Sensus Healthcare, Inc.

Previous wording

You should read the following discussion and analysis in conjunction with the information set forth within the condensed consolidated 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 2024 Annual Report.

Current wording

The following discussion and analysis should be read in conjunction with the information set forth within the condensed consolidated 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 2025 Annual Report.

Previous wording

Sensus Healthcare, Inc. (together, with its subsidiaries, Sensus Medical Devices Ltd. and Sensus Healthcare Services, LLC, unless the context otherwise indicates, “Sensus,” “we,” “us,” “our,” or the “Company”) is a medical device company committed to providing highly effective, non-invasive and cost-effective treatments for both oncological and non-oncological skin conditions. The Company uses a proprietary low-energy X-ray technology known as superficial radiation therapy (“SRT”), which is based on over a decade of dedicated research and development, and has successfully incorporated SRT into a portfolio of treatment devices: the SRT-100 TM, SRT-100+TM and SRT-100 Vision TM. To date, SRT technology has been used to effectively and safely treat oncological and non-oncological skin conditions in hundreds of thousands of patients around the world.

Current wording

Sensus Healthcare, Inc. (together, with its subsidiaries, Sensus Medical Devices Ltd. and Sensus Healthcare Services, LLC, unless the context otherwise indicates, “Sensus,” “we,” “us,” “our,” or the “Company”) is a medical device company committed to providing highly effective, non-invasive treatments for non-melanoma skin cancer and post-surgical keloid scar prevention. The Company uses a proprietary low-energy X-ray technology known as superficial radiation therapy (“SRT”), which is based on decades of dedicated research and development, and has successfully incorporated SRT into a portfolio of treatment devices: the SRT-100 TM, SRT-100+TM and SRT-100 Vision TM. To date, SRT technology has been used to effectively and safely treat oncological and non-oncological skin conditions of close to one-million patients around the world.

Previous wording

**Revenues.**Revenues were $6.9 million for the three months ended September 30, 2025 compared to $8.8 million for the three months ended September 30, 2024, a decrease of $1.9 million, or 21.6%. The decrease in revenue was primarily driven by a lower number of units sold (16 in the three months ended September 30, 2025, compared to 27 in the three months ended September 30, 2024), reflecting reduced sales to a large customer, slightly offset by revenue recognized from the new placement program under the Fair Deal Agreement.

Current wording

**Revenues.**Revenues were $3.4 million for the three months ended March 31, 2026 compared to $8.3 million for the three months ended March 31, 2025, a decrease of $4.9 million, or 59.0%. The decrease in revenue was primarily driven by a lower number of units sold (10 in the three months ended March 31, 2026, compared to 21 in the three months ended March 31, 2025), reflecting no units sold in the current period to a historically large customer. In addition, some systems placed during the quarter were under Fair Deal Agreement program and rental arrangements, for which revenue is recognized over the term of the agreement rather than at the time of shipment.

Previous wording

**Gross profit.**Gross profit was $2.7 million for the three months ended September 30, 2025 compared to $5.2 million for the three months ended September 30, 2024, a decrease of $2.5 million, or 48.1%. Our overall gross profit percentage was 39.1% in the three months ended September 30, 2025 compared to 59.1% in the corresponding period in 2024. The decrease in gross profit was primarily driven by lower sales, higher costs of servicing systems, and the cost associated with the new placement program in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

**Gross profit.**Gross profit was $1.0 million for the three months ended March 31, 2026 compared to $4.4 million for the three months ended March 31, 2025, a decrease of $3.4 million, or 77.3%. Our overall gross profit percentage was 29.4% in the three months ended March 31, 2026 compared to 53.0% in the corresponding period in 2025. The decrease in gross profit and margin was primarily driven by product mix, including a higher proportion of international shipments, which carry lower average selling prices, and costs associated with new system placements pursuant to the Fair Deal Agreement program, which are recognized upfront while related revenue is recognized over the term of the applicable agreement.

Previous wording

**General and administrative.**General and administrative expense was $1.9 million for the three months ended September 30, 2025 compared to $1.6 million for the three months ended September 30, 2024, an increase of $0.3 million, or 18.8%. The net increase in general and administrative expense was primarily due to higher professional fees (IT and consult) and compensation.

Current wording

**General and administrative.**General and administrative expense was $2.0 million for the three months ended March 31, 2026 compared to $2.2 million for the three months ended March 31, 2025, a decrease of $0.2 million, or 9.1%. The net decrease in general and administrative expense was primarily due to lower professional fees.

Previous wording

**Selling and marketing.**Selling and marketing expense was $1.5 million for the three months ended September 30, 2025 compared to $1.3 million for the three months ended September 30, 2024, an increase of $0.2 million, or 15.4%. The increase was primarily driven by an increase in payroll cost due to commissions related to the new placement program and an increase in headcount.

Current wording

**Selling and marketing.**Selling and marketing expense was $1.7 million for the three months ended March 31, 2026 compared to $2.2 million for the three months ended March 31, 2025, a decrease of $0.5 million, or 22.7%. The decrease was primarily driven by an decrease in tradeshow expenses.

Previous wording

Research and development. Research and development expense was $1.8 million for the three months ended September 30, 2025 compared to $0.9 million for the three months ended September 30, 2024, an increase of $0.9 million, or 100.0%. The increase was primarily due to significant lobbying costs related to billing code reimbursement, increased headcount, and an increase in product development costs related to next generation systems.

Current wording

Research and development. Research and development expense was $1.6 million for the three months ended March 31, 2026 compared to $2.6 million for the three months ended March 31, 2025, a decrease of $1.0 million, or 42%. The decrease was primarily due to the decrease in lobbying costs related to billing code reimbursement, decreased headcount, and decrease in product development costs related to next generation systems.

Previous wording

Other income. Other income of $0.2 million for the three months ended September 30, 2025 and $0.3 million for the three months ended September 30, 2024 relates primarily to interest income.

Current wording

Other income. Other income of $0.1 and $0.2 million for the three months ended March 31, 2026 and 2025, respectively, relates primarily to interest income.

Previous wording

Income taxes. The effective tax rates for the nine months ended September 30, 2025 and 2024 were 31.4% and 27.8%, respectively. The increase in the effective tax rate benefit for the nine months ended September 30, 2025 compared to the prior year period was primarily due to an increase in the estimated tax credits that are expected to be generated and utilized.

Current wording

Income taxes. The effective tax rates for the three months ended March 31, 2026 and 2025 were 37.9% and (4.5%), respectively. The increase in the effective tax rate for the three months ended March 31, 2026 compared to the prior period was primarily due to projected full year income and a decrease in the estimated tax credits that are expected to be generated and utilized in proportion to the amount of pretax profit.

Previous wording

Cash and cash equivalents were $24.5 million at September 30, 2025 compared to $22.1 million at December 31, 2024, an increase of $2.4 million. SeeCash Flowsfor details on the change in cash and cash equivalents during the nine months ended September 30, 2025.

Current wording

Cash and cash equivalents were $18.3 million at March 31, 2026 compared to $22.1 million at December 31, 2025, a decrease of $3.8 million. SeeCash Flowsfor details on the change in cash and cash equivalents during the three months ended March 31, 2026.

Previous wording

Accounts receivable was $9.3 million at September 30, 2025 compared to $19.7 million at December 31, 2024, a decrease of $10.4 million. The decrease was primarily due to the decrease in sales and concentration of sales to the Company’s primary customer that is subject to extended payment terms.

Current wording

Accounts receivable was $3.6 million at March 31, 2026 compared to $6.0 million at December 31, 2025, a decrease of $2.4 million. The decrease was primarily due to the decrease in sales and concentration of sales to the Company’s historically large customer, which have historically been subject to extended payment terms.

Previous wording

Inventories was $13.0 million at September 30, 2025 compared to $10.1 million at December 31, 2024, an increase of $2.9 million. The increase was primarily due to the anticipation of increasing future sales.

Current wording

Inventories were $16.5 million at March 31, 2026 compared to $14.6 million at December 31, 2025, an increase of $1.9 million. The increase was primarily due to the anticipation of increasing future sales.

Previous wording

There were no borrowings outstanding under our revolving line of credit with Comerica Bank at September 30, 2025 or December 31, 2024.

Current wording

There were no borrowings outstanding under our revolving line of credit with Comerica Bank at March 31, 2026 and December 31, 2025.

Previous wording

In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs. For the nine months ended September 30, 2025, funding was derived primarily from cash generated by the sale of equipment to our customers in the ordinary course of business. The Company believes that proceeds from maturing cash equivalents, as well as the Company’s borrowing capacity under its existing line of credit and access to capital resources are sufficient to meet operating capital and funding requirements for the next 12 months from the date this quarterly report was issued. Please see Note 3,Debt , to the condensed consolidated financial statements for a discussion regarding the Company’s revolving credit facility with Comerica Bank. The Company’s liquidity position and capital requirements may be impacted by a number of factors, including the following:

Current wording

In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs. For the three months ended March 31, 2026, funding was derived primarily from cash generated by the sale of equipment to our customers in the ordinary course of business and existing cash reserves. The Company believes that proceeds from maturing cash equivalents, as well as cash on hand are sufficient to meet operating capital and funding requirements for the next 12 months from the date this Quarterly Report was issued. The Company’s liquidity position and capital requirements may be impacted by a number of factors, including the following:

Previous wording

Net cash provided by operating activities was $2.7 million for the nine months ended September 30, 2025, consisting of net loss of $4.6 million and non-cash activity of $0.9 million, offset by a decrease in net operating assets of $8.2 million, primarily driven by a $10.4 million decrease in accounts receivable, a $2.0 million decrease in prepaid inventory, and a $3.7 million increase in inventories. 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 stock-based compensation expense, deferred income taxes, provision for product warranties, amortization of right-of-use asset, credit loss expense, and depreciation of property and equipment. Net cash used in operating activities was $4 thousand for the nine months ended September 30, 2024, consisting of net income of $5.1 million and noncash charges of $0.6 million, offset by an increase in net operating assets of $5.8 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.

Current wording

Net cash used in operating activities was $3.8 million for the three months ended March 31, 2026, consisting of net loss of $2.6 million and non-cash activity of $1.3 million, offset by a decrease in net operating liabilities of $0.1 million. Cash flows used in 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 stock-based compensation expense, deferred income taxes, provision for product warranties, amortization of right-of-use asset, and depreciation of property and equipment. Net cash used in operating activities was $2.7 million for the three months ended March 31, 2025, consisting of net loss of $2.6 million and an increase in net operating assets of $0.5 million, offset by non-cash charges of $0.4 million. Cash flows used in 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 stock-based compensation expense, provision for product warranties, amortization of right-of-use asset and depreciation of property and equipment.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 reflected $38 thousand of purchases of property and equipment. Net cash used in investing activities for the nine months ended September 30, 2024 reflected $0.6 million of purchases of property and equipment.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026 reflected $3 thousand of purchases of property and equipment. Net cash used in investing activities for the three months ended March 31, 2025 reflected $7 thousand of purchases of property and equipment.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2025 reflected $0.3 million of repurchases of common stock. Net cash used in financing activities for the nine months ended September 30, 2024 reflected $34 thousand of exercised stock options, offset by $47 thousand of withholding taxes on stock-based compensation.

Current wording

No cash was used in financing activities for the three months ended March 31, 2026. Net cash used in financing activities for the three months ended March 31, 2025 reflected $0.3 million of repurchases of common stock.

Previous wording

During the first three quarters of 2025, 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.

Current wording

During the first quarter of 2026, we continued to experience some increase in commodity and shipping prices and energy and labor costs which resulted in minor 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.

Previous wording

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 not applied any critical accounting estimates but has identified revenue recognition 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 2024 Annual Report for further information.

Current wording

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 not applied any critical accounting estimates but has identified revenue recognition policies as critical to understanding the Company’s 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 2025 Annual Report for further information.