The Company also Announces Expansion and Reorganization of its
Customer Support Functions
DexCom, Inc. (Nasdaq: DXCM) today reported its financial results
as of and for the quarter and fiscal year ended December 31,
2018.
Fourth Quarter 2018 Highlights:
- Revenue grew 53% versus the same
quarter of the prior year to $338.0 million
- U.S. revenue growth of 50% and
international revenue growth of 72%
- Advanced next generation pipeline and
improved future profitability profile with amended Verily
collaboration
- Strengthened balance sheet to provide
increased financial and strategic flexibility
Full Year 2018 Highlights:
- Revenue grew 44% versus the prior year
to $1.032 billion
- U.S. revenue growth of 37% and
international revenue growth of 74%
- Obtained FDA and CE Mark approval for
next generation Dexcom G6 system and initiated worldwide
launch
- Enhanced interoperability and decision
support initiatives, including acquisition of TypeZero
Technologies
“Dexcom achieved several landmark results in 2018, highlighted
by the approval and launch of our G6 platform, strong growth that
led us beyond $1 billion in annual sales, and an improved
profitability profile that culminated in our first positive annual
earnings on a non-GAAP basis,” said Kevin Sayer, Dexcom’s Chairman,
President and CEO. “With rising awareness of the benefits of
real-time CGM, we are well positioned to continue this momentum in
2019.”
Dexcom Reorganizing and Expanding Customer Support
Functions
In conjunction with its earnings release, Dexcom is also
announcing the expansion of its customer and technical support
capabilities, including growth in its call center in the
Philippines and with certain third parties. This initiative is
designed to allow Dexcom to better serve its expanding patient base
and will result in a reduction in certain areas of the company’s
domestic workforce, leading to pre-tax charges of approximately $25
million in 2019. Dexcom expects to record the majority of these
charges in the first half of 2019 and that the bulk of the
activities will be completed by the end of 2019.
“Dexcom remains focused on a best-in-class patient experience,
and this initiative strengthens our ability to support our growth
trajectory,” continued Mr. Sayer. “We are sincerely grateful for
the contributions of all affected employees who have played a
significant role in the advancement Dexcom’s mission. We have made
this move proactively to support future demand and position the
company to meet our long-term operating targets.”
2019 Annual Guidance
Dexcom reaffirmed its revenue projection and provided the
following gross profit and operating margin expectations for full
fiscal year 2019:
- Revenue of $1.175 billion to $1.225
billion
- Gross profit margin of approximately
65%
- Non-GAAP operating margin of
approximately 5.5%
- Non-GAAP adjusted EBITDA margin of
approximately 18%
Fourth Quarter 2018 Financial Results
Revenue: In the fourth quarter of 2018, worldwide revenue
grew 53% to $338.0 million, up from $221.0 million in the fourth
quarter of 2017. The growth was driven by strength in new patients
across the Commercial and Medicare channels, as well as Dexcom’s
direct markets outside the U.S.
Gross Profit: Gross profit totaled $222.8 million or
65.9% of sales for the fourth quarter of 2018, compared to $153.5
million or 69.5% of sales in the fourth quarter of 2017.
Operating Income: GAAP operating loss for the fourth
quarter of 2018 was $164.6 million, including the impact of a
$217.7 million non-cash charge related to the amended Verily
agreement announced in November 2018, compared to GAAP operating
income of $12.0 million in the fourth quarter of 2017. Fourth
quarter non-GAAP operating income* was $53.1 million or 15.7% of
revenues. This compares favorably to non-GAAP operating income of
$12.0 million or 5.4% of revenues in the fourth quarter of
2017.
Net Income and Earnings per Share: GAAP net loss was
$179.7 million, or $2.03 per basic share, for the fourth quarter of
2018, compared to a GAAP net loss of $9.4 million, or $0.11 per
basic share, for the same quarter of 2017. The GAAP net loss for
the fourth quarter of 2018 included the $217.7 million non-cash
charge related to the amended Verily agreement.
Non-GAAP net income* was $48.9 million, or $0.54 per diluted
share, for the fourth quarter of 2018, compared to non-GAAP net
income of $12.1 million, or $0.14 per diluted share, for the same
quarter of 2017. The fourth quarter 2018 amount excludes $6.0
million of non-cash interest expense related to DexCom’s senior
convertible notes, a $4.9 million loss related to equity
investments, and the non-cash charge related to the amended Verily
agreement.
Cash and Liquidity: As of December 31, 2018, Dexcom
held $1.386 billion in cash and marketable securities and
maintained full availability on its $200.0 million revolving credit
facility. The cash balance includes the net proceeds from Dexcom’s
November 2018 convertible notes offering and represents significant
financial and strategic flexibility as Dexcom continues to expand
production capacity and explore new market opportunities.
* See the tables 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,
Inc. website at www.dexcom.com by navigating to “About Us,” then
“Investor Relations,” and then “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 “47626299”
approximately five minutes prior to the start time.
Statement Regarding Use of Non-GAAP Financial
Measures
Dexcom reports non-GAAP financial measures in addition to, and
not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. Our financial measures under
GAAP include certain non-cash collaborative research and
development fees, income and expense related to our equity
investment in Tandem Diabetes Care, Inc., and certain interest
expense related to our senior convertible notes, as shown in the
itemized reconciliation between GAAP and non-GAAP financial
measures included in this press release. Management believes that
presentation of operating results that excludes these items
provides useful supplemental information to investors and
facilitates the analysis of our core operating results and
comparison of operating results across reporting periods.
Management also believes that this supplemental non-GAAP
information is therefore useful to investors in analyzing and
assessing our past and future operating performance.
These non-GAAP measures may be different from non-GAAP measures
used by other companies. In addition, these non-GAAP measures are
not based on any comprehensive set of accounting rules or
principles. We believe that non-GAAP measures have limitations in
that they do not reflect all of the amounts associated with our
results of operations as determined in accordance with U.S. GAAP
and that these measures should only be used to evaluate our results
of operations in conjunction with the corresponding GAAP measures.
We encourage investors to carefully consider our results under
GAAP, as well as our supplemental non-GAAP information and the
reconciliation between these presentations, to more fully
understand our business.
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 data)
December 31,2018
December 31,2017
Assets Current assets: Cash and cash equivalents $ 1,137.0 $
441.5 Short-term marketable securities 248.6 107.1 Accounts
receivable, net 226.7 134.3 Inventory 70.7 45.2 Prepaid and other
current assets 16.5 16.6 Total current assets 1,699.5
744.7 Property and equipment, net 183.1 145.6 Goodwill 18.7 12.1
Other assets 14.7 1.7 Total assets $ 1,916.0 $
904.1
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable and accrued liabilities $ 147.1 $
87.2 Accrued payroll and related expenses 72.4 48.5 Deferred
revenue 2.9 3.2 Total current liabilities 222.4 138.9
Other liabilities 20.0 18.2 Long-term senior convertible notes
1,010.3 327.6 Total liabilities 1,252.7 484.7
Commitments and contingencies Stockholders’ equity: Preferred
stock, $0.001 par value, 5.0 million shares authorized; no shares
issued and outstanding at December 31, 2018 and December 31, 2017,
respectively — — Common stock, $0.001 par value, 200.0 million
shares authorized; 91.1 million and 90.0 million shares issued and
outstanding, respectively, at December 31, 2018; 87.3 million and
87.0 million shares issued and outstanding, respectively, at
December 31, 2017 0.1 0.1 Additional paid-in capital 1,560.6
1,093.7 Accumulated other comprehensive income (loss) 1.5 (2.6 )
Accumulated deficit (798.9 ) (671.8 ) Treasury stock at cost; 0.8
million shares at December 31, 2018 (100.0 ) — Total
stockholders’ equity 663.3 419.4 Total liabilities
and stockholders’ equity $ 1,916.0 $ 904.1
DexCom, Inc. Table B Consolidated
Statements of Operations (In millions—except per share
data) Three Months Ended December
31, Twelve Months Ended December 31, 2018
2017 2018 2017 Revenue $ 338.0 $
221.0 $ 1,031.6 $ 718.5 Cost of sales 115.2 67.5
367.7 226.4 Gross profit 222.8 153.5 663.9 492.1
Operating expenses Research and development 57.6 48.7 199.7 185.4
Collaborative research and development fee 217.7 — 217.7 — Selling,
general and administrative 112.1 92.8 432.8
349.2 Total operating expenses 387.4 141.5
850.2 534.6 Operating income (loss) (164.6 ) 12.0
(186.3 ) (42.5 ) Interest expense (8.2 ) (4.7 ) (22.7 ) (12.8 )
Income (loss) from equity investments (4.9 ) — 80.1 — Interest and
other income (expense), net 0.8 1.3 2.4 6.7
Income (loss) before income taxes (176.9 ) 8.6 (126.5 )
(48.6 ) Income tax expense 2.8 18.0 0.6 1.6
Net loss $ (179.7 ) $ (9.4 ) $ (127.1 ) $ (50.2 )
Basic and diluted net loss per share $ (2.03 ) $ (0.11 ) $ (1.44 )
$ (0.58 ) Shares used to compute basic and diluted net loss per
share 88.7 86.9 88.2 86.3
DexCom, Inc. Table C Revenue by Geography
(In millions) (Unaudited) Three
Months Ended December 31, Twelve Months Ended
December 31, 2018 2017 2018
2017 U.S. revenue $ 281.0 $ 187.8 $ 818.4 $ 596.2
Year over year growth 50 % 25 % 37 % 20 % % of total revenue 83 %
85 % 79 % 83 % International revenue $ 57.0 $ 33.2 $ 213.2 $
122.3 Year over year growth 72 % 58 % 74 % 61 % % of total revenue
17 % 15 % 21 % 17 % Total revenue (1) $ 338.0 $ 221.0 $
1,031.6 $ 718.5 Year over year growth 53 % 29 % 44 % 25 %
(1) The sum of the revenue components may not equal total
revenue due to rounding.
DexCom, Inc. Table D Revenue by
Component (In millions) (Unaudited
Three Months Ended December 31, Twelve Months
Ended December 31, 2018
2017(2)
2018
2017(2)
Sensor and other revenue(3) (4) $ 252.8 $ 160.6 $ 758.1 $ 515.6
Year over year growth 57 % 30 % 47 % 26 % % of total revenue 75 %
73 % 73 % 72 % Transmitter revenue(3) $ 59.0 $ 42.4 $ 189.1
$ 144.9 Year over year growth 39 % 31 % 31 % 31 % % of total
revenue 17 % 19 % 18 % 20 % Receiver revenue $ 26.3 $ 18.0 $
84.4 $ 58.1 Year over year growth 46 % 21 % 45 % 11 % % of total
revenue 8 % 8 % 8 % 8 % Total revenue(1) $ 338.0 $ 221.0 $
1,031.6 $ 718.5 Year over year growth 53 % 29 % 44 % 25 %
(1) The sum of the revenue components may not equal total
revenue due to rounding.(2) Prior period reporting has been
adjusted to conform to current component level reporting.(3)
Includes allocated subscription revenue.(4) 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 December 31,
Twelve Months Ended December 31, 2018
2017(As
Adjusted)(1)
2018
2017(As
Adjusted)(1)
GAAP operating loss $ (164.6 ) $ 12.0 $ (186.3 ) $ (42.5 )
Non-cash collaborative research and development fee(2) 217.7
— 217.7 —
Non-GAAP operating income
(loss) $ 53.1 $ 12.0 $ 31.4 $ (42.5 )
GAAP net loss $ (179.7 ) $ (9.4 ) $ (127.1 ) $ (50.2
) Non-cash collaborative research and development fee(2) 217.7 —
217.7 — Share-based compensation 24.6 24.9 101.9 106.2 Depreciation
and amortization 8.6 4.2 29.1 16.1 (Income) loss from equity method
investments(5) 4.9 — (80.1 ) — Interest expense and interest income
3.9 3.3 12.2 9.5 Non-cash foreign exchange gains/losses 3.5 0.1 8.1
(3.4 ) Income tax expense 2.8 18.0 0.6 1.6
Non-GAAP adjusted EBITDA margin $ 86.3 $ 41.1
$ 162.4 $ 79.8
GAAP net loss $
(179.7 ) $ (9.4 ) $ (127.1 ) $ (50.2 ) Non-cash collaborative
research and development fee(2) 217.7 — 217.7 — Non-cash interest
expense(3) 6.0 3.3 16.0 8.2 Reversal of deferred tax benefit on
senior convertible notes(4) — 18.2 — — (Income) loss from equity
method investments(5) 4.9 — (80.1 ) — Tax effect of adjustments(6)
— — — —
Non-GAAP net income
(loss) $ 48.9 $ 12.1 $ 26.5 $ (42.0 )
GAAP basic and diluted net loss per share(8) $
(2.03 ) $ (0.11 ) $ (1.44 ) $ (0.58 ) Impact of diluted shares on
GAAP net loss per share(8) 0.04 — 0.01 — Non-cash collaborative
research and development fee(2) 2.41 — 2.44 — Non-cash interest
expense(3) 0.07 0.04 0.18 0.10 Reversal of deferred tax benefit on
senior convertible notes(4) — 0.21 — — (Income) loss from equity
method investments(5) 0.05 — (0.90 ) — Tax effect of adjustments(6)
— — — —
Non-GAAP diluted net income
(basic net loss) per share(7) $ 0.54 $ 0.14
$ 0.30 $ (0.49 ) Shares used to compute
diluted net income (basic net loss) per share: Basic 88.7 86.9 88.2
86.3 Diluted 90.4 87.6 89.1 86.3
(1) The 2017 non-GAAP presentation was adjusted to include
non-cash interest expense to conform to the 2018 presentation.(2)
Non-cash collaborative research and development fee under our 2018
collaboration and licensing agreement with Verily Life Sciences.(3)
Non-cash interest expense represents accretion of the debt discount
associated with our 2022 and 2023 Senior Convertible Notes.(4)
Non-cash tax benefit associated with our 2022 Senior Convertible
Notes.(5) Income and loss from equity method investments is related
to our investment in Tandem Diabetes Care, Inc.(6) We are
tax-effecting GAAP-only items at a 0% tax rate because we record a
full valuation allowance on our deferred tax assets.(7) The sum of
the basic and diluted non-GAAP net income (loss) per share
components may not equal the totals due to rounding.(8) GAAP 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 adjustments
shown above are necessary to transition from GAAP diluted net loss
per share, which excludes diluted shares, to non-GAAP diluted net
income per share, which includes diluted shares.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190221005883/en/
INVESTOR RELATIONS CONTACT:Steven R. PacelliExecutive Vice
President, Strategy and Corporate Development(858)
200-0200www.dexcom.com
MEDIA CONTACT:Lisa Schmidtke(480) 292-0786
DexCom (NASDAQ:DXCM)
Historical Stock Chart
From Mar 2024 to Apr 2024
DexCom (NASDAQ:DXCM)
Historical Stock Chart
From Apr 2023 to Apr 2024