DexCom, Inc. (Nasdaq: DXCM) today reported its financial results
as of and for the quarter ended September 30, 2019.
Third Quarter 2019 Highlights:
- Revenue grew 49% versus the same quarter of the prior year to
$396.3 million
- U.S. revenue growth of 53% and international revenue growth of
36%
- GAAP operating income of $56.0 million or 14% of revenue, an
increase of 890 basis points compared to the third quarter of 2018.
Non-GAAP operating income* of $59.1 million or 15% of revenue, an
increase of 940 basis points over the third quarter of 2018.
- 3-Year COMISAIR1 study results continued to demonstrate the
value proposition of Dexcom’s real-time CGM:
- Significant improvements to A1C and time in range for Dexcom
CGM subgroups regardless of one’s method of insulin delivery
- Time in range increased by more than 20% for CGM use in
conjunction with both MDI and pump cohorts, nearly 5 hours per day
of additional glycemic control
“Dexcom maintained its robust revenue growth momentum in the
third quarter, leading to another significant increase to our full
year revenue outlook,” said Kevin Sayer, Dexcom’s Chairman,
President and CEO. “Our team is working hard to meet demand and
ensure an exceptional experience for our customers, and we look
forward to a strong close to 2019.”
2019 Annual Guidance
Dexcom updated its revenue, operating margin, and adjusted
EBITDA expectations and brought gross profit guidance slightly
below the previous range for full fiscal year 2019:
- Revenue of $1.425 billion to $1.450 billion (38% - 41% growth)
compared to previous expectations of $1.325 billion to $1.375
billion (28% - 33% growth)
- Gross profit margin of approximately 63% compared to previous
expectations of 64% to 65%
- Non-GAAP operating margin of approximately 9% versus previous
expectations of 7%
- Non-GAAP adjusted EBITDA margin of approximately 19.5% versus
previous expectations of 18.5%
Third Quarter 2019 Financial Results
Revenue: In the third quarter of 2019, worldwide revenue
grew 49% to $396.3 million, up from $266.7 million in the third
quarter of 2018. Volume growth in conjunction with strong new
patient additions continues to be the primary driver of revenue
growth as awareness of real-time CGM increases.
Gross Profit: Gross profit totaled $246.9 million or
62.3% of sales for the third quarter of 2019, compared to $168.6
million or 63.2% of sales in the third quarter of 2018.
Operating Income: GAAP operating income for the third
quarter of 2019 was $56.0 million, compared to a GAAP operating
income of $13.9 million for the third quarter of 2018.
Non-GAAP operating income* for the third quarter of 2019 was
$59.1 million, compared to a non-GAAP operating income of $14.7
million for the third quarter of 2018. The third quarter 2019
non-GAAP amount excludes $2.8 million of business transition and
related costs and the third quarter 2018 non-GAAP amount excludes
$0.8 million of such costs.
Net Income and Net Income per Share: GAAP net income was
$45.8 million, or $0.50 per diluted share, for the third quarter of
2019, compared to GAAP net income of $46.6 million, or $0.52 per
diluted share, for the same quarter of 2018. GAAP net income for
the third quarter of 2018 included $34.9 million of income from
equity investments.
Non-GAAP net income* was $60.4 million, or $0.65 per diluted
share, for the third quarter of 2019, compared to a non-GAAP net
income of $15.9 million, or $0.18 per share, for the same quarter
of 2018. The third quarter 2019 non-GAAP amount excludes $2.8
million of business transition and related costs and $11.5 million
of non-cash interest expense related to Dexcom’s senior convertible
notes. The third quarter 2018 non-GAAP amount excludes $0.8 million
of business transition and related costs, $3.4 million of non-cash
interest expense related to DexCom’s senior convertible notes, and
$34.9 million of income from equity investments.
Cash and Liquidity: As of September 30, 2019, Dexcom held
$1.430 billion in cash and marketable securities and our revolving
credit facility remains undrawn. The cash balance includes the net
proceeds from Dexcom’s fourth quarter 2018 convertible notes
offering and represents significant financial and strategic
flexibility as Dexcom continues to expand production capacity and
explore new market opportunities.
* See Table E below for a reconciliation of these GAAP and
non-GAAP financial measures.
1 Data presented at the European Association for the Study of
Diabetes annual meeting in September 2019 and subsequently
published online by Diabetes Care on October 10, 2019. Soupal J,
Petruzelkova L, Grunberger G, et al. “Glycemic Outcomes in Adults
With T1D Are Impacted More by Continuous Glucose Monitoring Than by
Insulin Delivery Method: 3 Years of Follow-Up From the COMISAIR
Study.” Diabetes Care. 2019.
Conference Call
Management will hold a conference call today starting at 4:30
p.m. (Eastern Time). The conference call will be concurrently
webcast. The link to the webcast will be available on the Dexcom IR
website at investors.dexcom.com by navigating to “Events and
Presentations,” and will be archived for future reference. To
listen to the conference call, please dial (800) 446-1671
(US/Canada) or (847) 413-3362 (International) and use the
confirmation number “47626295” approximately five minutes prior to
the start time.
Statement Regarding Use of Non-GAAP Financial
Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
Generally Accepted Accounting Principles (GAAP), please see the
section of the accompanying tables titled “About Non-GAAP Financial
Measures” as well as the related Table E.
About DexCom, Inc.
DexCom, Inc., headquartered in San Diego, California, is
developing and marketing continuous glucose monitoring systems for
use by people with diabetes and by healthcare providers.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements that are
not purely historical regarding Dexcom’s or its management’s
intentions, beliefs, expectations and strategies for the future.
All forward-looking statements and reasons why results might differ
included in this press release are made as of the date of this
release, based on information currently available to Dexcom, deal
with future events, are subject to various risks and uncertainties,
and actual results could differ materially from those anticipated
in those forward-looking statements. The risks and uncertainties
that may cause actual results to differ materially from Dexcom’s
current expectations are more fully described in Dexcom’s Annual
Report on Form 10-K for the period ended December 31, 2018, as
filed with the Securities and Exchange Commission on February 21,
2019. Except as required by law, Dexcom assumes no obligation to
update any such forward-looking statement after the date of this
report or to conform these forward-looking statements to actual
results.
DexCom, Inc.
Table A
Consolidated Balance
Sheets
(In millions, except par value
and share data)
September 30, 2019
December 31, 2018
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
395.6
$
1,137.0
Short-term marketable securities
1,034.3
248.6
Accounts receivable, net
234.9
226.7
Inventory
120.4
70.7
Prepaid and other current assets
30.5
16.5
Total current assets
1,815.7
1,699.5
Property and equipment, net
301.0
183.1
Operating lease right-of-use assets
34.6
—
Goodwill
18.4
18.7
Other assets
16.0
14.7
Total assets
$
2,185.7
$
1,916.0
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
232.4
$
147.1
Accrued payroll and related expenses
70.9
72.4
Operating lease liabilities, current
portion
14.8
—
Deferred revenue
4.3
2.9
Total current liabilities
322.4
222.4
Long-term senior convertible notes
1,047.1
1,010.3
Operating lease liabilities, net of
current portion
34.3
—
Other long-term liabilities
17.6
20.0
Total liabilities
1,421.4
1,252.7
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 5.0
million shares authorized; no shares issued and outstanding at
September 30, 2019 and December 31, 2018
—
—
Common stock, $0.001 par value, 200.0
million shares authorized; 92.3 million and 91.5 million shares
issued and outstanding, respectively, at September 30, 2019; and
91.1 million and 90.0 million shares issued and outstanding,
respectively, at December 31, 2018
0.1
0.1
Additional paid-in capital
1,651.6
1,560.6
Accumulated other comprehensive income
1.0
1.5
Accumulated deficit
(788.4
)
(798.9
)
Treasury stock, at cost; 0.8 million
shares at September 30, 2019 and December 31, 2018
(100.0
)
(100.0
)
Total stockholders’ equity
764.3
663.3
Total liabilities and stockholders’
equity
$
2,185.7
$
1,916.0
DexCom, Inc.
Table B
Consolidated Statements of
Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues
$
396.3
$
266.7
$
1,013.2
$
693.6
Cost of sales
149.4
98.1
391.0
252.5
Gross profit
246.9
168.6
622.2
441.1
Operating expenses:
Research and development
66.7
50.1
194.7
142.1
Selling, general and administrative
124.2
104.6
386.7
320.7
Total operating expenses
190.9
154.7
581.4
462.8
Operating income (loss)
56.0
13.9
40.8
(21.7
)
Interest expense
(15.1
)
(4.9
)
(45.0
)
(14.5
)
Income (loss) from equity investments
—
34.9
(4.2
)
85.0
Interest and other income, net
4.9
0.9
18.3
1.6
Income before income taxes
45.8
44.8
9.9
50.4
Income tax expense (benefit)
—
(1.8
)
1.5
(2.2
)
Net income
$
45.8
$
46.6
$
8.4
$
52.6
Basic net income per share
$
0.50
$
0.53
$
0.09
$
0.60
Shares used to compute basic net income
per share
91.3
88.5
90.9
88.0
Diluted net income per share
$
0.50
$
0.52
$
0.09
$
0.59
Shares used to compute diluted net income
per share
92.5
90.3
92.2
89.3
DexCom, Inc.
Table C
Revenue by Geography
(Dollars in millions)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
U.S. revenue
$
308.8
$
202.4
$
785.6
$
537.4
Year over year growth
53
%
34
%
46
%
32
%
% of total revenue
78
%
76
%
78
%
77
%
International revenue
$
87.5
$
64.3
$
227.6
$
156.2
Year over year growth
36
%
93
%
46
%
75
%
% of total revenue
22
%
24
%
22
%
23
%
Total revenue (1)
$
396.3
$
266.7
$
1,013.2
$
693.6
Year over year growth
49
%
44
%
46
%
39
%
(1)
The sum of the revenue components may not
equal total revenue due to rounding.
DexCom, Inc.
Table D
Revenue by Component
(Dollars in millions)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Sensor and other revenue(2) (3)
$
317.2
$
194.0
$
789.5
$
505.3
Year over year growth
64
%
47
%
56
%
42
%
% of total revenue
80
%
73
%
78
%
73
%
Transmitter revenue(2)
$
61.8
$
48.5
$
169.0
$
130.1
Year over year growth
27
%
27
%
30
%
27
%
% of total revenue
16
%
18
%
17
%
19
%
Receiver revenue
$
17.3
$
24.2
$
54.7
$
58.1
Year over year growth
(29
)%
68
%
(6
)%
45
%
% of total revenue
4
%
9
%
5
%
8
%
Total revenue(1)
$
396.3
$
266.7
$
1,013.2
$
693.5
Year over year growth
49
%
44
%
46
%
39
%
(1)
The sum of the revenue components may not
equal total revenue due to rounding.
(2)
Includes allocated subscription
revenue.
(3)
Includes services, freight, accessories,
etc.
DexCom, Inc.
Table E
Itemized Reconciliation
Between GAAP and Non-GAAP Financial Measures
(In millions, except per share
data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018 (As Adjusted)(1)
2019
2018 (As Adjusted)(1)
GAAP operating income (loss)
$
56.0
$
13.9
$
40.8
$
(21.7
)
Amortization of intangible assets
0.3
—
1.0
—
Business transition and related
costs(2)
2.8
0.8
15.9
5.5
Non-GAAP operating income
(loss)
$
59.1
$
14.7
$
57.7
$
(16.2
)
GAAP net income
$
45.8
$
46.6
$
8.4
$
52.6
Share-based compensation
24.4
27.1
79.1
77.3
Depreciation and amortization
12.9
7.8
34.4
20.5
Business transition and related
costs(2)
1.7
0.8
13.4
5.5
(Income) loss from equity
investments(3)
—
(34.9
)
4.2
(85.0
)
Interest expense and interest income
7.7
2.4
23.5
8.3
Income tax benefit (expense)
—
(1.8
)
1.5
(2.2
)
Adjusted EBITDA
$
92.5
$
48.0
$
164.5
$
77.0
GAAP net income
$
45.8
$
46.6
$
8.4
$
52.6
Amortization of intangible assets
0.3
—
1.0
—
Business transition and related
costs(2)
2.8
0.8
15.9
5.5
Non-cash interest expense(4)
11.5
3.4
34.1
10.0
(Income) loss from equity
investments(3)
—
(34.9
)
4.2
(85.0
)
Tax effect of adjustments(5)
—
—
—
—
Non-GAAP net income (loss)
$
60.4
$
15.9
$
63.6
$
(16.9
)
GAAP diluted net income per
share
$
0.50
$
0.52
$
0.09
$
0.59
Impact of diluted shares on net income
(basic net loss) per share(7)
—
—
—
0.01
Amortization of intangible assets
—
—
0.01
—
Business transition and related
costs(2)
0.03
0.01
0.17
0.06
Non-cash interest expense(4)
0.12
0.04
0.37
0.11
(Income) loss from equity
investments(3)
—
(0.39
)
0.05
(0.97
)
Tax effect of adjustments(5)
—
—
—
—
Non-GAAP net income (loss) per
share(6)
$
0.65
$
0.18
$
0.69
$
(0.19
)
Shares used in GAAP diluted per share
calculations:
92.5
90.3
92.2
89.3
Shares used in non-GAAP per share
calculations:
92.5
90.3
92.2
88.0
(1)
The 2018 non-GAAP presentation is adjusted
to include amortization of intangible assets and business
transition and related costs to conform to the 2019
presentation.
(2)
Business transition costs are primarily
related to the activities that DexCom announced on February 21,
2019.
(3)
(Income) loss from equity investments is
related to our investment in Tandem Diabetes Care, Inc.
(4)
Non-cash interest expense represents
accretion of the debt discount associated with our 2022 and 2023
Senior Convertible Notes.
(5)
We are tax-effecting GAAP-only items at a
0% tax rate because we record a full valuation allowance on our
deferred tax assets.
(6)
The sum of the non-GAAP net income (loss)
per share components may not equal the totals due to rounding.
(7)
Basic and diluted net loss per share are
the same because in loss periods common share equivalents are
anti-dilutive and therefore excluded from the calculation of
diluted loss per share. The per share adjustments labeled “Impact
of diluted shares on net income (basic net loss) per share” are
necessary to transition from or to diluted net income per share,
which includes diluted shares.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated November 6, 2019 contains
non-GAAP financial measures. Table E reconciles the non-GAAP
financial measures in that press release to the most directly
comparable financial measures prepared in accordance with Generally
Accepted Accounting Principles (GAAP). These non-GAAP financial
measures include non-GAAP operating income (loss), non-GAAP net
income (loss), and non-GAAP net income (loss) per share as well as
adjusted EBITDA.
DexCom reports non-GAAP financial measures in addition to, and
not as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. These non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles, differ from GAAP measures with the
same names, and may differ from non-GAAP financial measures with
the same or similar names that are used by other companies. We
believe that non-GAAP financial measures should only be used to
evaluate our results of operations in conjunction with the
corresponding GAAP financial measures. We encourage investors to
carefully consider our results under GAAP, as well as our
supplemental non-GAAP information and the reconciliations between
these presentations, to more fully understand our business.
We compute non-GAAP financial measures using the same consistent
method from quarter to quarter and year to year. We may consider
whether other significant items that arise in the future should be
excluded from our non-GAAP financial measures.
We exclude the following items from non-GAAP operating income
(loss):
- Non-cash collaborative research and development fees
- Amortization of intangible assets
- Business transition and related costs
In addition, we exclude the following items from non-GAAP net
income (loss) and non-GAAP net income (loss) per share:
- Income and loss from equity investments
- Non-cash interest expense on senior convertible notes
- Income tax effects of non-GAAP adjustments
We believe that presentation of financial results that exclude
these items provides useful supplemental information to investors
and facilitates the analysis of our core operating results as well
as comparison of operating results across reporting periods. Our
non-GAAP financial measures exclude amounts that we do not consider
part of ongoing operating results when planning and forecasting and
when assessing the performance of the organization and our senior
management.
The following are descriptions of the items we exclude from
non-GAAP operating income (loss), non-GAAP net income (loss), and
non-GAAP net income (loss) per share.
Non-cash collaborative research and development fees.
Collaborative research and development fees under our 2018
collaboration agreement with Verily Life Sciences may be paid in
cash or shares of our common stock, at our election. We exclude
non-cash collaborative research and development fees that we pay
using shares of our common stock from our non-GAAP financial
measures.
Amortization of intangible assets. When we acquire an entity, we
are required by GAAP to record the fair values of the intangible
assets of the entity on our balance sheet and amortize them over
their useful lives. We exclude these non-cash amortization charges
from our non-GAAP financial measures.
Business transition and related costs. Represents costs
associated with acquisition, integration and business transition
activities, including severance, relocation, consulting, leasehold
exit costs, third party merger and acquisition costs, and other
costs directly associated with such activities. We exclude business
transition and related costs from our non-GAAP financial measures
because they are unrelated to our ongoing business operating
results.
Income and loss from equity investments. Income and loss from
equity investments is related to our investment in Tandem Diabetes
Care. We exclude income and loss from equity investments from our
non-GAAP financial measures because they are unrelated to our
ongoing business operating results.
Non-cash interest expense. Represents the accretion of the debt
discount associated with our 2022 Notes and 2023 Senior Convertible
Notes. We exclude these non-cash interest expenses from our
non-GAAP financial measures.
Income tax effects of non-GAAP adjustments. We currently reflect
no income tax effects for our non-GAAP adjustments because we
record a full valuation allowance on our deferred tax assets.
Adjusted EBITDA excludes non-cash operating charges for
share-based compensation and depreciation and amortization as well
as non-operating items such as interest income, interest expense,
income and loss from equity investments, and income tax expense.
Adjusted EBITDA also excludes non-cash collaborative research and
development fees and business transition and related costs for the
reasons explained above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106005764/en/
INVESTOR RELATIONS CONTACT: Steven R. Pacelli Executive Vice
President, Strategy and Corporate Development (858) 200-0200
www.dexcom.com
MEDIA CONTACT: James McIntosh (619) 884-2118
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