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~~June 30, ~~2022~~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~~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 ~~478,256,348~~492,900,981 shares of common stock, par value $0.001, outstanding as of ~~November~~August 4, ~~2022.~~2023.

Table of Contents

TABLE OF CONTENTS

PART I: Financial Information

ITEM 1: Financial Statements

Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022	3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	5
Unaudited Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	6
Notes to Unaudited Condensed Consolidated Financial Statements	7

ITEM 2: Management Discussion and Analysis of Financial Condition and Results of Operations	2426

ITEM 3: Quantitative and Qualitative Disclosures ~~about~~About Market Risk	37

ITEM 4: Controls and Procedures	37

PART II: Other Information	3739

ITEM 1: Legal Proceedings	3739

ITEM 1A: Risk Factors	3839

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

ITEM 3: Defaults Upon Senior Securities	39

ITEM 4: Mine Safety Disclosures	39

ITEM 5: Other Information	3940

ITEM 6: Exhibits	4041

SIGNATURES	4142

Table of Contents

Senseonics Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

September 30,

December 31,

2022

2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$
35,484

$
33,461

Short term investments, net

118,715

96,445

Accounts receivable, net

103

205

Accounts receivable, net - related parties

2,021

1,768

Inventory, net

7,257

6,316

Prepaid expenses and other current assets

5,714

6,218

Total current assets

169,294

144,413

Option

101

239

Deposits and other assets

3,241

1,086

Long term investments, net

8,851

51,882

Property and equipment, net

1,183

1,308

Total assets

$
182,670

$
198,928

Liabilities and Stockholders’ Equity (Deficit)

Current liabilities:

Accounts payable

$
684

$
1,204

Accrued expenses and other current liabilities

12,674

10,667

Accrued expenses and other current liabilities, related parties

671

3,597

Note payable, current portion, net

15,223

—

Derivative liability, current portion

328

—

Option, current

28,068

—

Term Loans, net

—

2,926

Total current liabilities

57,648

18,394

Long-term debt and notes payables, net

53,434

59,798

Derivative liabilities

83,794

236,291

Option

—

69,401

Other liabilities

2,859

579

Total liabilities

197,735

384,463

Commitments and contingencies

Stockholders’ equity (deficit):

Common stock, $0.001 par value per share; 900,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 478,211,956 shares and 447,282,263 shares issued and outstanding as of September 30, 2022 and December 31, 2021

478

447

Additional paid-in capital

806,069

765,215

Accumulated other comprehensive loss

(1,185)

(212)

Accumulated deficit

(820,427)

(950,985)

Total stockholders' equity (deficit)

(15,065)

(185,535)

Total liabilities and stockholders’ equity (deficit)

$
182,670

$
198,928


	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.

Table of Contents

Senseonics Holdings, Inc.

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

(in thousands, except share and per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,


2022

2021

2022

2021
Revenue, net

$
126

276

$
555

$
1,196
Revenue, net - related parties

4,496

3,256

10,263

8,471
Total revenue

4,622

3,532

10,818

9,667
Cost of sales

3,866

4,778

8,711

9,995
Gross profit (loss)

756

(1,246)

2,107

(328)

Expenses:

Research and development expenses

10,985

7,200

28,088

19,562
Selling, general and administrative expenses

7,340

7,585

23,785

23,347
Operating loss

(17,569)

(16,031)

(49,766)

(43,237)
Other income (expense), net:

Interest income

544

486

878

743
Gain (Loss) on fair value adjustment of option

(8,592)

13,556

41,333

(74,848)
Gain on extinguishment of debt and option

—

—

—

330
Interest expense

(4,801)

(4,245)

(13,806)

(12,337)
Gain (Loss) on change in fair value of derivatives

(28,948)

50,075

152,169

(255,185)
Impairment cost

(984)

(488)

(138)

(1,650)
Other expense

(41)

(439)

(112)

(723)
Total other income (expense), net

(42,822)

58,945

180,324

(343,670)

Net Income (Loss)

(60,391)

42,914

130,558

(386,907)
Other comprehensive income (loss)

Unrealized gain (loss) on marketable securities

(57)

18

(973)

2
Total other comprehensive gain (loss)

(57)

18

(973)

2
Total comprehensive income (loss)

$
(60,448)

$
42,932

$
129,585

$
(386,905)

Basic net income (loss) per common share

$
(0.13)

0.10

$
0.28

$
(0.93)
Basic weighted-average shares outstanding

472,475,747

445,378,308

464,244,736

414,128,283

Diluted net income (loss) per common share

$
(0.13)

0.08

$
(0.10)

$
(0.93)
Diluted weighted-average shares outstanding

472,475,747

581,760,516

608,345,713

414,128,283


	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.

Table of Contents

Senseonics Holdings, Inc.

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

Additional

Accumulated

Total

Series A

Common Stock

Paid-In

Other

Accumulated

Stockholders'

Convertible


Shares

Amount

Capital

Comprehensive Loss

Deficit

Equity (Deficit)

Preferred Stock Temporary Equity

Three months ended September 30, 2021:

Balance, June 30, 2021

445,125

445

765,262

(16)

(1,078,332)

(312,641)

$
—

Exercise of stock options and warrants

474

1

737

—

—

738

—

Issued common stock for vested RSUs and ESPP purchase

16

—

24

—

—

24

—

Stock-based compensation expense

—

—

2,301

—

—

2,301

—

Net income

—

—

—

—

42,914

42,914

—

Other comprehensive income, net of tax

—

—

—

18

—

18

—

Balance, September 30, 2021

445,615

$
446

$
768,324

$
2

$
(1,035,418)

$
(266,646)

$
—

Nine months ended September 30, 2021:

Balance, December 31, 2020

265,582

266

504,162

—

(648,511)

(144,083)

$
2,811

Issuance of convertible preferred stock, net

—

—

—

—

42,756

Conversion of preferred stock

54,166

54

45,512

—

—

45,566

(45,567)

Issuance of common stock, net

112,571

113

200,327

—

—

200,440

—

Exercise of stock options and warrants

5,501

5

4,622

—

—

4,627

—

Exchange and conversion of convertible notes, net

4,925

5

6,496

—

—

6,501

—

Issued common stock for vested RSUs and ESPP purchase

2,870

3

71

—

—

74

—

Stock-based compensation expense

—

—

7,134

—

—

7,134

—

Net loss

—

—

—

—

(386,907)

(386,907)

—

Other comprehensive income, net of tax

—

—

—

2

—

2

—

Balance, September 30, 2021

445,615

$
446

$
768,324

$
2

$
(1,035,418)

$
(266,646)

$
—

Three months ended September 30, 2022:

Balance, June 30, 2022

465,326

465

776,640

(1,128)

(760,036)

15,941

—

Issuance of common stock, net

12,084

12

26,427

—

—

26,439

—

Exercise of stock options and warrants

681

1

711

—

—

712

—

Issued common stock for vested RSUs and ESPP purchase

121

—

69

—

—

69

—

Stock-based compensation expense

—

—

2,222

—

—

2,222

—

Net loss

—

—

—

—

(60,391)

(60,391)

—

Other comprehensive loss, net of tax

—

—

—

(57)

—

(57)

—

Balance, September 30, 2022

478,212

$
478

$
806,069

$
(1,185)

$
(820,427)

$
(15,065)

$
—

Nine months ended September 30, 2022:

Balance, December 31, 2021

447,282

447

765,215

(212)

(950,985)

(185,535)

—

Issuance of common stock, net

15,161

15

34,428

—

—

34,443

—

Exercise of stock options and warrants

9,892

10

941

—

—

951

—

Issuance of common stock for vested RSUs and ESPP purchase

6,970

7

125

—

—

132

—

Stock-based compensation expense

—

—

6,543

—

—

6,543

—

Shares withheld related to net share settlement of equity awards

(1,093)

(1)

(1,183)

—

—

(1,184)

—

Net income

—

—

—

—

130,558

130,558

—

Other comprehensive loss, net of tax

—

—

—

(973)

—

(973)

—

Balance, September 30, 2022

478,212

$
478

$
806,069

$
(1,185)

$
(820,427)

$
(15,065)

$
—


				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.

Table of Contents

Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

Nine Months Ended

September 30,

2022

2021
Cash flows from operating activities

Net income (loss)
$
130,558

(386,907)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

751

918
Non-cash interest expense (debt discount and deferred costs)

8,858

5,825
Change in fair value of derivatives

(152,169)

255,185
(Gain) Loss on fair value adjustment of option

(41,333)

74,848
Gain on extinguishment of debt and option

—

(330)
Impairment of option, net

138

1,650
Stock-based compensation expense

6,543

7,134
Changes in assets and liabilities:

Accounts receivable

(151)

(686)
Prepaid expenses and other current assets

504

41
Inventory

(941)

(2,597)
Deposits and other assets

163

(30)
Accounts payable

(519)

(971)
Accrued expenses and other liabilities

(1,070)

1,319
Accrued interest

(257)

326
Net cash used in operating activities

(48,925)

(44,275)
Cash flows from investing activities

Capital expenditures

(255)

(75)
Purchase of marketable securities

(82,807)

(154,918)
Proceeds from sale and maturity of marketable securities

102,594

—
Net cash provided by (used in) investing activities

19,532

(154,993)
Cash flows from financing activities

Issuance of common stock, net

34,443

200,440
Proceeds from exercise of stock options, stock warrants and ESPP purchases

1,083

4,701
Taxes paid related to net share settlement of equity awards

(1,184)

—
Proceeds from issuance of Masters preferred stock, net

—

22,783
Repayment of term loans

(2,926)

(650)
Net cash provided by financing activities

31,416

227,274
Net increase in cash and cash equivalents

2,023

28,006
Cash and cash equivalents, at beginning of period

33,461

18,205
Cash and cash equivalents, at ending of period
$
35,484

$
46,211

Supplemental disclosure of cash flow information

Cash paid during the period for interest
$
5,137

$
6,149
Lease liabilities arising from obtaining right-of-use assets

2,944

—
Supplemental disclosure of non-cash investing and financing activities

Issuance of common stock converted from preferred shares

—

54,166
Issuance of common stock converted from notes payables

—

4,925


	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.

Table of Contents

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 ~~commercialization~~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. ~~However, to date, the Company has not generated any significant revenue from product sales.~~ The Company has incurred substantial losses and cumulative negative cash flows from operations since its inception in October ~~1996. The Company has never been profitable from operations,~~1996 and ~~its net~~expects to incur additional losses ~~were $302.5~~in the near future. We incurred total gross profit (loss) of $2.7 million, ~~$175.2~~($0.8) million, and ~~$115.5~~($17.4) million for the years ended December 31, 2022, 2021 and 2020, ~~and 2019,~~ respectively. ~~As of September~~For the three months ending June 30, ~~2022,~~2023, the Company had gross profit of $0.4 million and an accumulated deficit of ~~$820.4~~$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 ~~September~~June 30, ~~2022,~~2023, the Company had cash, cash equivalents and marketable securities of ~~$163.0~~ $125.1million.

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 stock sold through Jefferies under the 2021 Sales Agreement. During the nine months ended September 30, 2022, the Company received $34.4 million in net proceeds from the sale of 15,160,899 shares of its common stock under the 2021 Sales Agreement.

In November 2019, the Company entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with 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 $50.0 million through Jefferies as its sales agent in an “at the market” offering. In June 2021, the Company received $48.4 million in net proceeds from the sale of 12,830,333 shares of its common stock utilizing the full capacity under the 2019 Sales Agreement.

On January 21, 2021, the Company entered into an underwriting agreement, which was subsequently amended and restated on the same day (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative of the underwriters (the “Underwriters”), to issue and sell 51,948,052 shares of common stock, in an underwritten public offering pursuant to effective registration statements on Form S-3, including a related prospectus and prospectus supplement, in each case filed with the United States Securities and Exchange Commission (“the SEC”) (the “2021 Public Offering”). The price to the public in the 2021 Public Offering was $1.925 per share of common stock. The Underwriters agreed to purchase the shares from the Company pursuant to the Underwriting Agreement at a price of $1.799875 per share and the Company also agreed to reimburse them for customary fees and expenses. The initial closing of the 2021 Public Offering occurred on January 26, 2021. Subsequent to the initial closing, the Underwriters exercised their option to purchase an additional 7,792,207 shares of common stock. Total net proceeds from the 2021

Table of Contents

~~Public Offering were $106.1 million after deducting underwriting discounts and commissions and estimated offering expenses.~~

~~On January 17,~~stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2023, the Company ~~entered into a Securities Purchase~~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, ~~with certain institutional purchasers (the “Purchasers”),~~effective as of August 7, 2023. At the time of termination, approximately $106.6 million remained available for issuance pursuant to ~~which~~ the Company sold to the Purchasers, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 40,000,000 shares (the “Shares”) of common stock, $0.001 par value per share. The Shares were sold at a purchase price of $1.25 per share for aggregate gross proceeds to the Company of $50.0 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the SEC on November 27, 2019. The net proceeds to the Company from the Registered Direct Offering, after deducting fees and expenses and the estimated offering expenses payable by the Company, were approximately $46.1 million.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.~~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 ~~has not exercised this option as~~issued the Exchange Warrant to PHC in consideration for the cancellation of ~~September 30, 2022.~~the PHC Notes.

~~Additionally, on August 9, 2020,~~On March 13, 2023, the Company entered into a ~~Stock~~securities purchase agreement (the “Securities Purchase ~~Agreement~~Agreement”) with ~~Masters Special Solutions, LLC and certain affiliates thereof (collectively, “Masters”),~~PHC, pursuant to which the Company issued and sold to ~~Masters 3,000~~PHC in a private placement (the “Private Placement”) a warrant (the “Purchase Warrant”) to purchase 15,425,750 shares of ~~convertible preferred~~the Company’s common stock, ~~designated as Series A Preferred Stock~~$0.001 par value per share (the ~~“Series A Preferred Stock”~~“Purchase Warrant Shares”)~~, at a~~. The purchase price of ~~$1,000~~the Purchase Warrant was approximately $0.97 per ~~share in an initial closing. Masters also had~~Purchase Warrant Share, representing the ~~option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a~~undiscounted, trailing 10-day volume weighted average price of ~~$1,000~~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 ~~share in subsequent closings, subject to the terms and conditions~~Purchase Warrant Share. The issuance of the ~~Stock~~ Purchase Warrants enabled PHC to maintain, as of the closing of the transaction, a 15% beneficial ownership for purposes of the Investor Rights Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds todated August 9, 2020, between the Company of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All shares of Series A Preferred Stockand PHC. The Private Placement closed on March 13, 2023 (the “Private

Table of Contents

~~have been converted to common stock.~~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~~June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, results of operations, comprehensive income (loss), and changes in stockholder’s deficit for the three and ~~nine month periods~~six months ended ~~September~~June 30, ~~2022,~~2023 and ~~2021~~2022 and cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023 and ~~2021~~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, ~~2021,~~2022, as filed with the SEC on March ~~1, 2022.~~16, 2023. The interim results for ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2022,~~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.

Certain prior year amounts have been reclassified to conform to the current-year presentation. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Income (Loss) to consolidate the line items Sales and marketing expenses and General and administrative expenses to Selling, general and administrative expenses in order to conform to current year presentation. ~~These reclassifications had no effect on the reported results of operations.~~

Recent Accounting Pronouncements

~~Recently Adopted~~

~~In August 2020, the FASB issued ASU 2020-06,~~ ~~Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contract in Entity’s Own Equity (Subtopic 815-40)~~ ~~(“ASU 2020-06”)~~. This new guidance is intended to reduce the complexity of accounting for convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments. Entities may adopt ASU 2020-06 using either partial retrospective or fully retrospective method of transition. ASU 2020-06 is effective for public business entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2022 and its adoption did not have a material impact on the consolidated financial statements and related disclosures.

~~Not Yet Adopted~~

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

~~Table of Contents~~

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 ~~will adopt~~adopted this guidance as of January 1, 2023 and its adoption did not have a material impact on the ~~effective date for smaller reporting companies, January 1, 2023.~~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 ~~considered COVID-19 related impacts~~bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to ~~its~~future events. These estimates ~~as appropriate, within its unaudited condensed consolidated financial statements~~form the basis for making judgments about the carrying values of assets and ~~there may be changes to those estimates in future periods due to the uncertainties surrounding the severity~~liabilities and ~~duration of the COVID-19 pandemic.~~recorded revenues and expenses. Actual results could differ from those ~~estimates.~~estimates; however, management does not believe that such differences would be material.

Table of Contents

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, ~~2021.~~2022.

~~Table of Contents~~

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, ~~2021.~~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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30, 2022				September 30, 2022				June 30, 2023				June 30, 2023
			%				%				%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total		Amount		of Total		Amount		of Total
Revenue, net:
United States									$	1,793	43.5	%	$	3,955	47.9	%
Outside of the United States	$	2,688	58.2	%	$	6,910	63.9	%		2,333	56.5			4,308	52.1
United States		1,934	41.8			3,908	36.1
Total	$	4,622	100.0	%	$	10,818	100.0	%	$	4,126	100.0	%	$	8,263	100.0	%


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30, 2021				September 30, 2021				June 30, 2022				June 30, 2022
			%				%				%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total		Amount		of Total		Amount		of Total
Revenue, net:
United States									$	1,207	32.5	%	$	1,974	31.9	%
Outside of the United States	$	2,928	82.9	%	$	7,771	80.4	%		2,507	67.5			4,222	68.1
United States		604	17.1			1,896	19.6
Total	$	3,532	100.0	%	$	9,667	100.0	%	$	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 ~~September~~June 30, ~~2022,~~2023 and December 31, ~~2021~~2022, included unbilled accounts receivable of ~~$1.1~~$0.9 million and ~~$1.8~~$1.7 million, respectively. The Company expects to invoice and collect all unbilled accounts receivable within 12 months.

Table of Contents

Concentration of Revenue and Customers

For the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company derived ~~97%~~89% and ~~92%~~96%, respectively, of its total revenue from one customer, Ascensia. For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023, and ~~2021,~~2022, the Company derived ~~95%~~91% and ~~88%~~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.

~~Table of Contents~~

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. ~~Diluted~~An aggregate of 83,951,061shares 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.

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

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Net income (loss)

(60,391)

42,914

130,558

(386,907)
Impact of conversion of dilutive securities

—

1,385

(188,563)

—

Dilutive Net income (loss)

(60,391)

44,299

(58,005)

(386,907)

Net income (loss) per share

Basic

(0.13)

0.10

0.28

(0.93)
Diluted

(0.13)

0.08

(0.10)

(0.93)

Basic weighted average shares outstanding

472,475,747

445,378,308

464,244,736

414,128,283
Dilutive potential common stock outstanding

Stock-based awards

—

15,520,414

6,499,671

—
2023 Notes

—

4,617,646

4,617,646

—
2025 Notes

—

39,689,142

39,211,358

—
PHC Notes

—

65,348,857

67,625,174

—
Energy Capital Option

—

—

23,335,635

—
Warrants

—

11,206,148

2,811,493

—
Diluted weighted average shares outstanding

472,475,747

581,760,516

608,345,713

414,128,283

1211

Table of Contents

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

Impact of conversion of dilutive securities		—		(124,010)		—		(228,614)

Dilutive Net loss	$	(20,423)	$	(19,779)	$	(19,099)	$	(37,665)

Net (loss) income per share
Basic	$	(0.04)	$	0.22	$	(0.04)	$	0.42
Diluted	$	(0.04)	$	(0.03)	$	(0.04)	$	(0.06)

Basic weighted average shares outstanding		567,125,022		464,133,903		532,499,776		460,061,022
Dilutive potential common stock outstanding
Stock-based awards		—		4,649,548		—		7,003,387
2023 Notes		—		4,617,646		—		4,617,646
2025 Notes		—		39,689,142		—		39,689,142
PHC Notes		—		65,718,303		—		65,816,535
Energy Capital Option		—		21,164,986		—		23,690,945
Warrants		—		1,357,430		—		3,463,862
Diluted weighted average shares outstanding		567,125,022		601,330,959		532,499,776		604,342,540

Outstanding anti-dilutive securities not included in the diluted net income (loss) per share calculations were as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021	2023	2022	2023	2022
Stock-based awards	24,940,972	1,949,958	10,426,560	28,502,846	31,785,464	13,900,070	31,785,464	11,142,459
2023 Notes	4,617,646	—	—	4,617,646
PHC Option					—	20,003,765	—	23,161,214
2025 Notes	39,211,358	—	—	39,689,142	39,689,142	—	39,689,142	—
PHC Notes	68,322,952	—	—	65,757,177
PHC Option	31,512,605	—	22,717,076	—
Energy Capital Option	30,372,058	—		—
Energy Capital Preferred Shares					30,372,058	—	30,372,058	—
Warrants	3,177,821	116,581	427,821	13,177,822	427,821	427,821	427,821	260,251
Total anti-dilutive shares outstanding	202,155,412	2,066,539	33,571,457	151,744,633	102,274,485	34,331,656	102,274,485	34,563,924

Table of Contents

6.	Marketable Securities

Marketable securities available for sale, were as follows (in thousands):


	September 30, 2022								June 30, 2023
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
Commercial Paper	$	32,614		—		—	$	32,614	$	43,242	$	—	$	—	$	43,242
Corporate debt securities	$	37,209		—		(425)	$	36,784		11,867		3		(34)		11,836
Asset backed securities	$	13,979		—		(130)	$	13,849		7,479		—		(26)		7,453
Government and agency securities	$	44,949		—		(630)	$	44,319		34,052		—		(63)		33,989
Total	$	128,751	$	—	$	(1,185)	$	127,566	$	96,640	$	3	$	(123)	$	96,520


	December 31, 2021								December 31, 2022
			Gross		Gross		Estimated				Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
Commercial Paper	$	57,369		—		—	$	57,369	$	41,503	$	—	$	—	$	41,503
Corporate debt securities	$	39,825		—		(77)	$	39,748		32,331		—		(189)		32,142
Asset backed securities	$	26,736		—		(29)	$	26,707		8,363		—		(103)		8,260
Government and agency securities	$	24,609		—		(106)	$	24,503		38,956		—		(386)		38,570
Total	$	148,539	$	—	$	(212)	$	148,327	$	121,153	$	—	$	(678)	$	120,475

The following are the scheduled maturities as of ~~September~~June 30, ~~2022~~2023 (in thousands):


2022 (remaining three months)	$	29,625
2023		90,175
			Net		Fair
			Carrying Amount		Value
2023 (remaining six months)			$	62,529	$	62,519
2024		2,221		27,362		27,277
2025		6,730		6,749		6,724
Total	$	128,751	$	96,640	$	96,520

The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, the Company assesses at the individual security level, for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst

~~Table of Contents~~

reports, and the severity of impairment. Unrealized losses on available-for-sale securities at ~~September~~June 30, ~~2022~~2023 were not significant and were primarily due to changes in interest rates and not due to increased credit risk associated with specific securities. The Company does not intend to sell these impaired investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

Table of Contents

7. Inventory, net

Inventory, net of reserves, consisted of the following (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022
Finished goods	$	1,428	$	1,012	$	2,379	$	1,697
Work-in-process		4,306		3,770		5,408		4,057
Raw materials		1,523		1,534		1,407		1,552
Total	$	7,257	$	6,316	$	9,194	$	7,306

The Company charged ~~$0.5~~less than $0.1 million ~~and $1.1 million, respectively,~~ to cost of sales for each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~$1.8~~$0.6 million to cost of sales for each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 to reduce the value of inventory for items that are potentially obsolete due to expiry, in excess of product demand, or to adjust costs to their net realizable value.

8. 8. Prepaid Expenses and Other Current Assets ~~and Deposits and other assets~~

Prepaid expenses and other current assets consisted of the following (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022
Contract manufacturing⁽¹⁾	$	4,028	$	5,036	$	4,026	$	4,097
Tax credits receivable⁽²⁾						1,793		—
Insurance		506		74		625		1,243
Unsettled stock issuance proceeds						369		—
Clinical and Preclinical		472		142		255		924
Interest receivable		369		443		241		336
Research and development		9		39
Rent and utilities						150		132
Accounting and Audit		148		—		48		270
Rent and utilities		108		105
IT and software		21		225
Sales and Marketing		17		98
Other		36		56		235		426
Total prepaid expenses and other current assets	$	5,714	$	6,218	$	7,742	$	7,428

(1)

Includes deposits to contract manufacturers for manufacturing process.

(2)

Refundable employee retention credits, enacted under the CARES Act.

9.	Accrued Expenses and Other Current Liabilities

~~Deposits~~Accrued expenses and other ~~assets as~~current liabilities consisted of September 30, 2022 and December 31, 2021, were $3.2 million and $1.1 million, respectively. As of September 30, 2022, deposits and other assets is mainly comprised of $3.1 million for our right-of-use asset related to our operating lease of 33,000 square feet of research and office space for our corporate headquarters. In June 2022, the ~~Company extended our lease for an additional five-year term. We recorded a modification to our right-of-use asset for the right-to-use the underlying asset for the additional lease term.~~following (in thousands):


	June 30,		December 31,
	2023		2022
Research and development	$	5,367	$	3,502
Compensation and benefits		2,558		4,699
Professional and administration services		2,381		1,053
Contract manufacturing		2,105		2,480
Interest on notes payable		1,232		2,050
Product warranty and replacement obligations		494		781
Operating lease		483		725
Sales and marketing services		266		149
Other		—		14
Total accrued expenses and other current liabilities	$	14,886	$	15,453

Table of Contents

9.	~~Accrued Expenses, Other Current Liabilities, and Other Liabilities~~

~~Accrued expenses and other current liabilities consisted of the following (in thousands):~~

September 30,

December 31,

2022

2021
Compensation and benefits

$
3,462

$
3,484
Research and development

3,417

2,145
Interest on notes payable

1,887

2,144
Sales and marketing services

155

1,962
Product warranty and replacement obligations

661

1,697
Professional and administration services

1,334

1,011
Contract manufacturing


1,675


914
Operating lease

730

904
Other

24

3
Total accrued expenses and other current liabilities

$
13,345

$
14,264

Other liabilities as of September 30, 2022 and December 31, 2021, were $2.9 million and $0.6 million, respectively. Other liabilities is comprised of the non-current portion of our operating lease liability for our corporate headquarters. In June 2022, the Company extended our lease for an additional five-year term. We recorded a modification to the lease liability upon renewal to reflect our obligation to make the additional lease payments.

The current portion of our operating lease liability is included in the line-item accrued expenses and other current liabilities on our balance sheet. As of September 30, 2022 and December 31, 2021, the current portion of the operating lease liability was $0.7 million and $0.9 million, respectively.

10.

Leases

The Company leases approximately 33,000 square feet of research and office space for its corporate headquarters under a non-cancelable operating lease. In May 2023, the Company amended our lease, extending the lease term through May 31, 2033, and obtained a tenant improvement allowance of $1.3 million. The Company accounted for the amendment as a lease modification and remeasured the ROU asset and lease liability as of the amendment date, which resulted in an increase of $2.5 million to the ROU asset, and an increase of $3.8 million to the lease liability. The Company has one option to extend the term for an additional period of five years beginning on June 1, 2033. The rent expense is recognized on a straight-line basis through the end of the lease term, excluding option renewals. The difference between the straight-line rent amounts and amounts payable under the lease is recorded as deferred rent.

Operating lease expense for the six months ended June 30, 2023 and 2022 was $0.4 million and $0.3 million, respectively.

The following table summarizes the lease assets and liabilities as of June 30, 2023 and December 31, 2022 (in thousands):


				June 30,		December 31,
Operating Lease Assets and Liabilities	Balance Sheet Classification		2023		2022
Assets
Operating lease ROU assets		Deposits and other assets	$	5,340	$	3,032
Tenant improvement allowance receivable		Deposits and other assets		1,312		—
Liabilities
Current operating lease liabilities		Accrued expenses and other current liabilities	$	483	$	725
Non-current operating lease liabilities		Other non-current liabilities		6,408		2,689
Total operating lease liabilities			$	6,891	$	3,414

The following table summarizes the maturity of undiscounted payments due under operating lease liabilities and the present value of those liabilities as of June 30, 2023 (in thousands):


2023 (remaining 6 months)	$	594
2024		912
2025		939
2026		967
2027		996
Thereafter		5,934
Total		10,342
Less: Present value adjustment		(3,451)
Present value of lease liabilities	$	6,891

The following table summarizes the weighted-average lease term and weighted-average discount rate as of June 30, 2023:


Remaining lease term (years)	2023
Operating leases	9.7
Discount rate
Operating leases	8.5	%

Table of Contents

11.

Product Warranty Obligations

The Company provides a warranty of one year on its smart transmitters. Additionally, the Company may also replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment as a charge to cost of sales in the consolidated statement of operations and are developed by analyzing product performance data and historical replacement experience, including comparing actual replacements to revenue.

At each ~~of September~~June 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, the warranty reserve was ~~$0.7~~$0.5 million and $0.8 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023, and for the twelve months ended December 31, ~~2021~~2022 (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022
Balance at beginning of the period	$	723	$	646	$	781	$	723
Provision for warranties during the period		(53)		781		62		166
Settlements made during the period		(8)		(704)		(349)		(108)
Balance at end of the period	$	662	$	723	$	494	$	781

~~Table of Contents~~

~~11.~~12.

Notes Payable, Preferred Stock and Stock Purchase Warrants

Term Loans

PPP Loan

On April 22, 2020, the Company received $5.8 million in loan funding from the PPP pursuant to the CARES Act, as amended by the Flexibility Act, and administered by the Small Business Administration (“SBA”). The unsecured loan (the “PPP Loan”) was evidenced by the PPP Note dated April 21, 2020 (the “PPP Note”) in the principal amount of $5.8 million with Silicon Valley Bank (“SVB”).

Under the terms of the PPP Note and the PPP Loan, interest accrued on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Note was two years. In April 2022, the Company repaid the outstanding principal and accrued interest in full.

Convertible Preferred Stock and Warrants

On November 9, 2020, the Company entered into the Equity Line Agreement with Energy Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of the Company’s 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 the Company having less than $8 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company has the right, at sole discretion, to present Energy Capital with 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 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 provides that the Company shall not 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 have been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital has 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

Table of Contents

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 Company accounted for the Equity Line Agreement as a put/call option (the “Energy Capital Option”). This put/call option iswas classified as a liability in accordance with ASC 480, Distinguishing liabilities from equity, on the Company’s balance sheet and was recorded at the estimated fair value of $4.2 million upon issuance. The put/call option iswas required to be remeasured to fair value at each reporting period with the change recorded in change in fair value of derivatives that is a component of other income (expense). In connection with the execution of the Equity Line Agreement, the Company incurred $7.6 million in debt issuance costs in fiscal year 2020. The fair value of the Energy Capital Option as of ~~September 30, 2022 and~~ December 31, 2021 was ~~$28.1~~$69.4 million. The Company adjusted the Energy Capital Option to its fair value of $25.7 million ~~and $69.4 million, respectively.~~on the exercise date, recognizing a fair value adjustment gain of $43.7 million.

Concurrently with entry into the Equity Line Agreement, the Company issued a warrant to Energy Capital, exercisable beginning on May 9, 2021, to purchase up to 10,000,000 shares of common stock at an exercise price of $0.3951 per share (the “Warrant”). The Warrant was exercised on a net basis in February 2022 and Energy Capital received 8,917,535 shares of common stock upon the net exercise of the Warrants.

On ~~August 9, 2020,~~March 13, 2023, pursuant to the ~~Company entered into a Stock~~Securities Purchase Agreement with ~~Masters, pursuant to which~~PHC, the Company issued and sold ~~Masters 3,000~~to PHC in a private placement a warrant (the “Purchase Warrant”) to purchase 15,425,750 shares of ~~Series A Preferred Stock, at~~common stock (the “Purchase Warrant Shares”). The Purchase Warrant is a “pre-funded” warrant with a nominal exercise price of ~~$1,000~~$0.001 per ~~share~~Purchase Warrant Share. On the private placement closing date, the Company received aggregate gross proceeds of $15.0 million, before deducting private placement expenses payable by the Company. All or any part of the Purchase Warrant shall is exercisable by the holder at any time and from time to time.

The Company determined that the Purchase Warrant shall be classified as equity in accordance with ASC Topic 480, Distinguishing Liabilities from Equity and ASC Topic 815. At issuance, the Company recorded the estimated fair value of the Purchase Warrant in the amount of $14.3 million as additional paid-in-capital in the Company’s consolidated balance sheets.

Because PHC was an ~~initial closing. Masters also had~~existing stockholder of the ~~option~~Company at the time of the transaction, the $0.7 million excess of the purchase price over the fair value of the Purchase Warrant was recognized as an equity transaction and recorded as a capital contribution made by PHC to the Company as additional paid-in-capital in the Company’s consolidated balance sheets.

Additionally, on March 13, 2023, the Company entered into an 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 ~~an additional 27,000~~68,525,311 shares of ~~Series A Preferred Stock at~~common stock (the “Exchange Warrant Shares”). The Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of ~~$1,000~~$0.001 per ~~share in subsequent closings, subject to the terms and conditions~~Exchange Warrant Share. All or any part of the ~~Stock~~Exchange Warrant is exercisable by the holder at any time and from time to time. The number of Exchange Warrant Shares represents the number of shares of common stock previously issuable upon conversion of the PHC Notes, in accordance with the original terms of the notes, including a number of shares in respect of accrued and unpaid interest through the closing date, plus additional shares with a value of $675,000 reflecting a portion of the future interest payments forgone by PHC. On March 31, 2023 (6:00 am Japan Standard Time on April 1, 2023), the Exchange was consummated, and the Company issued the Exchange Warrant to PHC in consideration for the cancellation of the PHC Notes.

The Company determined that the Exchange Warrant shall be classified as equity in accordance with ASC 480 and ASC 815. At March 31, 2023, the Company recorded the estimated fair value of the Exchange Warrant in the amount of $48.6 million as additional paid-in-capital in the Company’s consolidated balance sheets.

As of June 30, 2023, the Purchase ~~Agreement,~~Warrant and the Exchange Warrant remained unexercised and outstanding. As they are prefunded warrants, the Company included the entirety of the warrant shares as ~~amended, through January 11, 2021. In January 2021, Masters and~~weighted average outstanding shares in the calculation of its ~~assignees purchased in aggregate an additional~~basic earnings per share.

1617

Table of Contents

22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All 25,783 shares of Series A Preferred Stock have been converted to shares of common stock. Masters’ option to purchase the remaining unissued shares of Series A Preferred Stock expired on January 11, 2021, resulting in a gain on extinguishment of $3.5 million.

Convertible Notes

PHC Notes

On August 9, 2020, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with PHC, as the purchaser (together with the other purchasers from ~~time to time~~time-to-time party thereto, the “Note Purchasers”) and Alter Domus (US) LLC, as collateral agent. Pursuant to the Note Purchase Agreement, the Company borrowed $35.0 million in aggregate principal through the issuance and sale of the PHC Notes on August 14, 2020 (the “Closing Date”). The Company also issued 2,941,176 shares of its common stock, $0.001 par value per share to PHC as a financing fee (the “Financing Fee Shares”) on the Closing Date. The Financing Fee Shares are accounted for as debt discount in the amount of $1.5 million.

The PHC Notes ~~are~~were senior secured obligations of the Company and ~~will be~~were guaranteed on a senior secured basis by the Company’s wholly owned subsidiary, Senseonics, Incorporated. Interest at the initial annual rate of 9.5% is payable semi-annually in cash or, at the Company’s option, payment in kind. The interest rate decreased to 8.0% in April 2022 as a result of the Company having obtained FDA approval for the 180-day Eversense E3 system for marketing in the United States. The maturity date for the PHC Notes iswas October 31, 2024 (the “Maturity Date”). The obligations under the PHC Notes ~~are~~were secured by substantially all of the Company’s and its subsidiary’s assets.

The Note Purchasers ~~are~~were entitled to convert the PHC Notes to common stock at a conversion rate of 1,867.4136 shares per $1,000 principal amount of the PHC Notes (including any interest added thereto as payment in kind), equivalent to a conversion price of approximately ~~$0.54~~$0.53 per share, subject to specified anti-dilution adjustments, including adjustments for the Company’s issuance of equity securities on or prior to April 30, 2022 below the conversion price. In addition, following a notice of redemption or certain corporate events that ~~occur~~occured prior to the maturity date, the Company ~~will,~~would have been required, in certain circumstances, to increase the conversion rate for a holder ~~who elects~~electing to convert its PHC Notes in connection with such notice of redemption or corporate event. In certain circumstances, the Company ~~will be~~would have been required to pay cash in lieu of delivering make whole shares unless the Company ~~obtains~~obtained stockholder approval to issue such shares.

Subject to specified conditions, on or after October 31, 2022, the PHC Notes ~~are~~would have become redeemable by the Company if the closing sale price of the common stock ~~exceeds~~were to exceed 275% of the conversion price for a specified period of time and subject to certain conditions upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest. On or after October 31, 2023, the PHC Notes ~~are~~would have become redeemable by the Company upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which ~~has~~had been added to such amount), plus any accrued but unpaid interest, plus a call premium of 130% if redeemed at least six months prior to the Maturity Date or a call premium of 125% if redeemed within six months of the Maturity Date.

The Note Purchase Agreement ~~contains~~contained customary terms and covenants, including financial covenants, such as operating within an approved budget and achieving minimum revenue and liquidity targets, and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions ~~are~~were subject to certain minimum thresholds and exceptions. The Note Purchase Agreement also ~~contains~~contained customary events of default, after which the PHC Notes would have become due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority.

~~Table of Contents~~

The Company also ~~has~~had the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022 (the “PHC Option”), which was initially contingent upon obtaining FDA approval for the 180-day Eversense product for marketing in the United States before such date, and which approval the Company successfully obtained in February ~~2022.~~2022. The PHC ~~Option represents a freestanding financial instrument~~option was not exercised and ~~is recognized as an asset in the Company’s consolidated balance sheets at fair value~~expired on the date of issuance and subject to impairment testing in each reporting period prior to the options exercise or expiration. The Company acknowledges that while the PHC Option is subject to impairment testing, there is no explicit guidance regarding how impairment should be assessed and measured for the PHC Option. As such, the measurement alternative in ASC Topic 321, Investments—Equity Securities, for equity securities without readily determinable fair values can be applied by analogy to assess and measure ~~impairment of the PHC Option. The Company developed an estimated fair value at September 30,~~December 31, 2022 and ~~December 31, 2021 to be $0.1 million and $0.2 million, respectively, and~~the Company recognized a loss on extinguishment of ~~less than~~ $0.1 ~~million was recognized in net income as the difference between the fair value~~million.

Table of ~~the investment and its carrying amount for the nine months ended September 30, 2022.~~Contents

The Note Purchase Agreement also contained several provisions requiring bifurcation as a separate derivative liability including an embedded conversion feature, mandatory prepayment upon event of default that constitutes a breach of the minimum revenue financial covenant, optional redemption upon an event of default, change in interest rate after PMA approval and default interest upon an event of default. On the date of issuance, the Company recorded the fair value of the embedded features in the amount of $25.8 million as a derivative liability in the Company’s consolidated balance sheets in accordance with ASC ~~Topic 815, Derivatives and Hedging.~~815. The derivative iswas adjusted to fair value at each reporting period, with the change in the fair value recorded in change in fair value of derivatives that is a component of other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. ~~The fair value of the derivative at September 30, 2022 and December 31, 2021 was $63.8 million and $149.1 million, respectively.~~

In connection with the issuance of the ~~Note Purchase Agreement,~~PHC Notes, the Company incurred $2.9 million in debt issuance costs and debt discounts. The associated debt issuance costs were recorded as a contra liability in the amount of $1.4 million and are deferred and amortized as additional interest expense over the term of the notes. There ~~have been~~were no conversions of the PHC Notes ~~since inception~~prior to the exchange of the ~~Note Purchase Agreement.~~PHC Notes for the Exchange Warrant described above.

As described above, the Exchange Agreement with PHC was consummated on March 31, 2023, whereby PHC exchanged the PHC Notes in $35.0 million principal amount and all accrued and unpaid interest for the Exchange Warrant. On March 31, 2023, the Company was released from its obligation under the PHC Notes.

Upon execution of the Exchange Agreement, the exercise of the original conversion feature of the PHC Notes became remote. Accordingly, the Company remeasured the embedded derivative to its fair value of $0. The Company recognized a change in fair value of the embedded derivative of $44.2 million in the caption “Exchange related gain, net” that is a component of other income (expense) in the Company’s consolidated statement of operations and comprehensive loss.

The Company accounted for the Exchange as an extinguishment of the PHC Notes, and thus, it derecognized the PHC Notes in its consolidated balance sheets and recognized a loss of $25.4 million as the difference between the carrying value plus accrued interest of the PHC Notes of $23.2 million and the $48.6 million fair value of the Exchange Warrant as an extinguishment loss in the caption “Exchange related gain, net” that is a component of other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. As a result of the Exchange, the Company recognized a total net gain on exchange of the PHC notes of $18.8 million representing the gain on change in the fair value of the PHC Notes conversion feature recognized as an embedded derivative and the loss on extinguishment of the PHC Notes in exchange for the Exchange Warrant.

2025 Notes

In July 2019, the Company issued $82.0 million in aggregate principal amount of senior convertible notes that will mature on January 15, 2025 (the “2025 Notes”), unless earlier repurchased or converted. The 2025 Notes are convertible, at the option of the holders, into shares of the Company’s common stock, at an initial conversion rate of 757.5758 shares per $1,000 principal amount of the 2025 Notes (equivalent to an initial conversion price of approximately $1.32 per share).

The 2025 Notes also contained an embedded conversion option requiring bifurcation as a separate derivative liability, along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$19.9~~$1.8 millionand ~~$81.4~~$7.9 million, respectively.

~~In connection with the Exchange on~~On April 24, 2020, $24.0 million aggregate principal of the Company’s outstanding 2025 Notes held by Highbridge Capital Management, LLC (“Highbridge”) were exchanged for (i) $15.7 million of Second Lien Notes (the “Second Lien Notes”), ~~(i)~~(ii) 11,026,086 shares of common stock, ~~(ii)~~(iii) warrants to purchase up to 4,500,000 shares of common stock at an exercise price of $0.66 per share, and ~~(iii)~~(iv) $0.3 million in accrued and unpaid interest on the 2025 Notes being ~~exchanged (the “Exchange”).~~exchanged. This transaction modified the original 2025 Notes outstanding with Highbridge and resulted in ~~$13.2~~

Table of Contents

$13.2 million of deferred issuance fees and debt discounts associated with the exchanged 2025 Notes being transferred as a discount to the Second Lien Notes.

~~Table of Contents~~

~~As of December 31,~~In January 2021, there were conversions of $6.5 million of outstanding principal amount of the 2025 notes for 4,924,998 shares of common stock. Accordingly, $3.2 million of allocated deferred issuance costs and debt discounts were recognized as a loss on extinguishment of ~~debt as of December 31, 2021.~~debt. There were no conversions of 2025 Notes during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023.

2023 Notes

In the first quarter of 2018, the Company issued $53.0 million in aggregate principal amount of senior convertible notes due February 1, 2023 (the “2023 Notes”). In July 2019, the Company used the net proceeds from the issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the outstanding 2023 Notes. Each $1,000 of principal of the 2023 Notes is initially convertible into 294.1176 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $3.40 per share, subject to adjustment upon the occurrence of specified events. Holders may convert at any time prior to February 1, 2023. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock. If specific corporate events occur prior to the maturity date, the Company will increase the conversion rate pursuant to the make-whole fundamental change provision for a holder who elects to convert their 2023 Notes in connection with such an event in certain circumstances. Additionally, if a fundamental change occurs prior to the maturity date, holders of the 2023 Notes may require the Company to repurchase all or a portion of their 2023 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest.

The Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and in January 2018 recorded the embedded features as a debt discount and derivative liability in the Company’s consolidated balance sheets at its initial fair value of $17.3 million. Additionally, the Company incurred transaction costs of $2.2 million. The debt discount and transaction costs are being amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 9.30%. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. On January 31, 2023, the Company repaid the outstanding principal and accrued interest in full. The derivative was unexercised upon maturity and the fair value in the amount of $0.02 million was recognized as an extinguishment gain in the ~~derivative at September 30, 2022 and December 31, 2021 was $0.3 million and $5.8 million, respectively.~~

There were no conversions of 2023 Notes during the nine months ended September 30, 2022. As the 2023 Notes have a maturity date of February 1, 2023, they are classified as other current liability on thecaption “Other income (expense)” in Company’s consolidated ~~balance sheet at September 30, 2022.~~statement of operations and comprehensive loss.

The following carrying amounts were outstanding under the Company’s notes payable as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


					June 30, 2023
					Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2025 Notes					51,199	(11,892)	(199)	39,108

	September 30, 2022				December 31, 2022
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(477)	-	15,223	15,700	(121)	-	15,579
2025 Notes	51,199	(16,500)	(276)	34,423	51,199	(15,029)	(252)	35,918
PHC Notes	35,000	(15,068)	(921)	19,011	35,000	(13,698)	(837)	20,465

	December 31, 2021
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(1,499)	-	14,201
2025 Notes	51,199	(20,535)	(344)	30,320
PHC Notes	35,000	(18,587)	(1,136)	15,277
PPP Loan	2,926	-	-	2,926

1920

Table of Contents

Interest expense related to the notes payable for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was as follows (dollars in thousands):


	Nine Months Ended September 30, 2022						Six Months Ended June 30, 2023
	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Loss on Extinguishment ($)	Total Interest Expense ($)	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Total Interest Expense ($)
2023 Notes	5.25%	618	1,022	-	-	1,640	5.25%	69	120	-	189
2025 Notes	5.25%	2,002	4,035	68	-	6,104	5.25%	1,344	3,146	53	4,543
PHC Notes	8.00%	2,319	3,519	215	-	6,053	8.00%	700	1,442	88	2,230
PPP Loan	1.00%	6	-	-	-	6
Total		4,945	8,576	283	-	13,803		2,113	4,708	141	6,962


	Nine Months Ended September 30, 2021						Six Months Ended June 30, 2022
	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Loss on Extinguishment ($)	Total Interest Expense ($)	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Total Interest Expense ($)
2023 Notes	5.25%	618	931	-	-	1,549	5.25%	412	673	-	1,085
2025 Notes	5.25%	2,044	3,362	56	3,183	8,645	5.25%	1,330	2,625	44	3,999
PHC Notes	9.50%	2,456	2,627	161	-	5,244	8.00%	1,531	2,246	137	3,914
PPP Loan	1.00%	44	-	-	-	44	1.00%	6	-	-	6
Total		5,162	6,920	217	3,183	15,482		3,279	5,545	181	9,005

The following are the scheduled maturities of the Company’s notes payable as of ~~September~~June 30, ~~2022~~2023 (in thousands):

2022 (remaining three months)

$
—
2023

15,700
2024

35,000
2025

51,199
Total

$
101,899


2023 (remaining six months)	$	—
2024		—
2025		51,199
Total	$	51,199

~~12.~~13.

Stockholders’ Equity (Deficit)

In November 2021, the Company entered into the 2021 Sales Agreement with 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 the sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the ~~nine~~six months ended ~~September~~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. In 2022, the Company received $34.4 million in net proceeds from the sale of 15,160,899 shares of its common stock under the 2021 Sales Agreement.

In November 2019, the Company entered into the 2019 Sales Agreement with Jefferies LLC which allowed the Company to issue and sell up to $50.0 million in gross proceeds of its common stock. In June 2021, the Company sold 12,830,333 shares of common stock under the 2019 Sales Agreement, resulting in gross proceeds of $48.4 million.

During the nine months ended September 30, 2021, in addition to the shares sold under the 2019 Sales Agreement, the Company sold 99,740,259 shares of common stock, of which 59,740,259 shares of common stock were sold in the 2021 Public Offering and 40,000,000 shares of common stock were sold in the Registered Direct Offering. For additional information on the 2021 Public Offering and the Registered Direct Offering, see Note 2—Liquidity and Capital Resources.

~~13.~~14. Stock-Based Compensation

2015 Plan

In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), under which incentive stock options, non-qualified stock options and restricted stock units may be granted to the Company’s employees and certain other persons, such as officers and directors, in accordance with the 2015 Plan provisions. In February 2016, the Company’s Board of Directors adopted, and the Company’s stockholders approved, an Amended and

~~Table of Contents~~

Restated 2015 Equity Incentive Plan (the “Amended and Restated 2015 Plan”), which became effective on February 20, 2016. The Company’s Board of Directors may terminate the Amended and Restated 2015 Plan at any time. Options granted under the Amended and Restated 2015 Plan expire ten years after the date of grant.

Pursuant to the Amended and Restated 2015 Plan, the number of shares of the Company’s common stock reserved for issuance automatically increases on January 1 of each year, ending on January 1, 2026, by 3.5% of the total number of shares of its common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by its Board of Directors. As of ~~September~~June 30, ~~2022, 20,390,940~~2023, 28,775,002 shares remained available for grant under the Amended and Restated 2015 Plan.

Table of Contents

Inducement Plan

On May 30, 2019, the Company adopted the Senseonics Holdings, Inc. Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 1,800,000 shares of the Company’s common stock for issuance. The only persons eligible to receive grants of awards under the Inducement Plan are individuals who satisfy the standards for inducement grants in accordance with NYSE American Company Guide Section 711(a), including individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. An “Award” is any right to receive the Company’s common stock pursuant to the Inducement Plan, consisting of non-statutory options, restricted stock unit awards and other equity incentive awards. As of ~~September~~June 30, ~~2022, 701,071~~2023, 201,569 shares remained available for grant under the Inducement Plan.

Commercial Equity Plan

On January 30, 2023, the Company adopted the Senseonics Holdings, Inc. 2023 Commercial Equity Plan (the “Commercial Equity Plan”), pursuant to which the Company reserved 10,000,000 shares of common stock for issuance. Eligible recipients under the plan are non-employees of Senseonics, including employees of our global commercial partner, Ascensia, who assist with the commercialization of our products. An “Award” is any right to receive the Company’s common stock pursuant to the Commercial Equity Plan, consisting of non-statutory options and restricted stock unit awards. On May 3, 2023, the Company issued 2,525,000 shares under the Commercial Equity Plan. As of June 30, 2023, 7,475,000shares remained available for grant under the Commercial Equity Plan.

2016 Employee Stock Purchase Plan

In February 2016, the Company adopted the 2016 Employee Stock Purchase Plan, (the “2016 ESPP”). The 2016 ESPP became effective on March 17, 2016. The maximum number of shares of common stock that may be issued under the 2016 ESPP was initially 800,000 shares and automatically increases on January 1 of each year, ending on and including January 1, 2026, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, the Board of Directors may act prior to the first day of any calendar year to provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares of common stock. ~~At September~~As of June 30, ~~2022~~2023, there were ~~13,050,523~~17,760,078 shares of common stock available for issuance under the 2016 ESPP. For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, there were purchases of ~~93,053~~86,816 shares of common stock pursuant to ~~this plan.~~the 2016 ESPP.

The 2016 ESPP permits participants to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time and deductions not yet used in a purchase are refundable upon employment termination. The Company initiated its first 2016 ESPP offering period on August 1, 2019 and new offering periods occur every six months thereafter, each consisting of two purchase periods of six months in duration ending on or about January 31^st and July 31^st of each year. A participant may only be in one offering at a time. On February 1, 2020, there were 566,573 shares purchased in connection with the ~~initial~~ offering period. The 2016 ESPP contains an offering reset provision whereby if the fair market value of a share on offering date of an ongoing offering is less than or equal to the fair market value of a share on a new offering date, the ongoing offering will terminate immediately after the purchase date and rolls over to the new offering.

The 2016 ESPP is considered compensatory for financial reporting purposes.

1997 Plan

On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), under which incentive stock options, non-qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 1997 Plan provisions. Approximately ~~1,223,273~~ 1,217,348shares of the Company’s

Table of Contents

common stock underlying options have vested under the 1997 Plan. Upon the effectiveness of the 2015 Plan, the

~~Table of Contents~~

Company no longer grants any awards under the 1997 Plan.

~~14.~~15.

Fair Value Measurements

The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


	September 30, 2022								June 30, 2023
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	33,610	$	33,610		—		—	$	25,007	$	25,007		—		—
Commercial paper		32,614		—		32,614		—		43,242		—		43,242		—
Corporate debt securities		36,784		—		36,784		—		11,836		—		11,836		—
Asset backed securities		13,849		—		13,849		—		7,453		—		7,453		—
Government and agency securities		44,319		37,403		6,916		—		33,989		33,989		—		—
PHC Option		101		—		—		101
Liabilities
Energy Capital Option	$	28,068	$	—		—		28,068
Embedded features of the 2023 Notes		328		—		328		—
Embedded features of the PHC Notes		63,847		—		—		63,847
Embedded features of the 2025 Notes		19,947		—		19,947		—	$	1,792	$	—		—		1,792


	December 31, 2021									December 31, 2022
	Total		Level 1		Level 2		��	Level 3		Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	29,197	$	29,197		—			—	$	34,658	$	34,658		—		—
Commercial paper		57,369		—		57,369			—		41,503		—		41,503		—
Corporate debt securities		39,748		—		39,748			—		32,142		—		32,142		—
Asset backed securities		26,707		—		26,707			—		8,260		—		8,260		—
Government and agency securities		24,503		19,957		4,546			—		38,570		31,627		6,943		—
PHC Option		239		—		—			239
Liabilities
Energy Capital Option	$	69,401	$	—		—			69,401
Embedded features of the 2023 Notes		5,817		—		—			5,817	$	20	$	—		20		—
Embedded features of the PHC Notes		149,058		—		—			149,058		44,191		—		—		44,191
Embedded features of the 2025 Notes		81,417		—		81,417			—		7,859		—		—		7,859

(1)Classified as cash and cash equivalents due to their short-term maturity

The following table provides a reconciliation of the beginning and ending net balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

Level 3

Instruments
December 31, 2021

$
224,037
Gain on fair value adjustment of option

(41,333)
Gain on change in fair value of derivatives

(85,211)
Financial asset (gain) impairment cost, net

138
Change in fair value hierarchy classification

(5,817)
September 30, 2022

$
91,814



	Level 3
	Instruments
December 31, 2022	$	52,050
Gain on change in fair value of embedded features of the PHC Notes		(44,191)
Gain on change in fair value of embedded features of the 2025 Notes		(6,067)
June 30, 2023	$	1,792

2223

Table of Contents

Transfers into Level 2 of liabilities previously classified in Level 3 were due to increased trade activity associated with these instruments providing better price transparency, permitting classification to Level 2.

The recurring Level 3 fair value measurements of the embedded features of the notes payable and preferred stock, include the following significant unobservable inputs at ~~September~~June 30, 2023 and December 31, 2022:



								As of June 30, 2023
	PHC Notes		PHC Option		Energy Capital Option			2025 Notes
Unobservable Inputs	Assumptions		Assumptions		Assumptions		`	Assumptions
Stock price volatility	110.0	%	104.0	%	88.0	%		40.0	%
Probabilities of conversion provisions	5.0 - 10.0	%	5.0 - 10.0	%	5.0 - 10.0	%		5.0 - 85.0	%
Time period until maturity (yrs)	2.09		0.25		0.00 - 0.11
Dividend yield	—	%	—	%	—	%
Credit spread								8.7	%


								As of December 31, 2022
								2025 Notes		PHC Notes
Unobservable Inputs								Assumptions		Assumptions
Stock price volatility								110.0	%	99.0	%
Probabilities of conversion provisions								5.0 - 10.0	%	5.0 - 10.0	%
Credit spread								13.96	%	13.96	%
Recovery rate								-1.56	%	-5.51	%

~~15.~~16.

Income Taxes

The Company has not recorded any tax provision or benefit for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 or ~~September~~June 30, ~~2021.~~2022. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, NOL carryforwards and research and development credits is not more-likely-than-not to be realized at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~

On March 27, 2020, Congress enacted the CARES Act, as amended by the Flexibility Act, to provide certain relief as a result of the COVID-19 pandemic. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision or net deferred tax assets for the nine months ended September 30, 2022.

~~16.~~17. Related Party Transactions

PHC has a noncontrolling ownership interest in the Company. In addition, PHC has representation on the Company’s board of directors. The Company entered into a financing agreement with PHC on August 9, 2020 and entered into an exchange agreement with PHC during 2023 (see Note 12 for further discussion). Ascensia, through the ownership interests of its parent company, PHC, ~~has~~is a ~~noncontrolling ownership interest in the Company. Ascensia also has representation on the Company’s board of directors.~~related party. Revenue from Ascensia during the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022 ~~and September 30, 2021~~ was ~~$10.3~~$7.5 million and ~~$8.5~~$5.7 million, respectively. We also purchase certain medical supplies from Ascensia for our clinical trials. We paid Ascensia, $0.3 million and $0.1 million during six months ended June 30, 2023 and 2022, respectively under this arrangement.

The amount due from Ascensia as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$2.0~~$3.0 million and ~~$1.8~~$2.3 million, respectively. The amount due to Ascensia as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$0.7~~$0.6 million and ~~$2.5~~$0.9 million, respectively.

~~17.~~18. Subsequent Events

The Company has evaluated all subsequent events through the filing date of this Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of ~~September~~June 30, ~~2022,~~2023, and events which occurred subsequently but were not recognized in the financial statements. ~~Except as described below there~~There were no ~~other~~ subsequent events ~~which~~ that required recognition ~~adjustment to~~ or disclosure, ~~in the financial statements.~~other than those described below.

On November 7, 2022, Energy Capital, LLC delivered a Regular Purchase Notice pursuant to the Equity Line Agreement, exercising their right to purchase $12.0 million of Series B Preferred Stock, having a conversion price of $0.3951 per share.2025 Notes Exchange Agreements

Table of Contents

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. 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.

At-the-Market Offering Program

As previously disclosed, in November 2021, the Company entered into an Open Market Sale Agreement with Jefferies, pursuant to 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. On August 7, 2023, the Company and Jefferies mutually agreed to terminate the Open Market Sale Agreement, effective as of August 7, 2023. Prior to termination, the Company had sold an aggregate of 25,105,562 shares under the Open Market Sale Agreement, resulting in gross proceeds of approximately $43.4 million, before deducting commissions and offering expenses. At the time of termination, approximately $106.6 million remained available for issuance pursuant to the Open Market Sale Agreement.

On August 10, 2023, the Company entered into the Equity Distribution Agreement with Goldman Sachs & Co. LLC, which will enable the Company to issue and sell shares of Common stock in one or more negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, for a maximum aggregate offering amount of up to $106.6 million (the “ATM Program”).

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. The Registration Statement, once effective, will provide for the issuance of common stock from time to time, in one or more transactions, in the aggregate offering amount of $106.6 million, inclusive of the $106.6 million pursuant to the ATM Program.

2325

Table of Contents

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks, uncertainties, and assumptions, ~~including the duration and severity of the COVID-19 pandemic and its impact on our business and financial performance,~~ actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those described below and elsewhere in this Quarterly Report on Form 10-Q, and in our Annual Report on Form 10-K, particularly in Part I – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, ~~2021,~~2022, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~1, 2022.~~16, 2023. Unless otherwise indicated or the context otherwise requires, all references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Senseonics Holdings, Inc. and its subsidiary.

Overview

We are a medical technology company focused on the development and manufacturing of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose management technology. Our implantable CGM (“Eversense”), including 90-day Eversense, Eversense XL and Eversense E3 ~~continuous glucose monitoring (“CGM”) systems~~CGM system versions are designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to six months in the case of Eversense E3XL and Eversense ~~XL,~~E3, as compared to seven to 14 days for non-implantable CGM systems. We affixed the CE mark to the original 90-day Eversense CGM system in June 2016, which marked the first certification for the product to be sold within the European Economic Area (being the European Union plus Norway, Iceland, and Liechtenstein) (“EEA”). Subsequently, we affixed the CE mark to the extended life Eversense XL CGM system in September 2017 ~~which is currently available~~to be sold in select markets in Europe and the Middle East. In June 2022, we affixed the CE mark to the extended life Eversense E3 CGM system and Ascensia began commercialization in select markets in Europe during the third quarter of 2022. In June 2018, the ~~U.S. Food and Drug Administration (“FDA”),~~FDA, approved the 90-day Eversense CGM system ~~and it is currently available~~for distribution throughout the United States. In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the 90-day Eversense system. With this approval and the availability of a new app in December 2019, the Eversense system can now be used as a therapeutic CGM in the United States to replace fingerstick blood glucose measurement to make treatment decisions, including insulin dosing. In February 2022, the 180-day extended life Eversense E3 CGM system was approved by the FDA and Ascensia ~~Diabetes Care Holdings AG (“Ascensia”)~~ began commercializing Eversense E3 in the United States in the second quarter of 2022. ~~In June 2022, we affixed the CE mark to the Eversense E3 CGM system and Ascensia Diabetes Care Holdings AG (“Ascensia”) began commercializing Eversense E3 in Europe in the third quarter of 2022.~~

~~Table of Contents~~

Our net revenues are derived from sales of the Eversense system which is sold in two separate kits: the disposable Eversense Sensor Pack which includes the sensor, insertion tool, and adhesive patches, and the durable Eversense Smart Transmitter Pack which includes the transmitter and charger.

We sell directly to our network of distributors and strategic fulfillment partners, who provide the Eversense system to healthcare providers and patients through a prescribed request and invoice insurance payors for reimbursement. Sales of the Eversense system are widely dependent on the ability of patients to obtain coverage and

Table of Contents

adequate reimbursement from third-party payors or government agencies. We leverage and target regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment. We have reached ~~more than 250~~approximately 300 million covered lives in the ~~U.S.~~United States through positive insurance payor coverage decisions. In ~~August 2022,~~June 2023, we received positive payor coverage decision from ~~Elevance Health, formerly Anthem, who has more than 45 million covered lives.~~UnitedHealthcare, the largest healthcare insurance company in the United States that effective July 1, 2023, Eversense E3 CGM system would be covered. On August 3, 2020, the Center for Medicare and Medicaid Services (“CMS”) released its Calendar Year 2021 Medicare Physician Fee Schedule Proposed Rule that announces proposed policy changes for Medicare payments, including the proposed establishment of national payment amounts for the three CPT© Category III codes describing the insertion (CPT 0446T), removal (0447T), and removal and insertion (0048T) of an implantable interstitial glucose sensor, which describes our Eversense CGM systems, as a medical benefit, rather than as part of the Durable Medical Equipment channel that includes other CGMs. In December 2021, CMS released its Calendar Year 2022 Medicare Physician Fee Schedule that updated global payments for the device cost and procedure fees. In July 2022, CMS provided temporary G-codes to enable immediate access to Eversense E3 for all eligible Medicare beneficiaries. In November 2022, CMS released its Calendar Year 2023 Medicare Physician Fee Schedule Proposed Rule that updates the payment amounts for the three CPT© Category III codes to account for the longer 6-month sensor.

In February 2020, we announced that the FDA approved a subgroup of PROMISE trial participants to continue for a total of 365 days to gather feasibility data on the safety and accuracy of a 365-day sensor. This sub-set of 30 participants was left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days. Information gathered from this sub-set and additional development efforts provided us the confidence to start the Pivotal study for the Eversense 365-day System. The ENHANCE pivotal study for the Eversense 365-day system completed enrollment in the third quarter of 2022 and we expect to have ~~been working with payors to transition their policies to Eversense E3 and have confirmed immediate coverage policy transition from select payors.~~data in the second half of 2023.

We are in the early commercialization stages of the Eversense brand and are focused on driving awareness of our CGM system amongst intensively managed patients and their healthcare providers. In both the United States and our overseas markets, we have entered into strategic partnerships and distribution agreements that allow third party collaborators with direct sales forces and established distribution systems to market and promote Senseonics CGM systems, including 90-day Eversense, Eversense XL, Eversense E3 and future generation products.

~~COVID-19~~

The current COVID-19 pandemic (“COVID-19”) has presented a substantial public health and economic challenge around the world and is affecting our employees, customers, communities and business operations, as well as the U.S. economy and financial markets. We will continue to monitor the overall impact of the COVID-19 pandemic on our business, financial condition, liquidity, assets and operations, including our personnel, programs, expected timelines, expenses and third-party contract manufacturing and distribution.

As a result of the COVID-19 pandemic’s disruption to our operations, suppliers, employees, and the healthcare community in which we sell to and support, and our limited cash resources, in March 2020, we made significant reductions in our cost structure and operations to improve cash flow and generate future expenditure savings to ensure the long-term success of Eversense. Specifically, commercial sales and marketing of the Eversense CGM System were temporarily suspended and a strategic review of the business was performed. As a result of the strategic review, in the third quarter of 2020, we entered into the Ascensia Commercialization Agreement, granting commercial and distribution responsibilities of Eversense. As we continue to recover from the pandemic we have expanded operations focusing on the design, development and manufacturing of Eversense.

In addition, in response to the ongoing spread of COVID-19, we have established safety protocols for personnel access to our headquarter offices. The effects of the COVID-19 pandemic could adversely impact our business, assets, operations and sales, particularly if the COVID-19 pandemic continues to persist for an extended period of time. See “Our business, product sales and results of operations could be adversely affected by the effects of health epidemics, including the recent COVID-19 outbreak, in regions where we or third parties distribute our products or where we or third parties on which we rely have significant manufacturing facilities, concentrations, clinical trial sites or other business operations. The COVID-19 pandemic has and may continue to, materially affect our operations, including at

~~Table of Contents~~

our headquarters in Maryland and at our clinical trial sites, as well as the business or operations of our manufacturers, distributors or other third parties with whom we conduct business” in the Risk Factors section of our most recent Annual Report on Form 10-K for more information regarding the potential impact of the COVID-19 pandemic on our business and operations. We continue to actively monitor this situation and the possible effects on our business and operations.

United States Development and Commercialization of Eversense

In 2016, we completed our PRECISE II pivotal clinical trial in the United States. This trial, which was fully enrolled with 90 subjects, was conducted at eight sites in the United States. In the trial, we measured the accuracy of Eversense measurements through 90 days after insertion. We also assessed safety through 90 days after insertion or through sensor removal. In the trial, we observed a mean absolute relative difference (“MARD”), of 8.5% utilizing two calibration points for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. Based on the data from this trial, in October 2016 we submitted a pre-market approval (“PMA”), application to the FDA to market Eversense in the United States for 90-day use. On June 21, 2018, we received PMA approval from the FDA for the Eversense system. In July 2018, we began distributing the 90-day Eversense system directly in the United States through our own direct sales and marketing organization. We have received Category III CPT codes for the insertion and removal of the Eversense sensor.

In December 2018, we initiated the PROMISE pivotal clinical trial to evaluate the safety and accuracy of Eversense for a period of up to six months in the United States and in September 30, 2019, we completed enrollment of the PROMISE trial. In the trial, we observed performance matching that of the then current Eversense 90-day product available in the United States, with a MARD of 8.5%. This result was achieved with reduced calibration, down to one per day, while also doubling the sensor life to six months. Following the results of the PROMISE trial, on September 30, 2020, a ~~Premarket Approval, or~~ PMA supplement application to extend the wearable life of the Eversense CGM System to six months was submitted to the FDA. In February 2022, the extended life Eversense E3 CGM system was approved by the FDA.

In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense system and launched with an updated app in December 2019. With this approval, the Eversense system can be used as a therapeutic CGM to replace fingerstick blood glucose measurement for treatment decisions, including insulin dosing.

Table of Contents

On February 26, 2020, we announced that the FDA approved a subgroup of PROMISE trial participants to continue for a total of 365 days to gather feasibility data on the safety and accuracy of a 365-day sensor. This sub-set of 30 participants were left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days. Information gathered from this sub-set and additional development efforts provided us the confidence to start the Pivotal study for the Eversense 365 System.

In April 2020, we announced that we received ~~regulatory approval~~an extension to our CE Certificate of Conformity in ~~Europe~~the EEA such that the Eversense XL is no longer contraindicated for MRI, which means the sensor does not need to be removed from under the skin during MRI scanning. We had previously obtained this indication for Eversense in the United States in 2019. This MRI approval is a first for the CGM category, as all other sensors are required to be removed during an MRI scan.

On August 9, 2020, we entered into a collaboration and commercialization agreement with Ascensia (the “Commercialization Agreement”) pursuant to which we granted Ascensia the exclusive right to distribute our 90-day Eversense CGM system and our 180-day Eversense E3 CGM system worldwide, with the following initial exceptions: (i) until January 31, 2021, the territory did not include countries covered by our then existing distribution agreement with Roche Diagnostics International AG and Roche Diabetes Care GmbH (together “Roche”), which ~~are the~~included Europe, Middle East and Asia, excluding Scandinavia and Israel, and 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the Asia Pacific and Latin American regions; (ii) until September 13, 2021, the territory did not include countries covered by our then current distribution agreement with Rubin Medical, which ~~are~~included Sweden, Norway and Denmark; and (iii) until May 31, 2022, the territory did not include Israel. Pursuant to the Commercialization Agreement, in the United States, Ascensia began providing sales support for the 90-day Eversense product on October 1, 2020 and Ascensia ramped up sales activities and assumed commercial responsibilities for the 90-day Eversense product during the second quarter of 2021.

~~Table of Contents~~

In February 2022, we received approval from the FDA for the Eversense E3 CGM System. The approval for our third-generation sensor, with proprietary sacrificial boronic acid (“SBA”) technology doubles the sensor life to six months with MARD of 8.5%. Ascensia began commercializing Eversense E3 in the United States during the second quarter of 2022.

The ENHANCE clinical study was initiated as a pivotal study with the purpose of gathering additional clinical data to support an integrated continuous glucose monitoring (iCGM) submission for the Eversense E3 system using the SBA technology. In March 2022, we extended the ongoing ENHANCE clinical study to evaluate the safety and accuracy of the Eversense 365 System for a period of up to one year in the United States. In September 2022, we completed enrollment of the ENHANCE study. In November 2022, we submitted and in the first quarter of 2023 we received approval of an IDE for the enrollment of a pediatric cohort in the ENHANCE ~~study and, pending approval, plan~~study. We began to ~~begin enrolling~~enroll pediatric patients induring the ~~first half~~second quarter of 2023.

European Commercialization of Eversense

In September 2017, we ~~received~~affixed the CE mark for Eversense XL which indicates that the product may be sold freely in any part of the European Economic Area (“EEA”). The Eversense XL is indicated for a sensor life of up to 180 days. Eversense XL began commercialization in Europe in the fourth quarter of 2017. All such commercialization and marketing activities remain subject to applicable government approvals.

In May 2016, we entered into a distribution agreement with Roche. Pursuant to the agreement, as amended, we had granted Roche the exclusive right to market, sell and distribute Eversense in ~~Europe, Middle East and Asia (“EMEA”),~~the EMEA, excluding Scandinavia and Israel. In addition, Roche had exclusive distribution rights in 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the Asia Pacific and Latin American regions. Roche was obligated to purchase from us specified minimum volumes of Eversense XL CGM components at pre-determined prices. On ~~December 12, 2019, we further amended the distribution agreement to lower minimum volumes for 2020 and increase pricing for the remaining period of the contract. On~~ November 30, 2020, we entered into a final amendment and settlement agreement with Roche to facilitate the transition of distribution to Ascensia as sales concluded on January 31, 2021, including final purchases, and transition support activities. The distribution rights under the agreement expired January 31, 2021.

Table of Contents

In June 2022, we affixed the CE mark to the extended life Eversense E3 CGM system, and Ascensia began commercialization in ~~select~~ European markets during the ~~third quarter of 2022, with the commercialization in all European markets in the fourth quarter~~second half of 2022.

Financial Overview

Revenue

We generate product revenue from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively “Customers”), who then resell the products to health care providers and patients. We are generally paid for our sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients.

Revenue from product sales is recognized at a point in time when the Customers obtain control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product. Contracts with our distributors contain performance obligations, mostly for the supply of goods, and is typically satisfied upon transfer of control of the product. Additionally, a portion of revenue is recognized through our consignment program whereas small quantities of inventory are maintained securely at various health care provider locations within the United States. Under this model, the Company does not recognize revenue upon shipment of product. Rather, revenue is recognized when the product is consumed by a patient.

Customer contracts do not include the right to return unless there is a product issue, in which case we may provide replacement product. Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance.

~~Table of Contents~~

Our contracts may contain some form of variable consideration such as prompt-pay discounts, tier-volume price discounts and for the Ascensia commercial agreement, revenue share. Variable consideration, such as discounts and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized. The amount of variable consideration that is included in the transaction price may be constrained and is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period, when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint requires the use of management judgment. Depending on the variable consideration, we develop estimates for the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates, and market conditions.

Concentration of Revenue and Customers

For the three months ended June 30, 2023 and ~~nine months ended September 30,~~ 2022, the Company derived 89% and ~~2021, we derived the majority~~96%, respectively, of ~~our~~its total ~~net~~ revenue from one customer, Ascensia. ~~During~~For the ~~three~~six months ended ~~September~~June 30, 2023, and 2022, the Company derived 91% and ~~2021, we derived 97% and 92%~~93%, respectively of ~~our~~its total revenue from ~~Ascensia. During the nine months ended September 30, 2022 and 2021, we derived 95% and 88%, respectively, of our total revenue from~~one customer, Ascensia. Revenues for these corresponding periods represent sales of sensors, transmitters and miscellaneous Eversense system ~~components.~~components

Table of Contents

Revenue by Geographic Region

The following table sets forth net revenue derived from our two primary geographical markets, the United States and outside of the United States, based on the geographic location to which we deliver the product, for three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended

Nine Months Ended

September 30, 2022

September 30, 2022

%

%

(Dollars in thousands)
Amount

of Total

Amount

of Total

Revenue, net:

Outside of the United States
$
2,688

58.2
%

$
6,910

63.9
%
United States

1,934

41.8

3,908

36.1

Total
$
4,622

100.0
%

$
10,818

100.0
%

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2021

%

%

(Dollars in thousands)
Amount

of Total

Amount

of Total

Revenue, net:

Outside of the United States
$
2,928

82.9
%

$
7,771

80.4
%
United States

604

17.1

1,896

19.6

Total
$
3,532

100.0
%

$
9,667

100.0
%


	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	%

2830

Table of Contents

Results of Operations for the Three Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022


	Three Months Ended						Three Months Ended
	September 30,				Period-to-		June 30,				Period-to-
	2022		2021		Period Change		2023		2022		Period Change

	(in thousands)					(in thousands)	(in thousands)					(in thousands)
Revenue, net	$	126	$	276	$	(150)	$	437	$	137	$	300
Revenue, net - related parties		4,496		3,256		1,240		3,689		3,577		112
Total revenue		4,622		3,532		1,090		4,126		3,714		412
Cost of sales		3,866		4,778		(912)		3,709		2,890		819
Gross profit		756		(1,246)		432		417		824		(407)

Expenses:
Research and development expenses		10,985		7,200		3,785		12,830		9,299		3,531
Selling, general and administrative expenses		7,340		7,585		(245)		7,455		8,561		(1,106)
Operating loss		(17,569)		(16,031)		(3,108)		(19,868)		(17,036)		(2,832)
Other (expense) income, net:
Other income (expense), net:
Interest income		544		486		58		1,311		241		1,070
Gain (Loss) on fair value adjustment of option		(8,592)		13,556		(22,148)
Gain on fair value adjustment of option								—		28,224		(28,224)
Exchange related gain, net								—		—		—
Interest expense		(4,801)		(4,245)		(556)		(2,310)		(4,510)		2,200
Gain (Loss) on change in fair value of derivatives		(28,948)		50,075		(79,023)
Impairment cost		(984)		(488)		(496)
Other expense		(41)		(439)		398
Total other (expense) income, net		(42,822)		58,945		(101,767)
Net Income (loss)	$	(60,391)	$	42,914	$	(104,875)
Gain on change in fair value of derivatives								289		96,548		(96,259)
Impairment cost, net								—		816		(816)
Other income (expense)								155		(52)		207
Total other income (expense), net								(555)		121,267		(121,822)
Net (Loss) Income							$	(20,423)	$	104,231	$	(124,654)

Total revenue

Our total revenue increased to ~~$4.6~~$4.1 million for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$3.5~~$3.7 million for the three months ended ~~September~~June 30, ~~2021.~~2022, an increase of $0.4 million. This increase was primarily due to the launch of Eversense E3 ~~in the United States partially offset by slightly lower sales~~ outside of the United ~~States.~~States in the third quarter of 2022 driving higher revenue in the current year.

Cost of sales and gross profit

Our cost of sales ~~decreased~~increased to ~~$3.9~~$3.7 millionfor the three months ended June 30, 2023, compared to $2.9 million for the three months ended ~~September~~June 30, ~~2022, compared~~2022. Our gross profit decreased to ~~$4.8~~$0.4 millionfor the three months ended ~~September~~June 30, ~~2021. Our gross profit increased~~2023, compared to $0.8 millionfor the three months ended ~~September~~June 30, ~~2022, compared to ($1.2) million for the three months ended September 30, 2021.~~2022. Gross profit as a percentage of revenue, or gross margin, was ~~16.4%~~10.1% and ~~(35.3)%~~22.2% for the three months ended ~~September~~June 30, 2023 and June 30, 2022, ~~and September 20, 2021,~~ respectively. The ~~increase~~reduction in gross margin was primarily driven by an increase in the ~~transition from the Eversense 90-day product~~revenue share percentage due to ~~the Eversense six-month product,~~Ascensia, sales channel mix ~~lower inventory write offs~~ and increased manufacturing ~~efficiencies.~~and logistics costs.

Research and development expenses

Research and development expenses were ~~$11.0~~$12.8 million for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$7.2~~$9.3 millionfor the three months ended ~~September~~June 30, ~~2021,~~2022, an increase of ~~$3.8~~$3.5 million. The increase was primarily due to investments ~~for~~in next generation technologies including a ~~$2.2~~$3.1 millionincrease in clinical studies activities anand a $0.4 million increase ~~of $0.7 million~~ in ~~personnel related costs due to the expansion of our research and development workforce and an increase of $0.9 million for consulting, contract fabrication and other~~ research and development support services.

Selling, general and administrative expenses

Selling, general and administrative expenses were ~~$7.3~~$7.5 million for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$7.6~~$8.6 million for three months ended ~~September~~June 30, ~~2021,~~2022, a decrease of ~~$0.3~~$1.1 million. The decrease was primarily

2931

Table of Contents

~~primarily~~ the result of a ~~$1.1~~$1.0 million reduction in personnel spend ~~related to marketing programs and support for Ascensia’s marketing programs including direct to consumer campaigns, partially offset~~primarily driven by ~~a $0.4 million increase in personnel~~payroll tax credits, lower recruiting costs and a ~~$0.5~~$0.1 million reduction in ~~increase in professional fees and other administrative expenses.~~insurance premiums.

Total other income (expense) ~~income,~~, net

Total other expense, net, was ~~$(42.8)~~$0.6 million for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to other income, net, of ~~$58.9~~$121.3 millionfor the three months ended ~~September~~June 30, ~~2021,~~2022, a ~~change~~decrease in other income of ~~$101.8~~$121.8 million. The change was primarily due to a ~~$79.0~~$28.2 million change in the fair value adjustment of options, a $96.3 millionchange in the fair value of derivatives, and a ~~$22.1~~$0.8 million change in ~~fair value of options and a $0.5 million~~impairment cost partially offset by an increase in interest ~~expense, partially offset by a decrease~~income (expense), net, of ~~$0.4~~$3.3 million and an increase of $0.2 million in other ~~expense.~~income (expense), net.

Results of Operations for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022


	Nine Months Ended						Six Months Ended
	September 30,				Period-to-		June 30,				Period-to-
	2022		2021		Period Change		2023		2022		Period Change

	(in thousands)						(in thousands)
Revenue, net	$	555	$	1,196	$	(641)	$	750	$	429	$	321
Revenue, net - related parties		10,263		8,471		1,792		7,513		5,767		1,746
Total revenue		10,818		9,667		1,151		8,263		6,196		2,067
Cost of sales		8,711		9,995		(1,284)		7,433		4,845		2,588
Gross profit		2,107		(328)		2,435		830		1,351		(521)

Expenses:
Research and development expenses		28,088		19,562		8,526		25,235		17,103		8,132
Selling, general and administrative expenses		23,785		23,347		438		15,173		16,445		(1,272)
Operating loss		(49,766)		(43,237)		(6,529)		(39,578)		(32,197)		(7,381)
Other (expense) income, net:
Interest income		878		743		135		2,420		334		2,086
Gain (Loss) on fair value adjustment of option		41,333		(74,848)		116,181
Gain on extinguishment of debt and option		—		330		(330)
Gain on fair value adjustment of option								—		49,925		(49,925)
Exchange related gain, net								18,776		—		18,776
Interest expense		(13,806)		(12,337)		(1,469)		(6,962)		(9,005)		2,043
Gain (Loss) on change in fair value of derivatives		152,169		(255,185)		407,354
Gain on change in fair value of derivatives								6,067		181,117		(175,050)
Impairment cost		(138)		(1,650)		1,512		—		846		(846)
Other expense		(112)		(723)		611
Other income (expense)								178		(71)		249
Total other (expense) income, net		180,324		(343,670)		523,994		20,479		223,146		(202,667)
Net Income (loss)	$	130,558	$	(386,907)	$	517,465
Net (Loss) Income							$	(19,099)	$	190,949	$	(210,048)

Total revenue

Our total revenue increased to ~~$10.8~~$8.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$9.7~~$6.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022, an increase of $2.1 million. This increase was primarily due to the launch of Eversense E3 ~~in the United States partially offset by slightly lower sales~~ outside of the United ~~States.~~States in the third quarter of 2022 driving higher revenue in the current year.

Cost of sales and gross profit

Our cost of sales were ~~$8.7~~$7.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$10.0~~$4.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021, a decrease~~2022, an increase of ~~$1.3 million, primarily driven by reduced inventory obsolescence charges.~~$2.6 million. Our gross profit ~~increased~~decreased to ~~$2.1~~$0.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$(0.3)~~$1.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Gross profit as a percentage of revenue, or gross margin, was ~~19.5%~~10.0% and ~~(3.4)%~~21.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~September 30, 2021,~~June 20, 2022, respectively. The ~~increase~~reduction in gross margin was primarily driven by an increase in the ~~transition from the Eversense 90-day product~~revenue share percentage due to ~~the Eversense six-month product,~~Ascensia, sales channel mix ~~lower inventory write-offs~~ and increased manufacturing ~~efficiencies.~~and logistics costs.

3032

Table of Contents

Research and development expenses

Research and development expenses were ~~$28.1~~$25.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$19.6~~$17.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, an increase of ~~$8.5~~$8.1 million. The increase was primarily due to investments for next generation technologies including a ~~$4.4~~$5.9 million increase in clinical studies activities, an increase of ~~$1.9~~$2.2 million in personnel ~~related~~ costs, ~~due to the expansion of our research and development workforce and an increase of $2.2 million for~~ consulting, contract fabrication and other research and development support services.

Selling, general and administrative expenses

Selling, general and administrative expenses were ~~$23.8~~$15.2 million for the ~~nine~~six months ended ~~September~~June 30, 2023, compared to $16.4 million for six months ended June 30, 2022, ~~compared to $23.3 million for nine months ended September 30, 2021, an increase~~a decrease of ~~$0.5~~$1.2 million. The ~~increase~~decrease was primarily due to a $0.7 million reduction in personnel costs primarily ~~to an increase of $2.0~~driven by payroll tax credits, a $0.4 million reduction in other general and administrative costs to include recruiting and associated employee overhead and local tax expenses, and ~~legal expenses~~a $0.3 million reduction in other sales and marketing costs partially offset by ~~a $1.5~~$0.2 million ~~decrease in sales~~of increased costs for customer support and ~~marketing costs.~~mobile app enhancements.

Total other income (expense) ~~income,~~, net

Total other income (expense), net, was ~~$180.3~~$20.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to other ~~expense,~~income (expense), net, of ~~($343.7)~~$223.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, a change of ~~$524.0~~$202.6 million. The change was primarily due to a ~~$407.4~~$175.1 million change in fair value of derivatives, ~~and~~ a ~~$116.2~~$49.9 million change in fair value of ~~options primarily driven~~option, and $0.8 million in impairment cost offset by ~~volatility~~an $18.8 million net gain on the extinguishment of PHC notes, an increase in ~~our share price.~~

interest income (expense), net, of $4.1 million and an increase of $0.2 million in other income (expense), net.

Liquidity and Capital Resources

Sources of Liquidity

From ~~our~~its founding in 1996 until 2010, wethe Company has devoted substantially all of ~~our~~its resources to researching various sensor technologies and platforms. Beginning in 2010, wethe Company narrowed ~~our~~its focus to developing and refining a commercially viable glucose monitoring system. ~~However, to date, we have not generated any significant revenue from product sales. We have~~The Company has incurred substantial losses and cumulative negative cash flows from operations since ~~our~~its inception in October ~~1996.~~1996 and expects to incur additional losses in the near future. We ~~have never been profitable and our net losses were $302.5~~incurred total gross profit of $2.7 million, ~~$175.2~~($0.8) million, and ~~$115.5~~($17.4) million for the years ended December 31, 2022, 2021 and 2020, ~~and 2019,~~ respectively. AsFor the period ending June 30, 2023, the Company had gross profit of ~~September 30, 2022, we had~~$0.4 million and an accumulated deficit of ~~$820.4~~$828.0 million. To date, ~~we have~~the Company has funded ~~our~~its operations principally through the issuance of preferred stock, common stock, warrants, convertible notes, and debt. As of ~~September~~June 30, ~~2022, we~~2023, the Company had cash, cash equivalents and marketable ~~debt~~ securities of ~~$163.0~~$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. 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 49,303,648 shares, representing 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.

Table of Contents

Assuming the successful consummation of the Exchanges, upon completion of the Exchanges, we anticipate that the restrictive covenants of the 2025 Notes will no longer be applicable, including limitations on indebtedness, and that approximately $19.2 million aggregate principal amount of the 2025 Notes will remain outstanding.

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. The Registration Statement, once effective, will provide for the issuance of common stock from time to time, in one or more transactions, in the aggregate offering amount of $106.6 million, inclusive of the $106.6 million pursuant to the ATM Program.

In November 2021, we entered into ~~an Open Market Sale~~the 2021 Sales Agreement ~~(the “2021 Sales Agreement”)~~ with Jefferies, ~~LLC (“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 will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. ~~As of September~~During the six months ended June 30, ~~2022, we~~2023, the Company received ~~$34.4~~$7.4 million in net proceeds from the sale of ~~15,160,899~~9,944,663 shares of ~~our~~its common stock under the 2021 Sales Agreement.

In November 2019, we entered into an Open Market Sale Agreement (the “2019 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 $50.0 million through Jefferies as our sales agent in an “at For the ~~market” offering. In~~six months ended June ~~2021, we~~30, 2022, Company received ~~$48.4~~$8.0 million in net proceeds from the sale of ~~12,830,333~~3,077,493 shares of ~~our~~its common stock ~~utilizing the full capacity~~ under the ~~2019~~2021 Sales Agreement.

On ~~January 21, 2021, we entered into an underwriting agreement, which was subsequently amended~~August 7, 2023, the Company and restated on the same day (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative of the underwriters (the “Underwriters”), to issue and sell 51,948,052 shares of common stock, in an underwritten public

~~Table of Contents~~

offering pursuant to effective registration statements on Form S-3, including a related prospectus and prospectus supplement, in each case filed with the Securities and Exchange Commission (the “2021 Public Offering”). The price to the public in the 2021 Public Offering was $1.925 per share of common stock. The UnderwritersJefferies mutually agreed to ~~purchase~~terminate the ~~shares from us~~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 ~~Underwriting~~2021 Sales Agreement at a price of $1.799875 per share and the Company also agreed to reimburse them for customary fees and expenses. The initial closing of the 2021 Public Offering occurred on January 26, 2021. Subsequent to the initial closing, the Underwriters exercised their option to purchase an additional 7,792,207 shares of Common Stock. Total net proceeds from the 2021 Public Offering were $106.1 million after deducting underwriting discounts and commissions and estimated offering expenses.

On January 17, 2021, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional purchasers (the “Purchasers”), pursuant to which we sold to the Purchasers, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 40,000,000 shares (the “Shares”) of common stock, $0.001 par value per share. The Shares were sold at a purchase price of $1.25 per share for aggregate gross proceeds to the Company of $50.0 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on November 27, 2019. The net proceeds to the Company from the Registered Direct Offering, after deducting fees and expenses and the estimated offering expenses payable by us are approximately $46.1 million.

On November 9, 2020, wethe Company entered into ~~an equity line agreement, (“~~the Equity Line ~~Agreement”),~~Agreement with Energy Capital ~~LLC (“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 ~~our~~the Company’s newly designated ~~series B convertible preferred stock (“the~~ Series B Preferred ~~Stock”),~~Stock at ~~our~~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 wethe Company have less than $8.0 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), wethe Company had the right, ~~in our~~at its sole discretion, to present Energy Capital with a ~~purchase notice (“~~Regular Purchase ~~Notice”)~~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 ~~our~~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.~~share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provided that ~~we were~~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 usthe 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.

~~Concurrently with entry into~~ The excess of the ~~Equity Line Agreement, we issued a warrant to~~Purchase Price and the fair value of the Energy Capital ~~exercisable beginning May 9, 2021, to purchase up to 10,000,000 shares~~option in the total amount of ~~common stock at an exercise price of $0.3951 per share, (the “Warrant”). The Warrant~~$37.6 million was ~~exercised~~recorded in ~~full in February 2022.~~additional-paid-in-capital.

On August 9, 2020, wethe Company entered into a financing agreement with ~~Ascensia~~PHC, pursuant to which wethe Company issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to ~~Ascensia’s parent company, PHC Holdings Corporation (“PHC”), on the Closing Date. We~~PHC. The Company also issued ~~PHC~~ 2,941,176 shares of common stock to PHC as a financing fee. WeThe Company also ~~have~~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 FDA approval for the 180-day Eversense product for marketing in the United States before such date. Upon the closing of the PHC Notes, we prepaid in full the First Lien Notes, issued and sold pursuant a loan agreement with Highbridge Capital Management, LLC (“Highbridge”) (the “Highbridge Loan Agreement”), in the amount of approximately $17.6 million.

3234

Table of Contents

the United States before such date. The Company successfully obtained FDA approval in February 2022 and the option was not exercised.

~~Additionally, on~~ ~~August 9, 2020, we~~On March 13, 2023, the Company entered into ~~a Stock Purchase~~an Exchange Agreement with ~~Masters~~ ~~Special Solutions, LLC and certain affiliates thereof (collectively, “Masters”)~~,PHC, pursuant to which ~~we issued~~PHC agreed to exchange its $35.0 million aggregate principal amount of the PHC Notes, including all accrued and ~~sold to Masters 3,000 shares of convertible preferred stock, designated as Series A Preferred Stock (the “Series A Preferred Stock”), at a price of $1,000.00 per share in an initial closing (“~~unpaid interest thereon, for the ~~Stock Purchase Agreement”). Masters also had the option~~Exchange Warrant to purchase up to ~~an additional 27,000 shares of Series A Preferred Stock at~~68,525,311 Exchange Warrant Shares. The Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of ~~$1,000.00~~$0.001 per ~~share in subsequent closings, subject to~~Exchange Warrant Share. The number of Exchange Warrant Shares represents the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds of $22.8 million. Each share of Series A Preferred Stock is initially convertible into a number of shares of common stock ~~equal~~previously issuable upon conversion of the PHC Notes, in accordance with the original terms of the notes, including a number of shares in respect of accrued and unpaid interest through the closing date, plus additional shares with a value of $675,000 reflecting a portion of the future interest payments forgone by PHC. On March 31, 2023, the Exchange was consummated, and the Company issued the Exchange Warrant to ~~$1,000 divided by~~PHC in consideration for the ~~conversion~~cancellation of the PHC Notes.

On March 13, 2023, the Company entered into a Securities Purchase Agreement with PHC, pursuant to which the Company issued and sold to PHC in a private placement a Purchase Warrant to purchase an aggregate of 15,425,750 Purchase Warrant Shares. The purchase price of ~~$0.476~~the Purchase Warrant was approximately $0.97 per ~~share, subject~~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 ~~customary anti-dilution adjustments, including in~~maintain, as of the ~~event~~closing of ~~any stock split.~~ ~~All shares~~the transaction, a 15% beneficial ownership for purposes of ~~Series A Preferred Stock have been converted to common stock.~~the Investor Rights Agreement, dated August 9, 2020, between the Company and PHC.

~~We believe that these agreements provide~~On the ~~financial resources and mutual commitment to support the growth of Eversense and specifically for~~Private Placement Closing Date, the Company received aggregate gross proceeds of $15.0 million, before deducting private placement expenses payable by the manufacturing of Eversense and continued product development, including the U.S. launch of Eversense E3. The timing and success of these collaborations and financings are dependent on certain events occurring in accordance with our plans, and may be influenced by uncontrollable external factors, including restrictions or impacts of COVID-19. Management has concluded that based on our current operating plans, existing cash and cash equivalents and cash flows from our future operations will be sufficient to meet our anticipated operating needs through 2023.Company.

Common Stock

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 ~~the~~our sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the ~~nine~~six months ended ~~September~~June 30, ~~2022, we~~2023, the Company received ~~$34.4~~$7.4 million in net proceeds from the sale of ~~15,160,899~~9,944,663 shares of ~~our~~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.

~~Table of Contents~~

Indebtedness

Term Loans

PPP Loan

On April 22, 2020, we received $5.8 million in loan funding from the PPP pursuant to the CARES Act, as amended by the Flexibility Act, and administered by the Small Business Administration (“SBA”). The unsecured loan ~~(the “PPP Loan”) is~~PPP Loan was evidenced by the PPP Note, ~~dated April 21, 2020 (the “PPP Note”),~~ in the principal amount of $5.8 million with Silicon Valley Bank (“SVB”).

Under the terms of the PPP Note and the PPP Loan, interest ~~accrues~~accrued on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Note was two years. In April 2022, the Company repaid the outstanding principal and accrued interest in full.

Convertible Notes

Table of Contents

The following table summarizes our outstanding convertible notes at ~~September~~June 30, ~~2022:~~2023:

Aggregate

Initial Conversion

Conversion Price

Aggregate

Initial Conversion

Conversion Price

Convertible

Issuance

Principal

Maturity

Rate per $1,000

per Share of

Issuance

Principal

Maturity

Rate per $1,000

per Share of

Note

Date

Coupon

(in millions)

Date

Principal Amount

Common Stock

Date

Coupon

(in millions)

Date

Principal Amount

Common Stock

2023 Notes

January 1, 2018

5.25%

15.7

February 1, 2023

294.1176

3.40

2025 Notes

July 1, 2019

5.25%

51.2

January 15, 2025

757.5758

1.32

July 1, 2019

5.25%

51.2

January 15, 2025

757.5758

1.32

PHC Notes

August 14, 2020

8.00%

35.0

October 31, 2024

1867.4136

0.54

As described above, on August 10, 2023, ~~Notes~~

Inwe entered into a series of exchange agreements with certain holders of the ~~first quarter of 2018, we issued $53.0 million in~~2025 Notes to exchange an aggregate principal amount of ~~senior convertible notes that will mature on February 1, 2023, (the “2023 Notes”),~~up to $30.8 million of ~~which $15.7 million in aggregate principal remains outstanding as of September 30, 2022, after some of the holders exchanged their 2023~~2025 Notes for ~~2025 Notes, as defined below, in July 2019.~~

~~2025 Notes~~

~~In July 2019, we~~a combination of cash and newly issued ~~$82.0 million in aggregate principal amount of~~ ~~senior convertible notes that will mature on January 15, 2025 (the “2025 Notes”), unless earlier repurchased or converted.~~ In connection with an exchange on April 24, 2020, $24.0 million in aggregate principal of Highbridge’s outstanding 2025 Notes were exchanged for (i) $15.7 million aggregate principal amount of Second Lien Notes (“Second Lien Notes”), (ii) 11,026,086 shares of ~~our~~ common stock, (iii) warrants to purchase up to 4,500,000 shares of our common stock at an exercise price of $0.66 per share, and (iv) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged (the “Exchange”).

stock. For additional information on the 2025 Notes, ~~and the 2023 Notes,~~ see Note 8—12—Notes Payable, Preferred Stock and Stock Purchase Warrants in the accompanying unaudited consolidated financial statements.

~~PHC Notes~~

On August 9, 2020, we entered into a note purchase agreement with PHC (the “Note Purchase Agreement”), pursuant to which we agreed to borrow $35.0 million in aggregate principal through the issuance and sale of PHC Notes on or prior to August 14, 2020. The PHC Notes will be senior secured obligations and will be guaranteed on a senior secured basis by our wholly owned subsidiary, Senseonics, Incorporated. Interest at the initial annual rate of 9.5% is payable semi-annually in cash or, at our option, payment in kind. The interest rate will decrease to 8.0% beginning in April 2022 because we obtained FDA approval for the 180-day Eversense E3 product for marketing in the United States.

~~Table of Contents~~

The maturity date for the PHC Notes will be October 31, 2024, provided that the maturity date will accelerate if we have not repaid our Second Lien Notes (other than an aggregate principal amount of up to $1.0 million) by 91 days prior to the maturity of the Second Lien Notes.

PHC will be entitled to convert the PHC Notes to common stock at a conversion rate of 1,867.4136 shares per $1,000 principal amount of the PHC Notes, equivalent to a conversion price of approximately $0.54 per share, subject to specified anti-dilution adjustments, including adjustments for our issuance of equity securities on or prior to April 30, 2022 below the conversion price. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such notice of redemption or corporate event. In certain circumstances, we will be required to pay cash in lieu of delivering make whole shares unless we obtain stockholder approval to issue such shares.

Subject to specified conditions, on or after October 31, 2022, the PHC Notes are redeemable by us if the closing sale price of the common stock exceeds 275% of the conversion price for a specified period of time and subject to certain conditions upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount, plus any accrued but unpaid interest. On or after October 31, 2023, the PHC Notes are redeemable by us upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount, plus any accrued but unpaid interest, plus a call premium of 130% if redeemed at least six months prior to the maturity date or a call premium of 125% if redeemed within six months of the maturity date.

The Note Purchase Agreement contains customary terms and covenants, including financial covenants, such as operating within an approved budget and achieving minimum revenue and liquidity targets, and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Note Purchase Agreement also contains customary events of default, after which the PHC Notes be due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, judgments against us, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority.

Funding Requirements and Outlook

Our ability to ~~generate revenue~~grow revenues and achieve profitability depends on the successful commercialization and adoption of our Eversense CGM systems by diabetes patients and healthcare providers, along with future product development, regulatory approvals, and post-approval requirements. These activities, including our ongoing focus to grow covered lives through positive insurance payor policy decisions and continued development of Eversense 365-day product, will require significant uses of working capital through ~~2022~~2023 and beyond.

~~Table~~We believe that our existing agreements, including the transactions with PHC, evidence the mutual commitment of ~~Contents~~

PHC and the Company to support the commercialization of Eversense and specifically for the Company, provide the financial resources for manufacturing of Eversense and continued product development. We expect that existing cash, cash equivalents and cash flows from our future operations will be sufficient to meet the Company’s current operating plans ~~through 2023.~~into 2025. As part of our liquidity strategy, we will continue to monitor our capital structure and ~~operating plans~~market conditions going forward and we may access the ~~capital markets~~debt and equity or ~~debt~~equity linked markets for additional funding if the opportunity arises to enhance our capital structure, for changes to our operating plans, for financing strategic initiatives and to provide financial flexibility.

Cash Flows

The following is a summary of cash flows for each of the periods set forth below (in thousands).


	Nine Months Ended				Six Months Ended
	September 30,				June 30,
	2022		2021		2023		2022
Net cash used in operating activities	$	(48,925)	$	(44,275)	$	(37,832)	$	(34,341)
Net cash provided by (used in) investing activities		19,532		(154,993)
Net cash provided by investing activities						25,871		42,108
Net cash provided by financing activities		31,416		227,274		4,719		4,197
Net increase in cash and cash equivalents	$	2,023	$	28,006
Net (decrease) increase in cash and cash equivalents					$	(7,242)	$	11,964

Net cash used in operating activities

Net cash used in operating activities was ~~$48.9~~$37.8 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and consisted of a net loss of $19.1 million, $18.8 million net gain on the exchange of the PHC Notes, a $6.1 million gain on change in the fair value of the 2025 Notes embedded derivative, a net change in operating assets and liabilities of $2.4 million (most notably increases in accounts receivable of $1.2 million and inventory of $1.8 million), partially offset by $3.9 million related to depreciation/amortization and other non-cash items and $4.7 million of stock-based compensation.

Net cash used in operating activities was $34.3 million for the six months ended June 30, 2022 and consisted of an ~~$152.2~~$181.1 million change in fair value of derivatives on convertible notes, a ~~$41.3~~$49.9 million ~~loss~~gain on fair value adjustment of the option, and a net change in operating assets and liabilities of ~~$2.3~~$4.0 million (most notably increases in ~~inventory~~accounts receivable of ~~$0.9~~$2.1 million and ~~a reduction~~prepaid expenses and other assets of ~~accrued expenses of $1.0~~$1.6 million), partially offset by net income of ~~$130.6~~

Table of Contents

$191.0 million, ~~$9.8~~$5.4 million related to depreciation/amortization and ~~other~~ non-cash items and ~~$6.5~~$4.3 million of ~~stock-based~~stock based compensation.

Net cash used in operating activities was $44.3 million for the nine months ended September 30, 2021 and consisted of a net loss of $386.9 million, a net decrease in operating assets and liabilities of $2.6 million (mostly due to an increase in inventory of $2.6 million, higher accounts receivable of $0.7 million, and a $1.0 million decrease in accounts payable, reflecting reduced operational activities, offset by an increase in accrued liabilities of $1.3 million and an increase of $0.3 million in accrued interest) and $0.3 million for gain on extinguishment for the convertible notes and options, offset by $255.2 million due to the change in fair value of derivatives on convertible notes, a $74.8 million loss on fair value adjustment of the option, $7.1 million of stock-based compensation, a $1.7 million net increase in impairment reserves, and $6.7 million related to depreciation/amortization and other non-cash items.

Net cash provided by ~~(used in)~~ investing activities

Net cash provided by investing activities was ~~$19.5~~$25.9 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and primarily consisted of $87.7 million in proceeds from the sale and maturity of marketable securities, partially offset by $61.8 million in purchase of marketable securities.

Net cash provided by investing activities was $42.1 million for the six months ended June 30, 2022 and primarily consisted of proceeds from the sale and maturity of marketable securities.

~~Net cash used in investing activities was $155.0 million for the nine months ended September 30, 2021 and primarily consisted of the purchase of marketable securities.~~

Net cash provided (used in) by financing activities

Net cash provided in financing activities was $4.7 million for the six months ended June 30, 2023, and primarily consisted of $7.4 million in proceeds from issuance of common stock and $14.7 million in proceeds from issuance of the PHC Purchase Warrant, partially offset by $15.7 million for the repayment of the 2023 Notes, $0.1 million for issuance of stock options, and $1.6 million related to the settlement of equity awards.

Net cash provided by financing activities was ~~$31.4~~$4.2 million for the ~~nine~~six months ended ~~September~~June 30, 2022, and primarily consisted of ~~$34.4~~$8.0 million from the issuance of common stock ~~pursuant to the 2021 Sales Agreement~~ and ~~$1.1~~$0.3 million for proceeds related to the exercise of stock options and warrants, partially offset by $2.9 million in repayment of the PPP loan and $1.2 million ~~in tax payments~~ related to the settlement of equity awards.

Net cash provided by financing activities was $227.3 million for the nine months ended September 30, 2021, primarily consisted of $200.4 million from issuance of common stock, proceeds of $22.8 million for the issuance of Series A preferred stock and $4.7 million for proceeds related to the exercise of stock options and warrants.

~~Table of Contents~~

Contractual Obligations

As of ~~September~~June 30, ~~2022,~~2023, there were no material changes in our contractual obligations and commitments from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March ~~1, 2022.~~16, 2023.

ITEM 3: Quantitative and Qualitative Disclosures ~~about~~About Market Risk

Under SEC rules and regulations, because we are considered to be a “smaller reporting company”, we are not required to provide the information required by this item in this Quarterly Report on Form 10-Q.

ITEM 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the assistance of our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~September~~June 30, ~~2022.~~2023. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the periodic reports filed with the SEC is accumulated and communicated to our management, including our principal executive, financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2022,~~2023, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Table of Contents

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended ~~September~~June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II: OTHER INFORMATION

ITEM 1: LegalProceedings

From time to time, we are subject to litigation and claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties.

In February 2021, wethe Company received notice and accepted service of a civil complaint that had been filed in the Western District of Texas and styled Carew ex rel. United States v. Senseonics, Inc., No. SA20CA0657DAE. The complaint was filed by a relator under seal in May 2020 pursuant to the qui tam provisions in the federal False Claims Act. Prior to the unsealing of the complaint, the government declined to intervene in the case. The case, therefore, is being pursued only by the ~~relator.~~relator and his counsel. The complaint alleges the Company’s marketing practices with physicians for its product, Eversense ~~Continuous Glucose Monitoring System,~~CGM system, violated the False Claims Act, 31 U.S.C. § 3729 and the Texas Medicaid Fraud Prevention Law, Tex. Hum Res. Code § 36.002. ~~Outside counsel, on behalf of~~The court granted the ~~Company, filed a~~Company’s motion to dismiss the ~~action for failure to state a claim. On~~complaint on March 31, 2022 ~~the court granted the motion to dismiss the action without prejudice which allows~~but permitted the plaintiff ~~60 days~~ to ~~refile~~file an amended complaint. The court dismissed the ~~complaint. On May 27, 2022, the plaintiff filed~~

~~Table of Contents~~

an amended complaint and entered judgment in favor of Senseonics Holdings, Inc. on ~~July 11, 2022, the Company~~March 30, 2023. The relator filed a ~~motion~~notice of appeal to ~~dismiss~~ the ~~action~~United States Court of Appeals for ~~failure to state a claim. Briefing~~the Fifth Circuit on ~~the motion was completed in August 2022~~April 28, 2023 and the ~~motion is before~~parties are briefing the ~~court for consideration and decision.~~

As previously reported, since February 2021 the Company has been in communication with the Italian Data Protection Authority, or Garante, with respect to the Garante’s review of the Company’s unintended disclosure of certain Italian user e-mail addresses to other users in Italy and other GDPR-related obligations of the Company. On July 29, 2022, the Garante delivered its decision to the Company finding that the Company had breached certain provisions of the GDPR, assessing a fine of EUR 45,000 and directing the Company to make certain changes within three months to its European privacy notice, including simplifications to the privacy notice and the inclusion of certain references. In accordance with the Garante’s decision, the Company was permitted to settle the matter for EUR 22,500 if it made the payment within 30 days, undertook to update the privacy notice and did not appeal the decision. The Company made such payment, confirmed it would not appeal the decision and released a new privacy notice intended to comply with the directive of the Garante. It is possible under the applicable process that the Garante may, in the future, follow up further regarding the Company’s corrective measures.

appeal.

ITEM 1A: Risk Factors

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. ~~Other than the risk factors~~Except as set forth below, our risk factors as of the date of this Quarterly Report on Form 10-Q have not changed materially from those described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K.

~~The ongoing military action by Russia~~Our recent exchange agreements with certain holders of our 2025 Notes will result in ~~Ukraine~~additional dilution and could ~~have negative impact on the global economy which could materially adversely affect~~cause our ~~business, operations, operating results and financial condition.~~stock price to decline.

On ~~February 24, 2022, Russian forces launched significant military action against Ukraine,~~August 10, 2023, we entered into a series of exchange agreements with certain holders of our 2025 Notes, pursuant to which these noteholders have agreed to exchange an aggregate principal amount of up to $30.8 million of 2025 Notes for a combination of cash and ~~sustained conflict and disruption~~newly issued shares of common stock. The number of shares we issue in connection with these exchanges will be based on the region is possible. The impact to Ukraine as well as actions taken by other countries, including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the U.S. and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and actions taken by Russia in response to such sanctions, and each country’s potential response to such sanctions, tensions, and military actions could adversely affect the global economy and financial markets and thus could affect our business, operations, operating results and financial condition as well as theaverage price of our common stock over the ensuing 15 trading day period, subject to a total limit of 10% of our outstanding shares of common stock outstanding as of August 10, 2023. The number of shares that we issue in connection with these exchanges will exceed the number of shares currently underlying the 2025 Notes being exchanged, resulting in incremental dilution to our common stockholders. Additionally, the shares that we issue to these noteholders will generally be eligible for immediate resale in the open market without restriction, which could potentially increase the number of shares sold over the near term and could cause our ~~ability~~stock price to ~~raise additional capital when needed on acceptable terms. The extent and duration~~decline. Additionally, if as result of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks describeddeclines in our ~~Annual Report on Form 10-K.~~

~~While our suppliers~~stock price, the total amount of 2025 Notes repurchased in these exchanges is less than we anticipate, we may ~~source certain raw materials~~not realize the full benefits that we anticipate from ~~Russia~~these transactions, including the overall level of debt reduction and ~~Ukraine, to date we have not been notified that~~ the ~~supply~~elimination of ~~these materials has been significantly impacted by~~restrictive covenants under the conflict. We continue to monitor the situation closely and are proactively assessing and evaluating alternative sources to bolster supply of these materials moving forward, in addition to working closely with our suppliers in any product re-qualification that may be required. Revenue relating to products manufactured from raw materials sourced from this region does not constitute a material portion of our business. Further, there is uncertainty regarding the ultimate impact the conflict, including any escalation or further expansion of the conflict’s current scope, will have on our customers, the global economy, supply chains, logistics, fuel prices, raw material pricing and our business.

~~Surging natural gas and electricity costs in Europe poses a threat to our contract manufacturers ability to maintain operations in Europe which can adversely affect or business supply chain~~

Europe’s energy crisis driven by the impacts of Russia’s military action in Ukraine is quickly soaring and causing extreme disruption to the manufacturing industry across the continent. The reduced natural gas supply to Europe has resulted in higher gas costs which have been unsustainable for energy intensive companies that operate across Europe. Several manufacturers have shut down, suspended or reduced operations amidst the skyrocketing prices. Several of our suppliers operate in Europe and may be impacted by the energy crisis as the result of increased production costs.

Across Europe, these energy constraints could result in nations or regions enacting emergency energy related policies, limiting energy availability for manufacturers. The impact of these developments cannot be predicted with certainty, however, any such production constraints could further exacerbate an already ailing supply chain and could have a material, adverse effect on our operations and our ability to source materials that are required to manufacture our products. We continue to monitor the situation closely and continue to have discussions with our suppliers to determine

~~Table of Contents~~

whether there may be any uncertainty with regards to our ability to source materials that are required to manufacture our products. If the energy crisis or other supply chain challenges impact our ability to obtain raw materials on a timely basis or without significant increases in costs, our financial results and business operations may be adversely affected.

Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as the COVID-19 pandemic, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, which have in the past and may in the future negatively impact our business and financial performance.

~~The global economy, including credit and financial markets, has experienced extreme volatility and disruptions,~~

including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability. For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets. The Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.2025 Notes.

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

Not applicable.

ITEM 3: Defaults Upon Senior Securities

Not applicable.

ITEM 4: Mine Safety Disclosures

Not applicable.

Table of Contents

ITEM 5: Other Information

~~None.~~2025 Notes Exchange Agreements

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. 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.

The foregoing description of the Exchange Agreements and the Exchanges contemplated thereby is not complete and is subject to, and qualified in its entirety by reference to, the form of Exchange Agreement, a copy of which is filed with this Quarterly Report as Exhibit 10.1 and the terms of which are incorporated herein by reference.

The Exchange Shares were offered, and will be sold, pursuant to the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) as a transaction by an issuer not involving a public offering.

At-the-Market Offering Program

On August 10, 2023, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Goldman Sachs & Co. LLC, which will enable the Company to issue and sell shares of Common stock in one or more negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, for a maximum aggregate offering amount of up to $106.6 million (the “ATM Program”).

3940

Table of Contents

ITEM 6: Exhibits

The exhibits listed on the Exhibit Index hereto are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.


Exhibit No.		Document

3.1		Amended and Restated Certificate of Incorporation of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on March 23, 2016).

3.2		Amended and Restated Bylaws of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on March 23, 2016).

3.3		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2018 (File No. 001-37717), filed with the Commission on August 8, 2018).

3.4		Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on August 18, 2020).

3.5		Certificate of ~~Designation~~Amendment to Amended and Restated Certificate of ~~Preferences, Rights and Limitations~~Incorporation of ~~Series B Convertible Preferred Stock~~the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717) filed on October 26, 2020).

3.6		Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37717) filed with the Commission on November 8, 2022).

~~3.6~~3.7		Amendment to Bylaws of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K (File No. 001-37717) filed with the Commission on March 5, 2021).

~~10.1+~~10.1*		~~Amended and Restated Employment~~Form of Exchange Agreement, ~~with Frederick Sullivan.~~dated August 10, 2023

~~10.2+~~		~~Transition and Release Agreement with Nick Tressler.~~

31.1*		Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act.

31.2*		Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act.

32.1**		Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act.

101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document)

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

+	~~Indicates management contract or compensatory plan.~~

4041

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SENSEONICS HOLDINGS, INC.


Date: ~~November 8, 2022~~August 10, 2023	By:	/s/Rick Sullivan
		Rick Sullivan
		Chief Financial Officer
		(Principal Financial Officer)

4142



	Level 3
	Instruments
December 31, 2021	$	224,037
Gain on fair value adjustment of option		(41,333)
Gain on change in fair value of derivatives		(85,211)
Financial asset (gain) impairment cost, net		138
Change in fair value hierarchy classification		(5,817)
September 30, 2022	$	91,814