# Sensus Healthcare, Inc.: Form 10-Q for the period ended Jun 30, 2024

- Company: [Sensus Healthcare, Inc.](/companies/srts.md) (CIK 1494891)
- Form: 10-Q
- Filed: 2024-08-13
- Accepted by EDGAR: Aug 13, 2024, 14:59 ET
- Period: 2024-06-30
- Accession: 0001213900-24-068165
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1494891/000121390024068165/ea0210678-10q_sensus.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1494891/000121390024068165/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $3.8m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-01-01 to 2024-06-30 | $7.8m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $5.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-01-01 to 2024-06-30 | $12.1m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $866.0k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $1.8m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | $2.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | $4.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $579.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $1.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $1.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | $3.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.10 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | $0.24 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.10 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | $0.24 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 16,333,481 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 16,325,764 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$4.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $236.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $19.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $54.5m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $58.2m | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $4.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $5.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $52.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 12,908 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 2023 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 June 30, 2024 | 2023 | For the Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Revenues** | $9,239 | $4,527 | $19,902 | $7,941 |
| **Cost of sales** | 3,816 | 1,908 | 7,817 | 3,700 |
| **Gross profit** | 5,423 | 2,619 | 12,085 | 4,241 |
| **Operating expenses** |  |  |  |  |
| Selling and marketing | 996 | 1,595 | 2,266 | 3,693 |
| General and administrative | 1,579 | 1,329 | 3,158 | 2,693 |
| Research and development | 866 | 822 | 1,792 | 1,920 |
| **Total operating expenses** | 3,441 | 3,746 | 7,216 | 8,306 |
| **Income (loss) from operations** | 1,982 | (1,127) | 4,869 | (4,065) |
| **Other income:** |  |  |  |  |
| Interest income | 209 | 245 | 423 | 488 |
| **Other income, net** | 209 | 245 | 423 | 488 |
| **Income (loss) before income tax** | 2,191 | (882) | 5,292 | (3,577) |
| Provision for (benefit from) income taxes | 579 | (502) | 1,406 | (1,303) |
| **Net income (loss)** | $1,612 | $(380) | $3,886 | $(2,274) |

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

**Revenues.** Revenues were $9.2 million for the three months ended June 30, 2024 compared to $4.5 million for the three months ended June 30, 2023, an increase of $4.7 million, or 104.4%. The increase was primarily driven by a higher number of units sold to a large customer in the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

**Cost of sales.** Cost of sales was $3.8 million for the three months ended June 30, 2024 compared to $1.9 million for the three months ended June 30, 2023, an increase of $1.9 million, or 100.0%. The increase in cost of sales was primarily related to a higher number of units sold and was fairly consistent as a percentage of revenue in the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

**Gross profit.** Gross profit was $5.4 million for the three months ended June 30, 2024 compared to $2.6 million for the three months ended June 30, 2023, an increase of $2.8 million, or 107.7%. Our overall gross profit percentage remained consistent at 58.7% in the three months ended June 30, 2024 compared to 57.9% in the corresponding period in 2023.

**Selling and marketing.** Selling and marketing expense was $1.0 million for the three months ended June 30, 2024 compared to $1.6 million for the three months ended June 30, 2023, a decrease of $0.6 million, or 37.5%. The decrease was primarily attributable to the decrease in marketing agency expense, lower headcount and decrease in tradeshow costs.

**General and administrative.** General and administrative expense was $1.6 million for the three months ended June 30, 2024 compared to $1.3 million for the three months ended June 30, 2023, an increase of $0.3 million, or 23.1%. The net increase in general and administrative expense was primarily due to higher professional fees and compensation.

**Research and development.** Research and development expense was $0.9 million for the three months ended June 30, 2024 compared to $0.8 million for the three months ended June 30, 2023, an increase of $0.1 million, or 12.5%. The increase was primarily due to expenses related to a project to develop a drug delivery system for aesthetic use.

**Other income.** Other income of $0.2 million for the three months ended June 30, 2024 and 2023 relate primarily to interest income.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

**Revenues.** Revenues were $20.0 million for the six months ended June 30, 2024 compared to $8.0 million for the six months ended June 30, 2023, an increase of $12.0 million, or 151.9%. The increase was primarily driven by a higher number of units sold to a large customer in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

**Cost of sales.** Cost of sales was $7.8 million for the six months ended June 30, 2024 compared to $3.7 million for the six months ended June 30, 2023, an increase of $4.1 million, or 110.8%. The increase in cost of sales was primarily related to a higher number of units sold in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

**Gross profit.** Gross profit was $12.1 million for the six months ended June 30, 2024 compared to $4.2 million for the six months ended June 30, 2023, an increase of $7.9 million, or 188.1%. Our overall gross profit percentage was 60.7% in the six months ended June 30, 2024 compared to 53.4% in the corresponding period in 2023. The increase in gross profit was primarily driven by a higher number of units sold in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

**Selling and marketing.** Selling and marketing expense was $2.3 million for the six months ended June 30, 2024 compared to $3.7 million for the six months ended June 30, 2023, a decrease of $1.4 million, or 37.8%. The decrease was primarily attributable to the decrease in marketing agency expense, lower headcount and decrease in tradeshow costs.

**General and administrative.** General and administrative expense was $3.2 million for the six months ended June 30, 2024 compared to $2.7 million for the six months ended June 30, 2023, an increase of $0.5 million, or 18.5%. The net increase in general and administrative expense was primarily due to higher professional fees and compensation.

**Research and development.** Research and development expense was $1.8 million for the six months ended June 30, 2024 compared to $1.9 million for the six months ended June 30, 2023, a decrease of $0.1 million, or 5.3%. The decrease was primarily due to expenses related to a project to develop a drug delivery system for aesthetic use.

**Other income.** Other income of $0.4 and 0.5 million for the six months ended June 30, 2024 and 2023, respectively, relate primarily to interest income.

Financial Condition

The following discussion summarizes significant changes in assets and liabilities. Please see the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 contained in Part I, Item 1 of this filing.

#### Assets

Cash and cash equivalents at June 30, 2024 decreased $4.1 million from December 31, 2023. See *Cash Flows* for details on the change in cash and cash equivalents during the six months ended June 30, 2024.

Accounts receivable at June 30, 2024 increased $7.7 million from December 31, 2023, primarily due to the increase in sales and concentration of sales to the Company’s primary customer that is subject to extended payment terms.

Inventories at June 30, 2024 increased $0.9 million from December 31, 2023, as volume has been increased in anticipation of increasing future revenues.

#### Liabilities

There were no borrowings outstanding under our revolving lines of credit at June 30, 2024 or December 31, 2023.

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 Six Months Ended June 30 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities | $(3,957) | $(5,255) |
| Investing activities | (236) | (218) |
| Financing activities | 17 | 6 |
| **Total** | $(4,176) | $(5,467) |

Net cash used in operating activities was $4.0 million for the six months ended June 30, 2024, consisting of net income of $3.9 million and non-cash charges of $1.1 million, offset by an increase in net operating assets of $9.0 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 credit loss expense, deferred income taxes, stock-based compensation expense, provision for product warranties, amortization of right-of-use asset and depreciation and amortization of property and equipment. Net cash used in operating activities was $5.3 million for the six months ended June 30, 2023, consisting of net loss of $2.4 million, an increase in net operating liabilities of $2.3 million, and non-cash charges of $0.6 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 credit loss expense, deferred income taxes, stock-based compensation expense, provision for product warranties and depreciation and amortization.

Net cash used in investing activities for the six months ended June 30, 2024 reflected $236 thousand of purchases of property and equipment. Net cash used in investing activities for the six months ended June 30, 2023 reflected $0.2 million of purchases of property and equipment.

Net cash provided by financing activities for the six months ended June 30, 2024 reflected $17 thousand of exercised stock options. Net cash provided in financing activities for the six months ended June 30, 2023 primarily reflected $46 thousand of exercised stock options, offset by $40 thousand of withholding taxes on stock-based compensation.

Inflation

During the first and second quarters of 2024, we continued to experience some increase in commodity and shipping prices and energy and labor costs which resulted in inflationary pressures across various parts of our business and operations, including on our customers, partners, and suppliers. We continue to monitor the impact of inflation and we are taking actions, such as ordering inventory in advance, to minimize its effects on our product cost and sales.

Indebtedness

As discussed in Note 3, Debt, to the financial statements, in September 2023, the Company entered into the new Credit Facility with Comerica, replacing the Company’s prior facility with SVB. Additional information regarding the Credit Facility, including the amounts that may be borrowed under the Credit Facility and the covenants and other terms included in the Credit Facility, is included in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 14, 2023.

Contractual Obligations and Commitments

Please see Note 6, *Commitments and Contingencies*, to the condensed consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of the 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. Management has identified certain accounting policies as critical to understanding the financial condition and results of operations. For a detailed discussion on the application of these and other accounting policies, see the Note 1*, Organization and Summary of Significant Accounting Policies* to the consolidated financial statements included in the 2023 Annual Report for further information.

## Controls and procedures

As filed, 1,955 characters.

### Evaluation of Disclosure Control and Procedures

As of June 30, 2024, 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 June 30, 2024, the end of the period covered by this Form 10-Q, we did not maintain effective disclosure controls and procedures, as described below.

- Information technology general controls were not designed and operating effectively to ensure that access to applications and data were adequately restricted to appropriate personnel, ensure segregation of duties, and appropriately monitor the activities of the individuals with access to modify data.

While the deficiencies described above did not result in any material misstatements to the Company’s condensed consolidated financial statements for the period ending June 30, 2024, they did represent a material weakness as of June 30, 2024, since there existed a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.

### Management’s Remediation Measures

Management is committed to maintaining a strong internal control environment. Accordingly, management is in the process of implementing a plan to remediate the material weakness described above as soon as possible.

### Changes in Internal Control over Financial Reporting

Except as described above, 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 2023 Annual Report, as updated in our subsequent quarterly reports. The risks described in our 2023 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 Aug 13, 2024.
Source: SEC EDGAR, the filing index for accession 0001213900-24-068165. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.