Senseonics Holdings, Inc. [SENS] Filings

10-Q 1 sens-20230630x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 001-37717

Senseonics Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)	3841 (Primary Standard Industrial Classification Code Number)	47-1210911 (I.R.S. Employer Identification Number)

20451 Seneca Meadows Parkway

Germantown, MD 20876-7005

(301) 515-7260

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	SENS	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 492,900,981 shares of common stock, par value $0.001, outstanding as of August 4, 2023.

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TABLE OF CONTENTS

PART I: Financial Information

ITEM 1: Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2023 and 2022	4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2023 and 2022	5
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	6
Notes to Unaudited Condensed Consolidated Financial Statements	7

ITEM 2: Management Discussion and Analysis of Financial Condition and Results of Operations	26

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk	37

ITEM 4: Controls and Procedures	37

PART II: Other Information	39

ITEM 1: Legal Proceedings	39

ITEM 1A: Risk Factors	39

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds	39

ITEM 3: Defaults Upon Senior Securities	39

ITEM 4: Mine Safety Disclosures	39

ITEM 5: Other Information	40

ITEM 6: Exhibits	41

SIGNATURES	42

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Senseonics Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	June 30,		December 31,
	2023		2022
		(unaudited)

Assets
Current assets:
Cash and cash equivalents	$	28,551	$	35,793
Short term investments, net		89,067		108,222
Accounts receivable, net		655		127
Accounts receivable, net - related parties		3,020		2,324
Inventory, net		9,194		7,306
Prepaid expenses and other current assets		7,742		7,428
Total current assets		138,229		161,200

Deposits and other assets		6,755		3,108
Long term investments, net		7,453		12,253
Property and equipment, net		925		1,112
Total assets	$	153,362	$	177,673
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	975	$	419
Accrued expenses and other current liabilities		14,256		14,616
Accrued expenses and other current liabilities, related parties		630		837
Note payable, current portion, net		—		15,579
Derivative liability, current portion		—		20
Total current liabilities		15,861		31,471

Long-term debt and notes payables, net		39,108		56,383
Derivative liabilities		1,792		52,050
Other liabilities		6,408		2,689
Total liabilities		63,169		142,593

Preferred stock and additional paid-in-capital, subject to possible redemption: $0.001 par value per share; 12,000 shares and 12,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022		37,656		37,656
Total temporary equity		37,656		37,656

Commitments and contingencies

Stockholders’ equity (deficit):
Common stock, $0.001 par value per share; 900,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 492,826,683 shares and 479,637,138 shares issued and outstanding as of June 30, 2023 and December 31, 2022		493		480
Additional paid-in capital		880,129		806,488
Accumulated other comprehensive loss		(120)		(678)
Accumulated deficit		(827,965)		(808,866)
Total stockholders’ equity (deficit)		52,537		(2,576)
Total liabilities and stockholders’ equity	$	153,362	$	177,673

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenue, net	$	437	$	137	$	750	$	429
Revenue, net - related parties		3,689		3,577		7,513		5,767
Total revenue		4,126		3,714		8,263		6,196
Cost of sales		3,709		2,890		7,433		4,845
Gross profit		417		824		830		1,351

Expenses:
Research and development expenses		12,830		9,299		25,235		17,103
Selling, general and administrative expenses		7,455		8,561		15,173		16,445
Operating loss		(19,868)		(17,036)		(39,578)		(32,197)
Other income (expense), net:
Interest income		1,311		241		2,420		334
Gain on fair value adjustment of option		—		28,224		—		49,925
Exchange related gain, net		—		—		18,776		—
Interest expense		(2,310)		(4,510)		(6,962)		(9,005)
Gain on change in fair value of derivatives		289		96,548		6,067		181,117
Impairment cost, net		—		816		—		846
Other income (expense)		155		(52)		178		(71)
Total other (expense) income, net		(555)		121,267		20,479		223,146

Net (Loss) Income		(20,423)		104,231		(19,099)		190,949
Other comprehensive income (loss)
Unrealized gain (loss) on marketable securities		100		(291)		558		(916)
Total other comprehensive gain (loss)		100		(291)		558		(916)
Total comprehensive (loss) income	$	(20,323)	$	103,940	$	(18,541)	$	190,033

Basic net (loss) income per common share	$	(0.04)	$	0.22	$	(0.04)	$	0.42
Basic weighted-average shares outstanding		567,125,022		464,133,903		532,499,776		460,061,022

Diluted net loss per common share	$	(0.04)	$	(0.03)	$	(0.04)	$	(0.06)
Diluted weighted-average shares outstanding		567,125,022		601,330,959		532,499,776		604,342,540

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (in thousands)


				Additional		Accumulated				Total		Series B
	Common Stock			Paid-In		Other		Accumulated		Stockholders'		Convertible
	Shares	Amount		Capital		Comprehensive Loss		Deficit		Equity (Deficit)		Preferred Stock Temporary Equity
Three months ended June 30, 2022:
Balance, March 31, 2022	463,229	$	463	$	775,172	$	(837)	$	(864,267)	$	(89,469)	$	—
Exercise of stock options and warrants	127		—		68		—		—		68		—
Issued common stock for vested RSUs and ESPP purchase	3,063		3		(2)		—		—		1		—
Stock-based compensation expense	—		—		2,585		—		—		2,585		—
Shares withheld related to net share settlement of equity awards	(1,093)		(1)		(1,183)		—		—		(1,184)		—
Net income	—		—		—		—		104,231		104,231		—
Other comprehensive loss, net of tax	—		—		—		(291)		—		(291)		—
Balance, June 30, 2022	465,326	$	465	$	776,640	$	(1,128)	$	(760,036)	$	15,941	$	—

Six months ended June 30, 2022:
Balance, December 31, 2021	447,282	$	447	$	765,215	$	(212)	$	(950,985)	$	(185,535)	$	—
Issuance of common stock, net of issuance costs	3,077		3		8,001		—		—		8,004		—
Exercise of stock options and warrants	9,211		9		230		—		—		239		—
Issued common stock for vested RSUs and ESPP purchase	6,849		7		56		—		—		63		—
Stock-based compensation expense	—		—		4,321		—		—		4,321		—
Shares withheld related to net share settlement of equity awards	(1,093)		(1)		(1,183)		—		—		(1,184)		—
Net income	—		—		—		—		190,949		190,949		—
Other comprehensive loss, net of tax	—		—		—		(916)		—		(916)		—
Balance, June 30, 2022	465,326	$	465	$	776,640	$	(1,128)	$	(760,036)	$	15,941	$	—

Three months ended June 30, 2023:
Balance, March 31, 2023	479,780	$	480	$	871,746	$	(220)	$	(807,542)	$	64,464	$	37,656
Issuance of common stock, net of issuance costs	9,945		10		7,366		—		—		7,376		—
Issued common stock for vested RSUs and ESPP purchase	5,228		5		(3)		—		—		2		—
Exercise of stock options and warrants	6		—		3		—		—		3		—
Warrant issuance costs	—		—		(260)		—				(260)		—
Stock-based compensation expense	—		—		2,870		—		—		2,870		—
Shares withheld related to net share settlement of equity awards	(2,132)		(2)		(1,596)		—		—		(1,598)		—
Other	—		—		3		—		—		3
Net loss	—		—		—		—		(20,423)		(20,423)		—
Other comprehensive income, net of tax	—		—		—		100		—		100		—
Balance, June 30, 2023	492,827	$	493	$	880,129	$	(120)	$	(827,965)	$	52,537	$	37,656

Six months ended June 30, 2023:
Balance, December 31, 2022	479,637	$	480	$	806,488	$	(678)	$	(808,866)	$	(2,576)	$	37,656
Issuance of common stock, net of issuance costs	9,945		10		7,366		—		—		7,376		—
Issued common stock for vested RSUs and ESPP purchase	5,371		5		82		—		—		87		—
Issuance of warrants, net of issuance costs	—		—		63,282		—		—		63,282		—
Exercise of stock options and warrants	6		—		3		—		—		3		—
Stock-based compensation expense	—		—		4,651		—		—		4,651		—
Shares withheld related to net share settlement of equity awards	(2,132)		(2)		(1,601)		—		—		(1,603)		—
Other	—		—		(142)		—		—		(142)
Net loss	—		—		—		—		(19,099)		(19,099)		—
Other comprehensive income, net of tax	—		—		—		558		—		558		—
Balance, June 30, 2023	492,827	$	493	$	880,129	$	(120)	$	(827,965)	$	52,537	$	37,656

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Six Months Ended
	June 30,
	2023		2022
Cash flows from operating activities
Net (loss) income	$	(19,099)	$	190,949
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization expense		454		520
Non-cash interest expense (debt discount and deferred costs)		3,426		5,726
Gain on change in fair value of derivatives		(6,067)		(181,117)
Gain on fair value adjustment of option		—		(49,925)
Exchange related gain, net		(18,776)		—
(Gain) Impairment of option, net		—		(846)
Stock-based compensation expense		4,651		4,321
Provision for inventory obsolescence and net realizable value		(65)		—
Other		55		—
Changes in assets and liabilities:
Accounts receivable		(1,224)		(2,070)
Prepaid expenses and other current assets		(314)		(1,600)
Inventory		(1,823)		(934)
Deposits and other assets		(26)		163
Accounts payable		556		530
Accrued expenses and other liabilities		493		44
Accrued interest		357		(102)
Operating lease liabilities		(430)		—
Net cash used in operating activities		(37,832)		(34,341)
Cash flows from investing activities
Capital expenditures		(57)		(211)
Purchase of marketable securities		(61,818)		—
Proceeds from sale and maturity of marketable securities		87,746		42,319
Net cash provided by investing activities		25,871		42,108
Cash flows from financing activities
Issuance of common stock, net of issuance costs		7,376		8,004
Issuance of stock options, net of issuance costs		(52)		302
Repayment of 2023 Note		(15,700)		—
Taxes paid related to net share settlement of equity awards		(1,603)		(1,183)
Proceeds from issuance of warrants, net		14,698		—
Repayment of term loans		—		(2,926)
Net cash provided by financing activities		4,719		4,197
Net (decrease) increase in cash and cash equivalents		(7,242)		11,964
Cash and cash equivalents, at beginning of period		35,793		33,461
Cash and cash equivalents, at ending of period	$	28,551	$	45,425

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	1,756	$	3,381
Lease liabilities arising from obtaining right-of-use assets		3,831		2,944
Supplemental disclosure of non-cash investing and financing activities
Issuance of warrant in exchange for PHC Notes		48,564		—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Senseonics Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1.	Organization and Nature of Operations

Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the development and manufacturing of long-term, implantable continuous glucose monitoring (“CGM”) systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy.

Senseonics, Incorporated is a wholly owned subsidiary of Senseonics Holdings, Inc. and was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings, Inc. and Senseonics, Incorporated are hereinafter collectively referred to as the “Company” unless otherwise indicated or the context otherwise requires.

2.	Liquidity and Capital Resources

From its founding in 1996 until 2010, the Company has devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the Company narrowed its focus to developing and refining a commercially viable glucose monitoring system. The Company has incurred substantial losses and cumulative negative cash flows from operations since its inception in October 1996 and expects to incur additional losses in the near future. We incurred total gross profit (loss) of $2.7 million, ($0.8) million, and ($17.4) million for the years ended December 31, 2022, 2021 and 2020, respectively. For the three months ending June 30, 2023, the Company had gross profit of $0.4 million and an accumulated deficit of $828.0 million. To date, the Company has funded its operations principally through the issuance of preferred stock, common stock, warrants, convertible notes and debt. As of June 30, 2023, the Company had cash, cash equivalents and marketable securities of $125.1 million.

On August 10, 2023 the Company entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with a limited number of holders (the “Noteholders”) of the Company’s currently outstanding 5.25% Convertible Senior Notes due 2025 (the “2025 Notes”). Under the terms of the Exchange Agreements, the Noteholders have agreed to exchange with the Company (the “Exchanges”) up to $30.8 million in aggregate principal amount of the Company’s outstanding 2025 Notes (the “Exchanged Notes”) for a combination of $7.5 million of cash and newly issued shares of common stock (the “Exchange Shares”). The Exchanged Notes are presently convertible into an aggregate of approximately 23.3 million shares of common stock. The number of Exchange Shares to be issued to the Noteholders will be determined based upon the volume-weighted average price per share of the common stock during a 15-day averaging period commencing on August 11, 2023. The maximum number of Exchange Shares that may be issued is 10% of the Company’s common stock outstanding as of August 10, 2023 (the “Exchange Share Cap”). If the average trading price over the averaging period would otherwise result in the number of shares to be issued exceeding the Exchange Share Cap, the amount of the Exchanged Notes will be proportionally reduced. The Exchanges are subject to customary closing conditions and are expected to close on or about September 5, 2023.

In August 2023, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Goldman Sachs & Co. LLC (“GS”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $106.6 million through GS as its sales agent in an “at the market” offering. GS will receive a commission up to 3.0% of the gross proceeds of any common stock sold through GS under the Equity Distribution Agreement. The shares will be offered and sold pursuant to a shelf registration statement on Form S-3 (the “Registration Statement”), filed with the Securities and Exchange Commission (the “Commission”) on August 10, 2023. The Registration Statement has not yet been declared effective by the Commission and no sales may be made until such time as the Registration Statement is declared effective.

In November 2021, the Company entered into an Open Market Sale Agreement, (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through Jefferies as its sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common

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stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2023, the Company received $7.4 million in net proceeds from the sale of 9,944,663 shares of its common stock under the 2021 Sales Agreement. For the six months ended June 30, 2022, Company received $8.0 million in net proceeds from the sale of 3,077,493 shares of its common stock under the 2021 Sales Agreement. On August 7, 2023, the Company and Jefferies mutually agreed to terminate the Open Market Sale Agreement, effective as of August 7, 2023. At the time of termination, approximately $106.6 million remained available for issuance pursuant to the 2021 Sales Agreement.

On November 9, 2020, the Company entered into an Equity Line Agreement (the “Equity Line Agreement”) with Energy Capital, LLC, a Florida limited liability company (“Energy Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital was committed to purchase up to an aggregate of $12.0 million of shares of the Company’s newly designated series B convertible preferred stock (the “Series B Preferred Stock”) at the Company’s request from time to time during the 24-month term of the Equity Line Agreement. Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including that the Company have less than $8.0 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company had the right, at its sole discretion, to present Energy Capital with a purchase notice (each, a “Regular Purchase Notice”) directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of the Company’s Series B Preferred Stock at a per share price (the “Purchase Price”) equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provided that the Company was not permitted to affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the Company’s common stock on the NYSE American is less than $0.25 without the approval of Energy Capital. In addition, beginning on January 1, 2022, since there had been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital had the right, at its sole discretion, by its delivery to the Company of a Regular Purchase Notice, to purchase up to the $12.0 million of Series B Preferred Stock under the Equity Line Agreement at the Purchase Price. On November 7, 2022, Energy Capital exercised in full its right to purchase $12.0 million of Series B Preferred Stock. The excess of the Purchase Price and the fair value of the Energy Capital option in the total amount of $37.6 million was recorded in additional-paid-in-capital.

On August 9, 2020, the Company entered into a financing agreement with the parent company of Ascensia Diabetes Care Holdings AG (“Ascensia”), PHC Holdings Corporation (“PHC”), pursuant to which the Company issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to PHC. The Company also issued 2,941,176 shares of common stock to PHC as a financing fee. The Company also has the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022, contingent upon obtaining U.S. Food and Drug Administration (“FDA”) approval for the 180-day Eversense product for marketing in the United States before such date. The Company successfully obtained FDA approval in February 2022 and the option was not exercised. As described in Note 11, on March 13, 2023, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with PHC, pursuant to which PHC agreed to exchange (the “Exchange”) its $35.0 million aggregate principal amount of the PHC Notes, including all accrued and unpaid interest thereon, for a warrant (the “Exchange Warrant”) to purchase up to 68,525,311 shares of the Company’s common stock, $0.001 par value per share (the “Exchange Warrant Shares”). The Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per Exchange Warrant Share. On March 31, 2023, the Exchange was consummated, and the Company issued the Exchange Warrant to PHC in consideration for the cancellation of the PHC Notes.

On March 13, 2023, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with PHC, pursuant to which the Company issued and sold to PHC in a private placement (the “Private Placement”) a warrant (the “Purchase Warrant”) to purchase 15,425,750 shares of the Company’s common stock, $0.001 par value per share (the “Purchase Warrant Shares”). The purchase price of the Purchase Warrant was approximately $0.97 per Purchase Warrant Share, representing the undiscounted, trailing 10-day volume weighted average price of the Company’s common stock through March 10, 2023. The Purchase Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per Purchase Warrant Share. The issuance of the Purchase Warrants enabled PHC to maintain, as of the closing of the transaction, a 15% beneficial ownership for purposes of the Investor Rights Agreement, dated August 9, 2020, between the Company and PHC. The Private Placement closed on March 13, 2023 (the “Private

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Placement Closing Date”) and the Company received aggregate gross proceeds of $15.0 million, before deducting private placement expenses payable by the Company.

3.	Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at June 30, 2023, and December 31, 2022, results of operations, comprehensive income (loss), and changes in stockholder’s deficit for the three and six months ended June 30, 2023 and 2022 and cash flows for the six months ended June 30, 2023 and 2022 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 16, 2023. The interim results for June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any future interim periods.

The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its wholly owned operating subsidiary Senseonics, Incorporated. The Company views its operations and manages its business in one segment, glucose monitoring products. Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company currently holds investments in available-for-sale securities. The Company has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its consolidated financial statements and related disclosures at this time. The Company adopted this guidance as of January 1, 2023 and its adoption did not have a material impact on the consolidated financial statements and related disclosures.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying unaudited consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, fair value of investments, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, bad debts, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual results could differ from those estimates; however, management does not believe that such differences would be material.

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Significant Accounting Policies

The accounting policies used by the Company in its presentation of interim financial results are consistent with those presented in Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

4. Revenue Recognition

The Company generates product revenue from sales of the Eversense system and related components and supplies to Ascensia, through a collaboration and commercialization agreement (the “Ascensia Commercialization Agreement”), third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively, the “Customers”), who then resell the products to health care providers and patients. Customers pay the Company for sales, regardless of whether or not the Customers resell the products to health care providers and patients. The Company’s policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for the year ended December 31, 2022.

Revenue by Geographic Region

The following table sets forth net revenue derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended				Six Months Ended
	June 30, 2023				June 30, 2023
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
United States	$	1,793	43.5	%	$	3,955	47.9	%
Outside of the United States		2,333	56.5			4,308	52.1
Total	$	4,126	100.0	%	$	8,263	100.0	%


	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
United States	$	1,207	32.5	%	$	1,974	31.9	%
Outside of the United States		2,507	67.5			4,222	68.1
Total	$	3,714	100.0	%	$	6,196	100.0	%

Contract Assets

Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement. Accounts receivable – related parties, net as of June 30, 2023 and December 31, 2022, included unbilled accounts receivable of $0.9 million and $1.7 million, respectively. The Company expects to invoice and collect all unbilled accounts receivable within 12 months.

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Concentration of Revenue and Customers

For the three months ended June 30, 2023 and 2022, the Company derived 89% and 96%, respectively, of its total revenue from one customer, Ascensia. For the six months ended June 30, 2023, and 2022, the Company derived 91% and 93%, respectively of its total revenue from one customer, Ascensia. Revenues for these corresponding periods represent sales of sensors, transmitters and miscellaneous Eversense system components.

5. Net Income (Loss) per Share

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period. An aggregate of 83,951,061 shares of common stock issuable upon the exercise of the Exchange Warrant Shares and the Purchase Warrant Shares held by PHC are included in the number of outstanding shares used for the computation of basic net income (loss) per share for the three and six months ended June 30, 2023. Since the shares are issuable for little or no consideration, sometimes referred to as “penny warrants”, they are considered outstanding in the context of earnings per share, as discussed in ASC 260-10-45-13.

Dilutive net income (loss) per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents. Potentially dilutive common shares consist of shares issuable from restricted stock units, stock options, warrants and the Company’s convertible notes. Potentially dilutive common shares issuable upon vesting of restricted stock units and exercise of stock options and warrants are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Company’s convertible notes are determined using the if converted method. The if-converted method assumes conversion of convertible securities at the beginning of the reporting period. Interest expense, dividends, and the changes in fair value measurement recognized during the period are added back to the numerator. The denominator includes the common shares issuable upon conversion of convertible securities.

In periods of net loss, all potentially dilutive common shares are excluded from the computation of the diluted net loss per share for those periods, as the effect would be anti-dilutive.

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The following table sets forth the computation of basic and diluted net income (loss) per share for the periods shown:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022

Net (loss) income	$	(20,423)	$	104,231	$	(19,099)	$	190,949

Senseonics Holdings, Inc. [SENS] Filings
10-Q	[2023-08-10]
10-Q	[2023-05-09]
10-K	[2023-03-16]
10-Q	[2022-11-08]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-01]
10-Q	[2021-11-09]
10-Q	[2021-08-09]
10-Q	[2021-05-13]
10-K	[2021-03-05]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-06-09]
10-K	[2020-03-16]
10-Q	[2019-11-12]
10-Q	[2019-08-07]
10-Q	[2019-05-09]
10-K	[2019-03-15]
10-Q	[2018-11-08]
10-Q	[2018-08-08]
10-Q	[2018-05-10]
10-K	[2018-03-13]
10-Q	[2017-10-31]
10-Q	[2017-08-09]
10-Q	[2017-05-04]
10-K	[2017-02-23]
10-Q	[2016-11-03]
10-Q	[2016-08-09]
10-Q	[2016-05-12]
10-K	[2016-02-19]
S-1	[2016-01-13]
10-Q	[2015-11-13]
10-K	[2015-09-18]
10-Q	[2015-05-15]
10-Q	[2015-02-17]
10-Q	[2014-12-18]
S-1	[2014-08-15]