Beta Bionics, Inc. (BBNX)

CIK: 0001674632. SIC: 3841 Surgical & Medical Instruments & Apparatus. Latest 10-K as of: 2026-02-24.

SIC breadcrumb: Manufacturing > SIC Major Group 38 > SIC 3841 Surgical & Medical Instruments & Apparatus

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1674632. Latest filing source: 0001193125-26-067065.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001674632.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-21. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001674632.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
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• DFEDTARL - Federal Funds Target Range - Lower Limit
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• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
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• PPIACO - Producer Price Index by Commodity: All Commodities
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• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
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• RSAFS - Advance Retail Sales: Retail Trade
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• RHORUSQ156N - Homeownership Rate in the United States
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• RRVRUSQ156N - Rental Vacancy Rate in the United States
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• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-166843.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-04-21. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and the related notes included elsewhere in this Quarterly Report, our financial statements and the related notes thereto for the fiscal year ended December 31, 2025 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our planned investments in our research and development, sales and marketing and general administrative functions, and our current plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in both our Annual Report on Form 10-K for the year ended December 31, 2025 and in this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

Overview

We are a commercial-stage medical device company engaged in the design, development, and commercialization of innovative solutions to improve the health and quality of life of insulin-requiring people with diabetes (PWD) by utilizing advanced adaptive closed-loop algorithms to simplify and improve the treatment of their disease. Diabetes is a chronic condition that requires ongoing insulin management, and despite advances in care, many PWD continue to struggle to achieve optimal outcomes. Despite decades of innovation, a significant unmet need remains. Our product, the iLet, is the first insulin delivery device cleared by the U.S. Food and Drug Administration (FDA) to utilize adaptive closed-loop algorithms to autonomously determine every insulin dose without requiring a user to count carbohydrate intake. We believe this represents a significant advancement over currently available insulin delivery options by offering a differentiated combination of improved glycemic control and a simplified experience for users and caregivers.

The iLet was specifically designed to provide improvements in glycemic control relative to currently available treatment options, such as insulin pumps, including partially automated insulin delivery (AID) systems (also known as hybrid closed-loop systems), and multiple daily injections (MDI), also reducing the complexity and burden of achieving these improved results for PWD. It is enabled by adaptive closed-loop algorithms that continuously learn each person’s unique and everchanging insulin requirements and then autonomously delivers the correct insulin doses every five minutes throughout the day and night. Only the user’s body weight is required for device initialization and the autonomous determination of all insulin doses, unlike insulin pumps and hybrid closed-loop systems, which require a complex host of parameters to configure.

Our initial commercialization efforts for the iLet are in type 1 diabetes (T1D), an indication for which we received FDA clearance in patients six and older in May 2023, in the United States. According to the Centers for Disease Control and Prevention (CDC), there are approximately 1.9 million people with T1D currently in the United States, all of whom require daily insulin replacement to manage their disease. We believe that one of the principal causes of suboptimal outcomes as it relates to disease management is the complexity of the user experience with most currently available insulin pumps and hybrid closed-loop systems, which has kept the majority of PWD from adopting them despite the improved disease management they can offer. We believe that approximately one-third of people with T1D in the United States utilize insulin pumps or hybrid closed-loop systems to receive their daily insulin, while the majority receive their daily insulin via MDI, which is less complex, but often less effective, and has been shown to be associated with higher HbA1c levels. Our initial commercial results suggest that the iLet’s value proposition is resonating strongly within the MDI population as approximately 70% and 71% of the iLet’s adoption during the three months ended March 31, 2026 and 2025, respectively, came from PWD who were previously utilizing MDI.

We have also partnered with Dexcom and Abbott—global leaders in popular and easy to use iCGM technology—to integrate the iLet with the Dexcom G6 and G7 iCGMs and with Abbott’s FreeStyle Libre 3 Plus Continuous Glucose Monitor (CGM) sensor. Use of the iLet requires the independent purchase of a compatible third-party iCGM to provide real-time data to the iLet user.

The iLet requires the use of single-use products, which we sell separately to our customers. These single-use products include cartridges for storing and delivering insulin, as well as infusion sets. These single-use products are generally recommended to be disposed of entirely every 2-3 days, or as directed by a healthcare provider. We also offer a mobile application that receives information from the iLet and displays that information discreetly to the user. This intuitive mobile application delivers real-time glucose readings, trends and graphs, with data securely stored in the cloud.

To maximize the commercial value of the iLet opportunity, we have assembled a team across our organization with broad experience in the successful commercialization of innovative technologies in the field of diabetes disease management. We are

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promoting sales of the iLet through an internal sales organization focused on high-volume endocrinology practices in the United States and may expand to primary care physicians (PCP) over time. We believe that the iLet’s core value proposition of marrying effective glycemic control with the simplicity of use that is brought about by adaptive closed-loop algorithm insulin-dose determination may resonate particularly well among PCP who do not have the subspecialty-level of expertise, the resources, or the clinical bandwidth that is needed to initiate insulin-pump or hybrid closed-loop therapy or for the continual demand (such as adjustments at quarterly visits) those systems place on clinical practices in follow-on care.

Our primary customers are distributors and pharmacies who sell the iLet and single-use products that are used together with the iLet. PWD acquire our products through the DME channel and the PBP channel. Currently, the majority of our new patient starts are reimbursed through the DME channel.

We are pursuing a multi-channel coverage and reimbursement strategy to maximize access to the iLet within the T1D population, provide flexibility for PWD in choosing their device and provide PWD with advantageous coverage and reimbursement terms. We are working with payors to establish coverage and reimbursement under both the DME and PBP channels as we believe this strategy increases access and optimizes the potential for better medical outcomes for PWD through the adoption of the iLet.

The durable medical equipment (DME) and pharmacy benefit plans (PBP) reimbursement channels for the iLet and its single-use products entail different payment outlays and therefore differentially impact PWD and our financial results. DME reimbursement requires the user and insurance carrier to make a large, upfront payment and reimbursement, respectively, for the iLet, which is typically in the thousands of dollars.

By contrast, PBP reimbursement requires the user and insurance carrier to make a small upfront payment and reimbursement, respectively, for the iLet, allowing for a potentially higher rate of adoption by PWD. The insurance carrier then makes larger reimbursement payments for the purchase of single-use products, with the user’s payments for the single-use products being generally consistent with what the user would likely pay for single-use products in DME reimbursement. As a result, we recognize a small amount of revenue at or around the date the iLet is sold in the PBP channel and we absorb initial negative gross margin. iLet sales in the PBP channel are generally expected to then start generating cumulative positive gross margin for us following the third month the user utilizes the iLet and continues to purchase single-use products. For the three months ended March 31, 2026 and 2025, PBP channel sales represented 39% and 22% of net sales, respectively.

When considering the overall economics over the lifetime of each iLet, sales through the DME channel generally result in higher upfront cash flows from the large upfront payment and reimbursement for the iLet, but lead to lower cash flows over time as the user purchases the necessary single-use products. By contrast, sales through the PBP channel generally result in lower upfront cash flows from the small payment and reimbursement for the iLet, but lead to higher cash flows over time as the user purchases the necessary single-use products. This reflects differences in both the upfront device economics and the pricing of recurring single-use products across channels. When comparing sales through the DME and PBP channels, we expect sales through the PBP channel will have a more favorable economic impact on our financial results over the expected life of the iLet, which we generally expect to be four years. As such, our current strategic priority is to direct demand to the PBP reimbursement channel.

In addition to our commercialized product and to maintain our competitive position in the marketplace, we intend to continue investing in disruptive technologies through our experienced research and development team. We are in the early stages of developing an insulin pump that adheres directly to the skin and administers insulin without the need for tubing, commonly known in the diabetes industry as a “patch pump.” We are also in the early stages of developing a first-of-its-kind bihormonal system of the iLet, which combines automated delivery of insulin and glucagon, the BG-raising hormone that protects against low blood sugar, or hypoglycemia, with adaptive closed-loop algorithms where all doses of both hormones are autonomously determined. As part of our development plans, in September 2025, we completed a clinical trial in Canada assessing the pharmacokinetics (PK) and pharmacodynamics (PD) of our glucagon product candidate (also referred to as the glucagon asset, and referred to herein as the PK-PD Trial). The completion of the PK-PD Trial enables us to bridge our previous bihormonal clinical data to our glucagon product candidate. We believe that the results from the PK-PD Trial are supportive of the continued development of our glucagon product candidate for use in our bihormonal system of the iLet. In the fourth quarter of 2025, we completed our first-in-human Phase 2a feasibility trial in New Zealand evaluating the integrated bihormonal system, including the glucagon formulation, pump, and dosing algorithms. In the first quarter of 2026, we initiated an additional Phase 2a feasibility trial to further evaluate the system as we advance development. We also intend to pursue the development of the iLet for expanded patient populations and indications, such as people with type 2 diabetes (T2D), as we believe the size and composition of this population make it a

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-24. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K (Annual Report). Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our planned investments in our research and development, sales and marketing and general administrative functions, and our current plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section titled “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Overview

We are a commercial-stage medical device company engaged in the design, development, and commercialization of innovative solutions to improve the health and quality of life of insulin-requiring people with diabetes (PWD) by utilizing advanced adaptive closed-loop algorithms to simplify and improve the treatment of their disease. Diabetes is a chronic condition that requires ongoing insulin therapy, and suboptimal glycemic control remains common despite advances in treatment technologies. Our product, the iLet, is the first insulin delivery device cleared by the U.S. Food and Drug Administration (FDA) to utilize adaptive closed-loop algorithms to autonomously determine every insulin dose without requiring users to count carbohydrate intake. We believe this represents a significant advancement over currently available insulin delivery options by combining improved glycemic control with a simplified user experience.

The iLet was designed to provide improved glycemic control relative to currently available treatment options, such as insulin pumps, partially automated insulin delivery systems, and multiple daily injections (MDI), while reducing the workload associated with achieving these outcomes. It uses adaptive closed-loop algorithms that learn each person’s unique and changing insulin requirements and autonomously deliver the appropriate insulin dose every five minutes throughout the day and night. Only the user’s body weight is required for initialization, unlike traditional pump and hybrid closed-loop systems that require numerous user-defined parameters. These adaptive algorithms eliminate the need to manually adjust pump settings or calculate meal and correction doses, which we believe makes the iLet easier to initiate and use than other available systems.

Our initial commercialization efforts for the iLet are in type 1 diabetes (T1D), an indication for which we received FDA clearance in patients six and older in May 2023, in the United States. T1D is an autoimmune disorder that often develops during childhood or adolescence, but can occur at any age, and arises from a person’s immune system attacking and destroying the insulin-producing beta cells in the pancreas. According to the Centers for Disease Control and Prevention (CDC), there are approximately 1.9 million people with T1D currently in the United States, all of whom require daily insulin replacement to manage their disease. We believe that one of the principal causes of suboptimal outcomes as it relates to disease management is the complexity of the user experience with most currently available insulin pumps and hybrid closed-loop systems, which has kept the majority of PWD from adopting them despite the improved disease management they can offer. These systems require PWD to set and to periodically adjust several insulin pump parameters, to quantify daily carbohydrate intake, and to frequently calculate proper doses of insulin for their pump to deliver. We believe this complexity, and the constant engagement that is required in order to enjoy the full therapeutic benefits that these systems can offer, limits their uptake to a subset of PWD and to subspecialty healthcare providers (HCPs). We believe that approximately one-third of people with T1D in the United States utilize insulin pumps or hybrid closed-loop systems to receive their daily insulin, while the majority receive their daily insulin via MDI, which is less complex, but often less effective, and has been shown to be associated with higher HbA1c levels. This is based on our internal estimates factoring epidemiologic data from government and leading industry organizations such as the CDC (to establish the overall size of the T1D population) and industry sales data from public filings and disclosures made by the leading device manufacturers (Medtronic, Tandem and Insulet, who collectively hold approximately 96% market share) and aggregated by third-party data service providers (to provide independent estimates of both overall device penetration of various diabetes populations). Our initial commercial results suggest that the iLet’s value proposition is resonating strongly within

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the MDI population as approximately 70% and 69% of the iLet’s adoption through December 31, 2025 and 2024, respectively, came from PWD who were previously utilizing MDI.

We have also partnered with Dexcom and Abbott—global leaders in popular and easy to use iCGM technology—to integrate the iLet with the Dexcom G6 and G7 iCGMs and with Abbott’s FreeStyle Libre 3 Plus Continuous Glucose Monitor (CGM) sensor. An iCGM is a wearable device that works by inserting a small sensor under the skin into fatty tissue and tracks blood sugar levels in real time. The sensor measures glucose levels in the interstitial fluid and sends the information to a receiver, smartphone or insulin pump. The user can view their glucose levels, trends and to what degree their levels are rising or falling. The iCGM is a crucial component of AID systems, and by partnering with these leading global iCGM platforms, we believe we leverage all of the benefits that these CGMs offer in an elegant solution for PWD. Use of the iLet requires the independent purchase of a compatible third-party iCGM to provide real-time data to the iLet user.

The iLet requires the use of single-use products, which we sell separately to our customers. These single-use products include cartridges for storing and delivering insulin, as well as infusion sets that connect the insulin pump to a user’s body. The user fills the cartridge with insulin and inserts it into the iLet. The iLet then administers the insulin from the cartridge to the user’s body through a single-use infusion set. These single-use products are generally recommended to be disposed of entirely every 2-3 days, or as directed by a healthcare provider. We also offer a mobile application that includes a share/follow feature which allows data to be shared in real time with a trusted “Bionic Circle” of friends and family members. The mobile application receives information from the iLet and displays that information discreetly to the user. This user-friendly, intuitive mobile application provides real-time glucose readings, trends and graphs. It also allows for cloud-based data storage.

To maximize the commercial value of the iLet opportunity, we have assembled a team across our organization with broad experience in the successful commercialization of innovative technologies in the field of diabetes disease management. While the iLet can be prescribed by any HCP (primary care physicians (PCP) or subspecialists), we are promoting sales of the iLet through an internal sales organization where our initial direct sales efforts are focused on high volume endocrinology practices in the United States. Over time, we plan to expand into the more diffuse population of patients with T1D who are treated by PCP. Although we continue to analyze the timing related to this expansion, we do not currently have a specific timeline. These PCP treat an estimated one-half of the T1D population in the United States but do so among a much more diversified patient base than the endocrinologists. We believe that the iLet’s core value proposition of marrying effective glycemic control with the simplicity of use that is brought about by adaptive closed-loop algorithm insulin-dose determination may resonate particularly well among PCP who do not have the subspecialty-level of expertise, the resources, or the clinical bandwidth that is needed to initiate insulin-pump or hybrid closed-loop therapy or for the continual demand (such as adjustments at quarterly visits) those systems place on clinical practices in follow-on care.

A key element of our commercialization strategy is educating users and potential users on the use of the iLet. We provide this education primarily through healthcare providers, online resources, and our customer care team. We offer all users with an initial training to provide an overview of the functionalities of our product either through our own clinical diabetes specialists or by contracting with healthcare providers that provide this training directly to the user. These users also receive a reference guide with their initial shipment in addition to access to our customer care team for immediate assistance. Our website also offers numerous resource guides, including frequently asked questions (FAQs), to help all users understand the functionalities and operation of the iLet, available to both current and potential users.

As part of these efforts to educate this community within the United States, we are optimizing our direct sales efforts by growing a community support team called the “Bionic Universe,” which is built around a community of iLet users, caregivers, and key opinion leaders (KOLs) who share their stories to inspire others. The Bionic Universe aims to create a people-focused community dedicated to making diabetes management easier for everyone. This community is designed to facilitate the sharing of experiences and to help members learn more about the iLet. We employ both direct media and social media communication strategies to build the Bionic Universe and leverage feedback from this community to continuously improve both current and future device generations.

Our primary customers are distributors and pharmacies who sell the iLet and single-use products that are used together with the iLet. PWD acquire our products through the DME channel and the PBP channel. Currently, the majority of our new patient starts are reimbursed through the DME channel.

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We are pursuing a multi-channel coverage and reimbursement strategy to maximize access to the iLet within the T1D population, provide flexibility for PWD in choosing their device and provide PWD with advantageous coverage and reimbursement terms. We are working with payors to establish coverage and reimbursement under both the DME and PBP channels as we believe this strategy increases access and optimizes the potential for better medical outcomes for PWD through the adoption of the iLet.

The durable medical equipment (DME) and pharmacy benefit plans (PBP) reimbursement channels for the iLet and its single-use products entail different payment outlays and therefore differentially impact PWD and our financial results. DME reimbursement requires the user and insurance carrier to make a large, upfront payment and reimbursement, respectively, for the iLet, which is typically in the thousands of dollars. In order to use the iLet, the user must purchase our single-use products, which are generally sold in a 30-day supply.

By contrast, PBP reimbursement requires the user and insurance carrier to make a small upfront payment and reimbursement, respectively, for the iLet, allowing for a potentially higher rate of adoption by PWD. The insurance carrier then makes larger reimbursement payments for the purchase of single-use products, with the user’s payments for the single-use products being generally consistent with what the user would likely pay for single-use products in DME reimbursement. As a result, we recognize a small amount of revenue at or around the date the iLet is sold in the PBP channel and we absorb initial negative gross margin. iLet sales in the PBP channel are generally expected to then start generating cumulative positive gross margin for us following the third month the user utilizes the iLet and continues to purchase single-use products. For the years ended December 31, 2025 and 2024, PBP channel sales represented 24% and 10% of net sales, respectively.

When considering the overall economics over the lifetime of each iLet, sales through the DME channel generally result in higher upfront cash flows from the large upfront payment and reimbursement for the iLet, but lead to lower cash flows over time as the user purchases the necessary single-use products. By contrast, sales through the PBP channel generally result in lower upfront cash flows from the small payment and reimbursement for the iLet, but lead to higher cash flows over time as the user purchases the necessary single-use products. This is because single-use products through the PBP channel are sold at a much higher per unit cost than through the DME channel. When comparing sales through the DME and PBP channels, we expect sales through the PBP channel will have a more favorable economic impact on our financial results over the expected life of the iLet, which we generally expect to be four years. As such, our current strategic priority is to direct demand to the PBP reimbursement channel.

In addition to our commercialized product and to maintain our competitive position in the marketplace, we intend to continue investing in disruptive technologies through our experienced research and development team. We are in the early stages of developing an insulin pump that adheres directly to the skin and administers insulin without the need for tubing, commonly known in the diabetes industry as a “patch pump.” We are also in the early stages of developing a first-of-its-kind bihormonal system of the iLet, which combines automated delivery of insulin and glucagon, the BG-raising hormone that protects against low blood sugar, or hypoglycemia, with adaptive closed-loop algorithms where all doses of both hormones are autonomously determined. As part of our development plans, in September 2025, we completed a clinical trial in Canada assessing the pharmacokinetics (PK) and pharmacodynamics (PD) of our glucagon product candidate (also referred to as the glucagon asset, and referred to herein as the PK-PD Trial). The completion of the PK-PD Trial enables us to bridge our previous bihormonal clinical data, which tested prior formulations of glucagon in three pre-pivotal inpatient and six pre-pivotal outpatient clinical trials, to our glucagon product candidate. We believe that the results from the PK-PD Trial are supportive of the continued development of our glucagon product candidate for use in our bihormonal system of the iLet. In the fourth quarter of 2025, we completed our first-in-human Phase 2a feasibility trial evaluating the integrated bihormonal system and expect to initiate an additional Phase 2a feasibility trial in the first half of 2026 as development progresses. We also intend to pursue the development of the iLet for expanded patient populations and indications, such as people with type 2 diabetes (T2D), as we believe the size and composition of this population make it a compelling opportunity.

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License and Collaboration Agreements

Below is a summary of the key terms of certain of our license and collaboration agreements. For a more detailed description of these agreements, see the section titled “Business—Collaboration and License Agreements.”

Device License Agreement with Boston University

We have the Device License Agreement with BU that requires ongoing royalty payments and other financial obligations related to products incorporating BU-licensed technology. As consideration for the license, we issued 1,160 shares of Class B common stock to BU. Under the agreement, we are required to pay (i) quarterly royalties in the mid-single-digit percentage range based on net sales of licensed products by us and our affiliates, (ii) quarterly royalties in the low double-digit percentage range based on net sales by sublicensees, which are creditable against a minimum annual royalty amount, and (iii) quarterly lump-sum payments in the low double-digit percentage range based on certain non-royalty sublicensing revenue. We are also responsible for reimbursing BU for patent-related costs and may be required to pay an assignment fee in the event of a sale of substantially all assets related to the licensed technology. Royalty and license-related costs under this agreement are recognized as cost of goods sold or operating expenses, as applicable, and increase as sales volumes grow.

Control Algorithm License Agreement with Boston University

We have the Control Algorithm license agreement with BU covering automated control system technology incorporated into the iLet. In connection with this agreement, we issued 1,140 shares of Class B common stock to BU. Under the financial terms of the agreement, we are required to pay BU (i) quarterly royalties of a mid-single-digit percentage based on net sales by us and our affiliates, (ii) quarterly royalties of a low double-digit percentage based on net sales by sublicensees, in each case of (i) and (ii) creditable against a minimum annual royalty amount, and (iii) quarterly lump-sum payments of a low double-digit percentage of certain non-royalty sublicensing revenue received from sublicensees. We are also responsible for reimbursing patent-related costs and are required to make a one-time change-of-control payment of $65,000 if such an event occurs. Royalty obligations under this agreement represent ongoing costs that are expected to increase as commercial adoption of the iLet expands.

Collaboration and License Agreement with Xeris Pharmaceuticals, Inc.

We have the Collaboration and License Agreement with Xeris Pharmaceuticals, Inc. to develop and commercialize a glucagon formulation for use in our bihormonal system. Under this agreement, we paid an upfront fee of $0.5 million and a milestone payment of $3.0 million, both of which were recognized as research and development expense when incurred. We are also obligated to pay tiered royalties in the low double-digit percentage range on future net sales of glucagon products, subject to customary reductions.

In connection with clinical development activities, we entered into the Clinical Supply Agreement with Xeris and incurred $0.9 million of costs for Phase 2 clinical materials during 2024, with the remaining balance paid in early 2025. We expect to incur up to $5.1 million in additional development and manufacturing costs related to Phase 3 activities, of which $4.0 million had been paid as of December 31, 2025. Amounts are recorded as prepaid expenses and expensed to research and development as services are performed. These agreements are expected to continue to drive research and development expense and future royalty obligations.

Development and Commercial Agreements

Below is a summary of the key terms of certain of our development and commercial agreements. For a more detailed description of these agreements, see the section titled “Business—Development and Commercial Agreements.”

We have the Commercialization Agreement and Development and Commercialization Agreement with DexCom, Inc. and Abbott Diabetes Care Inc., respectively, related to integrated automated insulin delivery systems. These agreements primarily involve shared development responsibilities and cross-licensing of technology and trademarks and do not require upfront payments, milestone payments, or ongoing royalty obligations. As a result, these arrangements have not had a material direct impact on our results of operations or cash flows to date, though

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they may affect future operating expenses associated with development, regulatory activities, and commercialization.

Key Factors Affecting Our Performance

We believe that our financial performance has been and in the foreseeable future will continue to be primarily driven by the following factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address the factors below is subject to various risks and uncertainties, including those described in the section under Part I. Item 1A. “Risk Factors.”

New Patient Adoption and iLet Sales

Our financial performance has largely been driven by, and in the future will continue to be impacted by, the rate of sales of our products to new patients. Management focuses on new patient starts as a key indicator of current business success. We expect our new patient starts to continue to grow as we increase penetration in our existing markets and expand into, or offer new features and solutions that appeal to, new markets.

We plan to grow our sales in the coming years through multiple strategies, including expanding our sales efforts to focus on the more diffuse population of people with T1D who are treated by PCP over time, expanding our marketing initiatives including via the Bionic Universe, leveraging our partnerships with global leaders in CGM technology like Dexcom and Abbott, growing our internal customer support team, continuing to enhance our product offerings and pursuing a multi-channel coverage and reimbursement strategy.

Third-Party Payor Reimbursement and Impact of Our Multi-Channel Reimbursement Strategy

As a medical device company, our revenue and results of operations may be impacted if we are unable to secure sufficient coverage or reimbursement from third-party payors for our current or future products, or if reimbursement structures change under our multi-channel strategy.

We are pursuing a multi-channel coverage and reimbursement strategy to maximize access to the iLet within the T1D population, provide flexibility for PWD in choosing their device and provide PWD with advantageous coverage and reimbursement terms. We are working with payors to establish coverage and reimbursement under both the DME and PBP channels as we believe this strategy increases access and optimizes the potential for better medical outcomes for PWD through the adoption of the iLet. The DME and PBP channels for the iLet and its single-use products entail different payment outlays and therefore differentially impact PWD and our financial results. When considering the overall economics over the lifetime of each iLet, sales through the DME channel generally result in higher upfront cash flows from the large, upfront payment and reimbursement for the iLet, but lead to lower cash flows over time as the user purchases the necessary single-use products. By contrast, sales through the PBP channel generally result in lower upfront cash flows from the small payment and reimbursement for the iLet, but lead to higher cash flows over time as the user purchases the necessary single-use products. This is because single-use products under the PBP channel are sold at a much higher per unit cost than under the DME. As a result of a small amount of revenue recognized at or around the date the iLet is sold in the PBP channel, we absorb initial negative gross margin. iLet sales in the PBP channel are generally expected to start generating cumulative positive gross margin for us following the third month the user utilizes the iLet and continues to purchase single-use products. For the year ended December 31, 2025 and 2024, PBP channel sales represented 24% and 10%, respectively, of net sales. When comparing sales through the DME and PBP channels, we expect sales through the PBP channel will have a more favorable economic impact on our financial results over the lifetime of the iLet. To the extent that our mix of channel reimbursement fluctuates, our financial results may vary from period to period.

Continued Investment In Growth and Innovation

Our revenue growth has been driven by rapid innovation and quick adoption of our products by our customer base. We intend to continue to make focused investments to increase revenue and grow our business, and therefore expect expenses in this area to increase.

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We have invested, and will continue to invest, significantly in our manufacturing capabilities and commercial and customer support infrastructure. We expect that our 50,000 square foot facility in Irvine, California, which commenced operations in 2020, will have sufficient production capacity to support our anticipated clinical and commercial demand for the foreseeable future. We also plan to invest in sales and marketing activities, expect to incur additional general and administrative expenses and to have higher stock- based compensation expenses as we support our growth and our transition to becoming a publicly traded company.

The medical device industry is intensely competitive, subject to rapid change and highly sensitive to the introduction of new products, treatment techniques or technologies. We expect our business to be impacted by the introduction of new diabetes devices and treatments by us or our competitors. In order to maintain our competitive position in the marketplace, we intend, through our experienced research and development team, to continue investing in disruptive technologies, such as a patch pump and bihormonal system of the iLet, as well as pursuing the development of the iLet for expanded patient populations and indications such as people with T2D.

As cost of revenue, operating expenses and capital expenditures fluctuate over time, we may experience short-term, negative impacts to our results of operations and cash flows, but we are undertaking such investments in the belief that they will contribute to long-term growth. Moreover, introduction of new products may negatively impact aspects of our financial performance such as our overall gross margins.

Regulatory Approvals and Actions

The medical devices we manufacture are subject to laws and regulation by numerous regulatory bodies, including the FDA. The laws and regulations govern, among other things, the research and development, design, testing, manufacture, packaging, storage, recordkeeping, approval, labeling, promotion, post-approval monitoring and reporting, distribution and import and export of medical devices. Any adverse event involving any products that we distribute could result in future corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action. In the future, we also intend to pursue additional products, such as a patch pump and bihormonal system of the iLet, as well as pursue the development of the iLet for expanded patient populations and indications such as people with T2D, which will increase our expenses and subject us to increased regulatory-related risks.

Seasonality

We anticipate that the revenue generated from our product sales will vary from quarter to quarter as we continue to commercialize the iLet. Specifically, we expect to typically experience lower sales in the first quarter of each year compared to the preceding fourth quarter. This seasonal sales pattern in the United States is associated with the annual insurance deductible resets and coinsurance requirements of the medical insurance plans providing coverage to PWD using the iLet.

Macroeconomic Factors, Global Supply Chain Challenges and Inventory

Our costs are subject to fluctuation, and we continue to evaluate contributing factors, specifically those leading to inflationary cost increases in logistics, price of raw materials (components of the iLet), cost of labor, transportation and operating supplies. While we are experiencing higher raw material, labor, transportation, and operating supply costs, we intend to continue to work to improve productivity to help offset these costs as we navigate these global macroeconomic challenges, including tariffs or other trade measures, future bank failures, increased geopolitical tensions and conflicts, global pandemics, global economic conditions, including changes in monetary and fiscal policy, U.S. political developments and other sources of instability.

We currently rely on a number of suppliers who manufacture the components of the iLet and obtain them on a purchase order basis. We have a supply agreement with Unomedical for the production of infusion sets for our iLet, a contract manufacturing agreement with PMC SMART Solutions LLC (PMC) for the manufacture of our cartridge connectors and a supplier quality agreement with Maxon Precision Motors, Inc. (Maxon) for the supply of pump motors for our iLet. Unomedical, PMC and Maxon are our only suppliers of infusion sets, cartridge connections and pump motors, respectively. For additional information regarding the risks of our reliance on these suppliers, please

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see the section under Part I. Item 1A. “Risk Factors—Risks Related to Manufacturing and Our Reliance on Third Parties”.

To date, we have been able to successfully mitigate the challenges described above and ensure uninterrupted supply to our customers. However, there may be times at which we determine that our inventory does not meet our product requirements or we maintain an insufficient level of inventory. We may also over- or underestimate the quantities of required components, in which case we may expend extra resources or be constrained in the amount of end product that we can procure. These factors subject us to the risk of obsolescence and expiration, which may lead to impairment charges.

Components of Results of Operations

Net Sales

In May 2023, the iLet was cleared by the FDA for the treatment of T1D and we began commercializing the iLet in the United States. We generate product revenue from the sale of the iLet and single-use products that are used together with the iLet, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body. We are able to recognize revenue when control of the promised goods and services is passed to the customer, which we have identified as our distributor and pharmacy partners. Revenue is recognized in the amount of the consideration received net of any estimated returns and estimated variable consideration adjustments, including rebates, chargebacks and patient assistance, all of which differ by product and sales mix. Revenue is recognized either over time or at a point in time, depending on when control of the associated performance obligation is transferred to the customer.

Cost of Sales

Cost of sales includes raw materials, labor costs, manufacturing overhead expenses, royalties, freight, import tariffs, scrap and reserves for expected warranty costs and excess and obsolete inventory. Manufacturing overhead expenses include expenses relating to manufacturing engineering, material procurement, inventory and quality control, facilities, depreciation, information technology and operations supervision and management.

Gross Profit and Gross Margin

Gross profit and gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by various factors, including the timing of new patient adoption, iLet and associated single-use products sales, reimbursement, length of product usage, our introduction of new products, including the costs associated with producing and bringing those new products to market, cost reduction and operational efficiency. As a result of the small revenue recognized at or around the date the iLet is sold in the PBP channel, we absorb initial negative gross margin. iLet sales in the PBP channel are generally expected to start generating cumulative positive gross margin for us beyond the third month the user uses the iLet and continues to purchase single-use products. Given the differences in the timing and amount of outlays which correlate directly to revenue between the DME and PBP channels, changes in our future sales mix may also impact our gross profit and gross margin.

Operating Expenses

Our operating expenses consist of (i) research and development expenses, (ii) sales and marketing expenses and (iii) general and administrative expenses.

Research and Development

Our research and development expenses include engineering and clinical trial activities for the iLet, regulatory efforts, personnel costs such as salaries, bonuses, stock-based compensation and benefits, payments under third-party license agreements, supplies, development prototypes, design and testing services, depreciation and allocated facilities and information technology expenses, all of which are expensed as incurred. We track research and development expenses by individual product candidate. We expect research and development expenses to

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increase significantly for the foreseeable future as we advance clinical development, pursue new products and indications including the bihormonal system, patch pump, and potential T2D use, expand technical and operational staffing, make required payments under license arrangements, and establish commercial scale manufacturing capabilities.

Sales and Marketing

We are in the early commercialization stages of the iLet and are focused on driving awareness and adoption among new customers. Sales and marketing expenses primarily include personnel costs for our sales and clinical teams, the development of customer support infrastructure, marketing and branding activities, healthcare conference and market research costs, payer education and market access initiatives, data purchases, website and consulting fees, and facilities, travel, and other related operating expenses. We anticipate a significant increase in sales and marketing expenses for the foreseeable future to support the continued commercialization of the iLet and our future products.

General and Administrative

General and administrative expenses include personnel-related costs, including salaries, bonuses, stock-based compensation expense and benefits for our personnel in executive, legal, finance, accounting, human resources, information technology, quality assurance and other administrative functions, as well as expenses for patent filings, legal services, accounting and tax services, insurance, travel, facilities and depreciation. We expect these expenses to increase significantly as we continue operating as a public company, driven by higher professional services costs, director and officer insurance, investor and public relations activities and compliance with SEC and stock exchange listing requirements. We anticipate a significant increase in general and administrative expenses for the foreseeable future in order to continue to scale the business and support future demand.

Other Income (Expense)

Our other income (expense) consists of (i) interest income, (ii) other income (expense) and (iii) change in fair value of warrant liabilities.

Interest Income

Interest income consists of cash interest earned on our cash, cash equivalents and short-term and long-term investment balances.

Other Income (Expense)

Other income (expense) consists of miscellaneous income and expenses unrelated to our core operations.

Change in Fair Value of Warrant Liabilities

In connection with our February 2022 Series C preferred stock financing, we granted warrants (Series C Warrants) to certain investors to purchase additional shares of our Series C convertible preferred stock. In connection with our August 2023 Series D preferred stock financing, we granted warrants to certain investors to purchase shares of our Class B common stock (Class B Warrants, and together with the Series C Warrants, the Warrants). These Warrants were classified as liabilities on our balance sheet and initially recorded at fair value on the grant date. They are subsequently remeasured to fair value at the end of each reporting period through their exercise in January 2025. Changes in the fair value were recognized as a component of other income (expense), net. We continued to recognize changes in fair value of the warrant liabilities until the Warrants were exercised prior to the completion of our IPO. The Warrants are no longer outstanding. For additional information, see Part II. Item 8. Note 4 of our audited financial statements included elsewhere in this Annual Report.

113

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the periods indicated:

Year Ended December 31,

Change

2025

2024

$

%

(in thousands, except percentages)

Net sales

$

100,251

$

65,124

$

35,127

54

%

Cost of sales(1)

44,714

29,236

15,478

53

%

Gross profit

55,537

35,888

19,649

55

%

Operating expenses:

Research and development(1)

34,789

26,184

8,605

33

%

Sales and marketing(1)

61,404

37,086

24,318

66

%

General and administrative(1)

31,025

17,869

13,156

74

%

Total operating expenses

127,218

81,139

46,079

57

%

Loss from operations

(71,681

)

(45,251

)

(26,430

)

58

%

Other income (expense):

Interest income

10,932

3,909

7,023

*

Other expense

(1

)

(2

)

1

*

Change in fair value of warrant liabilities

(12,450

)

(13,412

)

962

*

Total other expense, net

(1,519

)

(9,505

)

7,986

*

Net loss

$

(73,200

)

$

(54,756

)

$

(18,444

)

34

%

* Not meaningful

(1)
Includes stock-based compensation expense as follows:

Year Ended December 31,

2025

2024

(in thousands)

Cost of sales

$

542

$

275

Research and development

3,205

1,144

Sales and marketing

4,625

1,661

General and administrative

8,012

3,304

 Total stock-based compensation expense

$

16,384

$

6,384

Net Sales

Net sales for the year ended December 31, 2025 was $100.3 million, compared to $65.1 million for the year ended December 31, 2024. The increase in net sales of $35.2 million was primarily driven by higher sales volumes, reflecting an increase in the number of single-use products sold as a result of the expansion of our installed customer base and growth in new patient starts. The increase in net sales was driven predominantly by volume, with pricing and reimbursement changes having a limited impact on the year-over-year increase. For the year ended December 31, 2025, single-use products accounted for 47% of net sales, up from 25% for the year ended December 31, 2024. For the year ended December 31, 2025, there were 19,713 new patient starts, up from 12,994 for the year ended December 31, 2024.

For the year ended December 31, 2025, 76% of net sales were generated through the DME channel and 24% through the PBP channel, compared to 90% and 10%, respectively, for the year ended December 31, 2024. The shift toward the PBP channel was driven by expanded pharmacy benefit coverage, resulting in a larger percentage of new patient starts reimbursed through this channel.

114

Cost of Sales

Cost of sales for the year ended December 31, 2025 was $44.7 million, compared to $29.2 million for the year ended December 31, 2024. The $15.5 million increase was primarily driven by higher volumes of single-use products and iLets sold through the PBP channel.

Gross Profit and Margin

Gross profit for the year ended December 31, 2025 was $55.5 million, compared to $35.9 million for the year ended December 31, 2024. Gross margin was 55% for the year ended December 31, 2025, compared to 55% in the year ended December 31, 2024. The $19.6 million increase in gross profit was primarily driven by higher sales volume. Gross margin remained consistent year over year, as benefits from increased production scale and improved cost absorption were offset by a shift in revenue mix toward the PBP channel, which recognizes less revenue upfront compared to the DME channel.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2025 were $34.8 million, compared to $26.2 million during the year ended December 31, 2024. This increase of $8.6 million was primarily attributable to a net increase of $5.4 million in payroll-related expenses, including stock-based compensation, driven by an increase in headcount focused on supporting our innovation activities. The remaining increase is attributable to materials and clinical trial related expenses incurred for the development of our patch pump, bihormonal system of the iLet and incremental software and product updates.

The table below summarizes the nature of research and development expense by major expense category:

Year Ended December 31,

Change

2025

2024

$

%

(in thousands, except percentages)

External research and development(1)

$

5,573

$

6,722

$

(1,149

)

(17

)%

Internal research and development(2)

26,011

17,818

8,193

46

%

Stock-based compensation

3,205

1,144

2,061

180

%

Licensing fees and other

—

500

(500

)

(100

)%

Total research and development expense

$

34,789

$

26,184

$

8,605

33

%

(1)
External research and development costs primarily include expenses incurred with third parties such as clinical research organizations conducting the clinical trials and engineering and product development consulting services associated with our development of the iLet.

(2)
Internal research and development costs primarily include personnel-related expenses for research and development functions, excluding stock-based compensation and internal costs to manufacture product candidates before FDA marketing authorization, such as raw materials and internal facilities-related expenses.

Sales and Marketing Expenses

Sales and marketing expenses for the year ended December 31, 2025 were $61.4 million, compared to $37.1 million for the year ended December 31, 2024. This increase of $24.3 million was primarily attributable to an increase of $16.3 million in payroll-related expenses, including salaries and wages, sales incentive bonuses, and stock-based compensation, due to an increase in headcount of our sales force and customer care team in connection with the expansion of our sales territories within the United States. The remaining increase includes HCP-related marketing, training and travel-related expenses attributable to our continued efforts to grow our install base and support sales expansion.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2025 were $31.0 million, compared to $17.9 million for the year ended December 31, 2024. This increase of $13.1 million was primarily attributable to an

115

increase of $7.1 million in payroll-related expenses, driven by an increase in headcount following our IPO as well as increased corporate bonus incentives provided to management level employees and stock-based compensation. The remaining increase is partially attributable to professional fees, including legal, recruiting, and accounting services, software-related expenses, non-recurring expenses related to FDA-compliance, and increased insurance premiums primarily related to operating as a public company.

Other Income (Expense)

Total other expense, net for the year ended December 31, 2025 was $1.5 million, compared to $9.5 million for the year ended December 31, 2024. This decrease of $8.0 million was attributable to a $7.0 million increase in interest income from our short-term and long-term investments due to the investment of our IPO proceeds during the first quarter of 2025 as well as a $1.0 million decrease in expense from the change in fair value of our warrant liabilities due to changes in inputs associated with the fair value measurement immediately prior to our IPO compared to December 31, 2024.

Selected Quarterly Financial Information

The following table sets forth our selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in the period ended December 31, 2025. The information for each of these quarters has been prepared in accordance with generally accepted accounting principles in the United States (GAAP), on a basis consistent with our audited consolidated financial statements included elsewhere in this Annual Report and include, in our opinion, all normal recurring adjustments necessary for the fair presentation of the results of operations for the periods presented, with the exception of Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which is a non-GAAP financial measure discussed below. Our historical quarterly results are not necessarily indicative of the results that may be expected in the future and these quarterly results are not necessarily indicative of our operating results for a full year. The following quarterly financial information should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Annual Report.

The following table sets forth our selected unaudited quarterly statements of operations data for the periods presented:

Three Months Ended

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

(unaudited)

(in thousands, except percentages)

Net sales

$

17,639

$

23,238

$

27,253

$

32,121

Cost of sales(1)

8,668

10,735

12,134

13,177

Gross profit

8,971

12,503

15,119

18,944

Gross margin

50.9

%

53.8

%

55.5

%

59.0

%

Operating expenses:

Research and development(1)

7,590

8,873

8,195

10,131

Sales and marketing(1)

13,402

15,623

16,045

16,334

General and administrative(1)

6,621

7,879

7,922

8,603

Total operating expenses

27,613

32,375

32,162

35,068

Loss from operations

(18,642

)

(19,872

)

(17,043

)

(16,124

)

Other income (expense):

Interest income

2,436

3,005

2,833

2,658

Other income (expense), net

—

(2

)

1

—

Change in fair value of warrant liabilities

(12,450

)

—

—

—

Total other income (expense), net

(10,014

)

3,003

2,834

2,658

Net loss

$

(28,656

)

$

(16,869

)

$

(14,209

)

$

(13,466

)

Adjusted EBITDA

$

(15,535

)

$

(14,526

)

$

(12,179

)

$

(10,512

)

116

Three Months Ended

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

(unaudited)

(in thousands, except percentages)

Net sales

$

12,933

$

15,046

$

16,705

$

20,440

Cost of sales(1)

5,732

6,962

7,791

8,751

Gross profit

7,201

8,084

8,914

11,689

Gross margin

55.7

%

53.7

%

53.4

%

57.2

%

Operating expenses:

Research and development(1)

5,479

6,350

5,141

9,214

Sales and marketing(1)

7,663

8,974

9,645

10,804

General and administrative(1)

3,512

4,544

5,105

4,708

Total operating expenses

16,654

19,868

19,891

24,726

Loss from operations

(9,453

)

(11,784

)

(10,977

)

(13,037

)

Other income (expense):

Interest income

1,139

993

826

951

Other income (expense), net

4

(2

)

(4

)

—

Change in fair value of warrant liabilities

(4,139

)

(3,670

)

419

(6,022

)

Total other income (expense), net

(2,996

)

(2,679

)

1,241

(5,071

)

Net loss

$

(12,449

)

$

(14,463

)

$

(9,736

)

$

(18,108

)

Adjusted EBITDA

$

(7,805

)

$

(9,985

)

$

(8,672

)

$

(11,254

)

(1)
Includes stock-based compensation expense as follows:

Three Months Ended

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

(unaudited)

(in thousands)

Cost of sales

$

106

$

153

$

140

$

143

Research and development

502

924

893

886

Sales and marketing

801

1,314

1,273

1,237

General and administrative

1,395

2,408

2,172

2,037

Total stock-based compensation expense

$

2,804

$

4,799

$

4,478

$

4,303

Three Months Ended

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

(unaudited)

(in thousands)

Cost of sales

$

71

$

61

$

69

$

74

Research and development

263

287

294

300

Sales and marketing

288

390

472

511

General and administrative

735

762

1,141

666

Total stock-based compensation expense

$

1,357

$

1,500

$

1,976

$

1,551

The following table sets forth our selected unaudited quarterly key business metrics for the periods presented:

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Three Months Ended

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

(unaudited)

% of Total Net Sales:

Durable Medical Equipment (DME) Channel

78

%

80

%

77

%

70

%

Pharmacy Benefit Plan (PBP) Channel

22

%

20

%

23

%

30

%

Total

100

%

100

%

100

%

100

%

% of New Patient Starts (NPS) Reimbursed Through Pharmacy

Low 20s %

High 20s %

Low 30s %

Low 30s %

Three Months Ended

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

(unaudited)

% of Total Net Sales:

Durable Medical Equipment (DME) Channel

94

%

95

%

87

%

88

%

Pharmacy Benefit Plan (PBP) Channel

6

%

5

%

13

%

12

%

Total

100

%

100

%

100

%

100

%

% of New Patient Starts (NPS) Reimbursed Through Pharmacy

Mid-single digit %

Mid-single digit %

High-single digit %

Low-teens %

Adjusted EBITDA

In addition to our financial results determined in accordance with GAAP, we believe the following adjusted EBITDA non-GAAP measure is useful in evaluating our operating performance. We use adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial measure, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for adjusted EBITDA to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure, and not to rely on any single financial measure to evaluate our business.

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the eight quarters in the period ended December 31, 2025:

118

Year Ended December 31,

2025

2024

(unaudited)

(in thousands)

Net loss

$

(73,200

)

$

(54,756

)

Add:

Depreciation expense

1,573

1,151

Stock-based compensation expense

16,384

6,384

Interest income

(10,932

)

(3,909

)

Income tax expense

1

2

Litigation settlement and other related expense

410

—

Other non-recurring

562

—

Change in fair value of warrant liabilities

12,450

13,412

Adjusted EBITDA

$

(52,752

)

$

(37,716

)

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each quarter of the year ended December 31, 2025:

Three Months Ended

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

(unaudited)

(in thousands)

Net loss

$

(28,656

)

$

(16,869

)

$

(14,209

)

$

(13,466

)

Add:

Depreciation expense

303

347

386

537

Stock-based compensation expense

2,804

4,799

4,478

4,303

Interest income

(2,436

)

(3,005

)

(2,833

)

(2,658

)

Income tax expense (benefit)

—

2

(1

)

—

Litigation settlement and other related expense

—

200

—

210

Other non-recurring

—

—

—

562

Change in fair value of warrant liabilities

12,450

—

—

—

Adjusted EBITDA

$

(15,535

)

$

(14,526

)

$

(12,179

)

$

(10,512

)

The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each quarter of the year ended December 31, 2024:

Three Months Ended

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

(unaudited)

(in thousands)

Net loss

$

(12,449

)

$

(14,463

)

$

(9,736

)

$

(18,108

)

Add:

Depreciation expense

287

299

333

232

Stock-based compensation expense

1,357

1,500

1,976

1,551

Interest income

(1,139

)

(993

)

(826

)

(951

)

Income tax expense

—

2

—

—

Change in fair value of warrant liabilities

4,139

3,670

(419

)

6,022

Adjusted EBITDA

$

(7,805

)

$

(9,985

)

$

(8,672

)

$

(11,254

)

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Adjusted EBITDA is a key performance measure that we use to assess our operating performance. Because adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes.

We calculate adjusted EBITDA as net loss adjusted to exclude (i) depreciation expense, (ii) stock-based compensation expense, (iii) interest income, (iv) income tax expense (benefit), (v) litigation settlement and other related expense, and (vi) change in fair value of warrant liabilities.

Some of the limitations of adjusted EBITDA include: (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future and (ii) although depreciation expense includes non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures. Our adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. In evaluating adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.

Selected Quarterly Trends

Net sales

Net sales increased from the first quarter of 2025 to the fourth quarter of 2025, benefiting from favorable seasonality and continued growth in new patient starts, leading to higher net sales of both iLets and supplies. This followed a decline from the fourth quarter of 2024 to the first quarter of 2025, primarily due to seasonal factors. From the first quarter of 2024 through the fourth quarter of 2024, net sales steadily increased, driven primarily by growth in our installed customer base as more patients adopted the iLet. This expansion also contributed to higher recurring sales of single-use products, which are replaced every 2–3 days.

Cost of sales

Cost of sales increased from the first quarter of 2025 to the fourth quarter of 2025, largely due to increased volume, particularly in sales of iLets through the PBP channel, and higher product warranty costs. This followed a decline from the fourth quarter of 2024 to the first quarter of 2025, primarily due to product mix and lower volume due to seasonal factors. From the first quarter of 2024 through the fourth quarter of 2024, cost of sales steadily increased, reflecting higher iLet sales and a growing installed base, which drove increases in material cost and royalties expense.

Gross Margin

Gross margin improved from the first quarter of 2025 to the fourth quarter of 2025, reflecting higher sales volumes and improved manufacturing cost absorption. Margins also strengthened as production volumes increased and fixed costs were absorbed more efficiently. Gross margin decreased from the fourth quarter of 2024 to the first quarter of 2025 driven by lower volume and a shift in channel mix of new patient starts toward the PBP channel—which recognizes less revenue upfront compared to the DME channel. Prior to that, gross margin increased from the first quarter of 2024 to the fourth quarter of 2024 due to higher sales volumes and improved manufacturing cost absorption. PBP-reimbursed patient starts represented a low-30% share of new patients in the third and fourth quarter of 2025, compared to the high-20% range in the second quarter of 2025, the low-20% range in the first quarter of 2025, and the low-teens in the fourth quarter of 2024. Although the mix shift toward the PBP channel

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continues, the adverse margin impact was more than offset by higher unit volumes and improved manufacturing efficiencies during the period.

Operating expenses

Our quarterly research and development expenses increased in all periods presented, except the third quarters of 2024 and 2025 and the first quarter of 2025, primarily due to increases in payroll-related expenses, materials and clinical trial related expenses incurred to support our continued research and development efforts to enhance our existing product and develop new products.

Our sales and marketing expenses increased in all periods presented, primarily due to increases in payroll-related expenses driven by headcount increases in our sales force and customer care team, as well as other expenses incurred to market, educate and enhance the visibility of our product to HCPs.

Our general and administrative expenses increased in all periods presented, except the fourth quarter of 2024, primarily due to increases in payroll-related expenses driven by headcount increases in our quality assurance team, and public company costs, including accounting and audit services, insurance premiums and legal expenses, as well as expenses incurred for operational overhead expenses to meet the growing demand for the iLet.

Adjusted EBITDA

Adjusted EBITDA improved from the first quarter of 2025 to the fourth quarter of 2025 due to higher revenue, improved margins, and increased operating leverage despite continued headcount increases. The decline from the third quarter of 2024 to the first quarter of 2025 was primarily driven by product mix, lower volume due to seasonal factors as well as a $3.0 million milestone payment made to Xeris in the fourth quarter of 2024 for the achievement of certain developmental milestones. Adjusted EBITDA improved from the second quarter of 2024 to the third quarter of 2024 due to favorable timing of research and development expenses. Adjusted EBITDA declined from the first quarter of 2024 to the second quarter of 2024 primarily due to increases in sales and marketing and research and development expenses.

Key Business Metrics

We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions, although we may change our key business metrics or how we present our key business metrics from time to time.

We believe that the following metrics are representative of our current business:

Year Ended December 31,

2025

2024

New patient starts

19,713

12,994

New patient starts from MDI as a percentage of

   total new patient starts

70

%

69

%

Installed customer base

35,011

15,298

New Patient Starts

Our ability to add new patients is a key indicator of the market’s adoption of the iLet and a key growth driver for the business. We grow our patient base through our own internal sales organization, which drives most of our new patient growth. We define a new patient as an individual making their initial purchase of an iLet during the period presented, excluding replacements. This metric highlights our capability to identify and attract new users, illustrating the number of new iLet product users during each period presented.

In the year ended December 31, 2025, a high-twenties percentage of our new patient starts were reimbursed through the PBP channel. In the year ended December 31, 2024, a high-single digit percentage of our new patient starts were reimbursed through the PBP channel. The increase in new patient starts through the PBP channel reflects

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enhanced formulary access and broader pharmacy coverage for iLet. These improvements are primarily attributable to the execution of contracts with key PBMs.

New Patient Starts from MDI as a Percentage of Total New Patient Starts

The percentage of new patient starts from MDI is a valuable metric for us, as it demonstrates a user’s willingness to transition from an MDI therapy to the insulin delivery mechanism provided by the iLet. Percentage of new patient starts from MDI helps us understand our patient profile and quantifies our expansion of the insulin pump market. We believe a higher percentage of new patient starts from MDI indicates that the iLet’s value proposition is resonating with patients who have historically chosen to not wear an insulin pump. New patient starts from MDI as a percentage of total new patient starts is calculated by dividing the number of new patient starts from MDI by the total number of new patient starts.

Installed Customer Base

The installed customer base represents all new patient starts, over a rolling four-year period basis. This period reflects our in-warranty customer base under the typical four-year reimbursement cycle and helps us understand the total number of patients using the iLet.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. To date, research and development, market development and commercial launch activities have accounted for a significant portion of our overall operating expenses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the commercialization of our iLet, including future development of the patch pump and bihormonal system of the iLet.

To date, we have funded our operations primarily with proceeds from the sale of our convertible preferred stock, raising an aggregate of approximately $356.6 million of gross proceeds, including net proceeds of approximately $101.7 million from the issuance and sale of our Series D convertible preferred stock in August 2023 and approximately $59.7 million from the issuance and sale of our Series E convertible preferred stock in November 2024. In January 2025, we completed our IPO and a concurrent private placement, pursuant to which we received aggregate net proceeds of approximately $190.4 million and approximately $15.6 million, respectively, in each case after deducting underwriting discounts, commissions, and other offering expenses. We have also received payments in connection with collaboration agreements and government grants, receiving $6.1 million to date from these types of arrangements, as well as from the sale of the iLet and single-use products utilized with the iLet from our contracts with customers. As of December 31, 2025, we had cash and cash equivalents and short-term and long-term investments of $264.7 million.

Cash Flows

The following table summarizes our cash flows for the periods presented:

Year Ended December 31,

2025

2024

(in thousands)

Net cash used in operating activities

$

(50,925

)

$

(48,273

)

Net cash used in investing activities

(162,805

)

(3,476

)

Net cash provided by financing activities

214,874

55,615

Net increase in cash, cash

   equivalents and restricted cash

$

1,144

$

3,866

Operating Activities

Net cash used in operating activities was $50.9 million for the year ended December 31, 2025, compared to $48.3 million the year ended December 31, 2024. The increase in net cash used in operating activities was primarily

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driven by an increase of $18.4 million in net loss year over year. This was partially offset by an increase in non-cash charges of $12.7 million, primarily attributable to changes in fair value of our warrant liabilities and higher stock-based compensation expense due to increased headcount to support innovation activities, the expansion of our sales territories and our business operations as a public company. Working capital to support the growth of our commercial operations required cash of $9.9 million in 2025, compared to $12.1 million in 2024. The working capital outflow in 2025 was primarily driven by a $9.9 million increase in inventories, reflecting higher production levels to support anticipated future demand as commercial sales continue to grow, a $5.8 million increase in prepaid expenses and other current assets attributable to directors and officers insurance premiums, prepaid material components, and software license renewals, and a $5.2 million increase in accounts receivable due to higher sales volume. These cash requirements were offset by a $6.6 million increase in accrued expenses and other current liabilities primarily due to the payout of the 2024 corporate bonus offset by the twelve months of accrual for 2025 corporate bonus based on company goals, a $2.1 million increase to accounts payable due to the timing of vendor payments, and a $2.0 million increase in deferred revenue due to an increase in sales and unsatisfied performance obligations.

Investing Activities

Net cash used in investing activities increased to $162.8 million for the year ended December 31, 2025 compared to $3.5 million for the year ended December 31, 2024. The increase in net cash used in investing activities was primarily driven by the investment of net proceeds from our IPO in January 2025. The Company used $282.0 million in purchases of short-term investments and $45.5 million in purchases of long-term investments during 2025, partially offset by $170.0 million in proceeds from maturities and redemptions of short-term investments. Capital expenditures increased modestly to $5.3 million in 2025 compared to $3.4 million in 2024, reflecting continued investment in property and equipment for additional manufacturing equipment to support commercial growth.

Financing Activities

Net cash provided by financing activities was $214.9 million for the year ended December 31, 2025 compared to $55.6 million for the year ended December 31, 2024. The increase in net cash provided by financing activities was primarily driven by the completion of the Company’s IPO in January 2025. During 2025, financing activities primarily consisted of $195.4 million in net proceeds from the IPO, $15.6 million in proceeds from the private placement, and $4.8 million from stock option exercises. By comparison, financing activities in 2024 primarily consisted of $59.7 million from the issuance and sale of shares of our Series E convertible preferred stock, offset by $4.1 million in payments of deferred offering costs associated with our IPO.

Future Funding Requirements

We expect our expenses to increase significantly in connection with our ongoing activities. The timing and amount of our funding requirements will depend on many factors, including:

•
the cost of maintaining FDA clearance for the iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older;

•
the cost of obtaining and maintaining FDA marketing authorization or clearance for other future indications or other product candidates, including for the iLet for T1D using both insulin and glucagon (a bihormonal system), the iLet for T2D and the patch pump;

•
future revenue generated by sales of the iLet and any future product candidates, if approved;

•
costs associated with scaling up and expanding our manufacturing capacity;

•
costs associated with building and expanding our sales and marketing efforts in the United States and, in the future, internationally;

•
costs associated with conducting research and development efforts for future improvements to the iLet;

•
costs associated with conducting research and development efforts for future product offerings, such as the patch pump and bihormonal system of the iLet;

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•
the cost of complying with regulatory requirements;

•
costs associated with capital expenditures;

•
the costs associated with hiring additional personnel as our business grows;

•
the costs of operating as a public company;

•
costs associated with any future litigation;

•
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and

•
the impact of geopolitical and macroeconomic events, including tariffs or other trade measures, future bank failures, increased geopolitical tensions and conflict, global pandemics, global economic conditions including changes in monetary and fiscal policy, U.S. political developments and other sources of instability that may impact our ability to access capital on acceptable terms, if at all.

Based on our current operating plans, we believe that our existing cash, cash equivalents and short-term and long-term investments, as well as cash generated from sales of our products, will be sufficient to fund our projected operating expenses and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect and we may seek additional capital to support future growth initiatives.

We expect to finance our operations through product revenue, as well as potentially through equity or debt financing, collaborations or strategic alliances. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations or strategic alliances with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or investigational devices, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Other Commitments

Leases

We have entered into various non-cancelable operating leases for certain office, laboratory and manufacturing space. The leases have varying initial lease terms of approximately 1-6 years. For additional information, see Note 17 to our audited financial statements included elsewhere in this Annual Report.

Research and Development Costs

In May 2024, in connection with research and development activities, we entered into an exclusive worldwide License and Collaboration Agreement with Xeris which contains a number of contractual obligations. In consideration for the licenses and other rights granted to us under the License and Collaboration Agreement, we paid Xeris a one-time, non-refundable payment of $0.5 million and a one-time, non-refundable milestone payment of $3.0 million for the achievement of certain developmental milestones. In connection with entering into Phase 2 of the collaboration, we ordered and paid for clinical material totaling $0.9 million. In connection with entering into Phase 3 of the collaboration, we expect to incur development and manufacturing costs, including ordering clinical materials and technical transfer, development, and testing of the product, totaling $5.1 million. As of December 31, 2025, we have completed payments totaling $4.0 million. The payments were initially recognized in prepaid expense and other current assets in the balance sheets and a portion of the payment was expensed to research and development related to the services completed. In addition, we are required to pay tiered royalties of low double-digit percentages based on net sales of glucagon products, subject to certain reductions. We may continue to incur

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costs as we progress into Phase 2 and Phase 3 clinical trials. For additional information, see the section under Part I. Item 1. “Business—License and Collaboration Agreements.”

Royalty Obligations

In connection with the development, production and sale of the iLet, we have entered into certain agreements that obligate us to pay royalties based on specific production or net sales metrics. Among other obligations, certain license agreements with BU require us to pay quarterly royalties of a mid-single-digit percentage based on net sales (and royalties of a low double-digit percentage of net sales by sublicensees), of any products licensed under the agreements, which royalties are creditable against the minimum royalty amount. For additional information on these license agreements with BU, see the section under Part I. Item 1. “Business—License and Collaboration Agreements.”

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our audited financial statements, which are prepared in accordance with GAAP. The preparation of our audited financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our audited financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Part II. Item 8. Note 2 to our audited financial statements included elsewhere in this Annual Report, we believe that the following accounting policies are the most critical to the judgments and estimates used in the preparation of our audited financial statements.

Revenue Recognition

Our revenue from contracts with customers is generated from the iLet and single-use products that are used together with the iLet, including cartridges for storing and delivering insulin, and infusion sets that connect the insulin pump to a user’s body. Our primary customers are distributors and pharmacy partners who sell our products to insulin-requiring PWD. We recognize revenue when we transfer control of the promised goods or services to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services, net of estimated returns and estimated variable consideration. Variable consideration is related to pharmacy rebates and chargebacks is accounted for as a reduction in revenue and is estimated based on contractual arrangements, actual sales of products qualifying for rebates or chargebacks, and historical payments made related to pharmacy rebates and chargebacks. Estimates associated with pharmacy rebates and chargebacks on products sold are the most significant component of our variable consideration estimates and most at risk for material adjustment because of the time delay between the recording of the provision and its ultimate settlement, an interval that generally ranges from 30 to 90 days. Due to this time lag, in any given period, our adjustments to reflect actual amounts can incorporate changes of estimates related to prior periods. The amount of variable consideration that is included in the transaction price is estimated and is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. If the actual amounts of consideration that we receive differ from estimates, we adjust these estimates, which affects reported revenue, in the period that such variances become known or at the end of each reporting period.

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We have identified the ability for a customer to access the mobile application and our promise to provide firmware upgrades to the iLet through the mobile application as distinct performance obligations, as access and support is provided throughout the standard four-year warranty period of the device. Accordingly, revenue related to the mobile application and firmware upgrades are deferred and recognized ratably over a four-year period. Given the access to the mobile application and unspecified software updates follow the same pattern of transfer to the customer and are provided over the same four-year period, we recognize revenue for these performance obligations as if they were a single performance obligation. As there is no observable standalone selling price for access to the mobile application or promise to provide firmware upgrades, we estimate standalone selling price by applying the expected cost plus a margin approach.

Stock-Based Compensation

We measure stock-based awards granted to employees, non-employees and directors based on their fair value on the date of the grant. The fair value of stock options is estimated using the Black-Scholes option pricing model, while the fair value of restricted stock units (“RSUs”) is based on the closing price of our common stock on the grant date. Stock-based compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period of the respective award for employees and directors and the period during which services are performed for non-employees. Stock-based compensation expense for non-employee awards is recognized in the same manner as if we had paid cash in exchange for the goods or services, which is generally the vesting period of the award. We have issued awards with only service-based vesting conditions and record the expense for these awards using the straight-line method. We have not issued any stock-based awards with performance-based or market-based vesting conditions.

We determined the assumptions for the Black-Scholes option pricing model as discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. Forfeitures are accounted for as they occur.

•
Fair Value of Our Class B Common Stock—Prior to our initial public offering, our stock was not publicly traded, and therefore we estimated the fair value of our Class B common stock, as discussed in the subsection titled “Determination of Fair Value of Our Class B Common Stock and Series C Convertible Preferred Stock” below.

•
Expected Volatility—Because we do not have a trading history of our common stock, the expected volatility was derived from the average historical stock volatilities of several public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock-based awards. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

•
Expected Term—The expected term represents the period that the stock-based awards are expected to be outstanding. The expected term for our stock options was calculated based on the weighted-average vesting term of the awards and the contract period, or the simplified method.

•
Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. treasury notes with maturities approximately equal to expected term of the stock options.

•
Expected Dividend Yield—The expected dividend is zero as we have not paid and do not anticipate paying any dividends in the foreseeable future.

See Part II. Item 8. Note 13 of our audited financial statements included elsewhere in this Annual Report for more information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options. Certain of these assumptions involve inherent uncertainties and generally require significant analysis and judgment to develop. Changes in these assumptions can materially impact the fair value and ultimately how much stock-based compensation expense is recognized.

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Recent Accounting Pronouncements

A description of recently issued accounting standards that may potentially impact our financial position, results of operations, and cash flows is included in Part II. Item 8. Note 2 to our audited financial statements included elsewhere in this Annual Report.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups (JOBS) Act. For as long as we remain an “emerging growth company”, we may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to: (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period, and therefore, we are not subject to the same requirements to adopt new or revised accounting standards as other public companies that are not emerging growth companies; however, we may adopt certain new or revised accounting standards early. We may use these provisions until the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

We are also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act because both the market value of our stock held by non-affiliates is less than $700 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

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