margin guidance for the year.

Speaker #4: With that said, I'll hand the now back to Sean to discuss the recent CMS proposal and our innovation pipeline. Sean? Thanks, Stephen. On June 30th, CMS released a proposed rule for the 2026 Durable Medical Equipment payment system, which includes provisions that may impact insulin pumps supplied to Medicare fee-for-service beneficiaries.

There are two major elements in the proposal first CMS is proposing to implement a competitive bidding program for insulin pumps under this program <unk> would submit bids to supply insulin pumps.

In the seat and CMS would set the reimbursement rate at the 75th percentile of the accepted bids dms that bit above the price threshold set by CMS may be excluded from supplying pumps to Medicare fee for service beneficiaries in the bid geographic area.

Speaker #4: To be clear, this proposal only applies directly to traditional Medicare fee-for-service, not Medicare Advantage, which is managed by private plans. Approximately 10 to 15 percent of our users are Medicare fee-for-service beneficiaries, so let's walk through the key components of the proposed rule from our perspective on them.

Sean Saint: Yeah, sure. So there's a lot in there. The first, first question you asked is about why do we have confidence in our guidance for the rest of the year? And you know, we're raising guidance not just by the amount that we beat in Q2. So my first statement I'll say is, we have a high degree of confidence in every bit of guidance that we that we communicate. So, you know, our revenue guidance for the remainder of 2025 is no different. As it relates to the Q Q3 new patient starts guidance and the revenue outlook for the rest of the year.

This is new for pumps and is designed to reduce overall cost of the system.

Speaker #4: There are two major elements in the proposal. First, CMS is proposing to implement a competitive bidding program for insulin pumps. Under this program, DMEs submit bids to supply insulin pumps, and CMS would set the reimbursement rate at the 75th percentile of the accepted bids.

CMS is proposing a shift to a pay as you go rental model for pumps, replacing the current model, where CMS pays the <unk> supplier for the pump corporate 13 month period, after which the patient owns the pump and CMS will no longer pays for it under the new model CMS would pay <unk> a fixed amount each month for the pump for up to 60 months.

Speaker #4: DMEs that bid above the price threshold set by CMS may be excluded from supplying pumps to Medicare Fee-for-Service beneficiaries in the bid geographic area.

Instead of just paying for the pump over the first 13 months.

Sean Saint: I think kind of embedded in your question there, Stephanie, is you're asking, okay, so why are you forecasting or why are you guiding to a flat new patient start number when, you know, we're also expecting revenue to grow and that the company's grown quarter over quarter? So I guess I'll answer that when I give three reasons for that. The first one is in diabetes, as you're aware, seasonally, we tend to see Q1 being the weakest quarter relative to the other quarters throughout the year, and then Q4 being seasonally the best quarter, whereas Q2 and Q3 tend to be kind of flat or neutral relative to one another.

This is designed to allow patients to switch pumps more easily and to shift attrition risk from CMS to the Dms and the new model if the patients stopped using the pump anytime during the six month period CMS no longer pays for it.

Speaker #4: This is new for pumps and is designed to reduce overall costs to the system. Second, CMS is proposing a shift to a pay-as-you-go rental model for pumps, replacing the current model where CMS pays the DME supplier for the pump over a 13-month period, after which the patient owns the pump and CMS no longer pays for it.

Here's our view on the proposal, we support Cms's intent to modernize payment models in a way that better supports people living with diabetes, we believe that competitive bidding may undermine that goal.

Speaker #4: Under the new model, CMS would pay DMEs a fixed amount each month for the pump for up to 60 months, instead of just paying for the pump over the first 13 months.

The Medicare fee for service channel is already the most financially challenging for both pump manufacturers, who sell insulin pumps and supplies to <unk> and the <unk>, who distribute those pumps and supplies to patients and collect reimbursement from CMS.

Speaker #4: This is designed to allow patients to switch pumps more easily and to shift attrition risk from CMS to the DMEs. In the new model, if the patient stops using the pump any time during the 60-month period, CMS no longer pays for it.

Sean Saint: So there's nothing that we're noting about Q3 seasonality in our guidance. The second is that Q2 was a very strong quarter, which is part of the reason why, you know, for the flat new patient start guidance in Q3. And then the last point, the third point is just a reiteration of what I said actually to start my answer here, which is that any time we do give guidance, we set it at a level that we have a higher degree of confidence in our ability to achieve, and that new patient starts number is no exception.

That reimbursement amount from CMS with Dms Dms would be bidding on if competitive bidding is implemented.

Speaker #4: Here's our view on the proposal. We support CMS's intent to modernize payment models in a way that better supports people living with diabetes. We believe the competitive bidding may undermine that goal.

And the proposal Cms's capping the maximum allowable bid at approximately $226 per month. We believe this cap represents a single digit percentage reimbursement cut relative to what <unk> currently received from CMS today on normalized basis across 60 months.

Speaker #4: The Medicare fee-for-service channel is already the most financially challenging for both pump manufacturers who sell insulin pumps and supplies to DMEs, and the DMEs who distribute those pumps and supplies to patients and collect reimbursement from CMS.

We believe that cap was calculated using lower monthly infusion set and cartridge usage assumptions than what users actually require each month and we encourage CMS to correct. This in the final rule.

Stephanie Piazzolla: Thank you, that's helpful.

Stephanie Piazzolla: And then I just wanted to follow up on the CMS home health proposal for 2026. And maybe if you could just talk about some of the next steps as part of the process, and I guess, a bit more on the expected timing of how long it could take for some of the things in the proposal to be implemented. Thank you. Yeah, sure. So yeah, the next steps are CMS will receive comments from companies, DME distributors, particular to the insulin pump industry, they'll see comments from companies like Beta Bionics, as well as DME distributors. I think it's by the end of August is when those particular proposals, or early September, I think, is when those responses are due.

Speaker #4: That reimbursement amount from CMS is what DMEs would be bidding on if competitive bidding is implemented. In the proposal, CMS is capping the maximum allowable bid at approximately $226 per month.

Whether or not the proposed cap stands we do not anticipate any material financial impact on our business as we are not directly affected by the change in the unlikely scenario that <unk> faced price compression at or beyond the proposed cap that could force manufacturers or <unk> to withdraw from the Medicare fee for service channel and certain.

Speaker #4: We believe this cap represents a single-digit percentage reimbursement cut relative to what DMEs currently receive from CMS today, on a normalized basis across 60 months.

Speaker #4: We believe that the cap was calculated using lower monthly infusion set and cartridge usage assumptions than what users actually require each month, and we encourage CMS to correct this in the final rule.

Regions, thereby limiting patient access and choice, which is not what CMS intended with the proposed rule.

Regarding the proposed shift to a pay as you go rental model for pumps, we agree with Cms's intent to align reimbursement with the actual therapy use we were the first durable pump company to implement a pay as you go model through the pharmacy channel that said applying this model to the <unk> channel introduces significant logistical complexity.

Speaker #4: Whether or not the proposed cap stands, we do not anticipate any material financial impact on our business, as we are not directly affected by the change.

Sean Saint: So that'll happen. And then CMS will put together whether or not they choose to move forward with the proposal and, you know, implement, if they do implement the competitive bidding process, and then ultimately have make a ruling sometime in the future for when the new policy would be enacted. And our expectation is the earliest that would be as 2020. Thank you.

Speaker #4: In the unlikely scenario that DMEs face price compression at or beyond the proposed cap, that could force manufacturers or DMEs to withdraw from the Medicare fee-for-service channel in certain regions, thereby limiting patient access and choice, which is not what CMS intended with the proposed rule.

Slim pumps or personalized medical devices that are not designed for refurbishment and reuse from the way other <unk> categories might be if CMS decides to finalize this model will work with our JV partners to explore safe refurbishment arrangements for our customers and find a path forward financially that ensures our <unk> partners can continue to supply the channel.

Speaker #4: Regarding the proposed shift to a pay-as-you-go rental model for pumps, we agree with CMS's intent to align reimbursement with the actual therapy use. We were the first durable pump company to implement a pay-as-you-go model through the pharmacy channel.

Michael Pollack: And our next question will be coming from the line of Michael Pollack of Wolf Research. Your line is open. Hey, good afternoon. Thank you for taking the question.

It's too early to say what that arrangement will look like we see the shift to pay as you go is a net tailwind for the business. Let me walk you through that thinking.

Speaker #4: That said, applying this model to the DME channel introduces significant logistical complexity. Insulin pumps are personalized medical devices that are not designed for refurbishment and reuse in the way other DME categories might be.

Michael Pollack: I'm interested for a generic comment on kind of same-store, new-store dynamics as you assess the sequential growth in starts. How much would you attribute to kind of increased penetration with existing prescribers versus the sign-up of new prescribers? Yeah, hey, Mike, good question.

This would be a pretty extreme scenario, but if we hypothetically aligned the way we receive payments from <unk> to the way <unk> would receive payments from CMS and a pay as you go model. We would expect that change in revenue recognition to result in a single digit percentage headwind to our overall revenue in year, one followed by a single digit percentage of tailwind to our revenue in each of your.

Speaker #4: If CMS decides to finalize this model, we'll work with our DME partners to explore safe refurbishment arrangements for our customers and find a path forward financially that ensures our DME partners can continue to supply the channel.

Sean Saint: You're not going to love my answer, because I'm not going to answer it numerically. But we're actually seeing the dynamic of both happening. So we did, we did expand our field sales team relative to this time last year. So there is an element of new territories where, you know, Beta Bionics' field sales presence was, before this new expansion, still had a lot of white space throughout the country. So like areas that had no field sales presence at all.

<unk> two through five and cumulatively no material impact the amount of revenue we recognized over that five year period.

Speaker #4: While it's too early to say what that arrangement will look like, we see the shift to pay-as-you-go as a net tailwind for the business.

So how does that become a tailwind two reasons number one and the same way we see the pharmacy pay as you go model reduce upfront out of pocket cost the patient spend on an insulin pump.

Speaker #4: Let me walk you through that thinking. This would be a pretty extreme scenario, but if we hypothetically align the way we receive payments from DMEs to the way DMEs would receive payments from CMS, in a pay-as-you-go model, we would expect that change in revenue recognition to result in a single-digit percentage headwind to our overall revenue in year one, followed by a single-digit percentage tailwind to our revenue in each of years two through five.

As you go model in the <unk> channel could have that same effect. This could increase overall pump adoption by Medicare fee for service beneficiaries.

Sean Saint: So there is a new store dynamic as a result of that. But we are seeing a, across the board, an uptick in prescriber adoption within territories that we already do operate in. And, you know, again, I, we do quantify these things, but they're not KPIs that we communicate externally. But yeah, absolutely. The message of islet simplicity is resonating. HCPs are seeing, are seeing good results from their patients and becoming more comfortable prescribing the islet. And I think that's evidenced by our results.

Number two by enabling patients to switch more easily between pumps, we believe that benefits a market newcomer with a smaller installed base rather than incumbents, who have more to lose plus easier ability to switch pumps with healthy differentiated product like islet gain more share.

Speaker #4: And cumulatively, there is no material impact on the amount of revenue we recognize over that five-year period. So how does that become a tailwind? Two reasons.

Speaker #4: Number one, in the same way we see the pharmacy pay-as-you-go model reduce upfront out-of-pocket costs that patients spend on an insulin pump, a pay-as-you-go model in the DME channel could have that same effect.

So to summarize our view of the CMS proposal, we don't expect to see any material revenue impact from competitive bidding we expect the potential shift to pay as you go will create tailwind for the business and we are ready to adapt with our <unk> partners to ensure our customers are taken care of.

Speaker #4: This could increase overall pump adoption by Medicare fee-for-service beneficiaries. Number two, by enabling patients to switch more easily between pumps, we believe that benefits a market newcomer with a smaller installed base rather than incumbents who have more to lose, plus easier ability to switch pumps would help a differentiated product like Islet gain more share.

Sean Saint: So the dynamic is actually both, Mike, but I'm not going to quantify them. Understood.

We will keep you updated as the rule progresses, we anticipate the comment period closed in early September with a final ruling from CMS in early November.

Michael Pollack: Thank you.

Michael Pollack: If I can follow up, I appreciate all the comments on the on the Medicare proposal.

Michael Pollack: I know the response to this one will probably lean squish, but to the extent this moves forward substantially as envisioned, and I'm talking specifically about the shift to pay over time, to what extent would this Medicare fee-for-service standard create risk that the commercial DME or Medicare Advantage contracts over time head in this direction as well? How do you assess that in the past? Thank you.

Now, let's dig into our innovation pipeline, our goal with our pipeline programs with simple disrupt the industry and disrupt ourselves at our recent investor and analyst day in June we unveiled mint or patch pump and development and provided a live demonstration of its features and the patch change process.

Speaker #4: So, to summarize our view of the CMS proposal, we don't expect to see any material revenue impact from competitive bidding. We expect the potential shift to pay-as-you-go will create tailwinds for the company, and we're ready to adapt with our DME partners to ensure our customers are taken care of.

<unk> is being designed to marry the best aspects of fully disposable and partially disposable patch architectures and every decision. We made in the design of the product is centered around the user experience. We believe the men wear experience will fit well into a user's everyday life mint is being designed so that users won't need their phone to change events users won't.

Speaker #4: We'll keep you updated as the rule progresses. We anticipate the comment period to close in early September, with a final ruling from CMS in early November.

Sean Saint: Yeah, good question. Look, nowhere in that proposal, it doesn't mention anything of that nature, and we don't see any associated risk from this particular proposal stemming into commercial plans or within into the pharmacy model. I will just highlight that a pay-as-you-go model, like that's being proposed here in the CMS proposal, which is what this rental model is, as Sean, I think, well outlined in the prepared remarks, that's working quite well already in the pharmacy, in the pharmacy system, where Beta Bionics even, you know, and all patch pumps are getting reimbursed through, well, I guess, in the case of patch pumps, they're Medicare Part D coverage, which Beta Bionics, our islet is not, but we're already seeing in managed Medicare coverage on the islet through a pay-as-you-go model that exists in pharmacy.

Speaker #4: Now, let's dig into our innovation pipeline. Our goal with ur pipeline programs is simple. Disrupt the industry and disrupt urselves. At our recent Investor and Analyst Day in June, we unveiled Mint, our patch pump in development.

Ever needed to charge, a mint and users won't need to remove them and when they swim our shower.

The $4 five millimeter steel cannula is being designed to feel very similar to an insulin pen, which we expect will minimize discomfort drink cannula insertion said differently, we're seeking to provide a patch experience that aligns well with what patch wears are already used to and love. While also improving upon that experience, where we see opportunities to do so.

Speaker #4: And we provided a live demonstration of its features and the patch change process. Mint is being designed to marry the best aspects of fully disposable and partially disposable patch architectures, and every decision we made in the design of the product is centered around the user experience.

Speaker #4: We believe the Mint wear experience will fit well into a user's everyday life. Mint is being designed so that users won't need their phone to change a Mint.

Another great features that we expect to be able to rollout firmware over the air updates to the reasonable controller. So if a mint user wants to switch to the latest and greatest CGM and we're integrated with that CGM that can happen overnight. These.

Speaker #4: Users won't ever need to charge a Mint, and they won't need to remove a Mint when they swim or shower. The 4.5 millimeter steel cannula is being designed to feel very similar to an insulin pen, which we expect will minimize discomfort during cannula insertion.

These expected features are what we believe will separate mint from every other fully disposable or partially disposable patch, whether theyre already on the market or still in development. This.

Sean Saint: And so I think in the event that the CMS wanted to shift to a pay-as-you-go model into the pharmacy channel, they would use an already existing infrastructure that's already in place today. So, you know, I guess twofold that answer, Mike.

Speaker #4: Said differently, we're seeking to provide a patch experience that aligns well with what patch wearers are already used to and love, while also improving upon that experience where we see opportunities to do so.

This is what we mean when we say our architecture is intended to be the best of both worlds.

We strongly believe that we're we've harnessed the best aspects of both one piece and <unk> architectures all in the name of user experience at.

Speaker #4: Another great feature is that we expect to be able to roll out firmware over-the-air updates to the reusable controllers. So, if a Mint user wants to switch to the latest and greatest CGM, and we're integrated with that CGM, that can happen overnight.

Add this to our industry, leading algorithm and we believe <unk> will be a game changer. When it launches in Q2, we continued to advance meant rapidly towards our goal of commercialization by the end of 2027, which we are reiterating as our target and we remain highly confident in achieving it.

Sean Saint: I think I'd like to add to that one, Steven. You know, it's very hard for us to assess the risk of that happening. But I think, you know, what we've done is insulate ourselves from it, with our pre existing transfer to a pay-as-you-go model proactively. There are reasons that it makes a ton of sense, and makes a lot of sense for us as well. And again, we're already doing that proactively. So can't speak so much to the the risk of it. But I will say that we're preparing ourselves properly for it, if we're ever to have Understood.

Speaker #4: These expected features are what we believe will separate Mint from every other fully disposable or partially disposable patch, whether they're already on the market or still in development.

Shifting to our by hormonal pump program in July we completed dosing for our shelf stable pumped compatible glucagon candidates pharmacokinetic and Pharmacodynamic or PK PD bridging study as a reminder, the trial is intended to enable us to bridge all of our previous by hormonal clinical data, including three pre pivotal inpatient and six pre.

Speaker #4: This is what we mean when we say our architecture is intended to be the best of both worlds. We strongly believe that we've harnessed the best aspects of both one-piece and two-piece architectures, all in the name of user experience.

Sean Saint: I follow. Thank you. Yeah. Thank you. One moment.

Speaker #4: Add to our industry-leading algorithm, and we believe Mint will be a game changer when it launches. In Q2, we continue to advance Mint rapidly towards our goal of commercialization by the end of 2027, which we are reiterating as our target, and we remain highly confident in achieving it.

Pivotal outpatient trials to our new formulation of glucagon.

Phil Han: And the next question will be coming from the line of David Roman of Goldman Sachs. Your line is open. Good afternoon. This is Phil Han for David. Thanks for taking the questions. I thought I'd start with the type two comments that you ended with, Sean. Stronger contributor as a percentage of new patient starts with a much stronger new patient start number overall.

We expect to have full results from the PK PD study in the second half of 2025.

Which will inform our go forward development strategy for our glucagon candidate.

Speaker #4: Shifting to our biohormonal pump program, in July, we completed dosing for our shelf-stable, pump-compatible glucagon candidate's pharmacokinetic and pharmacodynamic, or PKPD, bridging study. As a reminder, the trial is intended to enable us to bridge all of our previous biohormonal clinical data, including three pre-pivotal inpatient and six pre-pivotal outpatient trials, to our new formulation of glucagon.

Preliminary PD results are in line with our expectations and supportive of continued development of our glucagon candidate per our previously communicated development strategy.

For the full PK PD data won't be publicly available we expect to provide additional updates on the program and our development strategy. During our Q3 Q3 earnings call.

Sean Saint: I was just hoping you could talk a bit more about the market dynamics going on there, the success that you're having, albeit off-label, and what would kind of act as a trigger or what we need to hear for a bigger push towards type two. Yeah, it's a great question, Phil. I think what I'll say, you know, given that ILADD obviously is off-label in that regard, I'm going to make comments. I'm going to keep my comments more general in terms of how physicians run their practices. I think it's a true statement that physicians are responsible for understanding the different tools they have available to them, and where they can best be used, and what they do, and with whom, and prescribe them as they fit.

As of now there is no change to the expectations that we will conduct a concurrent pivotal trials to fulfill their requirements for a 505 <unk> NDA with a chronic drug indication for glucagon in the <unk> and <unk> 10, Ks the pump and algorithm respectively.

Speaker #4: We expect to have full results from the PKPD study in the second half of 2025, which will inform our go-forward development strategy for our ucagon candidate.

Speaker #4: Preliminary PD results are in line with our expectations and supportive of continued development of our glucagon candidate per our previously communicated development strategy. While full PKPD data won't be publicly available, we expect to provide additional updates on the program and our development strategy during our Q3 earnings call.

Want to share a quick thought on the potential form factors for our by hormonal system.

In the past our by hormonal form factor has been a durable pump with two channel Senate one for insulin and one for glucagon that form factor seems very acceptable users who have used it informative clinical trials and it's very similar in size to our insulin only island commercial launch hardware. However, with the addition of <unk> technology to our pipeline that opens up several new.

Speaker #4: As of now, there is no change to the expectations that we'll conduct concurrent pivotal trials to fulfill the requirements for a 505(b)(2) NDA with a chronic drug indication for glucagon, and the ACE and IAGC510Ks for the pump and algorithm, respectively.

Sean Saint: And that's why the off-label rules are as they are. They have every right to do that. You know, I don't want to get into the specifics of islet, but I think that that's clearly being taken into account in the prescribing patterns that we're seeing as the awareness of islet generally, and other products becomes, you know, more broadly known. So sorry for the slightly vague answer, but yeah, type two.

<unk> to us the buy hormonal form factor could be a durable pump with two channels. It could also be the color islet, plus a mint or it could be two minutes.

Speaker #4: I want to share a quick thought on the potential form factors for our hormonal system. In the past, our biohormonal form factor has been a durable pump with two channels in it: one for insulin and one for glucagon.

One dispensing insulin and the other defense and glucagon.

We have the flexibility to choose and while we wont color shot today, we will spend significant time between now and launch investigating our users' preference. So we maximize the user experience of the buyer hormonal system, which is a core belief of beta bionics. However that plays out we continue to be extremely excited by the <unk> program's ability to transform clinical outcome.

Speaker #4: That form factor seems very acceptable to users who have used it in formative clinical trials, and it's very similar in size to our insulin-only Islet commercial launch hardware.

Phil Han: No, I think that's helpful, thanks.

Stephen Feider: The second one's probably for Steven. It's a different way of the guidance question and appreciate that pharmacy mix in a given quarter will matter to this question, but given the growing proportion of recurring revenue that's coming in, it is gonna be the case in this revenue ramp period that if you see sequential increase in patients, there should be even more so a sequential ramp in revenue to accompany that, right? Because you have the pump revenue as a supplement to a growing base of recurring revenue. I guess said differently, do you have better visibility moving forward into the guidance assumptions you're giving because of the relative scale of the recurring versus one time only revenue over time here?

Speaker #4: However, with the addition of Mint technology to our pipeline, that opens up several doors for us. The biohormonal form factor could be a durable pump with two channels; it could also be the Color Islet plus a Mint, or it could be two Mints.

For people with diabetes, but more importantly, the ability to transform the way people think about managing their diabetes as well as producing a larger lifetime customer value or value to beta bionics.

Speaker #4: One dispensing insulin and the other dispensing glucagon. We have the flexibility to choose, and while we won't call our shot today, we will spend significant time between now and launch investigating our users' preferences so we maximize the user experience of the biohormonal system, which is a core belief of Beta Bionics.

To briefly touch on the type two diabetes label expansion opportunity in Q2, we continued to see some health care providers prescribe islet to their type two patients off label.

We estimate that over 25% of our new patient starts in the quarter were from type two.

Speaker #4: However, that plays out, we continue to be extremely excited by the biohormonal programs' ability to transform clinical outcomes for people with diabetes. But more importantly, the ability to transform the way people think about managing their diabetes, as well as producing a larger lifetime customer value to Beta Bionics.

While we're not committing to a specific timeline, we look forward to pursuing the type two diabetes label through the FDA.

We covered lots of ground on today's call. So I want to leave you all with a few of the key points that we hope you take away from our remarks the.

Stephen Feider: Yeah, great question. Both answers are yes. Yes, we see upticks in our revenue. If we had flat new patients starts quarter over quarter because we have this powerful install base that's generating recurring revenue in the pharmacy channel. And yes, our business is more predictable if a higher percentage of our revenue is coming from pharmacy because that's a recurring revenue. Okay, great.

The island is continuing to see excellent traction in the market and we're building the right team and the right tools around it to expand its reach and transform the way people with diabetes their loved ones and their health care providers manage diabetes.

Speaker #4: To briefly touch on the type two diabetes label expansion opportunity, in Q2 we continued to see some healthcare providers prescribe Islet to their type-two patients off-label.

Speaker #4: We estimate that over 25% of our new patient starts in the quarter were from type two. While we're committing to a specific timeline, we look forward to pursuing the type two diabetes label through the FDA.

Q2 was an excellent quarter for our business and we're proud of the results. We delivered that also enable us to raise our full year 2025 guidance.

We're confident that our business can overcome any challenges thrown its way, whether that's tariffs policy changes that impact our partners or new entrants into the market.

Stephen Feider: Just one clarifying one. The pay-as-you-go model, just from a timing standpoint, could go into effect in 26 while the comment on the competitive bidding process not going into place was 27, right? No, actually. We would imagine that those, the competitive bidding process would end up dictating the rental model, or that would end up being a prereq for the rental model going into place. And so my comment on when we expect a 2027 being the earliest we would expect this to go into adoption, it means the policy in its totality, competitive bidding, which then leads to a rental model.

Speaker #4: We covered a lot of ground on today's call, so I want to leave you all with a few of the key points that we hope you take away from our remarks.

Speaker #4: The Islet is continuing to see excellent traction in the market, and we're building the right team and the right tools around it to expand its reach and transform the way people with diabetes they're oved ones and their healthcare providers manage diabetes.

We're building the most innovative pipeline in the industry with the aim of disrupting the industry and ourselves and remain as confident as ever in our ability to deliver those innovations to the people with diabetes, who need them.

This is a business that is set up for sustainable success today and tomorrow and we're excited to continue sharing updates with you all as we continue to execute against our mission.

Speaker #4: Q2 was an excellent quarter for our business, and we're proud of the results we delivered that also enable us to raise our full year 2025 guidance.

Speaker #4: We're confident that our business can overcome any challenges thrown its way whether that's tariffs, policy changes that impact our ners, or new entrants into the market.

With that operator, please open the call for Q&A.

Thank you.

Stephen Feider: And then that actually starts selling through that rental model in 2027 at the end. Okay, understood. That's very speculative, but that's that's that's what we Okay. All right.

I'd like to ask a question. Please press Star then one of your telephone.

Speaker #4: We're building the most innovative pipeline in the industry with the aim of disrupting the industry and ourselves. We remain as confident as ever in our ability to deliver those innovations to the people with diabetes who need them.

Then here an automated message advising your hands raised.

I'd like to remove yourself from the queue Press Star. One again, we also ask that you wait for your name and company to be announced before proceeding with your question.

Stephen Feider: That's helpful. Thank you.

Speaker #4: This is a business that is set up for sustainable success today and tomorrow. We're excited to continue sharing updates with you all as we execute against our mission.

Our first question.

Frank Petitken: And our next question will come from the line of Frank Petitken of Lake Street. Your line is open. Great, thanks for taking the questions. Congrats on the great quarter and the increased guidance. I wanted to start with one more on type twos and I appreciate the sensitivities given it's off label, but with how good that number has been trending, was hoping you could help us understand a little bit more of maybe where that strength is coming from. Is that the primary care channel? Is that patient group using the pharmacy benefit channel more or anything else specific to call out that has increased the use in that channel?

We will be coming from the line of Matthew O'brien.

Piper Sandler your line is open.

Speaker #4: With that, operator, please open the call for Q&A.

Great. Thanks, so much for taking my questions and really nice quarter across the board here.

Speaker #2: Thank you. If you would like to ask a estion, please press star when one of your telephone. You will then hear an automated message advising your hand is raised.

Everyone's so congrats on that I did want to ask about a couple of things that might get a little bit of attention here from investors.

Speaker #2: If you would like to remove yourself from the queue, press star. Once again, we also ask that you wait for your name and company to be announced before proceeding with your question.

The first thing on the pricing side it looks like the DMA.

Asps are quite <unk>.

In the quarter, but the pharmacy it looks like it's a little bit below what I might've been modeling. So is there anything going on in the pharmacy channel specifically on the pricing side of note that we shouldn't really be thinking about and then I do have a follow up.

Speaker #2: Our first question will be coming from the line of Matthew O'Brien of Piper Sandler. Your line is open.

Sean Saint: Oh, yeah, okay.

Stephen Feider: So, hey, Frank, we have to be a little careful here as we don't have a type 2 indication. So I don't want to sound like we're promoting the islet for type 2 use. And I'll just reiterate what Sean said about, you know, doctors have the ability to prescribe what they want. So I'm not going to, I'm not going to answer your question too thoroughly. But yes, absolutely, the islet is where when it is being adopted for type 2 patients, it's happening in both the primary care channel as well as the endo channel similar to how the islet is, frankly, today.

Speaker #3: Great! Thanks so much for taking the questions. And congrats on a really nice quarter across the board here. Everyone's so congratulatory on that. I did want to ask about a couple of things that might get a little bit of attention here from investors.

Yes, so Matt are you talking specifically about the eyelet pharmacy price or the farm.

The monthly supply kit Asps.

Asps.

For both both more so on the supply side yeah, Okay. So on the.

Speaker #3: The first thing on the pricing side, it oks like the DME ASPs are quite strong in the quarter, but the pharmacy looked like it's a little bit below what I might have been modeling.

The eyelet info in the pharmacy channel you did see a downtick, so I'm going to I'm going to comment on both of the first one is on the island in the pharmacy channel.

Speaker #3: So, is there something going on in the pharmacy channel, specifically on the pricing side, that we should really be thinking about? And I do have a follow-up.

You did see a downtick in the Asps in that for that particular channel because we're seeing more adoption from pbms.

Frank Petitken: Okay, that's helpful, understood.

Frank Petitken: And then just secondly, maybe an update on Salesforce hiring, appreciate the color and update you guys provided today, but maybe talk about kind of Salesforce hiring expectations. Yeah, so we, we started the year with 43 sales territories, we ended the year with 60, or we ended the first quarter with 63 sales territories, and we still have ended this quarter with 63 sales territories, you're not going to see a massive uptick in our territory expansion for the remainder of the year, we will likely expand again in the in early Okay, perfect. Thanks for taking the questions.

Speaker #4: Yeah. So Matt, are you talking specifically about the Islet pharmacy price or the monthly supply kit or ASP? Or both?

Which is evidenced by the uptick in the pharmacy, new patient percentage of new patient starts and when that happens we no longer rebate.

Sorry, we didn't issue a rebate for the island and the Asps in that particular channel then goes down over time, and so you have seen that that again is indicative.

Speaker #3: Both. But more so on the supply kit side.

Speaker #4: Yeah. Okay. So on the Islet in the pharmacy channel, you did see a downtick. So I'm going to ment on both. And the first one is on the Islet in the pharmacy channel.

Of the success that we're having in winning new patient starts and getting more traction in the pharmacy channel.

Speaker #4: You did see a downtick in the ASP in that for that particular channel because we're seeing more adoption from PBMs. Which is evidenced by the uptick in the pharmacy new patient percentage of new patient starts.

Again, more <unk> adoption and more underlying health plan adoption, there actually isn't anything.

Frank Petitken: Yeah, thanks, Frank. Good questions.

And moving to the pharmacy supply kits, there's actually nothing about the ASP.

Jeff Johnson: Thank you. And our next question will come from the line of Jeff Johnson of Beard. Your line is open. Thank you. Good afternoon, guys. I think she said Jeff. I hope you're hearing me okay here. Yeah, you got it. Yep. All right. Great. Hey, guys. Hey, just maybe one clarifying question.

Speaker #4: And when that happens, we no longer rebate the or sorry, we then issue a rebate for Islet and the ASP in that particular channel then goes down over time.

Changing from Q1 to Q2.

Nothing of no changing the ASP from Q1 to Q2, there is some stocking dynamics that was.

Speaker #4: And so you have seen that again as indicative of the success that we're having in winning new patient starts and getting more traction in the pharmacy channel with, again, more PBM adoption and more underlying health plan adoption.

President.

In Q2 relative to Q1, and what you saw was some headwind or unfavorable <unk> in Q2 relative to Q1 from stocking. So that dynamic is probably whats contributing to your numbers there Matt.

Jeff Johnson: You know, you talked about maybe that pharmacy channel mix not increasing at the same rate in the back half of the year as we saw in the first half of the year. Part of that due just to the strong uptake you saw through the prime contracts that started in February. As you have expanded, you know, access through additional payers here, why is the prime contract different maybe than some of those other payers or said another way? If you're pushing as many of your patients who do have pharmacy coverage into the pharmacy channel, why can't that rate of push and kind of that rate of adoption continue to move in the same sequential kind of pattern?

Got it okay. That's good to hear and then the other piece is just on the churn rate.

Speaker #4: There actually isn't anything and moving to the pharmacy supply kits there's actually nothing about the ASP changing from Q1 to Q2 or nothing of note changing the ASP from Q1 to Q2.

It looks like it was about 5% in the quarter based on my math God knows that could be wrong, but I just want to make sure.

The numbers are about right there and then.

Just anything you would call out on the churn side that might be a little higher or lower DNA or pharmacy and specific to pharmacy or you're seeing a little higher churn rate.

Speaker #4: There is some stocking dynamic that was present in Q2 relative to Q1. And at you saw was some headwind or unfavorability in Q2 relative to Q1 from stocking.

<unk> channel thanks.

Sean Saint: Thanks. Yeah. Really good question. Okay, so the prime, the prime deal is quite different than what we've seen with other PBM contracts. And that when, when we actually, I'm going to back up one second. Well, to gain pharmacy coverage, and the way that we define coverage is new patient starts going through the pharmacy channel. There's two really important steps that have to happen in order for us to obtain that coverage. The first one is we need the PBM agreement. And then the second is we need the underlying health plans that partner with that PBM. In the case of prime, both step one and two happened at the same time.

Yeah, so while I can appreciate that churn rate or the attrition rate.

Speaker #4: So that dynamic is probably what's contributing to your numbers there, Matt. Got it. Okay. That's good to hear. And then the other piece is just on the churn rate.

That we have in the pharmacy channel in particular has a ton of impact on your model and by the way, it's something that we monitor very closely that beta bionics.

Speaker #4: Looks like it was about 5% in the quarter based on my map, which God knows that uld be wrong. But I just want make sure you know the numbers are about right there.

For reasons that are simple as the industry doesn't have the diabetes industry doesn't.

Speaker #4: And then you ow just anything you would call out on the churn side that might be a little higher or lower, DME or pharmacy.

Report on attrition rates.

Beta bionics is not going to be the first pump company that does so again I understand that it's an important metric that you have in your model, but it's not something that we're commenting on.

Speaker #4: And specifically regarding pharmacy, are you seeing a little higher churn rate through that channel? Thanks.

Speaker #3: Yeah. So while I can appreciate that churn rate or the attrition rate that we have in the pharmacy channel has a ton of impact on your model, and by the way, it's something that we monitor very closely at Beta Bionics, for reasons that are as simple as the industry doesn't—or the diabetes industry doesn't—report on attrition rates.

Here's what I will say in principle, though that I think highlights why we have a lot of confidence in our attrition rates are in our retention rate I guess to use a more positive connotation.

Sean Saint: In the case of the other PBM agreements, and notably the one that Sean brought up in his preparatory remarks that will go into effect, the large PBM agreement that goes into effect on July 1st, that is not the case. Step one happened, but the underlying agreements with the health plans are a separate sales cycle that we need to go in and then add at future dates. Now, for the other PBM contracts that we have that are already in place and have been historically, we continue to tick off underlying health plans that are a part of that step two, which is part of the reason you see the sequential uptick that we've had historically in pharmacy adoption.

Every single patient that we can send to the pharmacy channel. We do so how this works logistically is when beta bionics gets a prescription for the eyelet, we check to see if the patient is covered in pharmacy, we check to see if the patient is and if they are we send that patient and pharmacy, if they're not we send them through <unk>.

Speaker #3: Beta Bionics is not going to be the first pump company that does. So again, I understand that it's an important metric that you have in your model, but it's not something that we're commenting on.

Well, that's really indicative of is that we know because we know what our retention rate is in the pharmacy channel. We know that is the most advantaged channel for us financially, which is why we send every patient there that we can so I will just again make that point to emphasize that.

Speaker #3: Here's what I will say in principle, though, that I think highlights why we have a of confidence in our attrition rate or in our retention rate, I ess, to use a more positive connotation.

Speaker #3: Every single patient that we can send through the pharmacy channel we do. So how this works logistically is when Beta Bionics gets a prescription for the Islet, we check to see if the patient is covered in pharmacy.

Sean Saint: It's not just because of the prime deal that we had in the first half of the year, but also the other PBMs, we continue to layer on more and more underlying health plans. All right, that's helpful. That explains it.

Fight us not communicating our retention or attrition rates numerically, they're very very good and it's why we continue to prioritize pharmacy over D&B.

Sean Saint: And then just one other question, I guess, on the competitive bidding in the pay-as-you-go model. You know, one of your competitors out there is talking about potentially as a tube pump getting in Medicare Part D. You guys obviously on the Pharmacy Channel are kind of taking a monthly on the PBM side. What would it take? Is there any possible way to get into Part D as opposed to Part B? And does your read of the documents, of the CMS documents, suggest that Part D will not be subject to competitive bidding? That was our read. But, you know, I think there's a couple varied opinions on some of the wording in that document.

Got it makes sense. Thanks, so much thanks.

Speaker #3: We check to see if the patient is eligible, and if they are, we send that patient to the pharmacy. If they're not, we send them through DME.

Thanks, Matt.

Thank you and our next question.

Speaker #3: What that’s really indicative of is that we now, because we know what our retention rate is in the pharmacy channel, know that it is the most advantaged channel for us financially, which is why we send every patient there that we can.

We will be coming from the line of Travis Steed.

Of Bank of America. Your line is open.

Hey, this is Stefan <unk> on for Travis Thanks for taking my question and congrats on a good quarter.

Speaker #3: So I'll just, again, make that point to emphasize that despite us not communicating our retention or trition rates numerically, they're very od and it's why we continue to prioritize pharmacy over DME.

Maybe just wanted to start out by asking about the guidance.

Q2 by $4 million and everybody's in the guide.

Speaker #4: Got it. Makes sense. Thanks so much.

No.

Sean Saint: Thank you. Yeah. So what would it take? We've always said that the longest train or the, you know, the big train to turn in order for durable insulin pumps to start becoming reimbursed, primarily through the pharmacy channel, was Medicare Part D treatment, which today durable, but for those that aren't aware, the eyelid and durable insulin pumps are considered Part B covered. Jeff, frankly, I don't really want to predict when that train turns and we start seeing durable insulin pumps be considered Part D treatment. I don't really want to predict. I think this does maybe start the discussion and maybe move it faster than it otherwise had been because it's clear that CMS is interested in a pay-as-you-go model, which is what the But I don't really want to give a timeline to predict when that happens.

So maybe just talk about some of the drivers.

Speaker #3: Thanks, Matt.

Speaker #2: Thank you. And our next question. We'll be coming from the line of Travis Steed. Of Bank of America, your line is open.

That increased outlook in the back half of the year and the confidence in those and then you gave some <unk>.

Cordelia cadence commentary, which was helpful. But maybe if you could elaborate a little bit on the underlying assumptions.

Speaker #5: Hey, this is Stephanie Pizzola on for Travis. Thanks for taking the question, and congrats on a good quarter. Maybe I just wanted to start out by asking about the guidance you’d be raising for Q2 by almost $4 million.

<unk> revenue being higher than Q2, and the Q3.

New patients start to Q2.

Yeah sure. So theres a lot in there. The first first question you asked was about.

Speaker #5: By 6 million at the midpoint. So maybe just talk about some of the drivers of that increased outlook and the back half of the year and the confidence in those and then you gave some quarterly cadence commentary, which was helpful.

Why do we have confidence that our guidance for the rest of the year and we're raising guidance not just by the amount that we beat in Q2.

So my first statement I'll say is.

We have a high degree of confidence in every bit of guidance that we communicate so our revenue guidance for the remainder of 2025 is no different.

Speaker #5: But maybe if you could elaborate a little bit on the underlying assumptions of the Q3 revenue being higher than Q2 and the Q3 new patient starts similar to Q2.

As it relates to the queue.

Q3, new patient starts guidance and the revenue outlook for the rest of the year I think kind of embedded in your question there Stephanie as Youre asking okay. So why are you forecasting or why are you guiding to a flat new patient start number.

Speaker #4: Yeah, sure. So there's a lot in there. The first question you asked is about why do we have confidence in our guidance for the rest of the year and you know we're raising guidance not just by the amount that we beat in Q2, so my first statement I'll say is we have a high degree of confidence in every bit of guidance that we communicate.

Sean Saint: I also, by the way, which leads me to actually do your second question, nowhere in that proposal does it mention anything about Part D or insulin pumps, you know, notably patch pumps that are considered Part D treatment. It doesn't mention them at all in that proposal. So I would have no to believe that the proposal is insinuating anything about patch pumps or any Part D treatment insulin delivery device because frankly, they just don't mention it. I think we have two concepts here, and they overlap, but they're not the same thing, but they are related. The first is durable versus patch pumps, or durable versus disposables if you prefer.

We're also expecting revenue to grow and that the company has grown quarter over quarter. So I guess I would answer that.

I'll give three reasons for that the first one is.

Speaker #4: So, you know our venue guidance for the remainder of 2025 is no different. As it relates to the Q3 new patient starts guidance and the revenue outlook for the rest of the year, I think kind of embedded in your question there, Stephanie, is you're asking, "Okay, so why are you forecasting or why are you guiding to a flat new patient start number?"

And diabetes as Youre aware seasonally we tend to see Q1 being the weakest quarter relative to the other quarters throughout the year, and then Q4 being seasonally the best quarter.

Whereas Q2, and Q3 tend to be kind of flat or neutral relative to one another so there's nothing that we're noting about Q3 seasonality and our guidance.

Speaker #4: When you know we're also expecting revenue to grow and the company's grown quarter over quarter, so I guess I'll answer that when I'd give three reasons for that.

Is that Q2 was a very strong quarter, which is part of the reason why for the flat new patients start guidance in Q3, and then the last point. The third point is just a reiteration of what I said actually to start my answer here, which is that any anytime we do give guidance.

Sean Saint: We've all come to know and understand what that means. However, there's also the concept of a durable pump model, meaning an upfront payment, followed by a smaller supply payment, versus a pay-as-you-go model, traditionally applied to a disposable system. And that makes all sense in the world. So I think what I'm saying is, is that as durable pumps get paid more in a pay-as-you-go model, the specific distinction of a durable versus disposable device starts to not matter, because that's not really what they were getting at originally. Right? The reasons for these statements have evolved over time.

Speaker #4: The first one is in diabetes, as you're ware, seasonally, we tend to see Q1 being the weakest quarter relative to the other quarters throughout the year, and then Q4 being seasonally the best quarter.

We set it at a level that we have a high degree of confidence in our ability to achieve and that new patients starts number is no exception.

Speaker #4: Whereas Q2 and Q3 tend to be kind of flat or neutral relative to one another. So there's nothing that we're noting about Q3 seasonality in our guidance.

Thank you that's helpful. And then I guess I wanted to follow up on the.

CMS.

Proposal for cultural fit.

Speaker #4: The second is that Q2 was a very strong quarter. Which is part of the reason why you know for the flat new patient start guidance in Q3, and then the last point, the third point is just a reiteration of what I said actually to start my answer here, which is that anytime we do give guidance, we set it at a level that we have a higher degree of confidence in our ability to achieve.

And maybe if you could just talk about the next steps as part of the process.

I guess a bit.

Sean Saint: The pay-as-you-go model is the original definition of that, I believe. But so what does that mean? I don't know. We'll have to wait and see. Fair enough. Thank you. One moment for the next.

Laura.

In Thailand.

Ill take that.

The proposal.

Thank you, yes sure.

So yes. The next steps are CMS will receive comments from companies Jimmy distributors, particularly to the insulin pump industry, you'll see comments from companies like beta bionics as well as to <unk> distributors I think it's by the end of August as when those particular proposal early September I think is when those responses are due.

Speaker #4: And that new patient starts number is no exception.

Richard Newitter: question.

Speaker #5: Thank you. That's helpful. And then I just wanted to follow up on the CMS home health proposal for 2026. And maybe if you could just talk about some of the next steps as part of the process and I ess a bit more on the expected timing of how long it could take for some of the things in the proposal to be implemented.

Philippe Allen: And the next question will be coming from the line of Richard. Newitter, of course, your line is open. Hey, this is Philippe Allen for Rich. I guess just like off the last point, I was wondering if you can just help us better understand in terms of new starts, just your presence in pharmacies is a lot larger compared to some of your durable pump competitors. So I'm just wondering, like, is removing that upfront cost maybe a decision driver for new MDI patients thinking about starting on durable pumps? And then just one follow up. Yeah. Yeah, absolutely.

So that will happen and then CMS will put together.

Whether or not they choose to move forward with the proposal and <unk>.

Speaker #5: Thank you.

Implement if they do implement the competitive bidding process and then ultimately have make a ruling sometime in the future for win.

Speaker #4: Yeah, sure. So yeah, the xt steps are CMS will receive comments from companies, DME distributors. In particular to the insulin pump industry, they'll e comments from companies like Beta Bionics as well as to get DME distributors I think it's by the end of August is when those particular proposals or early September, I think, is when those responses are due.

The new policy would be enacted and our expectation is the earliest that would be as 2027.

Sean Saint: If you were to ask me a question, why are we seeing such a uptick in new patient starts? Why do we continue to exceed expectation or even our own expectations on new patient starts? I would give you two reasons. One is the islet is absolutely resonating for its highly differentiated, it's highly differentiated characteristics, meaning it's simple to use the clinical results are fantastic. And so as doctors try it, they get great results, and they prescribe more of it. So really simple. But the other dynamic is that absolutely the pharmacy The pharmacy.

Thank you.

And our next question will be coming from the line of.

Speaker #4: So that'll happen. And then CMS will put together whether or not they choose to move forward with the proposal and, you know, implement. If they do implement the competitive bidding process.

Michael Pollack of wealth excuse me Wolfe Research your line is open.

Hey, good afternoon. Thank you for taking the question.

I'm interested for a generic comment on kind of same store new store dynamics as you assess the.

Speaker #4: And then ultimately make a ruling sometime in the future for when the new policy would be enacted. Our expectation is the earliest that would be is 2027.

Sequential growth in starts to what how much would you attribute to.

Kind of increased penetration with existing prescribers versus the sign up of new prescribers.

Speaker #2: Thank you. And our next question will be coming from the line. Of Michael Pollock of Wealth, excuse me, Wolf Research, your line is open.

Yeah, Hey, Mike Good question Youre, not going to love my answer because I'm not going to answer it numerically, but we're actually seeing the dynamic of both happening. So we did.

Sean Saint: coverage, the availability of the pharmacy reimbursement model for patients makes it so dramatically easier for a patient to purchase the islet, either to switch from their other durable pump, by the way, because they're not locked into a four-year warranty period, or just simply because the out-of-pocket is so much less than it would be for the islet and DME, that it does create a tailwind for new patient starts, and that's a large driver of our new patient start success.

We did expand our field sales team relative to this time last year.

Speaker #6: Hey, good afternoon. Thank you taking the question. I'm ested for a generic comment on kind of same store and new store dynamics. As you assess the sequential growth in starts to what how much would you ribute to kind of increased penetration with existing prescribers versus the signup of new prescribers?

So that there is an element of new territories, where beta bionics is field sales presence was before this new expansion still had a lot of white space throughout the country.

Areas that.

Had no field sales presence at all so there is a new store dynamic as a result of that but we are seeing across the board and uptick in prescriber adoption within territories that we already do operate in and again we.

Speaker #4: Yeah. Hey, Mike. Good question. You're not going to love my answer because I'm not going to answer it numerically. But we're all seeing the dynamic of both happening.

Jeffrey Cohen: And then just on the gross margin guidance, you know, you're upping your pharmacy contribution. So I'm just wondering, like, what's what's the main driver of bringing a gross margin guidance higher with that headwind? Yeah, we continue to see benefit from a lower cost per unit with scale. And so we just we have a really strong sense of what's what our cost per unit is going to be for the remainder of the year and hence confidence in our ability to continue to increase it. Thanks. Thank you. And our next question will be coming from the line of Jeffrey Cohen of Lindenburg-Fowlman.

Speaker #4: So, we did expand our field sales team relative to this time last year. So, there is an element of new territories where, you know, Beta Bionics' field sales presence was before this new expansion still had a lot of white space throughout the country.

We do quantify these things, but theyre not kpis that we communicate externally.

But you're absolutely the message of islets simplicity is resonating.

<unk> are seeing.

Are seeing good results from their patients and becoming more comfortable prescribing the island and I think that's evidenced by our results. So the dynamic is actually both Mike, but I'm not going to quantify them for you.

Speaker #4: So like areas that had no field sales presence at all. So there is a new store dynamic as a result of that. But we are seeing a across the board an uptick in prescriber adoption within territories that we already do operate in.

Understood. Thank you if I can follow up I appreciate all the comments on the on the Medicare proposal.

I know the response to this one we'll probably lean squish, but to the extent this moves forward substantially.

Speaker #4: And you know in, we do quantify these things, but they're not KPIs that we communicate externally. But yeah, absolutely, the message of Islet's simplicity is resonating.

Jeffrey Cohen: Your line is open. Oh, hi, Sean and Stephen. Just one from our standpoint, you talked about the field sales reps and territory coverage. And when you think about the back half, could you kind of walk us through how you may expect the OPEX to look as it relates to Q3 and Q4 related relative to the first half? Yeah, sure. So with G&A expenses and sales and marketing expenses, you won't see a big uptick in OPEX the rest of this year in Q3 and Q4. With R&D, you may see an uptick in Q3 and Q4 associated with the MINT program as well as the bi-hormonal project.

As envisioned and I'm talking specifically about the shift to pay over time.

Speaker #4: HCPs are seeing good results from their patients and becoming more comfortable prescribing the Islet. And I think that's evidenced by our results. So the dynamic is actually both, Mike, but I'm not going quantify them for you.

To what extent would this Medicare fee for service standard create risk that the commercial or Medicare advantage contracts overtime head in this direction as well how do you how do you assess that.

Yes. Thank you yes good question.

Speaker #6: Understood. Thank you. If I can follow up, I appreciate all the ments. On the Medicare proposal, I know the response to this one will probably lean squish, but to the extent this moves forward substantially, as envisioned, and I'm talking specifically about the shift to pay over time, to at extent would this Medicare fee-for-service standard create risk that the commercial DME or Medicare Advantage contracts over time head in direction as well?

Okay nowhere in that proposal it doesn't mention any anything of that nature, and we don't see any associated risks from.

This particular proposal stemming into commercial plans or within into.

The pharmacy model.

I will just highlight that our pay as you go model like that's being proposed here in the CMS proposal, which is what this rental model is as Sean I think well.

Stephen Feider: So again, we'll start to get more and more leverage out of our sales and marketing costs, as well as the GNA costs, but there'll be some lumpiness to buy hormonal, or as a result to buy hormonal and the mint project. Okay, got it.

Speaker #6: How do you assess that in the past? Thank you.

<unk> outlined in the prepared remarks.

Speaker #4: Yeah, good question. Look, nowhere in that proposal it doesn't ion anything of that nature. And we don't see any associated risk from either this particular proposal stemming into commercial plans or within into the pharmacy model.

That's working quite well already in the pharmacy, and the pharmacy system, where beta bionics even.

Stephen Feider: As it looks over the next two to six quarters, would you expect R2D2 to be lumpy? Yes. Got it. Okay, that does it for us. Thanks. Nice readout for the quarter. Yeah, appreciate it. Thanks, Jeff. Thank you so much. There are no more questions in the queue, and that does conclude the presentation for today. Thank you all for joining. You may now disconnect.

All patch pumps are getting reimbursed through.

Well I guess in the case of patch pumps through Medicare part D coverage, which beta bionics are island is not but we're already seeing and managed Medicare.

Speaker #4: I will just highlight that a pay-as-you-go model like that's being proposed here in the CMS proposal, which is what this rental model is, as Sean, I think, well outlined in the prepared remarks, that's working quite well already in the pharmacy system, where Beta Bionics, even, you know, and all patch pumps are getting reimbursed through, well, I guess, in the case of patch pumps, their Medicare Part D coverage, which Beta Bionics or Islet is not. But we're already seeing in managed Medicare coverage from on the Islet through a pay-as-you-go model that exists in pharmacy.

Coverage on the island through our pay as you go model that exists in pharmacy, and so I think in the event that the CMS wanted to shift to a pay as you go model.

Into the into the pharmacy channel they would use an already existing infrastructure that's already in place today. So.

I guess, two twofold to that answer Mike.

I think I'd like to add to that one Steven.

It's very hard for us to assess the risk of that happening, but I think what we've done is insulate ourselves from it with our preexisting transfer to a pay as you go model proactively.

Speaker #4: And so I think, in the event that the CMS wanted to shift to a pay-as-you-go model in the pharmacy channel, they would use an already existing infrastructure that's in place today.

There are reasons that it makes a ton of sense and it makes lot of sense for us as well and again, we're already doing that proactively so can't speak so much to the risk of it but I will say that we're preparing ourselves properly for whatever happens.

Speaker #4: So, you know, I guess there's a twofold answer to that, Mike. I think I'd like to add to that one, Stephen. You know, it's very hard for us to assess the risk of that happening.

Understood I'll follow up thank you.

Thank you one moment.

And the next question will be coming from the line of David Roman of Goldman Sachs. Your line is open.

Speaker #4: But I ink you know what we've done is insulate ourselves from it with our pre-existing transfer to a pay-as-you-go model of proactively. There are reasons that it makes a ton of sense.

Hi, Good afternoon. This is Phil on for David Thanks for taking the questions.

I thought I'd start with the type two comments that you had there was Sean stronger contributor as a percentage of new patient starts with which with a much stronger new patient start number overall I was just hoping you could talk a bit more about the market dynamics going on there the success that youre, having albeit off label in.

Speaker #4: And it makes a lot of sense for us as well. And again, we're already doing that proactively. So can't speak so much to the risk of it, but I will say that we're preparing urselves properly for it if we're ever to appen.

Speaker #6: Understood. I follow. Thank you.

Speaker #4: Yep.

Speaker #2: Thank you. One moment. And the next question will be coming from the line. Of David Roman of Ole Miss Acts, your line is open.

While we kind of act as a trigger or what we need to hear for a bigger push towards type deal.

Speaker #7: Good afternoon. This is Phil on for David. Thanks for taking the estions. I thought I'd start with the type two comments that you ended with, Sean.

Yes, that's a great question Phil.

I think what I will say given the island, obviously is off label in that regard I'm going to make comments I'm going to keep my comments more general in terms of how physicians run their practices I think its a true statement that physicians are responsible for understanding the different tools, they have available to them and where they can best be used.

Speaker #7: Stronger contributor as a percentage of new patient starts with which with a much stronger new patient start number overall. I was just hoping you could talk a bit more about the market dynamics going on there, the success that you're having albeit off-label, and what would kind of act as a trigger or what we'd need to hear for a bigger push towards type two?

And what they do and with whom and prescribe them as they see fit and that's why the off label rules are as they as they are they have every right to do that.

Speaker #4: Yeah, it's a great question, Phil. I think what I'll, you know, given that Islet obviously is off-label in that regard, I'm going to make comments.

Sure.

I don't want to get into the specifics of islet, but I think that's clearly being taken into account in the prescribing patterns that we're seeing as the awareness of islet generally and other products becomes.

Speaker #4: I'm ing to keep my comments more general. In terms of how physicians run their practices. I think it's a true statement that physicians are responsible for understanding the different tools they have available to them and where they can best be used and what they do and with whom.

More broadly known.

So sorry for the slightly.

Vague answer but.

Yes. Thank you.

No.

Speaker #4: And prescribe them as they see fit. And that's y the off-label rules are as they as they are. They have every right to do that.

I think that's that's helpful. Thanks.

The second one's probably for Steven.

It's a different way the guidance question.

Appreciate that pharmacy mix in a given quarter will matter to this question, but given the growing proportion of recurring revenue that's come again.

Speaker #4: You know I don't want to get into the specifics of Islet, but I think that that's clearly being taken into account in the prescribing patterns that we're eing.

Speaker #4: As the awareness of Islet, generally, and of other products becomes, you know, more broadly known. So sorry for the slightly vague answer, but yeah.

It is going to be the case in this revenue ramp periods that.

If you see sequential increase in peso and patients there should be even more so a sequential ramp in revenue.

Speaker #4: Type two, so.

Speaker #7: No, no, I think that's helpful. anks. The second one's probably for Stephen. It's a way the guidance question and appreciate that pharmacy mix in a given quarter.

To accompany that right because you have the pump revenue as a supplement to a growing base of recurring revenue I guess said differently do you have better visibility moving forward into the guidance assumptions youre, giving because of the relative scale of the recurring versus onetime only revenue overtime here, yes, great question both answers.

Speaker #7: Will matter to this question. But given the growing proportion of recurring revenue that's coming in, it is going to be the case in this revenue ramp period that if you see sequential increase in patients, there should be even more so a sequential ramp in revenue.

Yes.

Yes.

We see we see upticks in our revenue if we had flat new patient starts quarter over quarter, because we have this powerful installed base that.

That's generating recurring revenue in the pharmacy channel.

Speaker #7: To accompany that, right? Because you have the pump revenue as a supplement to a growing base of recurring revenue. I guess said differently, do you have better visibility moving forward into the guidance assumptions you're giving because of the relative scale of the recurring versus one-time-only revenue over time here?

And yes, our business is more predictable if a higher percentage of our revenue is coming from pharmacy, because that's a recurring revenue stream.

Okay great.

One clarifying one the pay as you go model just from a timing standpoint could go into effect in 2006, while they comment on the.

Speaker #4: Yeah, great question. Both answers are yes. Yes, we see we see upticks in our revenue if we had flat new patient starts quarter over quarter because we have this powerful install base.

Competitive bidding process not going into place was was 27%.

No actually we would imagine that those the competitive bidding process.

And up dictating the rental or would that would end up being pre rack for the rental model going into place and so my comment on when we expect that 2027 being the earliest we would expect us to go into adoption. It means the policy in its totality competitive bidding, which then leads to a rental model and then that actually start selling through that rental model.

Speaker #4: That's generating recurring revenue in the pharmacy channel. And yes, our business is more predictable if a higher percentage of our revenue is coming from pharmacy because that's a recurring revenue stream.

Speaker #7: Okay, great. Just one clarifying point: the pay-as-you-go model, from a timing standpoint, could go into effect in 2026, while their comments on the competitive bidding process indicate that it may not go into place.

In 2027 at the earliest.

Okay understood.

Speaker #7: Was '27, right?

That's very speculative, but that's that's what we think.

Speaker #4: No, actually. We would imagine that the competitive bidding process would end up dictating the rental model, or that would end up being a prerequisite for the rental model going into place.

Okay, Alright thats helpful. Thank you.

Thank you and our next question will come from the line of Frank to Chicken.

Speaker #4: And so my comment on when we expect a 2027 being the earliest we would expect this to go into adoption, it means the policy in its totality.

Lake Street. Your line is now open.

Great. Thanks, taking my questions. Congrats on the great quarter, and the increased guidance I wanted to start with one more on type twos and I appreciate the sensitivities given its off label, but with.

Speaker #4: Competitive bidding, which then leads to a rental model, and then that actually starts selling through that rental model in 2027 at the earliest.

With how good that number has been trending I was hoping you could help us understand a little bit more maybe where that strength is coming from is that the primary care channel is that.

Speaker #7: Okay. Understood. So excuse me.

Speaker #4: That's very speculative, but that's what think.

Speaker #7: Okay. All right. That's helpful. Thank ou.

Patient group, using the pharmacy benefit channel more or anything else.

Speaker #2: Thank you. And our next question will come from the line of Frank the Chicken. Of Lake Street, your line is open.

Specific to call out that has increased the use in that channel.

Oh, yes, okay, So hey, Frank.

Speaker #8: Great. Thanks for taking the questions. Congrats on the great quarter and the increased guidance. I wanted to start with one more on type twos, and I appreciate the sensitivities given it's off-label, but with how good that number's been trending, I was hoping ou could help us understand a ittle bit more of maybe where that strength is coming from.

We have to be a little careful here as we don't have a type two indication. So I don't want to sound like we're promoting the island for type two use and I would just reiterate what John said about.

Doctors have the ability to prescribe what they want so I'm not going to I'm not going to answer to your question to thoroughly but yes, absolutely. The island is when it is being adopted for type two patients that's happening in both the primary care channel as well as the Endo channel similar to how the island is frankly today.

Speaker #8: Is that the primary care channel? Is that patient group using the pharmacy benefit channel more? Or anything else specific to call out that has increased the use in that channel?

Okay Thats helpful. Understood and then just secondly, maybe an update on sales force hiring appreciate the color and update you guys provided today, but maybe talk about kind of sales force hiring expectations.

Speaker #4: Oh, yeah. Okay. So, hey Frank. We have to be a little careful here as we don't have a Type 2 indication. So I don't want to sound like we're promoting the Islet for Type 2 use, and I would just reiterate what Sean said about, you know, doctors have the ability to prescribe what they want.

So we we started the year with 43 sales territories. We ended the year with 60, we ended the first quarter with 63 sales territories and we still ended this quarter was 63, two sales territories youre not going to see a massive uptick in our territory expansion for the remainder of the year, we will likely expand again in early next year.

Speaker #4: So, I’m not going to answer our question too thoroughly, but yes, absolutely, the Islet is when it is being adopted for type 2 patients. It’s happening in both the primary care channel as well as the endo channel, similar to how the Islet is, frankly, today.

Okay perfect. Thanks for taking questions, yes, thanks, Frank good questions.

Thank you and our next question will come from the line of Jeff Johnson of Baird. Your line is open.

Thank you. Good afternoon, guys I think she said, Jeff I hope you're hearing me okay.

Alright, Great Hey, guys Hey.

Just maybe one clarifying question you talk about maybe that pharmacy channel mix not increasing at the same rate in the back half of the year as we saw in the first half of the year.

Part of that due just to the strong uptake you saw through the prime contracts.

It started in February as you have expanded.

Excess through additional payers here why is the prime contract different maybe than some of those other payers or said another way if you're pushing as many of your patients who do have pharmacy coverage into the pharmacy channel why can't that rate of question in kind of that rate of adoption continue to move in the same sequential kind of pattern. Thanks, yes.

Really good question, Okay. So the prime the prime deal is quite different than what we've seen with other <unk> contracts and that win win.

When we saw let me actually I'm going to back up one second.

To gain pharmacy coverage and the way that we defined coverage as new patient starts going through the pharmacy channel. There's two really important steps that have to happen in order for us to obtain that coverage. The first one is we need the <unk> agreement and then the second is we need the underlying health plans that partner with that TBM in the case of prime.

Both step one and two happened at the same time.

In the case of the other PVM agreements and notably the one that Sean brought up on the call on in his prepared remarks that will go into effect. The large PV have agreement that goes into effect on July one that is not the case, we step one happened, but the underlying agreements with the health plans are separate sales cycle that we need to go in and then add future.

<unk> now for the other <unk> contracts that we have that are already in place and have been historically, we continue to tick off underlying health plans that are a part of that step two which is part of the reason you see the sequential uptick that we've had historically and pharmacy adoption is not just because of the prime deal that we had in the first half of the year, but also the other pbms.

We continue to layer on more and more underlying health plans.

Alright, that's helpful that explains it and then just one other question I guess on the competitive bidding and the pay as you go model.

One of your competitors out there is talking about potentially as a tube pump getting in Medicare part D.

You guys, obviously on the pharmacy channel are kind of taking a monthly on the pbms side.

What would it take is there any possible way to get into part D. As opposed to part D and does your read of the documents of the CMS documents suggest that part D will not be subject to competitive bidding that was all read but.

I think theres a couple of varied opinions on some of the wording in that document. Thank you.

Yes.

So what would it take I, we've always said that the longest train or the big trained to turn in order for durable insulin pumps to start becoming reimbursed primarily through the pharmacy channel.

Medicare part D treatment, which today durable pump for those that aren't aware.

The eyelet and durable insulin pumps are considered part D coverage.

Jeff frankly, I don't really want.

To predict when that trend turns and.

We start seeing durable insulin pumps.

Be considered part D treatment I don't really want to predict I think this does maybe start.

Start the discussion and maybe move it faster than would otherwise had been because it's clear that CMS is interested in a pay as you go model, which is what the pharmacy channel really enables but I still do think that there is nothing and so but I don't really want to give a timeline to predict when that happens I also by the way, which leads me to actually to your second question.

Nowhere in that proposal doesn't mention anything about.

Part D R R.

So on pumps, notably patch pumps that are considered part D treatment.

It doesn't mentioned them at all in that proposal. So I would have no reason to believe that the proposal is insinuating anything about.

About patch.

Patch pumps or any part D treatment insulin delivery device, because frankly, it as Don mentioned at all.

Understood at a higher level conversation comments on that Jeff.

I think we have two concepts here and they overlap, but they're not the same thing.

Our related the first is durable versus patch pumps are durable versus disposables, if you prefer.

We've all come to know and understand what that means. However, there is also the concept of a durable pump model, meaning an upfront payment followed by a smaller supply payment versus the pay as you go model traditionally applied to a disposal system and that makes all sense in the world.

So I think what I'm, saying is is that as a durable pumps get paid more on a pay as you go model the specific distinction of a durable versus disposal device startup not matter because that's not really what they were getting out originally right. These are the reasons for these statements have evolved over time.

The pay as you go model was the original definition of that I believe but.

So what does that mean I don't know, we'll have to wait and see.

Fair enough. Thank you.

Thank you one moment for the next.

Question and the next question.

We will be coming from the line of Richard.

New water of choice your line is open.

Hey, this is philippe on for rich.

Yes, just like.

The last point I was wondering if you can just help us better understand.

Terms of new starts.

<unk> pharmacy is a lot larger compared to some of your durable pump competitors. So I'm just wondering like is removing that upfront cost maybe a decision driver for new MDI patients thinking about turning on their own pumps and then just one follow up yes.

Yes, absolutely. If you were to ask me a question why are we seeing such a uptick in new patient starts why.

Why do we continue to exceed expectations or even our own expectations on new patient starts.

I would give you two reasons one is the island is absolutely resonating for it's highly differentiated it's highly differentiated characteristics, meaning it's simple to use the clinical results are fantastic and so as doctors try it they get great results and they prescribed more of it so really simple.

But the other dynamic is that absolutely the pharmacy.

The.

Pharmacy.

Sure.

Coverage.

The availability of the pharmacy reimbursement model for patients makes it so dramatically easier for a patient to purchase the eyelet either to switch from their other durable pump by the way because they are not locked into a four year warranty period or just simply because of the out of pocket is so much less than it would be for the island and <unk> that it does create a tailwind.

For.

New patient starts and that's a large driver of our new patient starts success.

And then just on the gross margin guidance.

Your pharmacy contribution so I'm just wondering what's the main driver of bringing the gross margin guidance higher.

And yes, we continue to see benefit from a lower cost per unit with scale and so we just we have a really strong sense of whats what our cost per unit is going to be for the remainder of the year enhanced confidence in our ability to continue to increase it.

Thanks.

Thank you and our next question will be coming from the line of Jeffrey Cohen.

Ladenburg Thalmann your line is open.

Hi, Sean just one from our standpoint, we just talked about.

Charles Robertson territory coverage and when you think about the back half could you kind of walk us through how you might expect.

The opex to look as it relates to Q3 and Q4 related relative to the first half yes sure.

So with G&A expenses in sales and marketing expenses, you won't see a big uptick in Opex for the rest of this year and.

Q2, or Q3 and Q4.

With R&D.

You may see an uptick in Q3 and Q4 associated with the program as well as the by hormonal project.

So again, we'll get we'll start to get more and more leverage out of our sales and marketing costs as well as the G&A costs, but there'll be some lumpiness to buy hormonal or as a result, the by hormonal and the main projects.

Okay got it is it works over there.

Two to six quarters with respect to Argentina to be lumpy.

Yes.

Got it okay that goes across exploration write offs for the quarter I appreciate it thanks, Jeff.

Thank you so much there are no more questions in the queue and that does conclude the presentation for today. Thank you all for joining you may now disconnect.