Beta Bionics, Inc. (BBNX) Earnings Call Transcript & Summary

Thank you. Good afternoon and welcome to the Beta Bionic second quarter 2026 earnings conference call. At this time all participants are in listen only mode. After the speaker's presentation there will be a question and answer session and instructions will follow at that time. As a reminder please be advised that today's conference will be recorded on like the hand.

conference over to Blake Deaver, head of investor relations. Good afternoon, and thank you for joining Beta Bionics' second 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 second quarter 2026 results will be available on the investor relations of our website. Information recorded on this call speaks only as of today, July 29, 2026. Therefore, if you are listening to a replay, any time sensitive information may no longer be accurate. Also on our website is our supplemental second quarter 2026 earnings presentation and uploaded corporate presentation. We encourage you to refer to those documents for a summary of key metrics and business updates. Before we begin, we would 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. 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. Please note that the forward-looking statements made during this call speak only as of today's 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. Good afternoon, everyone, and thank you for joining. Getting down to business, today we're going to cover our financial results for the second quarter, updated guidance for the full year of 2026, and some recent developments in our innovation pipeline. Starting with a brief overview of our Q2 performance, we delivered $32 million in net sales, which grew approximately 38% year over year. The U2 revenue growth was driven predominantly by growth in new patient starts, as well as our growing installed base of users who continued to access their monthly supplies for the islet through the pharmacy channel and who we continue to retain at a high level. The percentage of new patient starts that were reimbursed through the pharmacy channel was a high 30s percentage, similar to the prior quarter. Our gross margin was 59%, expanding 524 basis points year over year. Before I hand the call to Steven, I want to highlight a very important update for Q2. We published our real-world data on our company website, and it's publicly available for all to see. This data is refreshed continuously and openly in near real-time, without filters or fine print. If an islet user has a provider reported baseline A1C and at least two weeks of data uploaded to our cloud, they are represented on that dashboard. No exclusions applied. Too often in our industry, it has become the norm to publish real world data that doesn't show the whole picture. Selective populations, optimized settings, no baseline comparators, short time periods, strict exclusion criteria. These are all ways that real world data in our industry has become disconnected from the real world experience and unrepresentative of population health statistics. I don't want that point to be missed. Any data set can be sub-segmented to show how well a system worked in a narrow set of users, and then marketed as what that system is capable of. However, Beta Bionics believes that all people with diabetes deserve great clinical outcomes with minimal work required. So we're setting a new standard in data transparency. The data you see isn't what our system is capable of in a narrow set of users. The data you see is what our system, in fact, does across our broad population. We believe that this is the right way to share real-world data because we're making it easier for healthcare providers, people with diabetes, payers, investors, and anyone else who's interested, to evaluate our outcomes with confidence. We have received very positive feedback on the dashboard and we view that feedback as a reflection of the positive experience that the islet is delivering on the market today. With that, I'll hand the call over to Stephen to provide some additional detail on our second quarter performance and our 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 more than 10%, but less than 20% 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 islet. A high 30s percentage of our new patient starts in Q2 accessed islet through the pharmacy channel, consistent with our expectations, and we continue to retain our pharmacy install base at a high level. Moving on to gross margin, Q2 gross margin was 59.0%, declining 45 basis points relative to the prior quarter and increasing 524 basis points relative to Q2 2025. Our gross margin exceeded our expectations, primarily driven by the high margin recurring revenue generated from our financial support. pharmacy installed base and a lower than expected warranty rate. Importantly, Q2 did not benefit from the kind of one-time tailwind that benefited Q1, so we view 59% as a clean read on our underlying gross margin profile and a solid base for continued expansion. Total operating expenses in the second quarter were $44.5 million, an increase of 37% year-over-year. The increase in sales and marketing expense compared to both the prior quarter and the prior year was driven by the continued expansion of our field sales organization. and increase marketing investments. In Q2, we achieved our previously stated goal of expanding by at least 20 sales territories in 2026. We expect these new sales territories to contribute more meaningfully to new patient starts in the second half of the year. On R&D expenses, the increase relative to the prior year is driven by the mint and bi-hormonal projects. 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 June 30th, 2026, we have approximately $225 million in cash, cash equivalents in short and long-term investments. We believe we are sufficiently capitalized to fund all of our key initiatives and remain well positioned to generate free cash flow well ahead of historical diabetes peers. I'd now like to discuss our updated full year 2026 guidance. We are reiterating our guidance for total revenue of $131 million to $136 million, as well as our expectation that 37 to 39% of our new patient starts will be reimbursed through the pharmacy channel. On gross margin, we are raising our full-year outlook to 58.5 to 59.5%, up from our prior guidance of 57.5 to 59.5%. This updated outlook reflects our strong first half performance, the underlying gross margin profile I discussed earlier, and our expectation for continued contributions from our pharmacy install base, along with the increasing manufacturing scale throughout the year. As we set our guidance, we also considered the benefit from one-time tailwinds in Q1, while recognizing that neither Q1 nor Q2 were impacted by meaningful one-time headwinds. Although we do not currently expect any notable headwinds in the second half of the year, we believe it is prudent for our outlook to reflect a variety of potential outcomes. To briefly comment on operating expenses, we expect a modest increase in operating expenses in the second half of the year relative to the first half, driven primarily by higher sales and R&D expenses. The sales expense increase reflects the impact of the sales territories we added during the first half of 2026, which will carry their full cost in the second half of 2026. We do not expect to further expand our field sales organization during the second half of the year.

Sean, back to you. Thanks, Stephen. To wrap up the call, I'll briefly touch on our remediation efforts regarding the FDA warning letter we received in late January, and then highlight some key updates in our innovation pipeline. Regarding the warning letter, the company has made considerable progress in remediating the systems that we believe were central to the agency's concerns. As we have previously stated, the two major focus points of the warning letter, the complaints handling system, primarily our definition of reportable complaints, as our post-market surveillance systems are both heavily revised and we believe will meet the agency's expectations. Now, turning to our pipeline, starting with MINT, our patch pump in development. We recently updated our expected timeline to achieve full commercial launch by the end of the second quarter of 2027, subject to regulatory clearance by the FDA. This reflects the FDA's initial feedback on our MINT ACE Pump 510K submission, as well as the significant progress we've made in minitaping. manufacturing readiness. We recently retired our manual manufacturing line, out a new cleanroom and now have our semi-automated production line operating in that cleanroom. This marks an important milestone in preparing for commercial scale. As our launch plan is built around these semi-automated lines, we believe we're well positioned to support anticipated demand at full launch and as adoption grows over time. We remain confident in our path to FDA clearance and in our ability to manufacture mint at scale. We believe mint has the potential to redefine the patch pump category and become the leading automated insulin delivery platform in the market. And we're excited by the progress we're making towards bringing it to people living with diabetes. Additionally, we're excited to really begin having a more in-depth discussion as to what constitutes a good patch pump, or in other words, what users want in a patch pump. We think it's impossible to have this conversation with only one product on the market. It's only when two or more products exist that true comparisons can begin to happen. We're excited for Mint's potential to thrive in that conversation, in our confidence in the architectural decisions that we've made, including the two-part design and importantly, the steel cannula. For our bi-hormonal system in development, in Q1, we initiated a Phase IIa feasibility trial to stress test and iterate the system. During that trial, we identified two key opportunities to improve the system, one focusing on the glucagon assets excipient profile and the other focusing on the dosing algorithms. Beta Bionics is in a unique position here. We're defining what bi-hormonal glucose management is all about. Is it about greater time and range or complete freedom from hypoglycemia or somewhere in between? It's this conversation that we are exploring, which is our responsibility as the developers of the fundamental technology. We expect these iterations to take less than one year prior to initiating additional Phase IIa trials. We continue to believe the biohormonal system has the potential to be a transformative innovation for people with diabetes, which is why our commitment to the program has never been stronger. Lastly, on our innovation pipeline, I want to cover two opportunities where the island is already being used today by providers and patients, albeit off-label. The first opportunity is in type 2 diabetes, where we estimate that greater than 30% of our new patient starts in Q2 were type 2. We recently gained alignment with the FDA in a pivotal trial design that may enable us to achieve the same results as the previous trial. INDICATION EXPANSION FOR THE ISLET TO INCLUDE ADULTS WITH TYPE 2 DIABETES. The PIPINAL trial is being conducted on real-world islet users with type 2 diabetes, and we initiated enrollment in July. We ultimately expect to expand ILADS indications for use to include adults with type 2 diabetes in the U.S. around mid-year 2027, subject to regulatory clearance by the FDA. The second opportunity I want to highlight is pursuing a fully closed loop indication. I've discussed in the past that a meaningful proportion of islet users choose to operate the device off-label in a fully closed loop manner, meaning they announce less than one meal per day on average. We've highlighted the clinical outcomes associated with the use of the islet in a fully closed loop manner and those are available in our most recent corporate presentation on the investor relations site. In the coming quarters, we intend to initiate a fully closed-loop pivotal trial in type 1 and type 2 diabetes and pursue the indication formally with the FDA. However, we are not committing to a specific timeline for commercialization at this time. I want to leave you all with one key message from today's call. We believe we're building the foundation for a category-leading diabetes technology company. Our commercial business continues to gain momentum. The islet is resonating with customers and delivering outstanding clinical outcomes. Our pharmacy strategy is working. And with our expanded field organization, we expect to continue increasing awareness and adoption. Looking ahead, the opportunity becomes even more compelling. We expect mint to launch in less than a year, pairing a differentiated patch pump with what we believe is the most advanced insulin dosing algorithm available. Around mid-year 27, we expect to expand the algorithm's indication for use to adults with type two diabetes, And beyond that, we plan to raise the bar with our bi-hormonal system. We believe the years ahead represent the most exciting chapter in beta bionics history, and the team is committed to bringing these life-changing solutions to people with diabetes. I want to close today with a heartfelt thank you to our team. As you've seen in today's call, we have a lot of initiatives going on as a company. We believe we have a category-leading product pipeline with a fraction of the resources. Said another way, we believe we're doing more with less, and that is all about our team. I just want to remind each of them that I appreciate it. as does the broader community of people with diabetes. You guys rock. With that, I'd like to thank you all for joining today's call, which will now open for Q&A.

Thank you. At this time, we'll collect the questions and answer the session. As a reminder to answer the question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. In our first question, customer line of Richard Newitter of True Securities, your line is now open.

Hey, it's Felipe on for RISC. Just starting with the live portal data, I mean, that's a huge feat. You're maybe the first one to actually put live patient data up online for providers to see, I guess, like, what are you doing to make sure that RISC-CoV-2 is actually being.

prescribing physicians are seeing that data and then just one follow-up? Yes, great question, Felipe. We are absolutely telling the healthcare provider community about this. They've always been able to see their own clinics in our healthcare provider portal, so they've had access to this for a while. But in this new portal on the website, you can see the entirety of our user base. But absolutely we're showing them that with our field sales team, but it's absolutely as much about users and others being able to come and take a look at that data there, you know, people who don't have access to our healthcare provider portal. So I'd actually say it's primarily for different audiences.

Great. And then, you know, on mint, you know, some of your competitors have nitpicked the steel cannula. I guess, can you remind us, like, what percent of patients on durable pumps, or if you have an idea of what percent of patients on durable pumps are using steel cannulas versus maybe soft cannulas and why that maybe isn't really a problem for a pass pump?.

Thanks for taking the questions. Yes, that's a good question. I do have an idea of what that mix is with durable pumps. For beta bionics, that mix, and I'm not going to give specifics, but I will say for beta bionics, that mix is quite a bit more heavy toward the steel cannula side of things. we believe in the durability of those systems. We believe in the comfort of those systems. And I think if you go back and look at the evolution into, quote, soft cannulas, they weren't about comfort. I think there's an underlying expectation. expectation that steel must be more, you know, more uncomfortable. But the reality is that a steel cannula is a much smaller system. It's a much smaller diameter system. And in our case, we're looking at the size of an insulin needle, right? Like a traditional insulin pen needle. So what I would encourage you to do is look at somebody taking an injection with an insulin pen and look at the reaction versus a person inserting a quote soft cannula of any description, whether it be an infusion set or one of the patch pumps that may be available, and then tell me what the reaction was. So there's a lot of things that go into these decisions, but we are firmly convinced that our system is going to be an advantage system from user experience. I want to be real careful here because I don't want to make any claims, but that being said, we have all the beliefs in the world of it. And we look forward to being able to talk in more detail about that. And as I said on the prepared remarks, having that head to head comparison, right? Right now, people are criticizing this decision of ours. But what we look forward to is a day when somebody has tried the competition, tried us, and then we just ask them, which one did you prefer? And we know where the answer lies, because, you know, newsflash, we've used both.

Moving on to our next question. Our next question comes from the line of Matthew O'Brien of Pepper Sandler. Your line is now open.

Good afternoon. Thanks for taking the questions. Just for starters, Sean, maybe just on the, Sean or Steven, on the pharmacy side of things here in Q2, I know the new patient start numbers were good through the pharmacy, but the supplies number was a little bit lighter than expected. Can you talk about that dynamic and WHAT I'M REALLY TRYING TO GET AT IS DURING THE BACK HALF OF THE YEAR, SHOULD WE EXPECT MORE OF THE THE REVENUE COMING FROM DME, YOU KNOW, FOR THE FULL YEAR GUIDE AND THEN MAYBE STARTING TO FLIP MORE AGGRESSIVELY TOWARDS THE SUPPLY SIDE AS WE HEAD INTO 27 AND THEN I DO HAVE A FOLLOW-UP.

This is Steven. Hey Matt. The softness that you're seeing in pharmacy supply revenue in the second quarter is driven by what I call a stocking dynamic from our pharmacy customers. And what I mean by this is that our pharmacy customers ended the second quarter with less pharmacy supply. inventory on their shelf than they did at the end of Q1. So the patient demand for pharmacy supplies was consistent with our expectation. The retention on the product is still strong. The new patient starts going through that channel, we're in line with our expectations. But the actual revenue can be pretty dramatically impacted based on ordering patterns from the pharmacy customers. And that's what drove that dynamic. So nothing notable about the actual business and performance from patients.

Okay. Appreciate that. And then, Sean, you know, one of your competitors that's coming into the patch market has kind of put a bogey out there of being able to supply about 10,000 patients when they launch. Is that a guidepost we can use for beta, or do you think we should, you know, anchor to something less than that or even more than that? Thank you.

Yes, I'm not going to comment at this time on our actual expectations or specifics to our supply or expected supply. Yes, sorry, it's just something we haven't commented on as of yet. What we can reiterate that we've said in the past is we have our own expectations by the end of Q2 27 for mint in terms of what demand will be. we are anticipating the ability to be able to fulfill that level of demand. So embedded in our full commercial launch guidance is, again, our expectation of demand and feeling confident that we will be able to fill that. Now, in the event that demand massively exceeds our expectations, then we could be wrong. You know, the commercial launch that we're describing is not, you know, slowly dripping this product into the market. It's at that time, it's the full launch.

Understood. Thank you. Thank you. One moment for our next question. Our next question comes from Patrick Wood of UBS. Your line is now open.

Beautiful. Thanks so much for the questions, guys. I'll keep it to one. You always get all this clinical data and see a ton of it. And I'm sure people appreciate you putting it out there. I'm curious, particularly for the type 2 patients, have you been surprised by anything in relation to how they've been using iALERT, whether it's you units or having more patients who are not exactly basal, but let's say higher up the acuity curve rather than somebody using a huge amount of units further down. Is there anything you could learn from the data in that type two cohort that surprised you at all in terms of how patients are using it? I hope the question is clear.

Let me clarify, in terms of how they're using it, are you referring primarily to meal announcements, which of course for us is essentially the only interaction that you have, but you did refer to units. I'm not sure if you mean units per day. Yes, can you clarify, please? Yes, just total amounts of units used. You can kind of infer, I guess, obviously type tubing essentially appropriate. aggressive condition, how far down the curve they are. Does that make any sense? Oh, yes. So I think what you're trying to get at is, you know, there's, I think, an expectation of type 2 that the farther down the curve you are, the more insulin you use. You're probably trying to get an idea of whether or not we're getting the early stage or late stage type 2. You got it. Got it. You know, it's a great question, and I don't have off the top of my head average units per day in our Type 2 population. But what I can say is that, you know, the islet has – we've made a number of design architecture decisions on the product, one of which is our cartridge, which is about 180 units. you know, that decision has been acceptable to our user base, of course. So that means sort of one of two things. One, the the average units per day is comparatively low or it means that despite the heavier usage that you're traditionally you know you're used to in seeing our cartridge change procedure is quite acceptable in that group So but with all that being said I you know, I have an idea of it and it's it's not insane I mean, yes, I don't want to comment specifically I'm not sure it's, I find it more interesting to talk about our meal announcement, um, behavior on on islet users than I do total daily dose.

Totally. Okay. Thanks for the question, guys. Patrick, congrats on the new gig. Oh, yes. Really nice to have you covering us.

Appreciate it. Glad to be here. Thanks, guys. Thank you. One moment for our next question.

Jordan Bernstein of CTO, your line is now open. Great. Thanks, Ed. Jordan on for John here. They're just thinking about as the year progresses on new customer starts, You know, nice beat here relative to our model in 2Q. As we think over to 3Q, Should we think about that being a step up from 2Q, but maybe a steeper slope 3Q to 4Q? In any color, that would be much appreciated.

Hey, Jordan. Yes, Q3 will be a step up from Q2, but the specifics of where new patient starts will end up or what's embedded in the guidance in terms of new patient starts relative to prior quarters, I don't want to comment on. But yes, we're expecting a step up. We added... More than 20 new territories in the first half of the year. Most of those territories start generating demand for the business. And our new territories start generating demand for the business in roughly one quarter. And, you know, and again, you'd expect that to make an impact in the third and fourth quarter.

Makes sense. And then my follow-up is just on that pharmacy dynamic that you were discussing before on the stocking and there seems to be some less pharmacy supply on the shelf. Is that something that you'd call industry-wide or company-specific, just kind of in the context? of a new competitor entering that channel here throughout the year trying to.

Trying to figure out if you could provide some more color on that. Thanks. It's very company specific is the short answer. If you even look at the history of our pharmacy revenue and as related specifically to supply, it's the pharmacy stocking dynamic has fluctuated from quarter to quarter, sometimes semi-dramatically, and it's not fully predictable. And so we generally comment proactively if there's a major impact to pharmacy or from stocking. But point is, you could have another company selling something similar or one of our competitors selling something similar to similar customers and our performance wouldn't necessarily dictate what their particular performance was in terms of stocking in the exact same quarter. So it's very company specific.

Super helpful. Thank you. Yes. Thank you. One moment for our next question. Our next question comes from the line of Mike Crackey of the Ring Partners. The line is now open.

Hey, everyone. Thanks for taking your questions. Can you talk about what ultimately prompted your strategic decision to pursue the pivotal trial of ILIT and Type 2? It seems like you've been getting good traction there without it. And then just as a follow-up, can you confirm whether we should expect Mint to also be commercially available for Type 2 as part of that mid-2027 expected timeline?.

Yes, great question, Mike. So we've been commenting for a number of quarters that we had Type 2 plans, we just weren't really commenting on them. And exactly to your point, we have had quite a bit of success in the Type 2 space. And for that reason, we didn't feel it was the right thing to do to go and run a traditional trial in that space with the expense and the timeline and everything else. So we had already seen the outcomes that we were getting. So there was a process of working with the agency to kind of compromise on the right data that was required for ILIT specifically in order to get that indication. And as we commented in prepared remarks, we did come to an agreement on that. We are looking at our current ILIT users. but enrolling them in a trial. So that's really what that was about. But why did we do it at any level? Because we're having a ton of success, but we'd love more. And certainly being able to comment on that and sell it publicly is something that we'd like to be able to do. We've achieved the level of success we have without doing that. So it was the right thing to do. right thing to do for us and it's a pretty modest investment considering how we've chosen to do it. Minton type 2. And yes, Minton type 2. Let me make sure I don't get this wrong. You know, mint itself, the submission on mint is an ACE pump submission. The pump side of things have historically been approved for people with insulin-dependent diabetes mellitus, right? It's the algorithms that have been specific to type one or type two. So to the extent we get a type two indication on our algorithm, that algorithm will be paired with mint, and yes, mint at that time would carry a type two indication as well. the mint system writ large, meaning mint hardware, with the ILIT algorithm.

Understood. Thanks very much. Thank you. One moment for our next question. Our next question comes from the line of Matthew Blackman of TD County. Your line is now open.

Good afternoon, everybody. Can you hear me okay? Yes, we got you, Matt. All right, great, guys. Maybe, Sean and Steven, just from a high level, how did the quarter play out on pumps shift? I know you said in line with expectations, but I think you probably appreciate there's a lot of background noise in med tech and utilization with coverage changes and perhaps macro headwinds. Just wondering, are you seeing or hearing any of this and the fields that bleeding into diabetes at all. And then I've got one follow-up. Yes.

I'll just reiterate that we did think the quarter's new patient starts performance and revenue performance in line with expectations. There was nothing that we saw about Q2 market dynamics-wise or traction with our product that changed our guidance. So I suppose in that respect, everything was, again, consistent with what we expected, and That includes anything related to public policy that may be a perceived headwind. We're just not seeing any of that.

Okay, I appreciate that. And then, Steven, I'm going to push a little bit, reflecting on your scripted comments, but also in response to one of the questions asked, as we think about the 3Q and 4QKs, and I appreciate you don't guide quarterly, but given that you are onboarding and have onboarded new reps, and I think you said it takes about a quarter for them to ramp to productivity. As we think about just the pump shift cadence, is it potentially going to be a little bit more heavily weighted to the fourth quarter than prior years, or no, last year is still a good proxy for how we think about the shape of the back half of the year? Thank you.

Yes, sorry. You want me to go at it again? No, no, Sean just clarified the question for me. Yes, so shoot, now I can't remember. I can't remember. Can you restate the question, Matt? MATTHEW WALKER- yes, sorry about that.

I'll give it another shot. So I think historically, recently, you know, this year you told us to use 2025 as sort of a guidepost from a cadence standpoint, percent pumps ship per quarter or revenue per quarter. And so I know you don't guide quarterly for the third and the fourth quarter. This year is a little bit different. You've onboarded a bunch. a bunch of new territories. It takes a little of time for them to ramp to productivity. So my question is, as we think about the third and fourth quarter, the shape of the third and fourth quarter for 2026, is 2025 still the right guidepost to use in terms of how we should think about the rest of the year playing out? Or no, maybe it's a little bit more fourth quarter weighted given the dynamics of bringing on a sales force, incremental sales force, and driving productivity gains as they work through the back half of the year.