Good afternoon, and welcome to the Beta Bionics Second Quarter 2025 Earnings Conference Call. As a reminder, please be advised that today's conference is being recorded. I would now like to turn the conference over to Blake Beber, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you for tuning in to Beta Bionics Second Quarter 2025 Earnings Call. Joining me for 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 2025 results will be available on the Investor Relations section of our website. The replay will be available for approximately one year following the conclusion of this call. Information recorded on this call speaks only as of today, July 29, 2025. Therefore, if you are listening to the replay, any time-sensitive information may no longer be accurate. Also on our website is our supplemental second quarter 2025 earnings presentation and updated corporate presentation. We encourage you to refer to those documents for a summary of key metrics and business updates. Before we begin, we'd 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 as well as our SEC filings, including our Form 10-Q filed 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 date, and we undertake no obligation to update them to reflect subsequent events or circumstances, except to the extent required by law. Today's discussion will also include references to non-GAAP financial measures with respect to our performance, namely adjusted EBITDA. Non-GAAP financial measures are provided to give our investors information that we believe is indicative of our core performance and reflects our ongoing business operations. We believe these non-GAAP financial measures facilitate better comparisons of operating results across reporting periods. Any non-GAAP information presented should not be considered as a substitution independently or superior to results prepared in accordance with GAAP. Please refer to our earnings press release and supplemental earnings presentation on the Investor Relations section of our website for a reconciliation of non-GAAP measures to the comparable GAAP financial measure. Now I'd like to turn the call over to Sean for some opening remarks.

Thanks, Blake. Good afternoon, everyone, and thank you for joining us for our second quarter 2025 earnings call. We're excited to share with you all today our financial results for the second quarter as well as positive updates to our full-year guidance for 2025. Starting with our performance in the second quarter, our team continues to execute at the highest level across all aspects of our business, and we made key advances commercially, clinically and in our innovation pipeline. We continue to see robust demand for the iLet, and our efforts to expand the iLet’s commercial reach resulted in a record number of new patient starts in the quarter in both the DME and Pharmacy channels, and a record percentage of those new patient starts going through the pharmacy channel. In late June, we hosted our first Investor and Analyst Day, where we talked about the iLet’s place on the continuum of user engagement from hybrid to fully closed loop and the continuum of system adaptation from static to adaptive algorithms. The iLet demands the least engagement from the user and delivers the most automated adaptation of any AID system, setting a new standard for our industry. We also highlighted the superior clinical outcomes of the iLet with our real-world data through the first two years of iLet's launch. We demonstrated that the iLet drove meaningful changes from baseline HbA1c to follow-up glucose management indicator, or GMI, which is a proxy for A1c, regardless of our users' baseline A1c group, prior therapy or level of engagement with the iLet. We also shared outcomes for users treated by endocrinologists or primary care practices, and the outcomes were virtually the same. We're extremely proud of those data and believe that the iLet is the only pump in the market capable of producing those results across such a wide range of users and clinicians. It's important to remind you all that if we had a user’s baseline A1c and at least three weeks of CGM data uploaded to our cloud, they were included in our real-world results. We've noticed a trend in our industry of subsegmented data in ways that make it appear more favorable, sometimes in dramatic fashion. And we encourage everyone to read the fine print on these data sets to get a sense of how populations are being subsegmented in a way that skews the results. Beta Bionics is committed to providing fair and honest representations of our real-world data. And when we do subsegment our data, we do it to highlight the performance of our system in our hardest users, not our easiest ones. In this way, we are not only setting a new standard with our technology, but also with our approach to sharing real-world results. In Q2, we also made some key strides in our innovation pipeline, which I'll dive into in more detail later in the call. I've never been more confident that we're building a highly differentiated business that is poised to achieve success over the short-, medium- and long-term. Our team's dedication to our mission of delivering life-changing solutions that simplify and alleviate the burden of managing diabetes is stronger than ever, and we want to thank our community of users, health care providers and caregivers in our Bionic universe that inspire us every day to achieve our mission. For today's call, I'll cover our Q2 results, which exceeded our expectations across the board. Stephen will provide some additional color on our performance in the quarter while highlighting positive updates to our annual guidance for the full year 2025. I'll discuss the recent CMS proposal for the 2026 durable medical equipment payment system, which has implications for durable insulin pumps and Beta Bionics. Lastly, I'll wrap up the call with key updates across our innovation pipeline, including Mint, which is our patch pump program and then our bihormonal system. Starting with a brief overview of our Q2 2025 financial performance, I'm proud to announce that we delivered $23.2 million in net sales, which grew 54% year-over-year. In Q2, we saw 4,934 new patients adopt the iLet, growing 57% versus the prior year. A high 20s percentage of those new patient starts were reimbursed through the pharmacy channel, which is substantially higher than the mid-single-digit percentage we saw in Q2 of the prior year and increasing relative to the low 20s percentage we saw in Q1 of this year. As a reminder, we believe the best metric to measure pharmacy coverage is the percentage of total new patient starts that were reimbursed through pharmacy as opposed to percent of lives covered under formulary arrangements with Pharmacy Benefit Managers, or PBMs, which doesn't account for adoption by the underlying health plans or the underlying logistics required to utilize this channel. As of July 1, Beta Bionics has effective formulary agreements in place with all the major PBMs that operate in the U.S. While we're proud of that accomplishment, it does not yet mean that all of those patients are benefiting from the pharmacy channel. We'll continue to work with the health plans that partner with those PBMs to expand adoption of the iLet under the pharmacy benefit as we've been successfully doing over the last two years. Shifting now to gross margin. Our gross margin in the quarter was 53.8%, up slightly relative to 53.7% in Q2 of 2024. There are a few moving pieces that impacted our gross margin in Q2 that Stephen will address in detail shortly. But overall, our gross margin in Q2 is indicative of our continued cost discipline across the business as well as our ability to extract leverage from our fixed manufacturing overhead as we continue to build scale. As I mentioned earlier, these Q2 results exceeded our expectations across the board, and I'm proud of what our teams accomplished. There are a number of drivers to point to when it comes to our strong performance, and we expect all of them to continue to contribute to our performance going forward. The first driver to point out is the market's deepening appreciation for our highly differentiated fully adaptive closed-loop algorithm. At the Investor and Analyst Day, we showed that the iLet delivered an average baseline A1c to follow a GMI decline of 1.6% in the real world, a result that we believe is unique in the history of insulin pumping and even diabetes management more broadly. And we're generating those results in our true real-world population, meaning our entire user base for whom we have baseline A1c and at least three weeks of CGM data. This isn't a fractional advantaged subsegment of our data, this is a representative real-world population. With each quarter, we see the iLet growing into new accounts and penetrating deeper into existing accounts, and there's still substantial runway. In Q2, we launched an update for the Bionic portal, our health care provider portal, which now allows providers to access real-time clinical outcomes for their patients that are using the iLet. The updated portal facilitates collaboration between providers and the clinic, enhances the connection that providers have with their iLet patients between visits and enriches communications between providers and their patients during visits to the clinic. Initial feedback from iLet prescribers has been overwhelmingly positive, and we're already seeing the Bionic portal drive more rapid adoption of the iLet at the provider and clinic level. As you may recall, in the second half of 2024, we launched three new products, including integration with Abbott's Freestyle Libre 3 Plus CGM, Color iLet and the Bionic Circle remote monitoring app. These product launches continue to gain traction in Q2, and we expect their contribution to continue to grow in the second half of the year. In Q1, we expanded our sales force by 20 territories to bring our total territory count to 63. Those 20 incremental territories began selling in earnest in Q2. The last driver I'll mention is we're continuing to expand our pharmacy channel presence, enabling more people with diabetes to access insulin therapy with minimal to no upfront out-of-pocket costs. What I hope you all take away from this is that we're positioning Beta Bionics' core business for success today and tomorrow, all while making key advances in our innovation pipeline, which I'm excited to share with you in more detail later on during the call. But for now, I'll hand the call over to Stephen to provide some additional color on our second quarter results and discuss our increased full-year guidance for 2025.

Thanks, Sean. Approximately 71% of our 4,934 new patient starts in Q2 came from people with diabetes that use multiple daily injections prior to starting the iLet. We look at this metric because it's an important representation of how much the iLet is expanding the market for insulin pumps, and the results we're seeing reinforce our confidence that the iLet is addressing an unmet need in the market. Let's talk about pharmacy. In Q2, a high 20s percentage of our new patient starts were reimbursed through the pharmacy channel. We're continuing to see great traction from our pay-as-you-go model from PBMs and the underlying health plans that partner with those PBMs. Turning now to gross margin. In Q2, our gross margin was 53.8%, up slightly compared to 53.7% in the second quarter of 2024. While gross margin may look very similar between Q2 of this year and Q2 of the prior year, there are two points I'd like to highlight that are indicative of healthy underlying gross margin dynamics. The first to highlight is related to pharmacy. As we've discussed extensively in prior earnings calls, increasing our pharmacy mix is financially accretive over the medium and long-term because we are reimbursed for the monthly supplies at a higher rate than in the DME channel. However, in the pharmacy channel, we forgo the upfront payment for the pump itself that we would have received if the pump went through the DME channel. This creates two dynamics: Number one, when we increase the percentage of new patient starts going through the pharmacy in any given quarter, the upfront revenue for the pump that we forgo creates a transitory headwind for our revenue and gross margin in that quarter. Number two is our existing pharmacy installed base generates substantially more revenue per month versus the DME channel. Coming back now to Q2's gross margin. We saw a substantial uptick in the percentage of new patient starts going through the pharmacy in Q2 of this year relative to the prior year. That creates a headwind for revenue and gross margin this quarter but is great for the business over the medium and long-term. In parallel to that, our pharmacy installed base of Q2 '25 was over seven times the size of our pharmacy installed base at the end of Q2 '24. Over time, as our mix of new patient starts continues to shift to the pharmacy, we believe the high gross margin recurring revenue generated from our existing pharmacy installed base will overpower the near-term headwind we experienced from new patient starts going through the pharmacy channel. Stated differently, in the near future, we expect the pharmacy channel's gross margin will consistently outperform the DME channel's gross margin. The second point that is indicative of healthy underlying gross margin dynamics is manufacturing volume leverage. As production volumes increased in Q2 of the prior year, we benefited from lower per unit costs driven by a reduced bill of materials and improved absorption of fixed manufacturing overhead. So in summary, growth in new patient starts through the pharmacy channel caused year-over-year margin compression, which was offset by high-margin recurring revenue from a substantially larger pharmacy installed base and lower per unit costs from manufacturing volume leverage. The pharmacy installed base and lower per unit costs are both durable gross margin tailwinds going forward. Shifting now to operating expenses. Total operating expenses in the second quarter were $32.4 million, an increase of 63% compared to $19.9 million in the second quarter of 2024. The increase in sales and marketing expenses relative to the prior year is driven by the expansion of our field sales team, which now stands at 63 sales territories exiting Q2. The increase in R&D expenses relative to the prior year is driven by the Mint and bihormonal projects. G&A expense increases relative to the prior year are driven by new costs related to operating as a public company. Let's move on to cash. As of June 30, 2025, we have approximately $281 million in cash, cash equivalents and short- and long-term investments. We remain confident in our ability to generate positive free cash flow at an earlier stage relative to our peer group's historical precedent. Here are a few reasons why: Number one, our device is designed to be manufactured efficiently evidenced by our current gross margin profile. Number two, our revenue model is shifting towards the pharmacy, which we are confident is financially accretive versus the DME channel over the medium and long-term. And number three is our management team's track record of operational efficiency, which is evident in our operating margin at our scale relative to competitive precedents at a similar scale. We know that an efficient operator title is earned, not given, and we intend to earn the public's trust on that with each passing quarter. Now turning to our 2025 annual guidance. We are raising guidance across the board. We now project that net sales for the full year of 2025 will be $88 million to $93 million, up from our prior guidance of $82 million to $87 million. We now expect 25% to 28% of our new patient starts to be reimbursed through the pharmacy channel versus our prior guidance of 22% to 25%. Allow me to remind you what the increase in pharmacy guidance means for revenue over the next four years. The raise from 23.5% to 26.5% new patient starts through pharmacy, which are the midpoints of our previous and updated guidance, are expected to generate roughly a $1 million headwind to 2025 revenue. This roughly $1 million headwind is baked into our updated 2025 annual guidance of $88 million to $93 million. From 2026 through 2028, we expect that same increase in pharmacy guidance to result in up to a $9 million tailwind to cumulative revenue, assuming no attrition. Said another way, a $1 million headwind in year one flips into a potential $9 million cumulative tailwind in years 2 through 4. We accept that trade-off. In terms of how to think about the revenue cadence for the remainder of the year, we anticipate revenue in Q3 to be slightly higher than Q2 and revenue in Q4 to increase relative to Q3, which is seasonally typical in the diabetes industry. For new patient starts, we expect Q3 new patient starts to be similar to Q2 and Q4 to increase relative to Q3. We expect the percentage of new patient starts reimbursed through the pharmacy in the second half of the year to increase relative to the high 20s percentage we saw in Q2. That said, we expect the rate of pharmacy mix increase in the second half of the year won't be as pronounced as the large increases we saw in both Q1 and Q2, which were fueled in large part by the formulary agreement with Prime Therapeutics that went into effect on February 1 and the strong adoption we saw from the underlying health plans that partnered with Prime as their PBM. While we now have an effective formulary agreement in place with all the major PBMs that operate in the U.S. as of July 1, sales cycles with the underlying health plans that partner with each PBM are highly variable depending on the specific PBM and the specific health plan that partners with that PBM. In the case of Prime, we saw immediate pull-through of the formulary agreement at the health plan level. For our more recent PBM agreement that became effective on July 1, we don't expect to see the immediate pull-through by the health plans that we saw with Prime. Moving on to gross margin. We are raising our outlook to 52% to 55% gross margin for the full year 2025 versus our prior guidance of 50% to 53%. We are increasing guidance for a couple of reasons. Number one, embedded in our revenue guidance raise and pharmacy mix guidance raise is a raise in our expectation for new patient starts, and that increased scale should generate a lower per-unit cost through manufacturing volume leverage. And number two, we expect to benefit from our growing pharmacy installed base with a large bolus of new pharmacy users we onboarded in Q1 and Q2 producing high-margin recurring revenue for the balance of the year. So the takeaway here is that while the outperformance in pharmacy adoption is a headwind to our gross margin outlook for the year, we expect to be able to more than offset that headwind, and we are raising guidance as a result. In terms of how to think about the gross margin cadence for the remainder of the year, we expect gross margin to increase slightly from Q2 to Q3 and again from Q3 to Q4. Regarding tariffs, I want to reiterate our prior commentary that custom components for the iLet and its consumables are exempt from tariffs under the Nairobi protocol. Overall, we expect the impact of tariffs on our business to be minimal, and their impact is contemplated in our updated gross margin guidance for the year. With that said, I'll hand the call now back to Sean to discuss the recent CMS proposal and our innovation pipeline.

Thanks, Stephen. On June 30, CMS released a proposed rule for the 2026 durable medical equipment payment system, which includes provisions that may impact insulin pumps supplied to Medicare fee-for-service beneficiaries. To be clear, this proposal only applies directly to traditional Medicare fee-for-service, not Medicare Advantage, which is managed by private plans. Approximately 10% to 15% of our users are Medicare fee-for-service beneficiaries. So let's walk through the key components of the proposed rule and our perspective on them. There are two major elements in the proposal. First, CMS is proposing to implement a competitive bidding program for insulin pumps. Under this program, DMEs would submit bids to supply insulin pumps and CMS would set the reimbursement rate at the 75th percentile of the accepted bids. DMEs that bid above the price threshold set by CMS may be excluded from supplying pumps to Medicare fee-for-service beneficiaries in the bid geographic area. This is new for pumps and is designed to reduce overall costs to the system. Second, CMS is proposing a shift to a pay-as-you-go rental model for pumps, replacing the current model where CMS pays the DME supplier for the pump over a 13-month period, after which the patient owns the pump and CMS no longer pays for it. Under the new model, CMS would pay DMEs a fixed amount each month for the pump for up to 60 months instead of just paying for the pump over the first 13 months. This is designed to allow patients to switch pumps more easily and to shift attrition risk from CMS to the DMEs. In the new model, if the patient stops using the pump anytime during the 60-month period, CMS no longer pays for it. Here's our view on the proposal. We support CMS' intent to modernize payment models in a way that better supports people living with diabetes. We believe the competitive bidding may undermine that goal. The Medicare fee-for-service channel is already the most financially challenging for both pump manufacturers who sell insulin pumps and supplies to DMEs, and the DMEs who distribute those pumps and supplies to patients and collect reimbursement from CMS. That reimbursement amount from CMS is what DMEs would be bidding on if competitive bidding is implemented. In the proposal, CMS is capping the maximum allowable bid at approximately $226 per month. We believe this cap represents a single-digit percentage reimbursement cut relative to what DMEs currently receive from CMS today on a normalized basis across 60 months. We believe that cap was calculated using lower monthly infusion set and cartridge usage assumptions than what users actually require each month, and we encourage CMS to correct this in the final rule. Whether or not the proposed cap stands, we do not anticipate any material financial impact on our business as we are not directly affected by the change. In the unlikely scenario that DMEs face price compression at or beyond the proposed cap, that could force manufacturers or DMEs to withdraw from the Medicare fee-for-service channel in certain regions, thereby limiting patient access and choice, which is not what CMS intended with the proposed rule. Regarding the proposed shift to a pay-as-you-go rental model for pumps, we agree with CMS’ intent to align reimbursement with the actual therapy use. We were the first durable pump company to implement a pay-as-you-go model to the pharmacy channel. That said, applying this model to the DME channel introduces significant logistical complexity. Insulin pumps are personalized medical devices that are not designed for refurbishment and reuse in the way other DME categories might be. If CMS decides to finalize this model, we'll work with our DME partners to explore safe refurbishment arrangements for our customers and find a path forward financially that ensures our DME partners can continue to supply the channel. While it's too early to say what that arrangement will look like, we see the shift to pay-as-you-go as a net tailwind for the business. Let me walk you through that thinking. This would be a pretty extreme scenario. But if we hypothetically align the way we receive payments from DMEs to the way DMEs would receive payments from CMS in a pay-as-you-go model, we would expect that change in revenue recognition to result in a single-digit percentage headwind to our overall revenue in year one, followed by a single-digit percentage tailwind to our revenue in each of years two through five; and cumulatively, no material impact on the amount of revenue we recognize over that five-year period. So how does that become a tailwind? Two reasons. Number one, in the same way we see the pharmacy pay-as-you-go model reduce upfront out-of-pocket costs that patients spend on an insulin pump, a pay-as-you-go model in the DME channel could have that same effect. This could increase overall pump adoption by Medicare fee-for-service beneficiaries. Number two, by enabling patients to switch more easily between pumps, we believe that benefits a market newcomer with a smaller installed base rather than incumbents who have more to lose. Plus, easier ability to switch pumps would help a differentiated product like iLet gain more share. So to summarize our view of the CMS proposal, we don't expect to see any material revenue impact from competitive bidding. We expect the potential shift to pay-as-you-go will create tailwinds for the business, and we're ready to adapt with our DME partners to ensure our customers are taken care of. We'll keep you updated as the rule progresses. We anticipate the comment period to close in early September with a final ruling from CMS in early November. Now let's dig into our innovation pipeline. Our goal with our pipeline programs is simple: disrupt the industry and disrupt ourselves. At our recent Investor and Analyst Day in June, we unveiled Mint, our patch pump in development and provided a live demonstration of its features and the patch change process. Mint is being designed to marry the best aspects of fully disposable and partially disposable patch architectures, and every decision we made in the design of the product is centered around the user experience. We believe the Mint wear experience will fit well into a user's everyday life. Mint is being designed so that users won't need their phone to change a Mint. Users won't ever need it to charge a Mint, and users won't need to remove a Mint when they swim or shower. The 4.5-millimeter steel cannula is being designed to feel very similar to an insulin pen, which we expect will minimize discomfort during cannula insertion. Said differently, we're seeking to provide a patch experience that aligns well with what patch wearers are already used to and love, while also improving upon that experience where we see opportunities to do so. Another great feature is that we expect to be able to roll out firmware over-the-air updates to the reusable controller. So if a Mint user wants to switch to the latest and greatest CGM and we're integrated with that CGM, that can happen overnight. These expected features are what we believe will separate Mint from every other fully disposable or partially disposable patch, whether they're already on the market or still in development. This is what we mean when we say our architecture is intended to be the best of both worlds. We strongly believe that we've harnessed the best aspects of both one-piece and two-piece architectures, all in the name of user experience. Add this to our industry-leading algorithm, and we believe Mint will be a game changer when it launches. In Q2, we continued to advance Mint rapidly toward our goal of commercialization by the end of 2027, which we are reaffirming as our target, and we remain highly confident in achieving it. Shifting to our bihormonal pump program. In July, we completed dosing for our shelf-stable pump-compatible glucagon candidates pharmacokinetic and pharmacodynamic, or PK/PD, bridging study. As a reminder, the trial is intended to enable us to bridge all of our previous bihormonal clinical data, including three prepivotal inpatient and six pre-pivotal outpatient trials to our new formulation of glucagon. We expect to have full results from the PK/PD study in the second half of 2025, which will inform our go-forward development strategy for our glucagon candidate. Preliminary PD results are in line with our expectations and supportive of continued development of our glucagon candidate per our previously communicated development strategy. While the full PK/PD data won't be publicly available, we expect to provide additional updates on the program and our development strategy during our Q3 earnings call. As of now, there is no change to the expectations that we'll conduct concurrent pivotal trials to fulfill the requirements for a 505(b)(2) NDA with a chronic drug indication for glucagon and the ACE and iAGC 510(k)s for the pump and algorithm, respectively. I want to share a quick thought on the potential form factors for our bihormonal system. In the past, our bihormonal form factor has been a durable pump with two channels in it, one for insulin and one for glucagon. That form factor seems very acceptable to users who have used it in formative clinical trials, and it's very similar in size to our insulin-only iLet commercial launch hardware. However, with the addition of Mint technology to our pipeline, that opens up several doors to us. The bihormonal form factor could be a durable pump with two channels. It could also be the Color iLet plus a Mint, or it could be two Mints, one dispensing insulin and the other dispensing glucagon. We have the flexibility to choose. And while we won't call our shot today, we will spend significant time between now and launch investigating our users' preference so we maximize the user experience of the bihormonal system, which is a core belief of Beta Bionics. However that plays out, we continue to be extremely excited by the bihormonal program's ability to transform clinical outcomes for people with diabetes, but more importantly, the ability to transform the way people think about managing their diabetes as well as producing a larger lifetime customer value to Beta Bionics. To briefly touch on the type 2 diabetes label expansion opportunity, in Q2, we continued to see some health care providers prescribe the iLet to their type 2 patients off-label. We estimate that over 25% of our new patient starts in the quarter were from type 2. While we're not committing to a specific timeline, we look forward to pursuing the type 2 diabetes label through the FDA. We covered lots of ground on today's call, so I want to leave you all with a few of the key points that we hope you take away from our remarks. The iLet is continuing to see excellent traction in the market, and we're building the right team and the right tools around it to expand its reach and transform the way people with diabetes, their loved ones, and their health care providers manage diabetes. Q2 was an excellent quarter for our business, and we're proud of the results we delivered that also enable us to raise our full-year 2025 guidance. We're confident that our business can overcome any challenges thrown its way, whether that's tariffs, policy changes that impact our partners or new entrants into the market. We're building the most innovative pipeline in the industry with the aim of disrupting the industry and ourselves and remain as confident as ever in our ability to deliver those innovations to the people with diabetes who need them. This is a business that is set up for sustainable success today and tomorrow, and we're excited to continue sharing updates with you all as we continue to execute against our mission. With that, operator, please open the call for Q&A.

Our first question will be coming from Matthew O'Brien of Piper Sandler.

And really nice quarter across the board here, everyone. So congrats on that. I did want to ask about a couple of things that might get a little bit of attention here from investors. Well, the first thing on the pricing side, it looks like the DME ASPs were quite strong in the quarter, but the pharmacy looked like it's a little bit below what I might have been modeling. So is there anything going on in the pharmacy channel specifically on the pricing side of note that we should really be thinking about? And then I do have a follow-up.

Yes. So Matt, are you talking specifically about the iLet pharmacy price or the monthly supply kit ASPs, or both?

Both, but more so on the supply kit side.

Yes. So regarding the iLet in the pharmacy channel, there was a decrease in the average selling price due to increased adoption by pharmacy benefit managers, as evidenced by a rise in the percentage of new patient starts. This leads to a situation where we issue a rebate for the iLet, which results in a lower average selling price over time. This trend indicates our success in acquiring new patients and gaining traction in the pharmacy channel, along with more adoption by PBMs and health plans. As for the pharmacy supply kits, there hasn't been any change in the average selling price from Q1 to Q2. However, there was a stocking dynamic in Q2 compared to Q1, which created some headwinds for us, contributing to the numbers you see.

Got it. Okay. That's good to hear. And then the other piece is just on the churn rate. It looks like it was about 5% in the quarter based on my math, which I know that could be wrong. But I just want to make sure the numbers are about right there. And then just anything you would call out on the churn side that might be a little higher or lower DME or pharmacy? And specifically pharmacy, are you seeing a little higher churn rate through that channel?

I understand that the churn rate, especially in the pharmacy channel, significantly impacts your model. We closely monitor this at Beta Bionics. However, the diabetes industry does not report attrition rates, and we will not be the first pump company to do so. While I recognize the importance of this metric, we won’t be providing specific comments on it. That said, I want to emphasize why we are confident in our retention rate. We make every effort to send patients through the pharmacy channel when we receive a prescription for the iLet. We check if the patient is covered by pharmacy insurance, and if they are, we process their prescription there. If not, we use DME instead. This process illustrates our understanding of the retention rate in the pharmacy channel, which is our best financial avenue. Therefore, we prioritize sending every eligible patient to the pharmacy. I want to stress that even though we don't disclose our retention or attrition rates numerically, they are quite strong, which is why we continue to focus on pharmacy over DME.

And our next question will be coming from the line of Travis Steed of Bank of America.

This is Stephanie Piazzola on for Travis. Congrats on a good quarter. Maybe just wanted to start out by asking about the guidance. You beat Q2 by almost $4 million and are raising the guide by $6 million at the midpoint. So maybe just talk about some of the drivers of that increased outlook in the back half of the year and the confidence in those. And then you gave some quarterly cadence commentary, which was helpful. But maybe if you could elaborate a little bit on the underlying assumptions of the Q3 revenue being higher than Q2 and the Q3 new patient starts similar to Q2.

Yes, absolutely. There's a lot to unpack here. Your first question was about our confidence in our guidance for the remainder of the year, and we're raising our guidance beyond just the amount we exceeded in Q2. I want to emphasize that we have a strong level of confidence in all the guidance we provide. Our revenue guidance for the rest of 2025 remains consistent with that. Regarding the guidance for new patient starts in Q3 and our revenue projections for the remainder of the year, I believe your question touches on why we are predicting a stable new patient start number despite expecting revenue growth and our history of quarter-over-quarter growth. I would like to provide three reasons for this. First, in diabetes, we typically see Q1 as the weakest quarter compared to the others, while Q4 is generally the strongest. Q2 and Q3 are usually similar in performance. Therefore, we are not anticipating any notable seasonality effects for Q3 in our guidance. Secondly, Q2 was an exceptionally strong quarter, contributing to our stable new patient start guidance for Q3. Lastly, I want to reiterate that whenever we offer guidance, we do so at a level that we feel very confident we can achieve, and this new patient starts estimate is no exception.

Yes, that's helpful. And then I just wanted to follow up on the CMS home health proposal for 2026. And maybe if you could just talk about some of the next steps as part of the process and I guess, a bit more on the expected timing of how long it could take for some of the things in the proposal to be implemented?

Yes, the next steps involve CMS receiving comments from companies, particularly DME distributors related to the insulin pump sector. They will gather feedback from companies like Beta Bionics and DME distributors. The deadline for these responses is by the end of August or early September. Following this, CMS will decide whether to proceed with the proposal and implement the competitive bidding process. Eventually, there will be a ruling on when the new policy will take effect, with our expectation being that the earliest implementation could occur is in 2027.

And our next question will be coming from the line of Michael Polark of Wolfe Research.

I'm curious to hear your general thoughts on the dynamics between existing stores and new openings as you evaluate the sequential growth in starts. How much of that growth do you think comes from increased engagement with current prescribers compared to the acquisition of new prescribers?

Yes, Mike, that's a good question. Unfortunately, I won't provide a numerical answer. We are actually experiencing both dynamics. We have expanded our field sales team compared to last year, which means there are new territories where Beta Bionics previously had little to no sales presence. This has created a new store dynamic. Additionally, we are noticing an overall increase in prescriber adoption in the areas where we already operate. We do track these metrics, but they are not shared externally. However, the message regarding the simplicity of the iLet is resonating well. Healthcare professionals are observing positive results in their patients and are becoming more comfortable prescribing the iLet, which is reflected in our results. So, the dynamic includes both factors, but I won't provide specific numbers.

Understood. If I can follow up, I appreciate all the comments on the Medicare proposal. I know the response to this one will probably lean squish, but to the extent this moves forward substantially as envisioned, and I'm talking specifically about the shift to pay over time. To what extent would this Medicare fee-for-service standard create risk that the commercial DME or Medicare Advantage contracts over time head in this direction as well? How do you assess that path?

Yes, that's a good question. The proposal does not mention anything about that, and we do not see any associated risks from it affecting commercial plans or the pharmacy model. I would like to point out that the pay-as-you-go model being proposed in the CMS proposal, which resembles a rental model, has been working well already in the pharmacy system. For example, Beta Bionics and all patch pumps are being reimbursed through this model. However, in the case of patch pumps, they do have Medicare Part D coverage, which Beta Bionics does not have for our iLet. Nonetheless, we are already seeing Managed Medicare coverage for the iLet through a pay-as-you-go model in the pharmacy system. If CMS decides to implement a pay-as-you-go model in the pharmacy channel, they would utilize the existing infrastructure that is already in place today. So, to summarize, that's my response.

I think I'd like to add to that one, Stephen. It's very hard for us to assess the risk of that happening. But I think what we've done is insulate ourselves from it with our pre-existing transfer to a pay-as-you-go model proactively. There are reasons that it makes a ton of sense and makes a lot of sense for us as well. And again, we're already doing that proactively. So I can't speak so much to the risk of it, but I will say that we're preparing ourselves properly for it, if it were ever to happen.

And the next question will be coming from the line of David Roman of Goldman Sachs.

This is Phil on for David. I thought I'd start with the type 2 comments that you ended with, Sean. Stronger contributor as a percentage of new patient starts with a much stronger new patient start number overall. I was just hoping you could talk a bit more about the market dynamics going on there, the success that you're having, albeit off-label and what would kind of act as a trigger or what we need to hear for a bigger push towards type 2?

Yes, that's a great question, Phil. I will keep my comments more general regarding how physicians operate their practices. Physicians have the responsibility to understand the various tools available to them, how to best use them, and whom to prescribe them to. That’s the rationale behind the off-label rules; they have the right to make those decisions. I won’t delve into specifics about iLet, but it's clear that this is being considered in the prescribing patterns we are observing as awareness of iLet and other products increases. Apologies for the somewhat vague response, but yes, type 2 is a focus.

No, I think that's helpful. The second one is probably for Stephen. It's a different way of the guidance question and appreciate that pharmacy mix in a given quarter will matter to this question. But given the growing proportion of recurring revenue that's coming in, it is going to be the case in this revenue ramp period that if you see sequential increases in patients, there should be even more so a sequential ramp in revenue to accompany that, right? Because you have the pump revenue as a supplement to a growing base of recurring revenue. I guess, said differently, do you have better visibility moving forward into the guidance assumptions you're giving because of the relative scale of the recurring versus one-time-only revenue over time here?

Yes, that's a great question. The answer to both parts is yes. We anticipate an increase in our revenue even if new patient starts remain unchanged quarter-over-quarter because our strong installed base is generating consistent revenue in the pharmacy channel. Additionally, our business becomes more predictable when a larger portion of our revenue comes from pharmacy, as that represents a consistent revenue stream.

Okay, great. Just one clarifying one. The pay-as-you-go model just from a timing standpoint could go into effect in '26, while the comment on the competitive bidding process not going into place was '27, right?

No, actually. We would expect that the competitive bidding process would determine the rental model or that it would be a prerequisite for the rental model to be implemented. My statement about when we anticipate this going into adoption, with 2027 being the earliest, indicates that the entire policy must be in place: competitive bidding leading to a rental model, which would then start generating sales through that rental model in 2027 at the earliest. I would say that's very speculative, but that's our perspective.

And our next question will come from the line of Frank Takkinen of Lake Street.

Congrats on the great quarter and increased guidance. I wanted to start with one more on type 2s, and I appreciate the sensitivities given it's off-label, but with how good that number has been trending. I was hoping you could help us understand a little bit more of maybe where that strength is coming from? Is that the primary care channel? Is that patient group using the pharmacy benefit channel more? Or anything else specific to call out that has increased the use in that channel?

Yes, we need to be cautious here since we don't have a type 2 indication, so I don't want to imply that we're promoting the iLet for type 2 use. I'll repeat what Sean said regarding doctors having the freedom to prescribe as they see fit. So I won't provide a detailed answer to your question. However, I can confirm that the iLet is being adopted for type 2 patients in both the primary care channel and the endocrinology channel, much like its current adoption today. Yes. We began the year with 43 sales territories and ended the first quarter with 63, which remains the same for this quarter. There won't be a substantial increase in our territory expansion for the rest of the year; we are likely to expand again early next year.

And our next question will be coming from the line of Jeff Johnson of Baird.

I think she said, Jeff. I hope you're hearing me okay here. Just maybe one clarifying question. You talked about maybe that pharmacy channel mix not increasing at the same rate in the back half of the year as we saw in the first half of the year. Part of that due just to the strong uptake you saw through the Prime contracts that started in February. As you have expanded access through additional payers here, why is the Prime contract different maybe than some of those other payers? Or said another way, if you're pushing as many of your patients who do have pharmacy coverage into the pharmacy channel, why can't that rate of push and kind of that rate of adoption continue to move in the same sequential kind of pattern?

Yes, that's a great question. The Prime deal is significantly different from other PBM contracts. To secure pharmacy coverage, which we define as new patient starts in the pharmacy channel, two key steps must occur. First, we need the PBM agreement in place, and second, we require the associated health plans that work with that PBM. With Prime, both steps happened simultaneously. In contrast, for other PBM agreements, such as the one Sean mentioned that starts on July 1, we have completed only the first step; the agreements with the health plans involve a separate sales cycle that we must secure at later dates. For the PBM contracts we already have, we continue to establish agreements with more underlying health plans, contributing to the steady increase in pharmacy adoption. This growth is due not only to the Prime deal from the first half of the year but also to our continued collaboration with other PBMs, as we add more underlying plans.

That's helpful. That clarifies things. I have one more question regarding the competitive bidding in the pay-as-you-go model. One of your competitors is mentioning the possibility of a tubed pump entering Medicare Part D. On your end, you're pursuing the pharmacy channel and working on the PBM side monthly. What would it take to enter Part D instead of Part B? And do you believe the CMS documents indicate that Part D will be exempt from competitive bidding? That's our interpretation, but there seem to be different opinions on certain phrases in that document.

Yes. We've always indicated that a crucial step for durable insulin pumps to begin receiving reimbursement primarily through the pharmacy channel hinges on Medicare Part D treatment. Currently, durable insulin pumps, including the iLet, are classified under Part B. I don't want to speculate on when this change might happen or when durable insulin pumps could be recognized as Part D treatment. What I can say is that this does seem to initiate a discussion and potentially accelerate the process, especially given CMS's interest in a pay-as-you-go model that the pharmacy channel supports. However, I don’t want to provide a timeline for when it will occur. Additionally, in relation to your second question, the proposal does not mention anything regarding Part B or insulin pumps, particularly patch pumps that fall under Part D treatment. Therefore, it gives me no basis to believe that the proposal implies anything about patch pumps or any insulin delivery devices classified under Part D, since it simply does not reference them.

I would like to comment on that, Jeff. There are two concepts we're discussing that overlap but aren't the same. The first is the distinction between durable pumps and patch pumps, or disposables if you prefer. We understand what that means. Additionally, there's the idea of a durable pump model, which involves an upfront payment followed by smaller supply payments, in contrast to a pay-as-you-go model typically associated with disposables. As durable pumps receive more payment under a pay-as-you-go model, the distinction between durable and disposable devices becomes less significant since that wasn't the original intent. The reasoning behind these statements has evolved over the years. The pay-as-you-go model aligns with the original definition. However, the implications of that are still uncertain, and we will have to wait to see how it unfolds.

And the next question will be coming from the line of Richard Newitter of Truist.

This is Felipe on for Rich. Building off the last point, I was wondering if you could help us understand better regarding new starts, since your presence in pharmacy is significantly larger compared to some of your durable pump competitors. Is the removal of that upfront cost a decision factor for new MDI patients considering starting on durable pumps? I have one follow-up as well.

Yes, absolutely. If you were to ask me why we are seeing such an increase in new patient starts and why we continue to exceed expectations for new patient starts, I would give you two reasons. First, the iLet is clearly resonating due to its unique characteristics; it's easy to use and the clinical outcomes are excellent. As doctors try it, they see positive results and prescribe it more. Second, the availability of pharmacy coverage significantly eases the purchasing process for patients, whether they are switching from another pump or simply finding the out-of-pocket costs much lower than for other options. This has created a favorable environment for new patient starts, which is a major factor in our success. Yes. We continue to benefit from a lower cost per unit due to scale. We have a strong understanding of what our cost per unit will be for the remainder of the year, which gives us confidence in our ability to continue increasing it.

And our next question will be coming from the line of Jeffrey Cohen of Ladenburg Thalmann.

Sean and Stephen, just one from our standpoint. You talked about the field sales reps and territory coverage. And when you think about the back half, could you kind of walk us through how you may expect the OpEx to look as it relates to Q3 and Q4 relative to the first half?

Certainly. You will not see a significant increase in operating expenses for G&A and sales and marketing for the remainder of the year in Q2, Q3, and Q4. However, there may be an increase in R&D expenses in Q3 and Q4 linked to the Mint program and the bihormonal project. We will begin to see more efficiency from our sales and marketing costs and G&A costs, but there will be some variability due to the bihormonal and Mint projects. Yes.

Thank you so much. There are no more questions in the queue. And that does conclude the presentation for today. Thank you all for joining. You may now disconnect.