[Edaily Reporter NA EUN-KYUNG ] i-SENS, Inc.(099190)’s continuous glucose monitoring (CGM) business has begun to secure profitability following its revenue growth. With CGM sales in the first half of this year surpassing last year’s annual sales, the CGM gross profit margin in the second quarter exceeded the mid-40s percent range, surpassing the company-wide average. While the company was in a phase of prioritizing investment in production facilities and R&D through last year, analysts assess that it has now entered a phase where increased sales volume is leading to improved company-wide profits.

CGM Margin Exceeds Company-Wide Average… Revenue Share Also in the 10% Range

According to i-SENS, Inc. on the 6th, consolidated CGM revenue for the second quarter of this year reached 9.4 billion won, a 162.4% increase year-over-year and a 12.7% increase quarter-over-quarter. Combined with the first quarter’s 8.4 billion won, cumulative revenue for the first half of the year totaled 17.8 billion won, surpassing last year’s annual CGM revenue of 17.6 billion won in just six months. On a non-consolidated basis, second-quarter revenue was 10.5 billion won, and cumulative revenue for the first half was 18.7 billion won.

CGM’s contribution to total company revenue has also risen significantly. In the first quarter of last year, CGM revenue was 3 billion won, accounting for just 3.9% of total revenue of 76.3 billion won. Subsequently, it rose to 4.7% in the second quarter, 7.2% in the third quarter, and 6.6% in the fourth quarter, before climbing to 11.1% in the first quarter of this year and 10.7% in the second quarter. CGM’s revenue share, which had remained in the single digits until last year, has now surpassed 10% for two consecutive quarters this year, establishing itself as a core business.

Along with this revenue growth, profitability has also improved. Yoon Jong-woo, Chief Financial Officer (CFO) of i-SENS, Inc., stated during the second-quarter earnings conference call, “The CGM gross profit margin rose from the low 40s in the first quarter of this year to just over the mid-40s in the second quarter,” adding, “This was driven by a combination of cost reductions and favorable exchange rates, and the improved profitability of CGM is contributing significantly to the company’s overall profitability.” This means that the gross profit margin for CGM was higher than the company-wide gross profit margin of 43.4% for the second quarter.

The gross profit margin is the percentage remaining after subtracting direct costs—such as raw material costs and production expenses—incurred in manufacturing a product from total product sales. A high gross profit margin does not necessarily mean an increase in operating profit. This is because the company must also bear additional selling, general, and administrative (SG&A) expenses, such as research and development (R&D) costs, clinical trial expenses, and marketing costs. However, since this indicates that the profit generated at the manufacturing stage when selling products has increased, it is significant in that it lays the groundwork for rapid growth in operating profit if future revenue expansion aligns with the stabilization of clinical trial costs. In fact, i-SENS, Inc.’s operating profit margin rose from 2.2% in the same period last year to 7.1% in the second quarter.

Since i-SENS, Inc. does not disclose the individual gross profit margins for its blood glucose monitors (BGM) and point-of-care testing (POCT) products, it is difficult to directly compare the margins of CGM with those of other business segments. However, given that the gross profit margin for CGM exceeded the company-wide average and the company itself cited improved product mix resulting from the expanding share of CGM as a key driver of increased profitability, it can be interpreted that CGM has established itself as a high-margin growth engine that is driving up the company’s overall profit margin.

CGM is a business that requires upfront investment in fixed costs, such as production lines and R&D personnel. Although unit costs were high in the early stages due to low sales volumes, costs decrease as production volume increases because fixed costs are spread across a larger number of sensors. This year, i-SENS, Inc. reduced manufacturing costs by increasing CGM production volume and improving production processes and yield rates. Favorable exchange rates also contributed to higher profitability in overseas sales.

As a result, i-SENS, Inc.’s second-quarter gross profit rose 21.9% year-over-year to 38.4 billion won. The gross profit margin also rose by 2.4 percentage points, from 41% to 43.4%. During the same period, revenue increased by 15.2% to 88.5 billion won, and operating profit surged 274.1% to 6.3 billion won. The operating profit margin rose from 2.2% to 7.1%.

Considering the increase in clinical trial costs, the improvement in profitability is even more significant. i-SENS, Inc.’s ordinary R&D expenses for the first half of the year, on a standalone basis, totaled approximately 18 billion won, an increase of 5.3 billion won compared to the same period last year. Of this amount, CGM-related clinical costs—including trials for U.S. Food and Drug Administration (FDA) approval and expanded clinical trials for children and adolescents in Europe—accounted for approximately 5 billion won. Operating profit also improved as the increase in gross profit exceeded the rise in selling, general, and administrative expenses.

From 17.6 billion

last year to 40.0 billion this year… U.S. clinical trial schedule on track

i-SENS, Inc. projected that it would comfortably achieve this year’s CGM revenue target of 40 billion won. If the target is met, this would represent an increase of approximately 127% from last year’s 17.6 billion won in just one year. Although CGM revenue in the first half of the year stood at 44.5% of the annual target, the company believes it is possible to slightly exceed the target when considering expanded European sales in the second half and the recognition of some deferred revenue.

CFO Yoon reaffirmed the CGM sales target to the market, stating, “At this point, we believe the annual target of 40 billion won is fully achievable,” and added, “Given the trends in shipment volumes and order intake, we can even expect to slightly exceed the target.”

Growth in the second half is expected to be driven by overseas markets. In the second quarter, domestic CGM revenue totaled 3.6 billion won, while overseas revenue reached 5.8 billion won. Overseas revenue surged 542.1% from 900 million won in the same period last year and rose 34% quarter-over-quarter. Overseas revenue now accounts for approximately 62% of total CGM revenue.

Currently, Hungary is the largest market for i-SENS, Inc.’s CGM sales, followed by Finland and HANDOK Inc.(002390), which sells CareSense Air in South Korea. In Finland, shipments for orders secured through a local government tender last year began in earnest in the second quarter of this year. Sales growth is also continuing in New Zealand, the United Kingdom, the Czech Republic, and Poland.

i-SENS, Inc. expects sales to expand in the second half of this year in Germany and the UK, where the product was added to the national health insurance coverage in the first half of the year. In Germany, CareSense Air has been listed on the statutory health insurance (GKV), which covers over 90% of the population. In the UK, “AliCGM,” a private-label (PL) product sold by i-SENS, Inc.’s local subsidiary Agamatrix, has been listed on the National Health Service (NHS). Given the time lag between insurance listing and the expansion of prescription and distribution channels, sales contributions are expected to increase starting in the second half of the year.

Clinical trials in the U.S. for the next-generation product, “CareSense Air 2,” are also underway with the goal of completion within the year. Although the trial was initially designed to enroll 32 adults across four U.S. institutions, the product’s usage period was extended, leading to changes in some product specifications and clinical protocols, as well as the addition of new clinical sites. However, the company explains that there are no significant changes to the sample size or the completion schedule. Once the clinical trial results are obtained, the company plans to proceed with a confirmatory clinical trial in the U.S.

i-SENS, Inc. obtained product approval for Air 2 from the Ministry of Food and Drug Safety last month. However, since the product approved this time is not the final model to be released, the company is pursuing additional approval to modify the actual retail model, which features improvements to the applicator and packaging. The retail model features a design where the sensor automatically attaches when the applicator is pressed firmly against the skin, and the package size has also been reduced. The company expects this to enhance user convenience and market competitiveness, while anticipating only a limited impact on its cost structure.

With the addition of LifeScan, a major distribution network, to the existing list of countries where CareSense Air is sold, the foundation for CGM growth next year is expected to expand further. An i-SENS, Inc. official stated, “While it is difficult to predict the exact scale of the contribution at this time, we plan to launch the product sequentially in four European countries (Germany, Portugal, Belgium, and Ireland) in early 2027,” adding, “We expect sales through LifeScan to gradually expand following the local insurance reimbursement process.”