Senseonics Holdings, Inc. (SENS) Bundle
Understanding Senseonics Holdings, Inc. (SENS) Revenue Streams
Understanding Senseonics Holdings, Inc.’s Revenue Streams
The total revenue for the nine months ended September 30, 2024, was $14.2 million, a slight decrease from $14.4 million for the same period in 2023, marking a 1.4% year-over-year decline.
For the three months ended September 30, 2024, total revenue amounted to $4.3 million, down from $6.1 million in the previous year, reflecting a 29.9% decrease.
Breakdown of Primary Revenue Sources
Revenue sources can be categorized into two primary geographical markets:
| Region | Q3 2024 Revenue ($000) | Q3 2023 Revenue ($000) | YTD 2024 Revenue ($000) | YTD 2023 Revenue ($000) |
|---|---|---|---|---|
| United States | $2,382 (55.9%) | $3,930 (64.5%) | $9,089 (64.1%) | $7,885 (54.9%) |
| Outside of the United States | $1,881 (44.1%) | $2,167 (35.5%) | $5,086 (35.9%) | $6,475 (45.1%) |
| Total | $4,263 (100%) | $6,097 (100%) | $14,175 (100%) | $14,360 (100%) |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate from Q3 2023 to Q3 2024 indicates a significant decline of 29.9%. For the nine-month period, the revenue decreased by 1.4%, reflecting challenges in sales projections and inventory management.
Contribution of Different Business Segments to Overall Revenue
Revenue from related parties, primarily Ascensia, represented a substantial portion of total revenue:
- For the nine months ended September 30, 2024, revenue from related parties was $11.9 million, down from $13.2 million in 2023.
- This indicates a 9.9% decrease in related party revenue.
Analysis of Significant Changes in Revenue Streams
The decline in revenue is attributed to:
- Sales projection adjustments made by Ascensia.
- Planned winddown of E3 inventory in preparation for transitioning to the Eversense 365 CGM system.
As a result, gross profit for the nine months ended September 30, 2024, was ($3.4 million) compared to $2.0 million in 2023, resulting in a gross margin of (24.1%) in 2024 versus 13.9% in 2023.
A Deep Dive into Senseonics Holdings, Inc. (SENS) Profitability
A Deep Dive into Senseonics Holdings, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the total revenue was $14.175 million, a slight decrease from $14.360 million during the same period in 2023. The cost of sales increased to $17.593 million in 2024, compared to $12.358 million in 2023, resulting in a gross loss of ($3.418 million) for 2024, compared to a gross profit of $2.002 million in 2023. This led to a gross margin of (24.1%) in 2024, down from 13.9% in 2023.
The operating loss for the nine months ended September 30, 2024, was ($60.571 million), slightly higher than the ($58.599 million) operating loss in 2023. The net loss for the same period was ($63.140 million), compared to ($43.202 million) in 2023.
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | $14.175 million | $14.360 million |
| Cost of Sales | $17.593 million | $12.358 million |
| Gross Profit (Loss) | ($3.418 million) | $2.002 million |
| Gross Margin | (24.1%) | 13.9% |
| Operating Loss | ($60.571 million) | ($58.599 million) |
| Net Loss | ($63.140 million) | ($43.202 million) |
Trends in Profitability Over Time
Over the past year, the company's profitability has seen a downward trend, primarily influenced by increased costs associated with the transition to the Eversense 365 CGM system. The gross margin has significantly decreased due to one-time charges of $4.8 million related to this transition.
Comparison of Profitability Ratios with Industry Averages
Comparing the gross margin of (24.1%) in 2024 with industry averages, which typically range from 50% to 70% for medical technology companies, indicates significant underperformance. Operating margins also reflect this trend, with the operating loss margin at (427.5%) for 2024 against a healthier industry benchmark of 15% to 25%.
Analysis of Operational Efficiency
The increase in operating expenses has been notable, with research and development expenses totaling $31.784 million for the nine months ended September 30, 2024, down from $38.003 million in 2023. Selling, general, and administrative expenses rose to $25.369 million in 2024 from $22.598 million in 2023, reflecting ongoing operational challenges.
| Expense Type | 2024 | 2023 |
|---|---|---|
| Research and Development Expenses | $31.784 million | $38.003 million |
| Selling, General, and Administrative Expenses | $25.369 million | $22.598 million |
The operational efficiency is further impacted by the need for cost management strategies to address rising expenses while attempting to stabilize revenue streams amidst transitions in product offerings and market strategies.
Debt vs. Equity: How Senseonics Holdings, Inc. (SENS) Finances Its Growth
Debt vs. Equity: How Senseonics Holdings, Inc. Finances Its Growth
Overview of the Company's Debt Levels:
As of September 30, 2024, the company's total debt stood at approximately $54.4 million, which includes:
- 2025 Notes: $20.4 million (principal amount)
- Loan and Security Agreement: $34.5 million (carrying amount)
The company has both long-term and short-term debt components. The Loan and Security Agreement includes an initial term loan of $25.0 million, with additional tranches of $10.0 million and $15.0 million available upon meeting certain conditions.
Debt-to-Equity Ratio and Comparison to Industry Standards:
The debt-to-equity ratio as of September 30, 2024, is approximately -3.18, calculated from total liabilities of $96.3 million and total stockholder's equity (deficit) of ($17.2 million). This ratio is notably lower than the industry average of around 0.4 for similar biotech firms, indicating a higher reliance on debt financing.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity:
On September 8, 2023, the company entered into a Loan and Security Agreement with Hercules Capital, Inc., providing up to $50.0 million in senior secured term loans. The initial $25.0 million was funded immediately, with subsequent tranches funded in January 2024.
The company's credit rating has not been explicitly mentioned, but the ability to secure loans indicates a level of confidence from lenders despite the company's ongoing financial challenges.
How the Company Balances Between Debt Financing and Equity Funding:
Senseonics Holdings has funded its operations primarily through equity financing, issuing preferred stock, common stock, and convertible notes. As of September 30, 2024, the total stockholders’ equity was ($17.2 million), reflecting an accumulated deficit of $932.4 million.
The company has also engaged in equity distribution agreements, allowing it to issue up to $55.0 million in common stock. In October 2024, Senseonics entered into a securities purchase agreement to issue approximately 45.7 million shares of common stock for gross proceeds of $16.0 million.
| Debt Component | Amount (in millions) | Maturity Date | Interest Rate |
|---|---|---|---|
| 2025 Notes | $20.4 | January 15, 2025 | 5.25% |
| Loan and Security Agreement | $34.5 | September 1, 2027 | 9.90% |
| Total Debt | $54.4 |
Assessing Senseonics Holdings, Inc. (SENS) Liquidity
Assessing Senseonics Holdings, Inc. Liquidity
Current and Quick Ratios
The current ratio as of September 30, 2024, stands at 1.11, calculated using current assets of $39.4 million and current liabilities of $35.5 million. The quick ratio is 0.91, derived from current assets minus inventory, resulting in $30.4 million in quick assets over current liabilities of $35.5 million.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is $3.9 million, representing a decrease from $10.3 million as of December 31, 2023. This decline reflects increased operational expenses and investment in marketable securities.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ending September 30, 2024, was ($46.2 million), compared to ($55.1 million) for the same period in 2023. Key components include:
- Net loss of $63.1 million (2024) vs. $43.2 million (2023)
- Stock-based compensation of $7.1 million (2024) compared to $6.7 million (2023)
- Depreciation and amortization of $7.2 million (2024)
Investing activities resulted in cash used of ($14.8 million), while financing activities provided $12.8 million. The net decrease in cash for the period was ($48.3 million).
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company reported unrestricted cash, cash equivalents, and marketable securities totaling $74.5 million. However, there are concerns regarding liquidity as substantial doubt exists about the company's ability to continue as a going concern beyond the next year without additional funding.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | (46.2) | (55.1) |
| Investing Activities | (14.8) | 53.5 |
| Financing Activities | 12.8 | 21.5 |
| Net Cash Decrease | (48.3) | 19.9 |
The company's reliance on additional funding and the significant operational losses indicate a critical focus area for investors regarding liquidity and solvency moving forward.
Is Senseonics Holdings, Inc. (SENS) Overvalued or Undervalued?
Valuation Analysis
Understanding the valuation of a company involves analyzing several key financial ratios and metrics. For this company, we will look into the Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated as the current share price divided by the earnings per share (EPS). As of the latest data, the share price is approximately $0.35. The net loss per share for the nine months ended September 30, 2024, is $(0.10). Therefore, the P/E ratio is not applicable as the company is currently reporting a loss.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated as the market price per share divided by the book value per share. The total stockholders' deficit is $(17.2 million), and there are approximately 620.9 million shares outstanding. The book value per share is approximately $(0.03), leading to a P/B ratio of N/A since the book value is negative.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we need the enterprise value, which is calculated as market capitalization plus total debt minus cash and cash equivalents. The total liabilities amount to $113.5 million, and cash equivalents are $27.4 million. Therefore, the enterprise value is calculated as follows:
- Market Capitalization = Share Price Shares Outstanding = $0.35 620.9 million = $217.3 million
- Enterprise Value = Market Capitalization + Total Liabilities - Cash = $217.3 million + $113.5 million - $27.4 million = $303.4 million
- EBITDA for the nine months ended September 30, 2024, is calculated as Operating Loss + Depreciation + Amortization. The Operating Loss is $(60.6 million), and depreciation is $0.7 million. Thus, EBITDA is approximately $(59.9 million).
As a result, the EV/EBITDA ratio is also not applicable due to the negative EBITDA.
Stock Price Trends
Over the last 12 months, the stock price has shown significant volatility. Starting the year at approximately $0.75, it has decreased to $0.35, reflecting a decline of about 53%. This decline correlates with ongoing operational losses and challenges in revenue generation.
Dividend Yield and Payout Ratios
Currently, the company does not pay any dividends, resulting in a dividend yield of 0%. The company has not established a payout ratio as it has not generated positive earnings to distribute to shareholders.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a "Hold" rating, reflecting caution due to the company's financial health and ongoing operational challenges. Analysts are closely monitoring the transition to the Eversense 365 CGM system and its potential impact on future revenue.
| Valuation Metric | Value |
|---|---|
| Current Share Price | $0.35 |
| Net Loss per Share | $(0.10) |
| P/E Ratio | N/A |
| P/B Ratio | N/A |
| Enterprise Value | $303.4 million |
| EBITDA | $(59.9 million) |
| EV/EBITDA Ratio | N/A |
| 12-Month Stock Price Change | -53% |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Senseonics Holdings, Inc. (SENS)
Key Risks Facing Senseonics Holdings, Inc.
Overview of Risks:
Senseonics Holdings, Inc. faces several internal and external risk factors that could significantly impact its financial health in 2024.
Industry Competition
The company operates in a highly competitive industry, with major players such as Abbott, Medtronic, and Dexcom. Competition is expected to intensify, which could affect pricing strategies and market share. For the nine months ended September 30, 2024, total revenue decreased to $14.2 million, a slight decline from $14.4 million in the same period in 2023, attributed to sales adjustments and increased competition.
Regulatory Changes
The medical device industry is subject to stringent regulatory scrutiny, which can impact product approval timelines. The transition from the Eversense E3 to the Eversense 365 system incurred $4.8 million in one-time charges, reflecting the costs associated with regulatory compliance.
Market Conditions
Changes in market conditions, such as fluctuations in demand for continuous glucose monitoring systems, can affect revenue. The company's gross profit margin for the nine months ended September 30, 2024, was (24.1%), a decrease from 13.9% in the prior year.
Operational Risks
Operational challenges, including supply chain disruptions, can affect production capabilities. As of September 30, 2024, the company reported an accumulated deficit of $932.4 million.
Financial Risks
The company has experienced significant financial losses, reporting a net loss of $63.1 million for the nine months ended September 30, 2024. The net cash used in operating activities during the same period was $46.2 million.
Mitigation Strategies
To address these risks, the company has focused on enhancing its product offerings and maintaining regulatory compliance. As of September 30, 2024, the company had unrestricted cash, cash equivalents, and marketable securities totaling $74.5 million, which may provide a buffer against operational disruptions.
| Risk Type | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition affecting pricing and market share. | Revenue: $14.2 million (2024) |
| Regulatory Changes | Compliance costs related to product transition. | One-time charges: $4.8 million |
| Market Conditions | Fluctuations in demand for glucose monitoring systems. | Gross Margin: (24.1%) |
| Operational Risks | Supply chain disruptions affecting production. | Accumulated Deficit: $932.4 million |
| Financial Risks | Significant financial losses impacting cash flow. | Net Loss: $63.1 million (2024) |
Future Growth Prospects for Senseonics Holdings, Inc. (SENS)
Future Growth Prospects for Senseonics Holdings, Inc.
Analysis of Key Growth Drivers
The company is focusing on significant product innovations, particularly with the transition from the Eversense E3 to the Eversense 365 continuous glucose monitoring (CGM) system. The Eversense 365 system has received FDA 510(k) clearance, which is expected to enhance marketability and expand user adoption. The company anticipates that the new system will lead to improved patient outcomes and greater market share.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue was $14.175 million, a slight decrease from $14.360 million in the same period of 2023. The revenue breakdown shows that 84% of total revenue came from a single customer, Ascensia, highlighting the dependency on this partnership. Revenue projections indicate potential growth as the Eversense 365 system gains traction in the market, with a forecasted increase in sales volume and improved gross margin over the next fiscal periods.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has a pivotal partnership with Ascensia, which is expected to continue driving sales through its established distribution channels. Additionally, Senseonics entered into a securities purchase agreement on October 24, 2024, to issue and sell 45,714,286 shares of common stock, raising approximately $15.0 million to support ongoing operations and product development. This capital infusion is critical for funding research and development efforts, as well as marketing initiatives for the Eversense 365 system.
Competitive Advantages That Position the Company for Growth
Senseonics holds a competitive advantage with its proprietary long-term implantable CGM technology, which differentiates it from traditional glucose monitoring devices. The Eversense system's unique features, such as a long sensor life and real-time glucose monitoring, are expected to appeal to patients seeking more convenient diabetes management solutions. Furthermore, the company reported an unrestricted cash balance of $74.5 million as of September 30, 2024, which provides a solid financial foundation for future investments.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $4,263 million | $6,097 million | ($1,834 million) |
| Net Loss | ($23,976 million) | ($24,103 million) | $127 million |
| Research & Development Expenses | $10,546 million | $12,769 million | ($2,223 million) |
| Cash and Cash Equivalents | $27,421 million | $55,759 million | ($28,338 million) |
Conclusion on Growth Opportunities
Overall, the focus on product innovation, strategic partnerships, and a solid financial position provides a pathway for future growth. The company's ability to capitalize on its unique market position and enhance its product offerings will be crucial in navigating the competitive landscape in the diabetes management sector.
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Resources:
- Senseonics Holdings, Inc. (SENS) Financial Statements – Access the full quarterly financial statements for Q1 2024 to get an in-depth view of Senseonics Holdings, Inc. (SENS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Senseonics Holdings, Inc. (SENS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.