Beta Bionics, Inc. Common Stock 2026 Q3 Earnings Call

Please go ahead, sir. Good afternoon, and thank you for joining Beta Bionics third quarter 2026 earnings call.

With me on today's call are Chief Executive Officer, Sean Saint, and Chief Financial Officer, Stephen Feider. Both the replay of this call and the press release discussing our third quarter 2026 results will be available on the investor relations section of our website. Information recorded on this call speaks only as of today, October 27, 2026. If you are listening to a replay of this call, any time-sensitive information may no longer be accurate. Also on our website is our supplemental third quarter 2026 earnings presentation and updated corporate presentation. 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.

These statements reflect management's expectations about future events, our product pipeline, development timelines, financial performance and operating plans, and speak only as of today's date. Please refer to the cautionary statements in the press release we issued earlier 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 forward-looking statements. We undertake no obligation to update them to reflect subsequent events or circumstances except to the extent required by law. With that, I'd now like to hand the call over to Sean.

Thanks, Blake, and thanks everyone for joining. Q3 is usually a somewhat boring quarter in diabetes, with summer vacations and a lull of news after ADA. Today, we're going to do our best to spice it up a little bit with some great updates. Let's dive in. In September, we received FDA clearance for Mint, our transformative patch pump, which we expect to fully commercialize in the U.S. in Q1 of 2027. I feel this will ultimately prove to be the largest milestone achieved by the company to this point, and what an incredible effort it has been from the team to get that product designed, developed, and cleared by the FDA in a matter of about three years, which we believe is the fastest ever timeline from concept to clearance for an automated insulin delivery or AID patch pump.

We believe that Mint will be a game changer for people with diabetes. Starting in Q1 of next year, the only fully adaptive and most advanced insulin dosing algorithm in the U.S. can power the smallest AID patch in the U.S., a patch pump that never requires recharging, integrates with industry-leading continuous glucose monitors, and can be controlled by iOS and Android smartphones. We designed Mint around the user experience, and the feedback we've gathered across our development program keeps reinforcing that. One recent example is from a survey of 30 active users of a competitive patch pump. All 30 rated Mint insertion as less painful. Delivering life-changing solutions that simplify and alleviate the burden of managing diabetes is critical. We strongly believe that Mint will deliver on that promise. In September, we completed a public offering, raising approximately $161 million in net proceeds.

This capital strengthens our balance sheet and provides flexibility to support the commercialization of Mint, invest in our operations, and pursue future growth opportunities. Moving now to a brief overview of our Q3 performance. We delivered a record quarter of $35.5 million in net sales, which grew approximately 30% year-over-year. Q3 revenue growth was driven by growth in new patient starts and our growing installed base of users in the pharmacy channel, who we continue to retain at a high level. The percentage of new patient starts that were reimbursed through the pharmacy channel was in the high 30s. Our gross margin was over 57%, expanding 179 basis points year-over-year. Later, I'll give more detail around our new algorithm, 3D Intelligence, and other projects in our innovation pipeline.

First, I'll hand the call over to Stephen to provide some additional detail on our third quarter performance and our updated full year 2026 guidance.

Stephen? Thanks, Sean. Our revenue performance was mainly driven by new patient starts and the recurring revenue generated from our growing pharmacy install base.

New patient starts increased a mid-single digit percentage compared to the prior quarter, consistent with our expectations. We continued to expand the insulin pump market as approximately 69% of our new patient starts came from people utilizing multiple daily injections prior to starting on iLet. A high 30s percentage of our new patients access iLet through the pharmacy channel, consistent with our expectations. Moving on to gross margin. Q3 gross margin was 57.3%, down 178 basis points quarter-over-quarter, and up 179 basis points year-over-year. Gross margin was below our expectations, primarily reflecting a lower contribution from higher margin DME iLet revenue due to distributor stocking dynamics.

DME iLet sales, a high margin revenue source, declined quarter-over-quarter, even as DME new patient starts increased. Distributors supplied more iLets to patients than they purchased from Beta Bionics, which means the DME distributors ended Q3 with lower iLet inventory than at the end of Q2. This reflects normal variability in distributor ordering rather than weaker patient demand. At the same time, increased distributor stocking of lower margin DME supplies, meaning infusion sets and cartridges, largely offset the revenue impact from DME iLets, but created an unfavorable mix for gross margin. We expect revenue mix to normalize in Q4 and are maintaining our full year gross margin guidance. Meanwhile, continued growth and strong retention of our pharmacy installed base support a growing stream of high-margin recurring supply revenue. Total operating expenses in the third quarter were $46.9 million, an increase of 46% year-over-year.

The increase in sales and marketing expense compared to the prior year is driven by expansion of our field sales organization and marketing investments. The increase in R&D expenses relative to the prior year is driven predominantly by the Mint and bi-hormonal projects. The increase in G&A expenses relative to the prior year is driven by continued efforts to scale the company in support of commercial growth and pipeline initiatives. As of September 30, 2026, we had approximately $374 million in cash equivalents, and short and long-term investments. The capital raise was primarily intended to fund CapEx for Mint manufacturing and strengthen our balance sheet. We will continue to spend with discipline and expect to achieve positive free cash flow well ahead of historical diabetes peers. I would now like to discuss our updated full year 2026 guidance.

We are increasing the lower end of our revenue guidance and now expect to generate total revenue of $124 million to $126 million, up from our prior guidance of $121 million to $126 million. The updated guidance reflects our expectation to generate $29 million to $31 million of revenue in the fourth quarter. Our previous guidance reflected a potential revenue deferral impact of up to $10 million in the fourth quarter as new prospective iLet users could choose to await the launch of Mint. While we are seeing some evidence of this occurring in the fourth quarter, it is not happening at the rate that we initially expected when Mint received clearance, and we now expect a potential revenue deferral impact of up to $8.5 million in the fourth quarter.

On the percentage of new patient starts reimbursed through the pharmacy channel, we are reiterating our expectation of 37%-39% for the full year. On gross margin, we are reiterating our full-year outlook of 58.5%-59.5%. This outlook reflects our expectation that the unfavorable revenue mix in Q3 will reverse in Q4, along with continued strong retention of our pharmacy installed base and the high margin recurring supply revenue it generates. We expect a modest increase in operating expenses in the fourth quarter compared to the prior quarter, driven primarily by higher R&D expenses supporting our fully closed loop pivotal study, which Sean Saint will describe in more detail momentarily. We expect fourth quarter CapEx in the low to mid-single digit millions as we expand Mint manufacturing ahead of the full U.S. launch in Q1 2027. Sean, back to you. Thanks, Stephen.