What happened

Shares of Senseonics (NYSEMKT:SENS) are down 20% at 11:51 a.m. EST after the diabetes-device company reported dismal third-quarter results after the bell yesterday.

So what

Revenue came in at just $4.3 million as Senseonics struggles to launch its Eversense implantable constant glucose monitoring system.

Senseonics grossed $2.1 million in U.S. sales, but that was written down to just $0.5 million in net sales, because the company offers discounts through its Bridge Program to patients who don't have insurance coverage for the device and procedure. About half of the patients have participated in the Bridge Program in some form.

Doctor talking to a patient in an exam room.

Image source: Getty Images.

Management updated its guidance for 2019 net revenue to a range of $20 million to $22 million, down from previous guidance of $25 million to $30 million. On a gross basis, revenue is expected to be in the range of $25 million to $27 million.

The idea here is that the Bridge Program will ultimately increase the number of doctors who prescribe Eversense. And if the patients have a good experience, the doctor is more likely to prescribe the device to additional patients. It's not much different than what pharmaceutical companies do with giving out samples, but it's a little more costly for Senseonics in the near term.

With recent coverage decisions from Humana, Health Care Service Corporation, and Medicare, and hopefully more to come, participation in the Bridge Program should decrease over time, increasing net revenue and gross margins.

Now what

In the meantime, Senseonics has to make its cash last to profitability. It ended the quarter with $130.6 million in the bank, thanks to a capital raise in July, and instituted a restructuring plan earlier this month that will eliminate approximately 30% of the company's current open and planned headcount.

Senseonics could end up being a good turnaround candidate, but with so many healthcare companies in better financial situations, this stock is only appropriate for highly risk-tolerant investors.

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