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Senseonics Holdings (NYSE:SENS) is on a roll, but what is driving the share price?


Shares in US med tech small cap stock Senseonics Holdings (NYSE:SENS) have soared in the past few trading days (+234%) as the $700m market cap stock has popped past the previous high of 1.62 set in February. But what has been driving the share price?

Volumes in the stock are already impressive, pointing to a lack of free float  changing hands and hence the higher price. Why are we adding it to our pick list?

Senseonics is a glucose monitoring specialist

Senseonics focuses on the development and commercialisation of long-term, implantable continuous glucose monitoring (CGM) systems for people with diabetes. It has just announced that EmblemHealth is now providing coverage for its Eversense CGM System, effective immediately. This is a big vote of confidence for Senseonics, as it becomes the latest healthcare provider to add this to its coverage policies.

EmblemHealth covers New York, New Jersey and Connecticut and has confirmed it is adding Eversense to its 2021 policies, effective immediately. It covers 2.9m residents in the eastern United States.

“Improved glucose control has always been the goal for health care professionals and patients,” explained Tim Goodnow, CEO of Senseonics. “Now that goal is even more imperative as the COVID-19 pandemic has revealed the negative consequences of poor glucose management in patients who contract the coronavirus.”

The Eversense CGM System consists of a fluorescence-based sensor, a smart transmitter worn over the sensor to facilitate data communication, and a mobile app for displaying glucose values, trends and alerts. In addition to featuring the first long-term and first implantable CGM sensor, the system is also first to feature a smart transmitter that provides wearers with discreet on-body vibratory alerts for high and low glucose and can be removed, recharged and re-attached to the skin without discarding the sensor. Eversense users now have the freedom to make treatment decisions based on their Eversense readings.

$50m of stock sold to institutional market

Senseonics has also just sold 40m shares of common stock at $1.25, raising some $50m. It says it wants to use the net proceeds for “general corporate purposes,” which is nice and vague.

We like the Eversense technology and feel this does offer a major new breakthrough in the way in which diabetes is monitored, both by patients and medical professionals. The fact that diabetes can be a factor in COVID-related deaths is another major boon for the technology’s utility, as it can conceivably help with ongoing detection and monitoring of people who might be vulnerable to the virus.

This is the sort of medtech we expect to see healthcare providers and the insurance sector using to gather data and monitor patients in the future. Couple this with the development of the Internet of Things, and you can see how the medtech sector is going to develop in years to come: live and detailed data on key physiology transmitted in real time.

Don’t expect it to slow down soon

The company’s next earnings date is 13 May, but it seems to be travelling too fast to wait around for that. It’s now up almost 200% for the year with most of that share price action coming in the last couple of weeks. The stock seems to be progressing higher via a series of plateaux, from 1.0 to 1.71 and then 2.63. All this since the 14 January. At some point soon it will run out of puff as we see some profit taking. BUT, there looks to be big institutional demand, a sound business case, and a lack of stock to meet demand, so we anticipate further upside on this one.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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