Dexcom Reports Third Quarter 2019 Financial Results
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
2019 Annual Guidance
-
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
Gross Profit: Gross profit totaled
Operating Income: GAAP operating income for the third quarter of 2019 was
Non-GAAP operating income* for the third quarter of 2019 was
Net Income and Net Income per Share: GAAP net income was
Non-GAAP net income* was
Cash and Liquidity: As of
* See Table E below for a reconciliation of these GAAP and non-GAAP financial measures.
1 Data presented at the
Conference Call
Management will hold a conference call today starting at
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
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, Inc. |
||||||||
Table A |
||||||||
Consolidated Balance Sheets |
||||||||
(In millions, except par value and share data) |
||||||||
|
September 30,
|
|
December 31,
|
|||||
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
|
|
Nine Months Ended
|
|||||||||||||||||||||
|
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
|
|
Nine Months Ended
|
|||||||||||||||||||||
|
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
|
|
Nine Months Ended
|
|||||||||||||||||||||
|
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
|
|
Nine Months Ended
|
|||||||||||||||||||||
|
2019 |
|
|
2018
|
|
2019 |
|
|
2018
|
|||||||||||||||
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. |
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(2) |
Business transition costs are primarily related to the activities that DexCom announced on February 21, 2019. |
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(3) |
(Income) loss from equity investments is related to our investment in Tandem Diabetes Care, Inc. |
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(4) |
Non-cash interest expense represents accretion of the debt discount associated with our 2022 and 2023 Senior Convertible Notes. |
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(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. |
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(6) |
The sum of the non-GAAP net income (loss) per share components may not equal the totals due to rounding. |
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(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
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
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/
Source:
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