The shape that we saw in 2025,

are generally consistent with what we're expecting in 2026. There's two primary factors driving that. One is that the sales territories that we added in the first half of 2026, we expect, and history would suggest this for us, or validate this, I should say, that the territories will start to get more productive in their second, third, and quarters beyond, meaning the fourth quarter they've had a longer tenure, They've been at the beta bionics for longer, and thus we would expect them to be more productive. In addition, fourth quarter tends to be seasonally more favorable relative to Q3. Now, that seasonality is muted for reasons that we've explained in the past, driven by the pharmacy dynamic. But those are kind of the contributing factors, I would say, for how we would see the new patient starts growth in the back half of the year. Okay. Thank you very much, guys. Yep, sorry to ask you to clarify there. Thanks, Matt.

Thank you. One moment for our next question. Our next question comes from the line of Jeff Johnson of RW Baird. Your line is now open.

Hey, guys. Thanks for taking the question. This is Maggie on for Jeff. I was wondering what you guys are seeing on the competitive front at present. One newer company that has come to market with a fairly sizable sales force just in the past. six to 12 months, and then another company that is newly independent and has made improvements on their own front. Are you guys seeing any sort of pause from positions, anything from your field sales rep that it's getting harder to win across accounts? Thanks for taking the question.

Yeah, great question, Maggie. No, I don't really think so. I mean, I think that, you know, we're obviously aware of the two competitors that you mentioned or alluded to. in one case, actually I would say in both cases, they represent pretty different products to what Beta Bionics is offering. And I think this is a really important point that I don't want to be missed. We've been continuing to educate the market on what Islet is over the last several years. And it does represent a highly differentiated offering as compared to what some of those other companies are doing, especially the ones that are more on the side where settings are important. And you can see that in some of the sub-segmented data that I referred to in my prepared remarks. If you're talking quite a bit about your outcomes and the settings required to get that, that's exactly what we're not doing. And that's why we see beta bionics as a sort of a population health tool, something everybody can get or most people can get a good result with. those other products you mentioned are a little bit the other end of that spectrum. They require quite a bit of aggressive interaction and so said another way the target islet patient is not necessarily a person who would really be striving for a system like that in general and we also think that that over time though people who actually think they want that kind of system will ultimately realize they don't love managing their diabetes and pivot more our way but That's a long way of answering the question and saying, no, we're not really seeing, you know, they're not pulling our target patient away from us in any way. Not seeing it.

Thanks.

Thank you. One moment for our next question. Our next question comes from the line of Michael Porak of Wolf Research. Your line is now open.

Hey, good afternoon. I'm curious for color on the 20 new sales territories. Are these folks opening portions of the country that previously were not open for ILUT? Or are you splitting geographies, going deeper in key places? What's those 20? How are they focused? And what is similar or different to the mandate for the existing rep bases?

Yeah, good question, Mike. So the way I would describe it is this. Beta Bionics really hasn't had much what we call white space, meaning areas without a sales rep at all for quite a while at this point. So from that perspective, all of these new territories do represent territory cuts. However, it is also true that if you're a rep with a large territory, especially geographically large territory, you're gonna have a very hard time getting to some of your target accounts, right? You're gonna be focused more in the large city nearest your home, for example. So from that perspective, this will ultimately be, will ultimately result in stores that never had a rep visit them starting to visit them at this point, which looks more like a new territory. Where that overlaps is when you cut a territory To the extent that a particular account that was previously writing is now in a new territories area, that rep is incentivized to go visit that account first. They were previously writing. They want to shore up that account. They want to make sure they don't stop. That can be a disruptive experience for that account, and we want to make sure we don't provide that. So they're going to start there and they're going to then expand into sort of new store sales, if you will. So it falls somewhere in between, you know, just a complete territory cut where the previous territory was completely visited, which wasn't true for us, and a net new territory, which it really isn't there either. Hopefully that's helpful.

Follow up on that and then I have my proper follow up. Has the splitting happened in 2Q or is that a 2H project?

Yeah, it's happened in 2Q, or in the first half of the year.

The follow-up maybe for Stephen and your prepared remark, you mentioned lower warranty expense is one of the gross margin good guys. I just want to understand that dynamic. Is there something to read there positively about retention, or that's an overread? I would welcome any further color on that mention. Thank you.

The reason warranty expense has gone down or the warranty rate has gone down is we made the screen stronger. So when we first launched the islet, it was shipping with a version of a certain screen strength. And then we've since upgraded the screen to what's called Gorilla Glass 3 to get technical. And now the screen is breaking far less frequently. So that's the impact on gross margin. A second order impact of that could certainly be retention, although that's a little hard to measure, meaning like, you know, the screen's breaking less often, patients are happier, how less often are they treating? I don't know exactly what that metric is, but yes, absolutely, it's a better patient experience if the islet is breaking less frequently, and that did have a favorable impact on gross margin.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Stephanie Algazi of Bank of America. Your line is now open.

Hi, thanks for taking the question. I wanted to follow up on the new patient starts this quarter. It looks like the quarter-over-quarter growth of mid-teens at the midpoint that you shared is below the typical historical trend, Q1 to Q2. Is there anything to call out there, or is it just hard to call history a trend given the initial launch period?

Well, I'm not sure I exactly agree with your math necessarily or calling, you know, this particular quarter down relative to a trend in the past. But again, this particular new patient start quarter met our expectations, and I guess I'll just leave it there.

Got it. And then on the mint manufacturing capacity and being able to meet demand at the launch, just Any progress you can share on the confidence you have driving that and just where you're at now with getting ready for that capacity and what may be left to do?

Yeah, definitely understand what you're trying to get at. I think that in general, we've provided a number of updates lately that are the reasons for our upgraded confidence here. Obviously, we talked about the submission of our 510K. We talked about our clean room construction. We've talked about our semi-automated lines being up and running, so much so that we've retired our manual lines. In the past, you've heard me talk about our progression from manual to semi-automated. That would be our launch configuration, followed by fully automated lines that would come on in the future. Those are a very long lead item. So without getting into the exact details of our production rates and our yields and everything else, I think I'll just say that try to give a little bit of color today on where we are. And obviously, we see the underlying numbers. And based on the timelines to launch here, we're feeling good. We're seeing what we need to see at this stage. This is not our first product launch ever. And we're seeing what we need to see to be able to continue to make that statement. Hopefully that's helpful.

Thank you. One moment for our next question. Our next question comes from the line of Jeffrey Cohen of Leidenberg Thelman. Call your lines now open.

Hey, good afternoon. Thanks for taking our questions, Sean and Stephen. Just one follow-up on manufacturing. Could you hypothesize with us regarding margins and how you may think that plays out on mint and how that might compare to either with the increased efficiency and the automation?

Yeah, just so I make sure I don't answer the wrong question, Jeff, you're asking about mint gross margin profile after we launch it?

Yeah, what you would anticipate, yes.

Gotcha. Thank you. Well, without giving you a specific number for gross margin that we're targeting or an outlook that we're targeting, I'll just say this. Manufacturing cost was very much embedded in the design of Mint, meaning the ability to manufacture and the corresponding cost. So like you mean the reliability of it yields and the corresponding cost of the actual device itself. And that's why we've done the two-part architecture where we have A reusable portion of the device, which is replaced every two years, and that's where all the expensive components live. And then the actual component of mint that gets thrown away every time a patient changes his or her insulin is actually quite inexpensive in terms of the bill of materials, because all it is is batteries, cannula, the syringe, and the adhesive, with, of course, a few other components. But again, all the expensive components in the reusable portion So at any level of real scale, meaning millions of parts manufactured or millions of mints manufactured annually, our gross margin profile on mint we believe will be advantaged relative to the patch pump competition. And again, that's because of our design. And so that gives you some directional sense as to what kind of gross margin profile we're talking about. And also embedded in that too is the capex associated with getting the mint production capacity to the level that's required. It's reasonably capex light, especially the first phase of mint manufacturing development where it's semi-automated. That is very capex light. There's more labor costs, of course, that's the trade-off. But then as mint capacity grows in the future and we move to full automation, more capex, but still reasonably light relative to numbers you're familiar with from our competition and then labor costs It drops out of it. So here from all this, that cost is very much at the forefront of all decision making. User experience being number one, but cost right there in the mint design. And that's part of how we're going to be building a profitable market leading company.

Thank you. One moment for our next question. Our next question comes from a line of Richard Neuwitter of Securities.is.open.

Hey guys, sorry, it's Felipe. Just one follow-up. This is like the second or third quarter that multiple durable pump players are moving into the pharmacy channel. So I'm just wondering if you could give us an update. Are you seeing any changes? You're the furthest along of those players. Are you seeing any changes in your conversations with the PBMs? Are PBMs more open to coverage? I guess like what kind of changes are you seeing?

Yeah, great question. You know, I think that multiple players moving in here definitely helps everybody. The conversations become more normal at some level. Nobody wants to do anything out of the ordinary, right? So the more of us do it, the more it's going to be easier for those to follow. We did pave this road a little bit, at least on the tube pump side, and that's okay. But yeah, I mean, we're happy to have everybody. I think that ultimately that, you know, the pharmacy channel benefits people with diabetes. And yes, it is getting a little easier to do as we do it and as we provide a roadmap to have it done. Are the conversations evolving? Mildly, I guess there's just a little bit more, you know, a little bit more understanding of what it is that we're doing. But beyond that, no, there's no there's no seismic shift here.

Yeah, I think maybe one other point I'd add is we've always desired to have the islet reimbursed in the pharmacy channel as the predominant reimbursement strategy in the long term. And I think what actually helps that strategy is other tubed insulin pump companies moving towards pharmacy. And in order for that vision that I've just described to be fulfilled, I don't think it can just be Beta Bionics being the only company that's prioritizing pharmacy or preferring pharmacy as their reimbursement path. And so, yes, maybe it creates in the short run a small bit of negotiation over time with the PBMs and the decision makers of the PBMs because there's more pump companies. But look, we like our differentiation and our ability to win those discussions. And then in the long term, this is absolutely healthy for a company like us that wants our product to be reimbursed in pharmacy. And that goes for Islet and Mint, of course.

Thank you. One moment for our next question. Our next question comes from the line of Frank Taganen of Lake Street Capital Markets. Your line is now open.

Great, thank you. I'll follow up on the pharmacy channel questions in a slightly different context. I know we've talked about in the past one of the gating factors to getting mint broadly adopted and having that unconstrained launch is really the pharmacy channel contracting. Can you remind us and walk us through how that process will go once you have that approval or if you need the approval prior to those contracting discussions? And then how should we think about that kind of impacting the launch cadency?

Hey, Frank. Yeah, look, ILIT's position with pharmacy PBMs, meaning the relationships we have, the contracts that we have, and then the underlying health plans is absolutely the runway that will help us get coverage for mint significantly faster than if we didn't already have ILIT on the market. So in some cases, these are the exact same agreements with the PBMs, with the underlying plans, with an amendment to add a new NDC code In other cases, it's a new agreement, but the point is we've already convinced chief medical officers or the decision makers at these respective accounts of the merits of ILIT clinically and the users and what their experience is on the device, and so there's no new sales process from zero. All we have to do is convince them that what our hardware is, why it's differentiated, why they should cover it, what the predicate is, and so that's I can't really understate how important that is for us to be able to have coverage that we'll feel good about at launch. Now, I guess CFO answer here, the other side of this is what I don't want you to hear is that we will have the level of pharmacy coverage that our patch pump competitor will have on day one. That will take us time, and I think it's actually really helpful that that road has already been paved that we can follow, but we will not right out of the gate have the same level of coverage that they have. but I think look there's other I'm just going to take a quick moment to make the point how set up Beta Bionics is for for Mint and how like you know I guess well positioned the company is and this plan that we've laid out years ago how well it's playing out and pharmacy coverage is only one part of that but you know you think like a company like us with a proven algorithm a are proven in terms of clinically that has confidence from healthcare providers, has confidence from patients, truly differentiated in terms of what its value proposition is. We talked about pharmacy reimbursement and how we've already become experts in that particular area that matters. We have a commercial infrastructure in place, a brand that's well recognized, and this is all exactly how you would draw up a launch for a product like Mint. and, you know, I guess so if you can't tell, we're kind of, we're excited about it. And I guess, Frank, just coming back to the pharmacy point, I appreciate you asking.

Small follow-up, just a very specific answer to your question, Frank, and I love Stephen's answer there. In answer to your specific question, do we need approval prior to signing these agreements? The answer is sometimes. But we don't need it to go out and start doing the work. And part of that work, as Stephen said, was laid by ILIT. Additional work is being done now. I'll leave it at that.

Okay, that's helpful. And then just a big picture question, I'm not sure if you'll be comfortable commenting on this or not, but I'll try. How should we think about the leverage profile coming back into the model? Obviously, investment is first and foremost today, and we're seeing OpEx going to grow at about the same rate of sales, if not sometimes a little bit faster. When should we see that line cross where that revenue growth starts to really outpace the OpEx investment?

I love the question. As you know, I haven't communicated a specific number for where we start generating free cash flow. So I'm not going to today. But look, what's become the expectation for diabetes med tech companies in particular in terms of what revenue scale or what revenue is required in order for you to start generating free cash? Don't use that when you're thinking about beta bionics. We're in a different universe in terms of what our expectations are for ourselves and what revenue level is required. And I guess just also here that profit and free cash flow generation and returning that to shareholders is just a core principle that Sean and I are building companies. And I guess you're just going to have to take my word for it and look at our history and what we've done, but I won't pick a particular level where we'll start generating free cash, at least for the moment. Fair enough. That's helpful. Thank you.

Thank you. I'm showing no further questions at this time. I'll now turn it back to Sean Saint for closing remarks.

I'll just say I appreciate everybody's time and understanding today and Thank you for your participation in today's conference. This concludes the program. You may now disconnect.