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Why Shares of Senseonics Soared 30.6% in August

By Jim Halley – Sep 8, 2021 at 8:23AM

Key Points

  • The stock has been volatile over the past two years.
  • The company’s Eversense continuous glucose monitoring system has a premarket approval supplement application before the FDA.
  • The company is growing revenue but still losing money.

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The maker of continuous glucose monitoring systems for diabetes treatment is a meme stock with some fundamental support.

What happened

Senseonics Holdings (SENS 0.86%), which makes continuous glucose monitoring systems for diabetes care, saw its shares rise 30.6% in August, according to data from S&P Global Market Intelligence. The stock started at $3.10 on Aug. 2, the first trading day of the month, and closed the month at $4.01. The stock has been volatile, climbing to as high as $5.56 in mid-February and slumping to as low as $0.35 last fall.

So what

There wasn't a lot of news to explain the stock's surge last month. The company did report second-quarter earnings on Aug. 9 and there was some good news in the report. Senseonics reported revenue of $3.29 million, compared to only $260,000, year over year. However, it also reported a net loss of $180.3 million, compared to only $7.52 million in the same period in 2020.

A person checks an insulin pump and blood sugar monitor while hiking outdoors.

Image source: Getty Images.

The day the report came out, the stock closed at $3.25. A day later, it closed at $3.04. However, from there, it climbed nearly every day. Why? The stock, which is No. 95 on Robinhood Markets' Robinhood Top 100, is being bought by a lot of retail investors who hope to get in on the relatively inexpensive stock before it jumps with a potential Food and Drug Administration supplemental premarket approval for its latest Eversense CGM. The latest iteration of the device would be an implantable CGM that could be worn for six months or even a year, with weekly calibration. The company already has an FDA-approved Eversense CGM that is wearable for three months, but six months would really be seen as a huge advantage to diabetes patients.

Senseonics is trading at a high multiple (a price-to-sales ratio of 115.42) considering its current sales, but the thinking is, if the new device is approved, the company said it would expect revenue to grow to $150 to $200 million a year by 2025.

Now what

To be clear, this is a long-term play with a lot of risk, but that's not unusual for the biotech industry. Given the company already has gotten approval for its 90-day Eversense CGM and the growth expected for diabetes therapies, it's easy to see why investors see this as a risk worth taking. The compound annual growth rate for diabetes CGMs is 10.1% between 2021 and 2027, according to a study by Grand View Research. The market, which was pegged at $4.7 billion in 2020, was expected to grow to $8.3 billion by 2027. That study was done before the Centers for Medicare and Medicare Services in July approved Medicare beneficiaries with diabetes to use any insulin along with continuous glucose monitor therapy and eliminate a four-times-per-day testing requirement.

Jim Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Senseonics Holdings, Inc. Stock Quote
Senseonics Holdings, Inc.
SENS
$1.17 (0.86%) $0.01
Robinhood Markets Stock Quote
Robinhood Markets
HOOD
$9.99 (1.22%) $0.12

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