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CGM sales on track to exceed full-year target

3Q25 review: In-line revenue, below-consensus OP

For 3Q25, i-SENS reported in-line revenue of W78.5bn (+10% YoY) and below-consensus operating profit of W1bn (-73% YoY; OP margin of 1.3%). The share of low-margin meter sales rose significantly―from around 10-15% historically to 23% in 3Q25―leading to a 4.7%p YoY drop in gross margin (to 37%). Meanwhile, SG&A expenses rose 8% YoY, reflecting higher commission payments (for patent reviews), R&D expenses, and bad debt expenses, though the increase was partially offset by cost savings from the restructuring of AgaMatrix.

In blood glucose monitoring, test strip revenue fell 19% YoY to W41.2bn, while meter revenue surged 153% YoY to W15.5bn. Continuous glucose monitoring (CGM) device revenue reached W5.7bn (including W1.31bn from overseas). Meanwhile, POCT revenue rose 26% YoY to W6.7bn, and PT/INR revenue increased 3% YoY to W4.3bn.

By region, revenue was W21.8bn (-25% YoY) in the US, W11bn (-4% YoY) in Asia, W19.5bn (+37% YoY) in Korea, W13.2bn (+76% YoY) in Europe, and W12.9bn (+38% YoY) in other regions.

Reiterate Buy and TP of W24,000

In 3Q25, domestic CGM revenue jumped 71% QoQ to W4.4bn, showing strong momentum. We expect hospital channel sales to strengthen further toward year-end, aided by Dong-A ST’s participation in domestic marketing. Although overseas progress remains modest, we believe that the recent launch of a dedicated CGM receiver (in October) will help drive growth via expanded insurance coverage. All in all, we forecast CGM revenue to reach W18.6bn in 2025 (vs. our previous estimate of W15.9bn) and W31.7bn in 2026.

It is important to remember that the CGM market is still in its early stages, with only a few players having a meaningful presence. While i-SENS is beginning to establish itself in the market, we believe investors should approach this as a long-term growth story that will take time to play out. The company has secured annual production capacity worth W80-100bn and aims to launch the next-generation CareSens Air 2 in Korea/Europe in 2027 and in the US in 2028.

For 2025, we look for revenue of W317.6bn (+9% YoY) and adjusted EBITDA of W30.6bn (adjusted EBITDA margin of 9.6%). The stock remains undervalued, trading at a 12-month forward P/S of 1.4x, below the global peer average of 4.9x and its three-year average of 1.8x.