Senseonics Is a Solid Recovery Play Poised to Unlock its Potential

To say that Senseonics Holdings (NYSEAMERICAN:SENS) had a rough 2020 would be an understatement. SENS stock had reached a high of $1.60 in the first quarter of 2020 but immediately crashed during the start of the pandemic. It had spent most of 2020 in the 40-cent range and severely testing investor’s patience.

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However, thanks to the power of Reddit, SENS stock saw new life as it rocketed to the $5 levels. SENS stock was trading around $3.10 per share on July 28. Despite the volatility, many investors who bought shares during 2020 and held on have done pretty well for themselves.

In this article, I want to highlight why the SENS stock is still attractive – even at these levels. The long-term thesis for Senseonics Holdings is only beginning to play out.

SENS Stock: Signs of Improvement

Examining the company’s first-quarter 2021 results shows a picture of rapid growth. Senseonics’ revenue in Q1 2021 was $2.85 million. This is a much-welcomed improvement over the $40,000 revenue recorded in Q1 2020.

At face value, the company recorded an astronomical growth rate of 72x. However, digging a little deeper unearths a more complicated picture.

The novel coronavirus pandemic, which went into full swing in the hemisphere in 2020, really damaged the company’s ability to do business. Senseonics’ main product is an implantable continuous glucose monitoring (CGM) device. This device is targeted at patients suffering from diabetics, the treatment of which a multi-billion industry in the U.S.

The company was beginning to ramp up its product sales when the pandemic hit.

Due to pandemic-related lockdowns and restrictions, healthcare providers were not able to see patients and perform insertions of the device. This resulted in a massive drop in sales in 2020. To make matters worse, Senseonics faced a liquidity crunch. This limited the company’s ability to generate revenues even further.

Prior to the pandemic, Senseonics had revenue of $9.0 million in Q4 2019 and $21.3 million for 2019.

Considering the widespread availability of vaccines, it could only a matter of time before the U.S. and Europe reach herd immunity. The company was guiding for revenues between $25 million and $30 million for 2020 before the pandemic hit. I believe that the company should be able to easily reach this level of revenue in the near future.

Bullish Thesis Remains

What makes me confident about Senseonics recovering to its pre-pandemic revenues – and possibly even growing from there – is it has a blockbuster product. As mentioned, the company’s main product is a long-term continuous glucose monitoring system for diabetics. In simple terms, a CGM is a device inserted under the skin that continuously monitors a person’s glucose levels.

Normally, CGMs only last 10 to 14 days. However, Senseonic’s Eversense and Eversense XL CGM systems last up to 90 and 180 days, respectively. The company’s CGM is also removable for extra convenience and is MRI compatible. The device also provides on-body vibration alerts for blood sugar warnings.

This product could potentially disrupt the multi-billion diabetics industry. According to the Centers for Disease Control and Prevention, there are 34 million people in the U.S. with diabetes. This number was less than half that number 20 years ago. The trend indicates a growing incidence of the disease as the American population has aged and become overweight.

Investor Takeaway

The massive decline in SENS stock was not caused by anything wrong with the company. Rather, the drop was due to the unfortunate circumstances of the Covid-19 pandemic. The bullish case for the company still remains. This is underscored now that Sesseonics executives have inked a commercialization partnership with Ascensia.

I believe that SENS stock still has a lot of room to grow. The company should see revenue growth start to accelerate even further once the re-opening is in full swing. Kudos to management for successfully navigating the company through a tough 2020.

I think risk-seeking investors should consider a position in Senseonics.

On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade.

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