Is Senseonics Stock A Buy?

Senseonics Holdings Inc (NYSE:SENS) is a medical technology company that developed EverSense, a long-term implantable continuous glucose monitoring (CGM) system. It’s a revolutionary diabetes monitor that could make life easier for those living with the condition.

Its clinical trials were delayed due to the pandemic and Operation Warp Speed rushing vaccines through the Federal Drug Administration (FDA).

Now that those delays could be nearing an end, is Senseonics stock a Buy?

There’s plenty of good news in 2021 – the year started with an announced partnership with EmblemHealth, a health insurance provider for 2.9 million people in New York, Connecticut, and New Jersey.

Insurance coverage and FDA approval are the key ingredients that sent the stock’s price skyrocketing by over 1,000 percent from December 2020 through February 2021. And there could be plenty of room to grow through the year as positive news rolls in.

Cash is the lifeblood of any business, so let’s check Senseonics cash flow and liquidity to determine if it’s a sweet deal for investors or will leave portfolios dragging.

Senseonics Disrupting Diabetes Monitoring

Senseonics is a medical technology company that developed a disruptive diabetes monitoring device. The Germantown, Maryland-based company was founded in 1996, and it spent much of its time developing this technology.

The biggest hurdles were overcome in the 2010s, as advances in microchip development and upgraded wireless infrastructure now make it easier. Think about it – Fitbits and other trackers and wearables are relatively new.

And glucose monitoring is an important medical use – the U.S. Centers for Disease Control (CDC) reports 34.2 Americans have diabetes and 88 million have prediabetes. The long-held method of testing whether glucose or insulin is necessary is to prick the finger with a needle.

There has been some evolution and development in the finger-sticking technology, along with blood glucose testing strips. However, this is a laborious process, and current tech doesn’t enable long-term monitoring beyond a month.

The ability to monitor data for up to 180 days before a replacement is needed can be a true medical breakthrough. However, FDA approval and insurance acceptance are the two hurdles, leaving investors wondering if this is a good investment.

Is Senseonics Stock A Buy?

Senseonics Holding stock skyrocketed through 2021. The stock was worth under a dollar for much of 2020, reaching lows of $0.35 per share. But by February 2021, the stock traded over $4.00 per share, giving the company a market capitalization in the ballpark of $1.5 billion.

It’s not wholly pre-revenue, as it reported $767,000 in revenue in the third quarter of 2020, which was largely driven by sensor reinsertion and supply orders from existing patients.

Still, the prospects of premarket approval from the FDA and coverage from EmblemHealth fueled plenty of investor interest. Should it continue providing its solution throughout the market with FDA approval, it could potentially reach sales of over $1 billion according to analysts.

Investors who have diabetes (or know a loved one with it) don’t necessarily care about the growth potential. The investment for some represents an investment in a future where diabetes is involved in fewer deaths, especially in the U.S.

Not only does diabetes have direct impacts, but it also leads to other health problems, like stroke. This could be fatal in older populations, and that makes it a big healthcare concern for our lifetimes.

That doesn’t mean the stock is completely risk-free. Every investment has inherent risks, and Senseonics is no different.

Senseonics Insurance Partnerships Needed To Grow

Senseonics has two major risks, with the biggest being that it doesn’t gain FDA approval nor insurance partnerships. These are the hurdles any successful health tech company need to overcome, and it’s not a cheap process.

In fact, the company held $96 million in liabilities, including a lot of debt on its books. As its share prices rose in January 2021, it continued diluting shareholders by selling as much stock as it could to gain liquidity for a longer runway.

The company will likely take at least until mid-2021 to gain FDA approval, and that’s being generous. It could take another year or longer.

There’s no telling if another mutation of SARS or MERS will ravage the world and take precedence over long-standing conditions.

And then there’s the competitive landscape.

Senseonic Is Still A Single Product Company

Most current-gen diabetes monitors can only take 14 days of data before needing to be replaced. And some patients prefer to use the stick method, as opposed to a continuous monitor.

Beyond FDA approval, the company needs to spend heavily on marketing its solution. Revolutionary or not, other companies are going to give up their market share easily.

This makes for a competitive industry, and because it only has this one product so far, the company is vulnerable. It needs to expand its offerings, otherwise it may need to depend on acquisition from a larger rival to survive.

We’ll need to wait to see more regional insurance carriers signing on before getting too excited, but the cheap share price could get some investors interested now.

Is Senseonics Stock A Buy? The Bottom Line

Diabetes is a widespread problem across the U.S., and glucose monitoring is a key factor in diagnosing and treating it. Current continuous glucose monitoring solutions last for 14 days, but Sensonics has a solution that works up to 180 days.

This could revolutionize healthcare, utilizing 5G and microchips to make it easier to wear.

And partnerships with insurance carriers like EmblemHealth means it’ll be reimbursed and can be accessible for the masses at any price. This puts the company’s investors in a great position for even bigger gains than the nearly 10x gains they already experienced.

It won’t happen until the FDA clinical trials are completed though, and the pandemic already delayed it.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.