Beta Bionics, Inc.

Comparison of the three and six months ended June 30, 2025 and 2024

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

* Not meaningful

(1)

Includes stock-based compensation expense as follows:

Net Sales

Net sales for the three months ended June 30, 2025 was $23.2 million, compared to $15.0 million for the three months ended June 30, 2024. The increase in net sales of $8.2 million was primarily driven by an increase in the number of single-use products sold, which increased proportionally with the expansion of our installed customer base. For the three months ended June 30, 2025, single-use products accounted for 41% of net sales, up from 21% as of the three months ended June 30, 2024.

For the three months ended June 30, 2025, 80% of net sales were generated through the DME channel and 20% through the PBP channel, compared to 95% and 5%, respectively, in the prior-year period. The increase in PBP channel sales was driven by expanded pharmacy benefit coverage enabled through contracts with PBMs and their affiliated health plans, resulting in a higher proportion of new patient starts being reimbursed through this channel.

Net sales for the six months ended June 30, 2025 was $40.9 million, compared to $28.0 million for thesix months ended June 30, 2024. This increase in net sales of $12.9 million was primarily driven by an increase in the number of single-use products sold, correlated to the growth in our installed base. For thesix months ended June 30, 2025, single-use products accounted for 42% of net sales, up from 19% of net sales as of thesix months ended June 30, 2024.

For thesix months ended June 30, 2025, 79% of net sales were generated through the DME channel and 21% through the PBP channel, compared to 94% and 6%, respectively, for thesix months ended June 30, 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.

Cost of Sales

Cost of sales for the three months ended June 30, 2025 was $10.7 million, compared to $7.0 million for the three months ended June 30, 2024. The $3.8 million increase was primarily driven by higher volumes of single-use products and pharmacy iLets.

Cost of sales for thesix months ended June 30, 2025 was $19.4 million, compared to $12.7 million for thesix months ended June 30, 2024. This increase of $6.7 million was primarily attributable to increased volumes of single-use products and pharmacy iLets.

Gross Profit and Margin

Gross profit for the three months ended June 30, 2025 was $12.5 million, compared to $8.1 million for the three months ended June 30, 2024. Gross margin was 54% for the three months ended June 30, 2025, compared to 54% in the three months ended June 30, 2024. The $4.4 million increase in gross profit was driven by higher sales volume.

Gross profit for the six months ended June 30, 2025 was $21.5 million, compared to $15.3 million for the six months ended June 30, 2024. Gross margin was 53% for the six months ended June 30, 2025, compared to 55% in the six months ended June 30, 2024. Gross profit increased by $6.2 million, but gross margin declined primarily due to a shift in revenue mix, with a higher proportion of new patient starts reimbursed through the PBP channel in the first quarter of 2025. Under the PBP model, less revenue is recognized upfront compared to the DME channel, which generates a short term negative impact on gross margin when PBP penetration increases.

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2025 was $8.9 million, compared to $6.4 million for the three months ended June 30, 2024. The increase of $2.5 million was primarily attributable to a $1.0 million increase in engineering, materials, and clinical trial related expenses incurred for the development of our patch pump, bihormonal configuration of the iLet and incremental software and product updates. The remaining increase is attributable to a net increase of $1.4 million in payroll-related expenses, including stock-based compensation related to RSUs granted on March 15, 2025 to eligible employees under the 2025 Plan, driven by an increase in headcount primarily with our tech transfer team focused on supporting our innovation activities, and $0.1 million in allocated facilities-related expenses driven by an increase in headcount.

Research and development expenses for thesix months ended June 30, 2025 was$16.5 million, compared to $11.8 million for thesix months ended June 30, 2024. The increase of $4.6 million was primarily attributable to a $2.1 million increase in engineering, materials, and clinical trial related expenses incurred for the development of our patch pump, bihormonal configuration of the iLet and incremental software and product updates. The remaining increase is attributable to a net increase of $2.2 million in payroll-related expenses, including stock-based compensation related to RSUs granted on March 15, 2025 to eligible employees under the 2025 Plan, driven by an increase in headcount primarily with our tech transfer team focused on supporting our innovation activities, and $0.3 million in allocated facilities-related expenses driven by an increase in headcount.

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

(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.

(3)

Other primarily includes licensing fees.

Sales and Marketing Expenses

Sales and marketing expenses for the three months ended June 30, 2025 was $15.6 million, compared to $9.0 million for the three months ended June 30, 2024. The increase of $6.6 million was primarily attributable to an increase of $4.2 million in payroll-related costs, 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 professional education.

Sales and marketing expenses for the six months ended June 30, 2025 was $29.0 million, compared to $16.6 million for the six months ended June 30, 2024. The increase of $12.4 million was primarily attributable to an increase of $7.9 million in payroll-related costs, 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 professional education.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2025 was $7.9 million, compared to $4.5 million for the three months ended June 30, 2024. The increase of $3.3 million was primarily attributable to an increase of $2.2 million in payroll-related expenses, driven by an increase in headcount following the Company's initial public offering as well as increased stock-based compensation related to RSUs granted on March 15, 2025 to eligible employees under the 2025 Plan. The remaining increase is partially attributable to professional fees, including legal and accounting services of $0.5 million primarily related to operating as a public company.

General and administrative expenses for the six months ended June 30, 2025 was $14.5 million, compared to $8.1 million for the six months ended June 30, 2024. The increase of $6.4 million was primarily attributable to an increase of $3.7 million in payroll-related expenses, driven by an increase in headcount following the Company's initial public offering as well as increased corporate bonus incentives provided to management level employees and stock-based compensation related to RSUs granted on March 15, 2025 to eligible employees under the 2025 Plan. The remaining increase is partially attributable to professional fees, including legal and accounting services, and increased insurance premiums primarily related to operating as a public company.

Other Income (Expense)

Total other income (expense), net for the three months ended June 30, 2025 was $3.0 million income, compared to ($2.7) million expense for the three months ended June 30, 2024. This increase of $5.7 million was attributable to a $3.7 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 initial public offering, which were converted into shares of common stock upon IPO effectiveness. This was partially offset by a $2.0 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.

Total other expense, net for thesix months ended June 30, 2025 was $7.0 million, compared to $5.7 million for thesix months ended June 30, 2024. This increase of $1.3 million was attributable to a $4.6 million increase 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 initial public offering compared to June 30, 2024. This was partially offset by a $3.3 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.

Selected Quarterly Financial Information

The following tables set forth our selected unaudited quarterly statements of operations data for each of the eight quarters in the period ended June 30, 2025. The information for each of these quarters has been prepared in accordance with GAAP, on a basis consistent with our unaudited condensed financial statements included elsewhere in this Quarterly Report and our audited financial statements included in our 2024 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 financial statements and related notes thereto included elsewhere in this Quarterly Report.

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

(1)

Includes stock-based compensation expense as follows:

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 June 30, 2025:

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

Quarterly net sales increased from the third quarter of 2023 through the fourth quarter of 2024, driven primarily by growth in our installed customer base as more patients adopted the iLet. This growth also contributed to higher recurring sales of single-use products, which are replaced every 2–3 days. Net sales declined in the first quarter of 2025, primarily due to seasonal factors and an unfavorable product mix. Net sales increased in the second quarter of 2025, benefiting from favorable seasonality and continued growth in both iLets and supplies.

Cost of sales

Quarterly cost of sales increased from the third quarter of 2023 through the fourth quarter of 2024, reflecting higher iLet sales and a growing installed base, which drove increases in material cost and royalties expense. Cost of sales declined in the first quarter of 2025, primarily due to product mix and lower volume. Cost of sales increased again in the second quarter of 2025, largely due to increased volume, particularly in pharmacy iLet sales, and higher product warranty costs.

Gross Margin

Gross margin improved from the second quarter through the fourth quarter of 2023, driven by net sales growth. However, gross margin declined from the fourth quarter of 2023 through the first quarter of 2025, reflecting a shift in channel mix. A higher proportion of new patient starts were reimbursed through the pharmacy benefit (PBP) channel, which recognizes less revenue upfront compared to the DME channel. Specifically, PBP-reimbursed starts accounted for a mid-single-digit percentage of new patients in the third quarter of 2023, increasing to the low teens in the fourth quarter of 2024, the low twenties in the first quarter of 2025, and the high twenties in the second quarter of 2025. Gross margin increased in the second quarter of 2025 due to higher volumes and improved cost absorption.

Operating expenses

Our quarterly research and development expenses increased in all periods presented, except the third quarter of 2024 and first quarter of 2025, primarily due to increases in engineering, third-party consulting costs and payroll-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

Our quarterly Adjusted EBITDA increased from the third quarter 2023 to the fourth quarter of 2023 primarily due to an increase in Net Sales and Gross Profit. Our quarterly Adjusted EBITDA decreased from the fourth quarter of 2023 to the third quarter of 2024 primarily due to increases in Sales & Marketing and Research & Development expenses. The decrease in Adjusted EBITDA from the third quarter of 2024 to the fourth quarter of 2024 was primarily driven by a $3.0 million milestone payment made to Xeris in the fourth quarter of 2024 for the achievement of certain developmental milestones. The decrease in Adjusted EBITDA from the fourth quarter of 2024 to the first quarter of 2025 was primarily driven by an increase in the change in fair value of warrant liabilities and an increase in stock compensation expenses as a result of additional headcount. Adjusted EBITDA improved from the first quarter of 2025 to the second quarter of 2025 due to higher revenue, improved margins and increased operating leverage despite continued headcount increases.