Envoy Medical, Inc. Segments Disclosure
14. Segment Reporting
Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the CODM in deciding resource allocation and assessing performance. The Company has determined that its CODM is its Chief Executive Officer.
The Company has one reportable segment: hearing. The hearing segment derives revenue from the sale of the Esteem FI-AMEI implants and replacement components to Esteem FI-AMEI implants. The Company enters into arrangements with patients to provide them with the Esteem FI-AMEI device, personal programmer devices, sound processor replacements, and Battery replacements.
The Company derives revenue primarily in the United States and manages the business activities on a consolidated basis.
The accounting policies of the hearing segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the hearing segment and decides how to allocate resources based on net loss that also is reported on the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the consolidated balance sheets as total assets.
The CODM uses net loss to evaluate the results generated from segment assets (return on assets) in deciding whether to make investments into the hearing segment or into other parts of the entity, such as for entering into significant contracts, hiring of key management or executive personnel, making significant capital investment decisions, or changing Company-wide strategy.
Net loss is used to monitor budget versus actual results and assist the CODM in understanding the Company’s cash flows and liquidity position, which is critical as a development state entity. This allows the CODM to make the appropriate spending decisions for the Company.
The following table summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024 and 2023.
| Year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Net revenues | $ | 225 | $ | 316 | ||||
| Costs and operating expenses: | ||||||||
| Cost of goods sold | 742 | 789 | ||||||
| Research and development | 10,179 | 8,956 | ||||||
| Sales and marketing | 1,734 | 1,666 | ||||||
| General and administrative | 6,826 | 7,264 | ||||||
| Total costs and operating expenses | 19,481 | 18,675 | ||||||
| Operating loss | (19,256 | ) | (18,359 | ) | ||||
| Other segment items(1) | (697 | ) | (11,617 | ) | ||||
| Interest expense, related party | (816 | ) | ||||||
| Other income | (26 | ) | 54 | |||||
| Total other expense, net | (1,539 | ) | (11,563 | ) | ||||
| Net loss | $ | (20,795 | ) | $ | (29,922 | ) | ||
| (1) | Other segment items include the change in fair value of convertible notes payable (related party), change in fair value of forward purchase agreement put option liability, change in fair value of forward purchase agreement warrant liability, change in fair value of forward purchase agreement warrant liability due to modification, and change in fair value of publicly traded warrant liability. |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.