DexCom, Inc. (Nasdaq: DXCM) today reported its financial results
as of and for the quarter ended June 30, 2020.
Second Quarter 2020 Financial Highlights:
- Revenue grew 34% versus the same quarter of the prior year to
$451.8 million
- U.S. revenue growth of 38% and international revenue growth of
21%
- GAAP operating income of $67.8 million or 15.0% of revenue, an
increase of 1520 basis points compared to the second quarter of
2019. Non-GAAP operating income* of $76.7 million or 17.0% of
revenue, an increase of 1510 basis points over the same quarter of
the prior year
- Strengthened balance sheet with successful $1.2 billion
convertible note offering
Strategic Highlights:
- Made Dexcom CGM systems available in the U.S. for use in
hospitals and other healthcare facilities to assist frontline
workers during the COVID-19 pandemic
- Obtained the CE Mark for use of the Dexcom G6 CGM system on the
back of the upper arm
- After the conclusion of the quarter, commenced launch of Dexcom
G6 Pro CGM system, the first and only single-use, professional CGM
available in blinded and unblinded modes
“Our growth in the second quarter reflects the commitment of the
Dexcom teams to rapidly adjust during the COVID-19 pandemic and
ensure service to our customers and our communities,” said Kevin
Sayer, Dexcom’s chairman, president and CEO. “We are pleased to
reinstate 2020 guidance as we press forward to bring Dexcom CGM to
the many more who stand to benefit from real-time glucose
monitoring.”
2020 Annual Guidance
The company is reinstating guidance for fiscal year 2020
revenue, gross profit, operating margin, and Adjusted EBITDA margin
as follows:
- Revenue of approximately $1.850 billion (25% growth)
- Non-GAAP Gross profit margin to meet or exceed 65%
- Non-GAAP Operating margin to meet or exceed 14%
- Adjusted EBITDA margin to meet or exceed 24%
Second Quarter 2020 Financial Results
Revenue: In the second quarter of 2020, worldwide revenue
grew 34% to $451.8 million, up from $336.4 million in the second
quarter of 2019. 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: GAAP gross profit totaled $284.1 million or
62.9% of sales for the second quarter of 2020, compared to $206.5
million or 61.4% of sales in the second quarter of 2019. Non-GAAP
gross profit* totaled $289.7 million or 64.1% of sales for the
second quarter of 2020, compared to $206.5 million or 61.4% of
sales in the second quarter of 2019. The second quarter 2020
non-GAAP amount excludes $5.6 million of incremental labor costs
incurred as a result of the COVID-19 outbreak.
Operating Income: GAAP operating income for the second
quarter of 2020 was $67.8 million, compared to a GAAP operating
loss of $0.8 million for the second quarter of 2019.
Non-GAAP operating income* for the second quarter of 2020 was
$76.7 million, compared to non-GAAP operating income of $6.2
million for the second quarter of 2019. The second quarter 2020
non-GAAP amount excludes $7.8 million of incremental costs incurred
as a result of the COVID-19 outbreak, primarily related to payroll,
consulting support, IT infrastructure and facilities costs. The
second quarter 2019 non-GAAP amount excludes $6.7 million of
business transition and related costs.
Net Income and Net Income per Share: GAAP net income was
$46.3 million, or $0.48 per diluted share, for the second quarter
of 2020, compared to a GAAP net loss of $10.5 million, or $0.12 per
diluted share, for the same quarter of 2019.
Non-GAAP net income* was $77.1 million, or $0.79 per diluted
share, for the second quarter of 2020, compared to non-GAAP net
income of $7.8 million, or $0.08 per diluted share, for the same
quarter of 2019. The second quarter 2020 non-GAAP amount excludes
$16.5 million of non-cash interest expense related to Dexcom’s
senior convertible notes, $7.8 million of incremental costs
incurred as a result of the COVID-19 outbreak and a $5.4 million
loss on extinguishment of debt. The second quarter 2019 non-GAAP
amount excludes $11.3 million of non-cash interest expense related
to Dexcom’s senior convertible notes and $6.7 million of business
transition and related costs.
Cash and Liquidity: As of June 30, 2020, Dexcom held
$2.51 billion in cash and marketable securities and our revolving
credit facility remains undrawn. The cash balance 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.
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
Investor Relations 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)
447-0521 (US/Canada) or (847) 413-3238 (International) and use the
confirmation number “49260064” 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. empowers people to take control of diabetes through
innovative continuous glucose monitoring (CGM) systems.
Headquartered in San Diego, California, Dexcom has emerged as a
leader of diabetes care technology. By listening to the needs of
users, caregivers, and providers, Dexcom simplifies and improves
diabetes management around the world.
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,
including statements with respect to the impacts of the COVID-19
pandemic on Dexcom and our outlook for the full year 2020. 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 Quarterly
Report on Form 10-Q for the period ended June 30, 2020, as filed
with the Securities and Exchange Commission on July 28, 2020.
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)
June 30, 2020
December 31, 2019
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
530.0
$
446.2
Short-term marketable securities
1,978.8
1,087.1
Accounts receivable, net
296.5
286.3
Inventory
165.3
119.8
Prepaid and other current assets
62.4
30.0
Total current assets
3,033.0
1,969.4
Property and equipment, net
384.3
321.3
Operating lease right-of-use assets
71.6
71.5
Goodwill
18.7
18.6
Other assets
14.2
14.2
Total assets
$
3,521.8
$
2,395.0
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
315.9
$
256.4
Accrued payroll and related expenses
67.4
88.5
Operating lease liabilities, current
portion
15.1
13.6
Deferred revenue
1.7
1.7
Total current liabilities
400.1
360.2
Long-term senior convertible notes
1,658.8
1,059.7
Operating lease liabilities, net of
current portion
73.7
72.4
Other long-term liabilities
35.3
20.1
Total liabilities
2,167.9
1,512.4
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 5.0
million shares authorized; no shares issued and outstanding at June
30, 2020 and December 31, 2019
—
—
Common stock, $0.001 par value, 200.0
million shares authorized; 96.2 million and 95.4 million shares
issued and outstanding, respectively, at June 30, 2020; and 92.4
million and 91.6 million shares issued and outstanding,
respectively, at December 31, 2019
0.1
0.1
Additional paid-in capital
2,079.8
1,675.9
Accumulated other comprehensive income
3.5
2.3
Accumulated deficit
(629.5
)
(695.7
)
Treasury stock, at cost; 0.8 million
shares at June 30, 2020 and December 31, 2019
(100.0
)
(100.0
)
Total stockholders’ equity
1,353.9
882.6
Total liabilities and stockholders’
equity
$
3,521.8
$
2,395.0
DexCom, Inc.
Table B
Consolidated Statements of
Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020
2019
2020
2019
Revenues
$
451.8
$
336.4
$
856.9
$
616.9
Cost of sales
167.7
129.9
316.3
241.6
Gross profit
284.1
206.5
540.6
375.3
Operating expenses:
Research and development
79.9
69.0
153.0
128.0
Selling, general and administrative
136.4
138.3
286.2
262.5
Total operating expenses
216.3
207.3
439.2
390.5
Operating income (loss)
67.8
(0.8
)
101.4
(15.2
)
Interest expense
(20.3
)
(15.0
)
(35.7
)
(29.9
)
Loss on extinguishment of debt
(5.4
)
—
(5.4
)
—
Loss from equity investments
—
—
—
(4.2
)
Interest and other income, net
4.1
6.5
8.3
13.4
Income (loss) before income taxes
46.2
(9.3
)
68.6
(35.9
)
Income tax expense (benefit)
(0.1
)
1.2
2.4
1.5
Net income (loss)
$
46.3
$
(10.5
)
$
66.2
$
(37.4
)
Basic net income (loss) per share
$
0.49
$
(0.12
)
$
0.71
$
(0.41
)
Shares used to compute basic net income
(loss) per share
93.8
91.1
92.8
90.7
Diluted net income (loss) per share
$
0.48
$
(0.12
)
$
0.69
$
(0.41
)
Shares used to compute diluted net income
(loss) per share
97.0
91.1
95.6
90.7
DexCom, Inc.
Table C
Revenue by Geography
(Dollars in millions)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020
2019
2020
2019
U.S. revenue
$
367.1
$
266.3
$
659.4
$
476.8
Year over year growth
38
%
40
%
38
%
42
%
% of total revenue
81
%
79
%
77
%
77
%
International revenue
$
84.7
$
70.1
$
197.5
$
140.1
Year over year growth
21
%
33
%
41
%
52
%
% of total revenue
19
%
21
%
23
%
23
%
Total revenue (1)
$
451.8
$
336.4
$
856.9
$
616.9
Year over year growth
34
%
39
%
39
%
45
%
(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
June 30,
Six Months Ended
June 30,
2020
2019
2020
2019
Sensor and other revenue (1) (2)
$
364.5
$
260.4
$
689.5
$
472.3
Year over year growth
40
%
45
%
46
%
52
%
% of total revenue
81
%
77
%
80
%
77
%
Hardware revenue (1)(3)
$
87.3
$
76.0
$
167.4
$
144.6
Year over year growth
15
%
21
%
16
%
25
%
% of total revenue
19
%
23
%
20
%
23
%
Total revenue (4)
$
451.8
$
336.4
$
856.9
$
616.9
Year over year growth
34
%
39
%
39
%
45
%
(1) Includes allocated subscription
revenue.
(2) Includes services, freight,
accessories, etc.
(3) Includes transmitter and receiver
revenue.
(4) The sum of the revenue components may
not equal total revenue due to rounding.
DexCom, Inc.
Table E
Itemized Reconciliation
Between GAAP and Non-GAAP Financial Measures
(In millions, except per share
data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020
2019
2020
2019
GAAP gross profit
$
284.1
$
206.5
$
540.6
$
375.3
COVID-19 costs (1)
5.6
—
7.8
—
Non-GAAP gross profit
$
289.7
$
206.5
$
548.4
$
375.3
GAAP operating income (loss)
$
67.8
$
(0.8
)
$
101.4
$
(15.2
)
Amortization of intangible assets
0.6
0.3
1.2
0.7
Business transition and related costs
(2)
0.5
6.7
0.3
13.1
COVID-19 costs (1)
7.8
—
11.0
—
Litigation settlement costs (3)
—
—
6.1
—
Non-GAAP operating income
(loss)
$
76.7
$
6.2
$
120.0
$
(1.4
)
GAAP net income (loss)
$
46.3
$
(10.5
)
$
66.2
$
(37.4
)
Business transition and related costs
(2)
0.5
5.6
0.3
11.7
COVID-19 costs (1)
7.8
—
11.0
—
Depreciation and amortization
15.3
11.6
28.3
21.5
Litigation settlement costs (3)
—
—
6.1
—
Loss on extinguishment of debt (5)
5.4
—
5.4
—
Loss from equity investments (6)
—
—
—
4.2
Share-based compensation
30.7
29.7
54.6
54.7
Interest expense and interest income
16.7
8.3
26.1
15.8
Income tax benefit (expense)
(0.1
)
1.2
2.4
1.5
Adjusted EBITDA
$
122.6
$
45.9
$
200.4
$
72.0
GAAP net income (loss)
$
46.3
$
(10.5
)
$
66.2
$
(37.4
)
Amortization of intangible assets
0.6
0.3
1.2
0.7
Business transition and related costs
(2)
0.5
6.7
0.3
13.1
COVID-19 costs (1)
7.8
—
11.0
—
Litigation settlement costs (3)
—
—
6.1
—
Non-cash interest expense (4)
16.5
11.3
28.3
22.6
Loss on extinguishment of debt (5)
5.4
—
5.4
—
Loss from equity investments (6)
—
—
—
4.2
Tax effect of adjustments (7)
—
—
—
—
Non-GAAP net income
$
77.1
$
7.8
$
118.5
$
3.2
GAAP diluted net income (loss) per
share
$
0.48
$
(0.12
)
$
0.69
$
(0.41
)
Impact of diluted shares on net income
(basic net loss) per share (8)
—
—
—
0.01
Amortization of intangible assets
0.01
—
0.01
0.01
Business transition and related costs
(2)
0.01
0.07
—
0.14
COVID-19 costs (1)
0.08
—
0.12
—
Litigation settlement costs (3)
—
—
0.06
—
Non-cash interest expense (4)
0.17
0.12
0.30
0.25
Loss on extinguishment of debt (5)
0.06
—
0.06
—
Loss from equity investments (6)
—
—
—
0.05
Tax effect of adjustments (7)
—
—
—
—
Non-GAAP net income per share
(9)
$
0.79
$
0.08
$
1.24
$
0.03
Shares used in GAAP diluted per share
calculations
97.0
91.1
95.6
90.7
Shares used in non-GAAP per share
calculations
97.0
92.1
95.6
92.1
(1) Represents costs associated with the
COVID-19 outbreak related to taking the necessary precautions for
essential personnel to operate safely both in person as well as
remotely.
(2) Business transition costs are
primarily related to the Restructuring Plan that DexCom announced
on February 21, 2019.
(3) Represents costs associated with a
settlement of litigation and proceedings related to a patent
infringement lawsuit.
(4) Non-cash interest expense represents
accretion of the debt discount associated with our senior
convertible notes.
(5) Loss on extinguishment of debt is
related to the repurchase and conversions of our 2022 Senior
Convertible Notes.
(6) Loss from equity investments is
related to our investment in Tandem Diabetes Care, Inc.
(7) We are tax-effecting GAAP-only items
at a 0% tax rate because we record a full valuation allowance on
our deferred tax assets.
(8) 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.
(9) The sum of the non-GAAP net income
(loss) per share components may not equal the totals due to
rounding.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated July 28, 2020 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 gross profit, 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 gross profit:
We exclude the following items from non-GAAP operating income
(loss):
- Amortization of intangible assets
- Collaborative research and development fees
- Business transition and related costs
- COVID-19 costs
- Litigation settlement costs
In addition to the items listed above, we exclude the following
items from non-GAAP net income and non-GAAP net income per
share:
- Non-cash interest expense on senior convertible notes
- Loss on extinguishment of debt
- Income and loss from equity investments
- 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 gross profit, non-GAAP operating income (loss), non-GAAP
net income, and non-GAAP net income per share.
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.
Collaborative research and development fees. Represents
milestone and incentive payments under our collaborative research
and development arrangement. We may elect to pay these fees by
issuing shares of our common stock, and when we do so we exclude
these non-cash fees 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.
COVID-19 costs. Represents costs associated with the COVID-19
outbreak related to taking the necessary precautions for essential
personnel to operate safely both in person as well as remotely.
Cost incurred include items like incremental payroll costs,
consulting support, IT infrastructure and facilities related costs.
We exclude these costs from our non-GAAP financial measures because
they are unrelated to our ongoing business operating results.
Litigation settlement costs. Represents costs associated with
the settlement of litigation and proceedings related to a patent
infringement lawsuit. We exclude significant one-time litigation
settlement charges and related costs when evaluating our operating
performance because we do not incur such charges on a predictable
basis and exclusion of such charges enables more consistent
evaluation of our operating performance.
Non-cash interest expense on senior convertible notes.
Represents the accretion of the debt discount associated with our
senior convertible notes. We exclude these non-cash interest
expenses from our non-GAAP financial measures.
Loss on extinguishment of debt. Represents losses associated
with repurchases and/or conversions of our senior convertible
notes. We exclude these losses 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.
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,
loss on extinguishment of debt, income and loss from equity
investments, and income tax expense. For the reasons explained
above, adjusted EBITDA also excludes non-cash collaborative
research and development fees, business transition and related
costs, COVID-19 costs, and litigation settlement costs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005250/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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