# Sensus Healthcare, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Sensus Healthcare, Inc.](/companies/srts.md) (CIK 1494891)
- Form: 10-Q
- Filed: 2023-11-13
- Accepted by EDGAR: Nov 13, 2023, 17:22 ET
- Period: 2023-09-30
- Accession: 0001213900-23-086237
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1494891/000121390023086237/f10q0923_sensus.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1494891/000121390023086237/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $3.9m | us-gaap:Revenues |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $11.8m | us-gaap:Revenues |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $2.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $6.2m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $1.1m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $3.0m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$1.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$6.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$125.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | −$1.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$1.5m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$3.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.09 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.23 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.09 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.23 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 16,270,403 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 16,255,263 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$4.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $229.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $27.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $20.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $45.9m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $50.5m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $5.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $6.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $44.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 13,964 characters.

You should read the following discussion and analysis in conjunction with the information set forth within the financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and with our Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Annual Report.

Overview

Sensus is a medical device company committed to providing highly effective, non-invasive and cost-effective treatments for both oncological and non- oncological skin conditions.

Segment Information

The Company manages its business globally within one reportable segment, which is consistent with how our management reviews the business, prioritizes investment and resource allocation decisions and assesses operating performance.

### Results of Operations

*(in thousands, except shares and per share data)*

|  | For the Three Months Ended September 30, 2023 | 2022 | For the Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| **Revenues** | $3,898 | $9,010 | $11,838 | $31,428 |
| **Cost of sales** | 1,909 | 3,136 | 5,609 | 10,150 |
| **Gross profit** | 1,989 | 5,874 | 6,229 | 21,278 |
| **Operating expenses** |  |  |  |  |
| Selling and marketing | 1,290 | 1,807 | 4,983 | 4,753 |
| General and administrative | 1,511 | 1,160 | 4,204 | 3,564 |
| Research and development | 1,083 | 746 | 3,001 | 2,302 |
| **Total operating expenses** | 3,884 | 3,713 | 12,188 | 10,619 |
| **Income (loss) from operations** | (1,895) | 2,161 | (5,959) | 10,659 |
| **Other income (expense):** |  |  |  |  |
| Gain on sale of assets | 42 | - | 42 | 12,779 |
| Interest income | 277 | 119 | 764 | 147 |
| Interest expense | - | (1) | - | (2) |
| **Other income, net** | 319 | 118 | 806 | 12,924 |
| **Income (loss) before income tax** | (1,576) | 2,279 | (5,153) | 23,583 |
| Provision for (benefit from) income taxes | (125) | 450 | (1,428) | 2,168 |
| **Net income (loss)** | $(1,451) | $1,829 | $(3,725) | $21,415 |

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

**Revenues.** Revenues were $3.9 million for the three months ended September 30, 2023 compared to $9.0 million for the three months ended September 30, 2022, a decrease of $5.1 million, or 56.7%. The decrease was primarily driven by the lower number of SRT units sold, as customers continued to defer purchases of our product and lower sales to a large customer in the three months ended September 30, 2023.

**Cost of sales.** Cost of sales was $1.9 million for the three months ended September 30, 2023 compared to $3.1 million for the three months ended September 30, 2022, a decrease of $1.2 million, or 38.7%. The decrease in cost of sales was primarily related to the decrease in sales in the three months ended September 30, 2023.

**Gross profit.** Gross profit was $2.0 million for the three months ended September 30, 2023 compared to $5.9 million for the three months ended September 30, 2022, a decrease of $3.9 million, or 66.1%. Our overall gross profit percentage was 51.3% in the three months ended September 30, 2023 compared to 65.6% in the corresponding period in 2022. The decrease in gross profit was primarily driven by the lower number of units sold and higher costs charged by vendors in the three months ended September 30, 2023.

**Selling and marketing.** Selling and marketing expense was $1.3 million for the three months ended September 30, 2023 compared to $1.8 million for the three months ended September 30, 2022, a decrease of $0.5 million, or 27.8%. The decrease was primarily attributable to the decrease in marketing initiatives, decrease in tradeshow costs and commission expense.

**General and administrative.** General and administrative expense was $1.5 million for the three months ended September 30, 2023 compared to $1.2 million for the three months ended September 30, 2022, an increase of $0.3 million, or 25.0%. The net increase in general and administrative expense was primarily due to higher professional fees and bank fees.

**Research and development.** Research and development expense was $1.1 million for the three months ended September 30, 2023 compared to $0.7 million for the three months ended September 30, 2022, an increase of $0.4 million, or 57.1%. The increase was primarily due to expenses related to a project to develop a drug delivery system for an aesthetic project. The Company expects the completion of this project by the end of 2023.

**Other income.** Other income of $0.3 million for the three months ended September 30, 2023 and $0.1 million for the three months ended September 30, 2022 relate primarily to interest income.

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

**Revenues.** Revenues were $11.8 million for the nine months ended September 30, 2023 compared to $31.4 million for the nine months ended September 30, 2022, a decrease of $19.6 million, or 62.4%. The decrease was primarily driven by the lower number of SRT units sold, as customers continued to defer purchases of our product and lower sales to a large customer in the nine months ended September 30, 2023.

**Cost of sales.** Cost of sales was $5.6 million for the nine months ended September 30, 2023 compared to $10.2 million for the nine months ended September 30, 2022, a decrease of $4.6 million, or 45.1%. The decrease in cost of sales was primarily related to the decrease in sales in the nine months ended September 30, 2023.

**Gross profit.** Gross profit was $6.2 million for the nine months ended September 30, 2023 compared to $21.3 million for the nine months ended September 30, 2022, a decrease of $15.1 million, or 70.9%. Our overall gross profit percentage was 52.5% in the nine months ended September 30, 2023 compared to 67.8% in the corresponding period in 2022. The decrease in gross profit was primarily driven by the lower number of units sold and higher costs charged by vendors in the nine months ended September 30, 2023.

**Selling and marketing.** Selling and marketing expense was $5.0 million for the nine months ended September 30, 2023 compared to $4.8 million for the nine months ended September 30, 2022, an increase of $0.2 million, or 4.2%. The increase was primarily attributable to the increase in tradeshow expenses and an increase in headcount, offset by reduction in commission and advertising expenses.

**General and administrative.** General and administrative expense was $4.2 million for the nine months ended September 30, 2023 compared to $3.6 million for the nine months ended September 30, 2022, an increase of $0.6 million, or 16.7%. The net increase in general and administrative expense was primarily due to higher professional fees and bank fees.

**Research and development.** Research and development expense was $3.0 million for the nine months ended September 30, 2023 compared to $2.3 million for the nine months ended September 30, 2022, an increase of $0.7 million, or 30.4%. The increase was primarily due to expenses related to a project to develop a drug delivery system for an aesthetic project. The Company expects the completion of this project by the end of 2023.

**Other income.** Other income of $0.8 million for the nine months ended September 30, 2023 and $12.9 million for the nine months ended September 30, 2022, a decrease of $12.1 million, or 93.8%. The decrease relates to the sale of the Sculptura assets during the nine months ended September 30, 2022.

Financial Condition

The following discussion summarizes significant changes in assets and liabilities. Please see the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 contained in Part I, Item 1 of this filing.

Assets

Cash and cash equivalents at September 30, 2023 decreased $5.0 million from December 31, 2022. See *Cash Flows* for details on the change in cash and cash equivalents during the nine months ended September 30, 2023.

Accounts receivable at September 30, 2023 decreased $10.4 million from December 31, 2022, primarily due to collections of receivables and the decrease in sales in the nine months ended September 30, 2023.

Inventories at September 30, 2023 increased $9.7 million from December 31, 2022, primarily due to an increase in completion of finished goods offset by shipments of units sold in the nine months ended September 30, 2023.

Prepaid inventory at September 30, 2023 decreased $2.3 million from December 31, 2022, primarily due to the completion of finished goods from inventory deposits paid to a manufacturer in the nine months ended September 30, 2023.

Liabilities

There were no borrowings under our revolving lines of credit at September 30, 2023 or December 31, 2022.

Liquidity and Capital Resources

The Company’s liquidity position and capital requirements may be impacted by a number of factors, including the following:

- ability to generate and increase revenue;
- fluctuations in gross margins, operating expenses and net results; and
- financial market instability or disruptions to the banking system due to bank failures

The Company’s primary short-term capital needs, which are subject to change, include expenditures related to:

- expansion of sales and marketing activities; and
- expansion of research and development activities.

Sensus’s management regularly evaluates cash requirements for current operations, commitments, capital requirements and business development transactions, and may seek to raise additional funds for these purposes in the future. However, there can be no assurance that it will be able to raise such funds or the terms on which such funds may be raised, if at all.

Cash flows

The following table provides a summary of cash flows for the periods indicated:

*(in thousands)*

| Net cash provided by (used in): | For the Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Operating activities | $(4,813) | $8,701 |
| Investing activities | (187) | 14,851 |
| Financing activities | (33) | (494) |
| **Total** | $(5,033) | $23,058 |

Net cash used in operating activities was approximately $4.8 million for the nine months ended September 30, 2023, consisting of net loss of approximately $3.7 million, a decrease in net working capital of approximately $0.6 million, and non-cash charges of approximately $0.5 million. Cash flows provided by operating activities primarily include the receipt of revenues offset by the payment of operating expenses incurred in the normal course of business. Non-cash items consisted of deferred income taxes, stock compensation expense, provision for product warranties, gain on sale of assets and depreciation and amortization. Net cash provided by operating activities was approximately $8.7 million for the nine months ended September 30, 2022, consisting of net income of approximately $21.4 million and an increase in net operating assets of approximately $1.0 million, offset by non-cash charges of approximately $13.7 million. Cash flows provided by operating activities primarily include the receipt of revenues offset by the payment of operating expenses incurred in the normal course of business. Non-cash charges consisted of a gain on asset sale, deferred income taxes, stock compensation expense, depreciation and amortization, and a provision for product warranties.

Net cash used in investing activities for the nine months ended September 30, 2023 reflected $0.2 million of purchases of property and equipment, partially offset by $42 thousand of proceeds from the sale of assets. Net cash provided by investing activities for the nine months ended September 30, 2022 reflected $14.9 million of proceeds from the sale of assets, partially offset by purchases of property and equipment.

Net cash provided in financing activities for the nine months ended September 30, 2023 primarily reflected $46 thousand of exercised stock options, offset by $79 thousand used for the repurchase of common stock and withholding taxes on stock-based compensation. Net cash used in financing activities for the nine months ended September 30, 2022 primarily reflected $1.2 million for actions including the repurchase of common stock, the withholding of taxes on stock-based compensation, and the prepayment of a loan payable, offset by approximately $0.7 million provided by exercised stock options.

Indebtedness

As discussed in Note 4, *Debt*, to the financial statements, in September 2023, the Company entered into the new Credit Facility with Comerica, replacing the prior facility with SVB. Additional information regarding the Credit Facility, including the amounts that may be borrowed under the Credit Facility and the covenants included in and other terms of the Credit Facility, is included in the Company’s Report on Form 8-K, filed with the Securities and Exchange Commission on September 14, 2023.

Contractual Obligations and Commitments

Please see Note 7, *Commitments and Contingencies*, to the financial statements.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ significantly from those estimates. For a summary of these and additional accounting policies see Note 1, *Organization and Summary of Significant Accounting Policies,* to the financial statements. In addition, see *Critical Accounting* Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1, *Organization and Summary of Significant Accounting Policies*, in the 2022 Annual Report for further information.

## Controls and procedures

As filed, 927 characters.

### Evaluation of Disclosure Control and Procedures

As of September 30, 2023, the end of the period covered by this Form 10-Q, our management, including our Chief Executive Officer and Chief Financial Officer, 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). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer each concluded that, as of September 30, 2023, the end of the period covered by this Form 10-Q, we maintained effective disclosure controls and procedures.

### Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 561 characters.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2022 Annual Report, as updated in our subsequent quarterly reports. The risks described in our 2022 Annual Report and our subsequent quarterly reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

Filed Nov 13, 2023.
Source: SEC EDGAR, the filing index for accession 0001213900-23-086237. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.