Shares were down $3.36, or 39%, at $5.17 in midday trading.
The company said sales are expected to be $39 million, lower than previously forecast. The company also said it expects a net loss of 24 cents a share. Analysts were expecting the company would lose a penny a share.
TheraSense said customers are ordering its FreeStyle system kits and test strips at a faster rate than some of its wholesalers and retailers are buying them. The company also said its costs for coupon and promotional activities have risen in a "competitive" market.Alameda, Calif.-based TheraSense develops glucose-monitoring systems for people with diabetes.