Benseonics... LIVE LIFE WITH CONFIDENCE AND EASE September 2019 FORWARD-LOOKING STATEMENTS | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Senseonics Holdings, Inc. (NYSE:SENS) Q2 2019 Earnings Conference Call August 7, 2019 4:30 PM ET Company Participants Philip Taylor - Associate, Gilmartin Group Tim Goodnow - President and Chief Executive Officer Jon Isaacson - Chief Financial Officer Mike Gill - Vice President, General Manager of the US Conference Call Participants Rebecca Wang - SVB Leerink Matt Wizman - Raymond James Operator Good day and welcome to the Senseonics Second Quarter 2019 Earnings Conference. Today's conference is being recor ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2019 or ☐ 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 ...

| --- | --- | --- | --- | |----------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | LIVE LIFE WITH | | | | | CONFIDENCE | | | | | AND EASE | | | | | 2019 Raymond James June 18, 2019 | | | | FORWARD-LOOKING STATEMENTS | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | This presentation contains forward-looking stateme ...

Financial Data and Key Metrics Changes - The company achieved total revenue of $3.4 million in Q1 2019, an increase from $2.9 million in the prior year period, driven by U.S. sales of $800,000 and European sales of $2.6 million [8][39] - The net loss for Q1 2019 was $29.4 million, or $0.17 per share, compared to a net loss of $22.3 million, or $0.16 per share in Q1 2018 [44] - Gross margin decreased to negative $3.3 million in Q1 2019 from negative $400,000 in the prior year, primarily due to product obsolescence and expiry [42] Business Line Data and Key Metrics Changes - The U.S. revenue was $800,000, while European revenue was $2.6 million, both in line with expectations based on contractual obligations [8] - The company launched a bridge access program, which significantly increased shipments of Eversense, nearly tripling per week post-launch [12] - The number of prescriptions written each week doubled, and healthcare professionals prescribing Eversense increased by 66% [13] Market Data and Key Metrics Changes - In Europe, new users increased by 62% year-over-year, with sensor placements up by 85% [36] - The company now serves over 66 million covered lives with Eversense technology, aiming for 100 million by the end of 2019 [21] - The company received positive coverage decisions in Germany and Austria, expanding access to Eversense [34] Company Strategy and Development Direction - The company aims to expand its patient access through the bridge program and is focused on increasing payer coverage [45] - The innovation strategy includes advancing technology with a PMA supplement for a 90-day sensor and a clinical trial for a 180-day sensor [26][28] - The company is also exploring value-based coverage programs with payers to emphasize the long-term adherence and clinical outcomes of Eversense [21][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching the target of 100 million covered lives by the end of 2019, with ongoing discussions with major payers [56] - The company is optimistic about the early reception of the bridge program and its impact on patient access and prescriber confidence [41][48] - Management acknowledged the importance of positive patient experiences in influencing payer decisions and coverage [22] Other Important Information - The company completed its long-term post-market safety registry study in Europe, confirming high safety performance with less than 4% adverse events [30] - The company plans to present clinical data at the upcoming ADA conference, showcasing the safety and efficacy of Eversense [115] Q&A Session Summary Question: Progress on reaching 100 million covered lives - Management reported 66 million covered lives achieved, with ongoing discussions with major payers like Aetna [53][54] Question: Adoption trends in the U.S. versus Europe - Management noted significant interest from prescribers in the U.S., with a streamlined process for sensor insertions [58][60] Question: Year one launch reflections and improvements - Management expressed satisfaction with the launch, highlighting the importance of the bridge program for patient access [64][67] Question: Confidence in hitting revenue targets - Management indicated strong visibility in European revenues and positive trends in U.S. metrics [71] Question: Patient mix and new CGM users - Approximately 25% of U.S. patients are new to CGM, with the remainder coming from existing CGM users [118] Question: Medicare coverage plans - Plans for Medicare coverage discussions are set for 2020, contingent on obtaining a dosing claim [120]

PART I: Financial Information This section provides a comprehensive overview of the company's financial performance, position, and related disclosures [ITEM 1: Financial Statements](index=2&type=section&id=ITEM%201%3AFinancial%20Statements) This section presents unaudited consolidated financial statements: balance sheets, income, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202019%20(Unaudited)%20and%20December%2031%2C%202018) This statement presents the company's financial position, detailing assets, liabilities, and stockholders' equity | Metric | March 31, 2019 (unaudited) | December 31, 2018 | | :--------------------------------- | :------------------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $103,675 | $136,793 | | Total current assets | $125,110 | $158,106 | | Total assets | $129,401 | $159,973 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $27,459 | $28,886 | | Total liabilities | $85,457 | $88,712 | | Total stockholders' equity | $43,944 | $71,261 | | Total liabilities and stockholders' equity | $129,401 | $159,973 | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This statement outlines the company's revenues, expenses, and net loss over specific reporting periods | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue | $3,423 | $2,946 | | Cost of sales | $6,733 | $3,308 | | Gross profit | $(3,310) | $(362) | | Sales and marketing expenses | $12,834 | $3,441 | | Research and development expenses | $7,108 | $8,113 | | General and administrative expenses | $6,516 | $4,011 | | Operating loss | $(29,768) | $(15,927) | | Total other income (expense), net | $403 | $(6,346) | | Net loss | $(29,365) | $(22,273) | | Basic and diluted net loss per common share | $(0.17) | $(0.16) | | Basic and diluted weighted-average shares outstanding | 176,954,116 | 137,069,008 | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This statement tracks changes in the company's equity accounts, including common stock and accumulated deficit | Metric | Balance, December 31, 2018 | Balance, March 31, 2019 | | :--------------------------------------- | :------------------------- | :---------------------- | | Common Stock Shares | 176,918 | 176,958 | | Common Stock Amount | $177 | $177 | | Additional Paid-In Capital | $428,878 | $430,926 | | Accumulated Deficit | $(357,794) | $(387,159) | | Total Stockholders' Equity (Deficit) | $71,261 | $43,944 | **Changes during Q1 2019:** * Exercise of stock options: $23 thousand (Additional Paid-In Capital increased by $23 thousand) * Stock-based compensation expense and vesting of RSUs: $2,025 thousand (Additional Paid-In Capital increased by $2,025 thousand) * Net loss: $(29,365) thousand (Accumulated Deficit increased by $(29,365) thousand) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) This statement categorizes cash flows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(30,152) | $(20,499) | | Net cash (used in) provided by investing activities | $(490) | $16,187 | | Net cash (used in) provided by financing activities | $(2,476) | $49,064 | | Net (decrease) increase in cash and cash equivalents | $(33,118) | $44,752 | | Cash and cash equivalents, at end of period | $103,675 | $60,902 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the financial statements [1. Organization](index=7&type=section&id=1.%20Organization) This note describes the company's business, its focus on glucose monitoring systems, and its corporate structure - Senseonics Holdings, Inc. is a medical technology company focused on **designing, developing, and commercializing glucose monitoring systems** to improve diabetes management. Its wholly-owned subsidiary is Senseonics, Incorporated[19](index=19&type=chunk) [2. Liquidity](index=7&type=section&id=2.%20Liquidity) This note addresses the company's ability to meet short-term obligations and its going concern considerations - The Company has incurred **substantial operating losses** since inception and has **not generated significant product revenues**. Its ability to achieve profitability depends on product development and regulatory approvals, requiring **significant working capital**[20](index=20&type=chunk) - Management concluded that existing cash and cash equivalents **will not be sufficient to meet anticipated operating needs through Q1 2020**, raising **substantial doubt about the Company's ability to continue as a going concern through March 31, 2020**[22](index=22&type=chunk) - The Company plans to finance operations through external capital (equity/debt) but may face **challenges in raising additional funds on acceptable terms**, potentially leading to **delays, suspensions, or liquidation**[23](index=23&type=chunk) [3. Summary of Significant Accounting Policies](index=7&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles, estimates, and revenue recognition policies applied - The financial statements are prepared in accordance with **U.S. GAAP**, with certain disclosures omitted as permitted for interim reports. Management uses **estimates** for areas like stock-based compensation, asset recoverability, and deferred taxes[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - The Company operates and manages its business as a **single segment: glucose monitoring products**[27](index=27&type=chunk) - Revenue is recognized when customers obtain control of products, typically at delivery. The Eversense Bridge Program, launched in March 2019, provides **financial assistance to eligible U.S. patients**, treated as a **reduction of revenue**[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - The Company adopted **ASC 842 (Leases)** effective January 1, 2019, using a modified retrospective approach. This resulted in the recognition of **operating lease assets of $2,235 thousand** and **operating lease liabilities of $2,319 thousand** (current and non-current portions) on the balance sheet[62](index=62&type=chunk)[63](index=63&type=chunk) Revenue Concentration by Customer (Q1 2019 vs. Q1 2018) | Customer | Q1 2019 Revenue % | Q1 2018 Revenue % | | :------- | :---------------- | :---------------- | | One primary customer | 70% | 100% | Revenues by Geographic Region (Q1 2019) | Region | Amount (in thousands) | % of Total | | :-------------------- | :-------------------- | :--------- | | Outside of the United States | $2,607 | 76.2% | | United States | $816 | 23.8% | | Total | $3,423 | 100.0% | *Note: All revenues in Q1 2018 were from sales outside the United States.* [4. Inventory, net](index=13&type=section&id=4.%20Inventory%2C%20net) This note details the composition and valuation of the company's inventory, including finished goods and raw materials | Inventory Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :----------------- | :---------------------------- | :----------------------------- | | Finished goods | $1,746 | $1,457 | | Work-in-process | $11,010 | $7,211 | | Raw materials | $1,614 | $1,563 | | Total | $14,370 | $10,231 | [5. Prepaid Expenses and Other Current Assets](index=13&type=section&id=5.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note provides a breakdown of the company's prepaid expenses and other short-term assets | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--------------------------------- | :---------------------------- | :----------------------------- | | Contract manufacturing | $2,490 | $2,962 | | Marketing and sales | $675 | $287 | | IT and software | $295 | $244 | | Interest receivable | $670 | $239 | | Clinical and preclinical | $340 | $111 | | Other | $228 | $142 | | Total | $4,698 | $3,985 | [6. Accrued Expenses and Other Current Liabilities](index=14&type=section&id=6.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note details the company's accrued expenses and other short-term liabilities | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :--------------------------------- | :---------------------------- | :----------------------------- | | Contract manufacturing | $6,436 | $6,068 | | Compensation and benefits | $1,885 | $3,685 | | Interest on notes payable and 2023 Notes | $557 | $1,268 | | Product warranty | $311 | $816 | | Sales and marketing services | $2,122 | $738 | | Professional services | $1,428 | $727 | | Clinical and preclinical | $649 | $147 | | Other | $366 | $402 | | Total | $13,754 | $13,851 | [7. Leases](index=14&type=section&id=7.%20Leases) This note describes the company's lease agreements and the impact of new lease accounting standards - The Company leases approximately **33,000 square feet of research and office space** under a **non-cancelable operating lease expiring in 2023**, with an option to renew for an additional five-year term. A separate cancelable operating lease for **12,000 square feet expires in June 2019**[68](index=68&type=chunk)[69](index=69&type=chunk) - With the adoption of **ASC 842**, the Company recorded a **right-of-use asset of $2,131 thousand** and corresponding **lease liabilities of $2,222 thousand** as of March 31, 2019[71](index=71&type=chunk) Maturity of Undiscounted Lease Payments (as of March 31, 2019) | Year | Amount (in thousands) | | :--- | :-------------------- | | 2019 (remaining nine months) | $461 | | 2020 | $629 | | 2021 | $648 | | 2022 | $668 | | 2023 | $282 | | Total | $2,688 | | Present value adjustment | $(466) | | Present value of lease liabilities | $2,222 | [8. Notes Payable](index=15&type=section&id=8.%20Notes%20Payable) This note details the company's outstanding debt obligations, including term loans and convertible notes - The Company has **Term Loans totaling $25.0 million** from Oxford Finance LLC and Silicon Valley Bank, bearing a **floating annual interest rate with a minimum floor of 6.95%**. Monthly principal payments began in January 2018, with a **maturity date of June 1, 2020**[74](index=74&type=chunk)[75](index=75&type=chunk) - In January and February 2018, the Company issued **$53.0 million in aggregate principal amount of 5.25% convertible senior subordinated notes due 2023** (2023 Notes). These notes are convertible into common stock at an **initial conversion price of approximately $3.40 per share**[82](index=82&type=chunk)[83](index=83&type=chunk) - The embedded conversion option and related provisions of the 2023 Notes were bifurcated and recorded as a **derivative liability**, initially valued at **$17.3 million**, and are remeasured each reporting period[84](index=84&type=chunk)[85](index=85&type=chunk) Scheduled Maturities of 2023 Notes and Term Loans (as of March 31, 2019) | Year | Amount (in thousands) | | :--- | :-------------------- | | 2019 (remaining nine months) | $7,500 | | 2020 | $5,000 | | 2021 | — | | 2022 | — | | 2023 | $52,700 | | Total | $65,200 | [9. Stockholders' Equity](index=17&type=section&id=9.%20Stockholders'%20Equity) This note outlines the components of stockholders' equity, including common stock, warrants, and equity plans - As of March 31, 2019, the Company had **450,000,000 authorized shares of common stock** ($0.001 par value) and **176,958,487 shares issued and outstanding**. No preferred stock was outstanding[87](index=87&type=chunk)[88](index=88&type=chunk) - The Company has issued **10-year stock purchase warrants** to lenders in connection with Term Loans, with **exercise prices ranging from $1.86 to $3.86 per share**. The **fair value of these warrants ($0.5 million)** was recorded as a discount to the Notes[89](index=89&type=chunk) - The 2015 Equity Incentive Plan (amended and restated) allows for **incentive stock options, non-qualified stock options, and restricted stock awards**. As of March 31, 2019, **844,301 shares remained available for grant** under this plan[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [10. Fair Value Measurements](index=18&type=section&id=10.%20Fair%20Value%20Measurements) This note explains the company's fair value accounting practices and the measurement of financial instruments - The Company applies **fair value accounting using a three-level hierarchy**. Level 1 inputs are quoted prices in active markets, Level 2 are observable inputs other than Level 1, and Level 3 are unobservable inputs[95](index=95&type=chunk)[96](index=96&type=chunk) - The embedded features of the 2023 Notes are classified as a **Level 3 liability**, measured at fair value on a recurring basis. Its fair value **decreased from $17.091 million at December 31, 2018, to $15.019 million at March 31, 2019**, reflecting a **$2.072 million change in fair value**[99](index=99&type=chunk) [11. Income Taxes](index=20&type=section&id=11.%20Income%20Taxes) This note discusses the company's income tax position, including deferred tax assets and valuation allowances - The Company has **not recorded any tax provision or benefit** for the three months ended March 31, 2019 or 2018. A **full valuation allowance** has been provided for net deferred tax assets due to uncertainty of future benefit realization[104](index=104&type=chunk) [ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202%3AManagement%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Senseonics' financial condition and results for Q1 2019, detailing revenue, costs, expenses, liquidity, and ongoing losses [Overview](index=21&type=section&id=Overview) This section covers the company's core business, product offerings, and financial performance summary - Senseonics is a medical technology company developing and commercializing **continuous glucose monitoring (CGM) systems, Eversense and Eversense XL**, designed for **long-term implantable use (up to 90 and 180 days, respectively)**[108](index=108&type=chunk) - **Eversense and Eversense XL are approved for sale in Europe, the Middle East, and Africa (EMEA)**, while **Eversense is approved in the United States**[108](index=108&type=chunk) - The Company launched the **Eversense Bridge Program in March 2019 in the U.S.** to provide **financial assistance to eligible patients**, aiming to increase access and stimulate payor coverage decisions[115](index=115&type=chunk) - The Company has **never been profitable**, reporting **net losses of $29.4 million for Q1 2019** and **$22.3 million for Q1 2018**, with an **accumulated deficit of $387.2 million** as of March 31, 2019. **Significant expenses are expected to continue** for commercialization and R&D[116](index=116&type=chunk)[117](index=117&type=chunk) [European Commercialization of Eversense](index=21&type=section&id=European%20Commercialization%20of%20Eversense) This section details the company's commercialization strategy and agreements for Eversense in Europe - Senseonics has **distribution agreements with Rubin Medical (Scandinavia) and Roche Diagnostics (EMEA, excluding certain countries)** for Eversense and Eversense XL[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) - In January 2019, the agreement with Roche was amended to extend through **January 31, 2021**, expanding Roche's **exclusive distribution rights to 17 additional countries**, including Brazil, Russia, India, and China[112](index=112&type=chunk) - **Eversense XL, with a sensor life of up to 180 days**, received **CE mark in September 2017** and began commercialization in Europe in Q4 2017[113](index=113&type=chunk) [United States Development and Commercialization of Eversense](index=22&type=section&id=United%20States%20Development%20and%20Commercialization%20of%20Eversense) This section outlines the development, regulatory approval, and commercialization efforts for Eversense in the U.S - The Eversense system received **PMA approval from the FDA on June 21, 2018**, following the PRECISE II pivotal clinical trial which showed a **MARD of 8.4% over 90 days**[114](index=114&type=chunk) - **U.S. distribution of Eversense began in July 2018** through the Company's direct sales and marketing organization[114](index=114&type=chunk) - **Category III CPT codes have been received** for sensor insertion and removal, with plans to pursue a Category I CPT code[114](index=114&type=chunk) [Financial Overview](index=23&type=section&id=Financial%20Overview) This section provides an overview of the company's revenue generation, cost structure, and expense trends - Revenue is generated from sales of Eversense and Eversense XL systems to distributors in Europe and fulfillment partners in the U.S. The **Eversense Bridge Program reimbursements are accounted for as a reduction of revenue**[119](index=119&type=chunk)[120](index=120&type=chunk) - Cost of sales includes raw materials, contract manufacturing fees, warranty reserves, inventory valuation reserves, scrap, and shipping costs. **Gross margin is expected to improve long-term with increased sales volume** but may fluctuate[121](index=121&type=chunk) - Sales and marketing expenses are expected to **increase substantially** due to expanded commercialization efforts in the U.S. and Europe[122](index=122&type=chunk) - Research and development expenses, primarily for Eversense and future enhancements, are expected to **increase in absolute dollars** but **decline as a percentage of total expenses** as commercialization expands[123](index=123&type=chunk)[125](index=125&type=chunk) - General and administrative expenses are **increasing due to public company operations**, including additional personnel, legal, accounting, and compliance costs. These are expected to **further increase after the Company no longer qualifies as an 'emerging growth company' by December 31, 2019**[126](index=126&type=chunk)[127](index=127&type=chunk) - Other income (expense), net, includes interest income, interest expense on convertible notes and term loans, and **changes in the fair value of derivative liability** related to the 2023 Notes' embedded conversion option[128](index=128&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section compares the company's financial performance for the three months ended March 31, 2019 and 2018 Comparison of Three Months Ended March 31, 2019 and 2018 (in thousands) | Metric | March 31, 2019 | March 31, 2018 | Period-to-Period Change | | :------------------------------------ | :------------- | :------------- | :---------------------- | | Revenue | $3,423 | $2,946 | $477 | | Cost of sales | $6,733 | $3,308 | $3,425 | | Gross profit | $(3,310) | $(362) | $(2,948) | | Sales and marketing expenses | $12,834 | $3,441 | $9,393 | | Research and development expenses | $7,108 | $8,113 | $(1,005) | | General and administrative expenses | $6,516 | $4,011 | $2,505 | | Operating loss | $(29,768) | $(15,927) | $(13,841) | | Total other income (expense), net | $403 | $(6,346) | $6,749 | | Net loss | $(29,365) | $(22,273) | $(7,092) | - Revenue **increased by $0.5 million (16.2%)** primarily due to U.S. Eversense sales following its July 2018 launch[131](index=131&type=chunk) - Cost of sales **increased by $3.4 million (103.5%)** due to U.S. sales and write-offs from product design changes and yield losses, leading to a **significant decrease in gross margin from (12.3)% to (96.7)%**[132](index=132&type=chunk)[133](index=133&type=chunk) - Sales and marketing expenses **surged by $9.4 million (273%)** due to increased headcount and marketing costs for the U.S. launch[134](index=134&type=chunk) - Research and development expenses **decreased by $1.0 million (12.4%)** due to reduced development efforts at contract manufacturers and completion of U.S. PMA approval activities, partially offset by higher clinical trial expenses[136](index=136&type=chunk) - General and administrative expenses **rose by $2.5 million (62.4%)** due to increased headcount and other operational support costs[137](index=137&type=chunk) - Total other income (expense), net, **improved by $6.7 million**, primarily driven by a **$2.1 million decrease in the fair value of derivative liability in Q1 2019** compared to a **$4.8 million increase in Q1 2018**[138](index=138&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, funding needs, and debt obligations - The Company has incurred **substantial losses and negative cash flows from operations** since inception, with a **net loss of $29.4 million for Q1 2019** and an **accumulated deficit of $387.2 million**[139](index=139&type=chunk) - As of March 31, 2019, **cash and cash equivalents totaled $103.7 million**. The Company **does not expect this to be sufficient to fund operations through Q1 2020** and will require additional capital through equity offerings, debt financings, or collaborations[140](index=140&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - The Company has **$25.0 million in Term Loans** with Oxford and SVB, bearing a **floating interest rate (minimum 6.95%)** and **maturing June 1, 2020**. It also has **$52.7 million in 5.25% convertible senior subordinated notes due 2023**[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[155](index=155&type=chunk)[157](index=157&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(30,152) | $(20,499) | | Net cash (used in) provided by investing activities | $(490) | $16,187 | | Net cash (used in) provided by financing activities | $(2,476) | $49,064 | | Net (decrease) increase in cash and cash equivalents | $(33,118) | $44,752 | - **Net cash used in operating activities increased to $30.2 million in Q1 2019 from $20.5 million in Q1 2018**, driven by net loss and changes in operating assets and liabilities (e.g., inventory increase, accounts receivable decrease)[160](index=160&type=chunk)[161](index=161&type=chunk) - **Net cash used in investing activities was $0.5 million in Q1 2019** (capital expenditures, lease payments), a shift from **$16.2 million provided in Q1 2018** (sales/maturities of marketable securities)[162](index=162&type=chunk) - **Net cash used in financing activities was $2.5 million in Q1 2019** (Term Loan principal payments), a decrease from **$49.1 million provided in Q1 2018** (2023 Notes issuance, stock option exercise)[163](index=163&type=chunk)[164](index=164&type=chunk) - The Company has **no material off-balance sheet arrangements** and expects to **no longer qualify as an 'emerging growth company' by December 31, 2019**, which will require compliance with additional reporting requirements[166](index=166&type=chunk)[168](index=168&type=chunk) [ITEM 3: Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=ITEM%203%3AQuantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the Company's exposure to market risks, including interest rate and foreign currency fluctuations, and their potential financial impact [Interest Rate Risk](index=30&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to interest rate fluctuations and their potential impact - The Company's **primary exposure to market risk is interest rate sensitivity**. As of March 31, 2019, it held **$103.7 million in cash and cash equivalents**, primarily in interest-bearing money market accounts[172](index=172&type=chunk) - Due to the short-term maturities and low-risk profile of its cash equivalents, a hypothetical **100 basis point change in interest rates would not materially affect their fair market value**. The interest rates on the 2023 Notes and Term Loans are fixed[174](index=174&type=chunk) [Foreign Currency Risk](index=31&type=section&id=Foreign%20Currency%20Risk) This section discusses the company's exposure to foreign currency exchange rate fluctuations - The majority of international sales are denominated in Euros, making the Company's dollar value of sales **susceptible to exchange rate fluctuations**. A **strengthening U.S. dollar could decrease revenue** from these sales[175](index=175&type=chunk) - To date, foreign currency transaction gains and losses have **not been material**, and a hypothetical **10% change in exchange rates is not expected to have a material impact** on operating results or financial condition. The Company **does not currently engage in hedging transactions**[175](index=175&type=chunk) [ITEM 4: Controls and Procedures](index=31&type=section&id=ITEM%204%3AControls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures and reports on changes in internal control over financial reporting - As of March 31, 2019, management, including the CEO and CFO, concluded that the Company's **disclosure controls and procedures were effective at a reasonable assurance level**[176](index=176&type=chunk)[177](index=177&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended March 31, 2019, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[178](index=178&type=chunk) PART II: Other Information This section covers non-financial disclosures, including legal proceedings, risk factors, and exhibit listings [ITEM 1: Legal Proceedings](index=32&type=section&id=ITEM%201%3ALegal%20Proceedings) This section states that the Company is not currently involved in any material legal proceedings - The Company is **not currently a party to any material legal proceedings** and is unaware of any pending or threatened legal proceedings that could have a material adverse effect on its business, operating results, or financial condition[180](index=180&type=chunk) [ITEM 1A: Risk Factors](index=32&type=section&id=ITEM%201A%3ARisk%20Factors) This section refers to the risk factors previously disclosed in the Company's Annual Report on Form 10-K - The Company's **risk factors have not materially changed** from those described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018[181](index=181&type=chunk) [ITEM 2: Unregistered Sales of Equity and Securities and Use of Proceeds](index=32&type=section&id=ITEM%202%3AUnregistered%20Sales%20of%20Equity%20and%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period [ITEM 3: Defaults Upon Senior Securities](index=32&type=section&id=ITEM%203%3ADefaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period [ITEM 4: Mine Safety Disclosures](index=32&type=section&id=ITEM%204%3AMine%20Safety%20Disclosures) This item is not applicable for the reporting period [ITEM 5: Other Information](index=32&type=section&id=ITEM%205%3AOther%20Information) This item indicates no other information to report [ITEM 6: Exhibits](index=33&type=section&id=ITEM%206%3AExhibits) This section lists the exhibits filed or incorporated by reference, including organizational documents, agreements, and certifications - The exhibits include the **Amended and Restated Certificate of Incorporation, Bylaws, Certificate of Amendment, Fourth Amendment to Distribution Agreement with Roche, Executive Employment Agreements, and various certifications** (Sarbanes-Oxley Act, XBRL documents)[188](index=188&type=chunk) SIGNATURES This section provides the official signatures certifying the accuracy and completeness of the financial report - The report was **signed on May 9, 2019, by Jon Isaacson, Chief Financial Officer** (Principal Financial Officer) of Senseonics Holdings, Inc[195](index=195&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 __________________________________________ ☐ 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 HOLD ...

| --- | --- | --- | --- | --- | |------------------|-----------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Senseonics ... | | | | | | | | | | | | | | | | | | CONFIDENTLY LIVELIFE WITH EASE | | | | | 11-13 March 2019 | Cowen & Co. 39th Annual Health Care Conference 2019 | | | | 3 and and 2017 - 11:12 11-2 FORWARD-LOOKING STATEMENTS | --- | |---------------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - For Q4 2018, the company generated $7.2 million in revenue, up from $2.9 million in the prior year period, attributed to increased sales of the Eversense system in Europe and incremental sales in the U.S. [38] - The total net loss for Q4 2018 was $7.3 million, or approximately $0.04 per share, compared to a net loss of $16.3 million, or $0.12 per share in Q4 2017 [41]. - Cash and cash equivalents as of December 31, 2018, were $136.8 million, with outstanding indebtedness of $67.7 million [42]. Business Line Data and Key Metrics Changes - Sales and marketing expenses increased by $7.9 million year-over-year to $10.3 million, primarily due to the build-out of the sales force in the U.S. [39]. - Research and development expenses decreased by approximately $300,000 year-over-year to $8.1 million, driven by the completion of activities associated with U.S. PMA approval for Eversense [40]. Market Data and Key Metrics Changes - The company reported a 167% year-over-year increase in new users in the OUS market, with sensor insertions increasing by 266% [34]. - The company aims to secure 100 million covered lives by the end of 2019, with current coverage at 16 million [17][22]. Company Strategy and Development Direction - The company is focused on expanding patient access to the Eversense system through initiatives like the Eversense patient access bridge program [12][14]. - The company is working to gain positive coverage decisions from payors to increase the conversion rate from patient interest to inserted sensors [13][19]. - The company is also enhancing its product pipeline, with a PMA supplement under review with the FDA to expand the label of the current product [26]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the early physician and patient interest in Eversense, noting significant growth in the CGM market as patients seek advanced technologies [11]. - The company anticipates that investments in patient access programs will pay dividends in 2020 and beyond [16]. - Management acknowledged the complexities of the reimbursement process but remains committed to demonstrating the clinical benefits of Eversense [20][19]. Other Important Information - Dr. Fran Kaufman was welcomed as the new Chief Medical Officer, bringing extensive experience in clinical endocrinology and patient advocacy [8][9]. - The company has received positive coverage decisions from several payors, including Aetna and Blue Cross Blue Shield, and continues to work on expanding coverage [16]. Q&A Session Summary Question: Changes in the European business with the new Roche contract - Management noted that it is early days, but local countries are excited about the absence of overhang from the Roche agreement, and marketing campaigns are being developed [55]. Question: Details on the Bridge program - The Bridge program aims to facilitate patient access and support those whose insurance coverage is delayed, making it more achievable from a cost perspective [58][59]. Question: Key patient demographics in the U.S. - The company sees a broad base of patients attracted to Eversense, similar to Europe, with interest from both younger and older demographics [70][72]. Question: Time to get an HCP implant after training - The training process varies, but generally, physicians can become certified after inserting three patients, which takes about 90 days [79]. Question: Expectations for non-adjunctive claim and Medicare - Management expects to receive approval for the non-adjunctive claim by mid-year, which is crucial for discussions with Medicare [85]. Question: Role of Dr. Kaufman in the strategy - Dr. Kaufman is expected to play a key role in patient-centered strategies, product development, and working with payors [122][126]. Question: Logistics for centers adopting Eversense - Centers are integrating Eversense into their practices in various ways, including scheduling specific days for procedures and referring to general surgeons [128][130].