Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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Table of Contents

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 September 30, 2024

☐ 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 592,626,155 shares of common stock, par value $0.001, outstanding as of November 1, 2024.

Table of Contents

TABLE OF CONTENTS

PART I: Financial Information

ITEM 1: Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023			3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023			4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the three and nine months ended September 30, 2024 and 2023			5
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023			6
Notes to Unaudited Condensed Consolidated Financial Statements			7

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			27

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk			38

ITEM 4: Controls and Procedures			38

PART II: Other Information			40

ITEM 1: Legal Proceedings			40

ITEM 1A: Risk Factors			40

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds			42

ITEM 3: Defaults Upon Senior Securities			42

ITEM 4: Mine Safety Disclosures			42

ITEM 5: Other Information			42

ITEM 6: Exhibits			43

SIGNATURES			44

Table of Contents

Senseonics Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	September 30,		December 31,
	2024		2023
		(unaudited)

Assets
Current assets:
Cash and cash equivalents	$	27,106	$	75,709
Restricted cash		315		—
Short term investments, net		47,375		33,747
Accounts receivable, net		1,523		808
Accounts receivable, net - related parties		2,507		3,724
Inventory, net		3,207		8,776
Prepaid expenses and other current assets		5,665		7,266
Total current assets		87,698		130,030

Deposits and other assets		5,209		7,006
Property and equipment, net		3,424		1,184
Total assets	$	96,331	$	138,220
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	2,107	$	4,568
Accrued expenses and other current liabilities		12,578		11,744
Accrued expenses and other current liabilities, related parties		1,448		945
Notes payable, current portion, net		19,376		—
Total current liabilities		35,509		17,257

Long-term debt and notes payables, net		34,448		41,195
Derivative liabilities		—		102
Other liabilities		5,899		6,214
Total liabilities		75,856		64,768

Preferred stock and additional paid-in-capital, subject to possible redemption: $0.001 par value per share; 12,000 shares authorized and 12,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023		37,656		37,656
Total temporary equity		37,656		37,656

Commitments and contingencies

Stockholders’ (deficit) equity:
Common stock, $0.001 par value per share; 1,400,000,000 shares and 900,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 545,612,780 shares and 530,364,237 shares issued and outstanding as of September 30, 2024 and December 31, 2023		546		530
Additional paid-in capital		914,637		904,535
Accumulated other comprehensive income (loss)		34		(11)
Accumulated deficit		(932,398)		(869,258)
Total stockholders’ (deficit) equity		(17,181)		35,796
Total liabilities and stockholders’ (deficit) equity	$	96,331	$	138,220

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 Loss

(in thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenue, net	$	955	$	426	$	2,322	$	1,176
Revenue, net - related parties		3,308		5,671		11,853		13,184
Total revenue		4,263		6,097		14,175		14,360
Cost of sales		8,314		4,925		17,593		12,358
Gross (loss) profit		(4,051)		1,172		(3,418)		2,002

Expenses:
Research and development expenses		10,546		12,769		31,784		38,003
Selling, general and administrative expenses		8,250		7,425		25,369		22,598
Operating loss		(22,847)		(19,022)		(60,571)		(58,599)
Other (expense) income, net:
Interest income		1,010		1,460		3,584		3,879
Exchange related (loss) gain, net		—		(4,569)		—		14,207
Interest expense		(2,133)		(2,425)		(6,266)		(9,388)
Gain on change in fair value of derivatives		—		438		102		6,505
Other (expense) income		(6)		15		11		194
Total other (expense) income, net		(1,129)		(5,081)		(2,569)		15,397

Net Loss		(23,976)		(24,103)		(63,140)		(43,202)
Other comprehensive loss
Unrealized gain on marketable securities		41		61		45		619
Other comprehensive gain		41		61		45		619
Total comprehensive loss	$	(23,935)	$	(24,042)	$	(63,095)	$	(42,583)

Basic net loss per common share	$	(0.04)	$	(0.04)	$	(0.10)	$	(0.08)
Basic weighted-average shares outstanding		620,897,955		592,452,262		617,370,311		552,703,546

Diluted net loss per common share	$	(0.04)	$	(0.04)	$	(0.10)	$	(0.08)
Diluted weighted-average shares outstanding		620,897,955		592,452,262		617,370,311		552,703,546

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’ (Deficit) Equity

(in thousands)


													Series B
	Common Stock			Paid-In		Other		Accumulated		Stockholders'		Convertible
	Shares	Amount		Capital		Comprehensive Loss		Deficit		(Deficit) Equity		Preferred Stock Temporary Equity
Three months ended September 30, 2023:
Balance, June 30, 2023	492,827	$	493	$	880,129	$	(120)	$	(827,965)	$	52,537	$	37,656
Issued common stock for vested RSUs and ESPP purchase	210		1		117		—		—		118		—
Exercise of stock options and warrants	—		—		5		—		—		5		—
Exchange of 2025 Notes	35,139		35		20,967		—		—		21,002		—
Issuance of warrants, net of issuance costs	—		—		363		—		—		363		—
Stock-based compensation expense	—		—		2,084		—		—		2,084		—
Net loss	—		—		—		—		(24,103)		(24,103)		—
Other comprehensive income, net of tax	—		—		—		61		—		61		—
Balance, September 30, 2023	528,176	$	528	$	903,665	$	(59)	$	(852,069)	$	52,065	$	37,656

Nine months ended September 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	5,581		6		199		—		—		205		—
Issuance of warrants, net of issuance costs	—		—		63,645		—		—		63,645		—
Exercise of stock options and warrants	6		—		3		—		—		3		—
Exchange of 2025 Notes	35,139		35		20,967		—		—		21,002		—
Stock-based compensation expense	—		—		6,735		—		—		6,735		—
Shares withheld related to net share settlement of equity awards	(2,132)		(2)		(1,601)		—		—		(1,603)		—
Other	—		—		(137)		—		—		(137)		—
Net loss	—		—		—		—		(43,202)		(43,202)		—
Other comprehensive income, net of tax	—		—		—		619		—		619		—
Balance, September 30, 2023	528,176	$	528	$	903,665	$	(59)	$	(852,069)	$	52,065	$	37,656

Three months ended September 30, 2024:
Balance, June 30, 2024	535,277	$	535	$	908,472	$	(7)	$	(908,422)	$	578	$	37,656
Issuance of common stock, net of issuance costs	10,039		10		3,657		—		—		3,667		—
Issued common stock for vested RSUs and ESPP purchase	296		1		75		—		—		76		—
Issuance of warrants, net of issuance costs	—		—		1		—		—		1		—
Stock-based compensation expense	—		—		2,432		—		—		2,432		—
Net loss	—		—		—		—		(23,976)		(23,976)		—
Other comprehensive income, net of tax	—		—		—		41		—		41		—
Balance, September 30, 2024	545,612	$	546	$	914,637	$	34	$	(932,398)	$	(17,181)	$	37,656

Nine months ended September 30, 2024:
Balance, December 31, 2023	530,364	$	530	$	904,535	$	(11)	$	(869,258)	$	35,796	$	37,656
Issuance of common stock, net of issuance costs	10,767		11		3,656		—		—		3,667		—
Issued common stock for vested RSUs and ESPP purchase	6,785		7		170		—		—		177		—
Issuance of warrants, net of issuance costs	—		—		149		—		—		149		—
Exercise of stock options and warrants	12		—		6		—		—		6		—
Stock-based compensation expense	—		—		7,160		—		—		7,160		—
Shares withheld related to net share settlement of equity awards	(2,316)		(2)		(1,039)		—		—		(1,041)		—
Net loss	—		—		—		—		(63,140)		(63,140)		—
Other comprehensive income, net of tax	—		—		—		45		—		45		—
Balance, September 30, 2024	545,612	$	546	$	914,637	$	34	$	(932,398)	$	(17,181)	$	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)


	Nine Months Ended
	September 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(63,140)	$	(43,202)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and ROU amortization expense		709		641
Non-cash interest expense (debt discount and deferred costs)		2,828		6,581
Net amortization of premiums and accretion of discounts on marketable securities		(960)		(2,253)
Gain on change in fair value of derivatives		(102)		(6,505)
Exchange related gain, net		—		(14,207)
Stock-based compensation expense		7,160		6,735
Provision for inventory obsolescence and losses		4,203		89
Loss on disposal of assets		—		5
Other		488		56
Changes in assets and liabilities:
Accounts receivable		425		(998)
Prepaid expenses and other current assets		1,056		(129)
Inventory		1,909		(2,509)
Deposits and other assets		1,542		(342)
Accounts payable		(2,947)		669
Accrued expenses and other liabilities		1,483		1,161
Accrued interest		(192)		(292)
Operating lease liabilities		(681)		(596)
Net cash used in operating activities		(46,219)		(55,096)
Cash flows from investing activities
Capital expenditures		(2,205)		(180)
Purchase of marketable securities		(58,018)		(68,537)
Proceeds from sale and maturity of marketable securities		45,395		122,235
Net cash (used in) provided by investing activities		(14,828)		53,518
Cash flows from financing activities
Proceeds from issuance of common stock, net		3,667		7,376
Proceeds from exercise of stock options and ESPP issuances, net		183		71
Proceeds from issuance of term loan, net		9,950		24,446
Taxes paid related to net share settlement of equity awards		(1,041)		(1,603)
Repayment of 2023 Notes		—		(15,700)
Repayment of 2025 Notes		—		(7,500)
Payment of debt issuance costs		—		(244)
Proceeds from issuance of warrants, net		—		14,698
Net cash provided by financing activities		12,759		21,544
Net (decrease) increase in cash, cash equivalents		(48,288)		19,966
Cash, cash equivalents, and restricted cash at beginning of period		75,709		35,793
Cash, cash equivalents, and restricted cash at ending of period	$	27,421	$	55,759

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	3,630	$	3,100
Lease liabilities arising from obtaining right-of-use assets		—		3,831
Supplemental disclosure of non-cash investing and financing activities
Property and equipment purchases included in accounts payable and accrued expenses		466		—
Issuance of warrants in exchange for PHC Notes		—		48,564
Issuance of warrants for Loan and Security Agreement		149		364
Issuance of common stock converted from 2025 Notes		—		21,002

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. Eon Care Services, LLC and Eon Management Services, LLC are wholly owned subsidiaries of Senseonics, Incorporated formed in April 2024 and July 2024, respectively. Senseonics Holdings, Inc. and its consolidated subsidiaries and affiliated entities, including its consolidated variable interest entities (“VIEs”) 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. Since our inception, we have incurred significant net losses and expect to incur additional losses in the near future. We incurred total net (loss) income of ($60.4) million and $142.1 million for the years ended December 31, 2023 and 2022, respectively. For the nine months ending September 30, 2024, the Company had gross loss of ($3.4) million and an accumulated deficit of $932.4 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 September 30, 2024, the Company had unrestricted cash, cash equivalents and marketable securities of $74.5 million.

The Company’s ability to grow revenues and achieve profitability depends on the successful commercialization and adoption of our implantable CGM (“Eversense”), including Eversense E3 CGM and Eversense 365 system, by diabetes patients and healthcare providers, along with future product development, regulatory approvals, and post-approval requirements. These activities and continued development of the Gemini product, Freedom product and other future products, will require significant uses of working capital through 2024 and beyond.

In accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification, 205-40, Presentation of Financial Statements - Going Concern, management is required to assess the Company’s ability to continue as a going concern through twelve months after issuance of the financial statements. Based on the Company’s current operating plan, existing unrestricted cash, cash equivalents and marketable securities, anticipated debt repayments, and minimum cash and satisfaction of performance milestones to comply with debt covenants under its Loan and Security Agreement as discussed in Note 12, the Company has determined that substantial doubt exists regarding its ability to continue as a going concern for the one-year period following the date these condensed consolidated financial statements are issued. To sustain its future operations beyond such one-year period, the Company will require additional funding. As part of our liquidity strategy, we will continue to monitor our capital structure and market conditions, and we may finance our cash needs through public or private debt and equity financings and other sources which may include collaborations, strategic alliances, and licensing arrangements with third parties. There is no assurance that the Company will be successful in obtaining sufficient funding on acceptable terms, if at all, and could be forced to delay, reduce, or eliminate some or all of its research, clinical trials, product development or future commercialization efforts, which could materially adversely affect its business prospects or its ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and that contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

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On September 8, 2023 (the “Effective Date”), the Company entered into a loan agreement (the “Loan and Security Agreement”) with the several institutions or entities party thereto (collectively, the “Lenders") and Hercules Capital, Inc., a Maryland corporation (“Hercules”) in its capacity as administrative agent and collateral agent for itself and the Lenders, pursuant to which the Lenders have agreed to make available to the Company up to $50.0 million in senior secured term loans (the “Term Loan Facility”), consisting of (i) an initial term loan of $25.0 million (the “Tranche 1 Loan”), which was funded on the Effective Date and (ii) two additional tranches of term loans in the amounts of up to $10.0 million (the “Tranche 2 Loan”) and $15.0 million (the “Tranche 3 Loan”), respectively, which will become available to the Company upon the Company’s satisfaction of certain terms and conditions set forth in the Loan and Security Agreement. In December 2023, we met the terms and conditions to draw on the Tranche 2 Loan and the loan was funded on January 2, 2024 in an amount of $10.0 million. The loans under the Loan and Security Agreement mature on September 1, 2027 (the “Maturity Date”).

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 agreed to exchange with the Company (the “Exchanges”) up to $30.8 million in aggregate principal amount of the 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 number of Exchange Shares was 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 and ending August 31, 2023. Based on the volume-weighted average price per share of the common stock during the averaging period, a total of 35.1 million shares of common stock were issued in the Exchanges. The Exchanges were settled on the initial share issuance date of August 14, 2023 and the final settlement date of 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, which represented the remaining capacity under our then-existing at the market program with Jefferies LLC (“Jefferies”), as described below. 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 an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on August 10, 2023. On October 24, 2024, the Company amended the Equity Distribution Agreement with GS to reduce the maximum amount of shares issuable thereunder to $55.0 million. As of September 30, 2024, the Company received approximately $4.2 million in net proceeds from the sale of 10,766,983 shares under the Equity Distribution Agreement.

In November 2021, we entered into the 2021 Sales Agreement with Jefferies, under which we could offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million through Jefferies as our sales agent in an “at the market” offering. Jefferies received commissions up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During 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. Effective August 7, 2023, the Company and Jefferies mutually agreed to terminate the 2021 Sales Agreement. At the time of termination, approximately $106.6 million remained available for issuance pursuant to the 2021 Sales Agreement.

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 had 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 12, on March 13, 2023, the Company entered into

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an Exchange Agreement (the “PHC Exchange Agreement”) with PHC, pursuant to which PHC agreed to exchange (the “PHC Exchange”) its $35.0 million aggregate principal amount of the PHC Notes, including all accrued and unpaid interest thereon, for a warrant (the “PHC Exchange Warrant”) to purchase up to 68,525,311 shares of the Company’s common stock, $0.001 par value per share (the “PHC Exchange Warrant Shares”). The PHC Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per PHC Exchange Warrant Share. On March 31, 2023, (6:00 am Japan Standard Time on April 1, 2023) the PHC Exchange was consummated, and the Company issued the PHC Exchange Warrant 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 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 September 30, 2024, and December 31, 2023, results of operations, comprehensive income (loss), and changes in stockholders’ (deficit) equity for the three and nine months ended September 30, 2024 and 2023 and cash flows for the nine months ended September 30, 2024 and 2023 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, 2023, as filed with the SEC on March 1, 2024. The interim results for September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future interim periods.

The unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company’s ability to continue as a going concern exists. As discussed in Note 2, based on the Company's current operating plan, existing unrestricted cash, cash equivalents and marketable securities, anticipated debt repayments, and minimum cash and satisfaction of performance milestones to comply with debt covenants under its Loan and Security Agreement as discussed in Note 12, the Company has determined that substantial doubt exists regarding its ability to continue as a going concern. The Company will require additional liquidity to continue its operations over the next 12 months and we are currently evaluating strategies to obtain the required additional funding for future operations.

In November 2024, Eon Management Services, LLC entered into management services agreements (the “Administrative Agreement”) for an initial fixed term of 10 years with several professional corporations created to support patient access to the Eversense system by contracting nurse practitioners and other healthcare professionals to perform Eversense insertion procedures and other clinical activities. Eon Care Clinicians PC, Eon Care Clinicians of NJ PC, and Eon Care Clinicians of CA PC (collectively referred to as “Eon Care PCs”) are the professional corporations that

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were established pursuant to the requirements of its respective domestic jurisdiction governing the corporate practice of medicine.

In accordance with relevant accounting guidance, the Eon Care PCs have been determined to be VIEs of the Company, as the Company is its primary beneficiary with the ability, through the Administrative Agreement to direct the activities (excluding clinical activities) that most significantly affect the Eon Care PCs financial performance and have the obligation to absorb losses of, or the right to receive benefits from, the Eon Care PCs that could potentially be significant to it. Our variable interest entities’ assets, liabilities, and results of operations were not material to our consolidated financial results.

The Company also consolidates its wholly owned subsidiaries (Senseonics, Incorporated, Eon Care Services, LLC and Eon Management Services, LLC) as discussed in Note 1, Organization. All intercompany balances and transactions are eliminated upon consolidation.

The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its consolidated subsidiaries and affiliated entities, including its VIEs. The Company views its operations and manages its business in one segment, diabetes products and services. 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 November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis, with early adoption permitted. Adoption of this ASU will result in additional disclosure, but it will not impact the Company’s consolidated financial position, results of operations or cash flows.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), the objective of which is to enhance the transparency of income tax disclosures by requiring greater disaggregation of information presented and consistent categories in the rate reconciliation. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, or our fiscal year 2025, using either a prospective or retrospective transition method, and early adoption is permitted. The Company is currently evaluating the impact of the new standard on its financial statements and 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, allowance for credit losses, 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, 2023.

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 outside the United States and to strategic fulfillment partners in the United States, who then resell the products to health care providers and patients, or directly to health care systems and health care providers (collectively, the “Customers”). Customers pay the Company for sales, regardless of whether or not the Customers resell the products to health care providers and patients. The Company also generates product revenue from sales of the Eversense system and related components and supplies through a consignment model with our network of healthcare professionals and revenue is recognized when the product is consumed by a patient. 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, 2023.

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 nine months ended September 30, 2024 and 2023:


	Three Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2024
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
United States	$	2,382	55.9	%	$	9,089	64.1	%
Outside of the United States		1,881	44.1			5,086	35.9
Total	$	4,263	100.0	%	$	14,175	100.0	%


	Three Months Ended				Nine Months Ended
	September 30, 2023				September 30, 2023
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
United States	$	3,930	64.5	%	$	7,885	54.9	%
Outside of the United States		2,167	35.5			6,475	45.1
Total	$	6,097	100.0	%	$	14,360	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 September 30, 2024 and December 31, 2023 included unbilled accounts receivable of $0.5 million and $1.5 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 September 30, 2024 and 2023, the Company derived 78% and 93%, respectively, of its total revenue from one customer, Ascensia. For the nine months ended September 30, 2024 and 2023, the Company derived 84% and 92%, 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 Loss per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. An aggregate of

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SENS Senseonics Holdings Inc