DexCom, Inc. (Nasdaq: DXCM) today reported its financial results
as of and for the quarter and fiscal year ended December 31,
2019.
Fourth Quarter 2019 Highlights:
- Revenue grew 37% versus the same quarter of the prior year to
$462.8 million
- U.S. revenue growth of 34% and international revenue growth of
52%
- GAAP operating income of $101.5 million or 21.9% of revenue.
Non-GAAP operating income* of $103.6 million or 22.4% of
revenue
- Commenced launch of G6 into Medicare
Full Year 2019 Highlights:
- Full year revenue grew 43% versus the prior year to $1,476.0
million
- U.S. revenue growth of 42% and international revenue growth of
48%
- GAAP operating income of $142.3 million or 9.6% of revenue.
Non-GAAP operating income* of $161.3 million or 10.9% of
revenue
- Doubled G6 sensor manufacturing capacity
“Dexcom sustained its revenue growth momentum in 2019, exceeding
40% growth for the second consecutive year and driving our first
full year of GAAP profitability,” said Kevin Sayer, Dexcom’s
Chairman, President and CEO. “We have taken significant steps to
prepare the business for long-term growth and believe we are
well-positioned as we enter 2020.”
2020 Annual Guidance
Dexcom reaffirmed its revenue projection and provided the
following gross profit, operating margin, and Adjusted EBITDA
margin expectations for full fiscal year 2020:
- Revenue of $1.725 billion to $1.775 billion (17% - 20%
growth)
- Gross profit margin of approximately 64%
- Non-GAAP operating margin of approximately 13%
- Non-GAAP adjusted EBITDA margin of approximately 23%
Fourth Quarter 2019 Financial Results
Revenue: In the fourth quarter of 2019, worldwide revenue
grew 37% to $462.8 million, up from $338.0 million in the fourth
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 $309.3 million or
66.8% of sales for the fourth quarter of 2019, compared to $222.8
million or 65.9% of sales in the fourth quarter of 2018.
Operating Income: GAAP operating income for the fourth
quarter of 2019 was $101.5 million, compared to a GAAP operating
loss of $164.6 million for the fourth quarter of 2018.
Non-GAAP operating income* for the fourth quarter of 2019 was
$103.6 million, compared to a non-GAAP operating income of $54.4
million for the fourth quarter of 2018.
Net Income and Net Income per Share: GAAP net income was
$92.7 million, or $1.00 per diluted share, for the fourth quarter
of 2019, compared to GAAP net loss of $179.7 million, or $2.03 per
diluted share, for the same quarter of 2018. 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 $106.5 million, or $1.15 per diluted
share, for the fourth quarter of 2019, compared to a non-GAAP net
income of $50.2 million, or $0.56 per diluted share, for the same
quarter of 2018. The fourth quarter 2019 non-GAAP amount excludes
$11.7 million of non-cash interest expense related to Dexcom’s
senior convertible notes, $1.3 million of business transition and
related costs and $0.8 million of amortization of intangible
assets. The fourth quarter 2018 non-GAAP amount excludes the $217.7
million non-cash charge related to the amended Verily agreement,
$6.0 million of non-cash interest expense related to Dexcom’s
senior convertible notes, $4.9 million of loss from equity
investments, $0.8 million of business transition and related costs
and $0.5 million of amortization of intangible assets.
Cash and Liquidity: As of December 31, 2019, Dexcom held
$1,533.3 million 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)
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, 2019, as
filed with the Securities and Exchange Commission on February 13,
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)
December 31, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
446.2
$
1,137.0
Short-term marketable securities
1,087.1
248.6
Accounts receivable, net
286.3
226.7
Inventory
119.8
70.7
Prepaid and other current assets
30.0
16.5
Total current assets
1,969.4
1,699.5
Property and equipment, net
321.3
183.1
Operating lease right-of-use assets
71.5
—
Goodwill
18.6
18.7
Other assets
14.2
14.7
Total assets
$
2,395.0
$
1,916.0
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
256.4
$
147.1
Accrued payroll and related expenses
88.5
72.4
Operating lease liabilities, current
portion
13.6
—
Deferred revenue
1.7
2.9
Total current liabilities
360.2
222.4
Long-term senior convertible notes
1,059.7
1,010.3
Operating lease liabilities, net of
current portion
72.4
—
Other long-term liabilities
20.1
20.0
Total liabilities
1,512.4
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
December 31, 2019 and December 31, 2018
—
—
Common stock, $0.001 par value, 200.0
million shares authorized; 92.4 million and 91.6 million shares
issued and outstanding, respectively, at December 31, 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
1,675.9
1,560.6
Accumulated other comprehensive income
2.3
1.5
Accumulated deficit
(695.7
)
(798.9
)
Treasury stock, at cost; 0.8 million
shares at December 31, 2019 and December 31, 2018
(100.0
)
(100.0
)
Total stockholders’ equity
882.6
663.3
Total liabilities and stockholders’
equity
$
2,395.0
$
1,916.0
DexCom, Inc.
Table B
Consolidated Statements of
Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Revenues
$
462.8
$
338.0
$
1,476.0
$
1,031.6
Cost of sales
153.5
115.2
544.5
367.7
Gross profit
309.3
222.8
931.5
663.9
Operating expenses:
Research and development
78.8
57.6
273.5
199.7
Collaborative R&D fee
—
217.7
—
217.7
Selling, general and administrative
129.0
112.1
515.7
432.8
Total operating expenses
207.8
387.4
789.2
850.2
Operating income (loss)
101.5
(164.6
)
142.3
(186.3
)
Interest expense
(15.3
)
(8.2
)
(60.3
)
(22.7
)
Income (loss) from equity investments
—
(4.9
)
(4.2
)
80.1
Interest and other income, net
8.1
0.8
26.4
2.4
Income (loss) before income taxes
94.3
(176.9
)
104.2
(126.5
)
Income tax expense
1.6
2.8
3.1
0.6
Net income (loss)
$
92.7
$
(179.7
)
$
101.1
$
(127.1
)
Basic net income (loss) per share
$
1.01
$
(2.03
)
$
1.11
$
(1.44
)
Shares used to compute basic net income
(loss) per share
91.6
88.7
91.1
88.2
Diluted net income (loss) per share
$
1.00
$
(2.03
)
$
1.10
$
(1.44
)
Shares used to compute diluted net income
(loss) per share
92.8
88.7
92.3
88.2
DexCom, Inc.
Table C
Revenue by Geography
(Dollars in millions)
(Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
U.S. revenue
$
375.9
$
281.0
$
1,161.5
$
818.4
Year over year growth
34
%
50
%
42
%
37
%
% of total revenue
81
%
83
%
79
%
79
%
International revenue
$
86.9
$
57.0
$
314.5
$
213.2
Year over year growth
52
%
72
%
48
%
74
%
% of total revenue
19
%
17
%
21
%
21
%
Total revenue (1)
$
462.8
$
338.0
$
1,476.0
$
1,031.6
Year over year growth
37
%
53
%
43
%
44
%
(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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Sensor and other revenue(2) (3)
$
359.5
$
252.8
$
1,149.0
$
758.1
Year over year growth
42
%
57
%
52
%
47
%
% of total revenue
78
%
75
%
78
%
73
%
Transmitter revenue(2)
$
86.1
$
59.0
$
255.1
$
189.1
Year over year growth
46
%
39
%
35
%
31
%
% of total revenue
19
%
17
%
17
%
18
%
Receiver revenue
$
17.2
$
26.3
$
71.9
$
84.4
Year over year growth
(35
)%
46
%
(15
)%
45
%
% of total revenue
4
%
8
%
5
%
8
%
Total revenue(1)
$
462.8
$
338.0
$
1,476.0
$
1,031.6
Year over year growth
37
%
53
%
43
%
44
%
(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 December
31,
Twelve Months Ended December
31,
2019
2018
(As Adjusted)(1)
2019
2018
(As Adjusted)(1)
GAAP operating income (loss)
$
101.5
$
(164.6
)
$
142.3
$
(186.3
)
Non-cash collaborative research and
development fee (2)
—
217.7
—
217.7
Amortization of intangible assets
0.8
0.5
1.8
0.5
Business transition and related costs
(3)
1.3
0.8
17.2
6.3
Non-GAAP operating income
$
103.6
$
54.4
$
161.3
$
38.2
GAAP net income (loss)
$
92.7
$
(179.7
)
$
101.1
$
(127.1
)
Non-cash collaborative research and
development fee (2)
—
217.7
—
217.7
Share-based compensation
23.6
24.6
102.7
101.9
Depreciation and amortization
14.3
8.6
48.7
29.1
Business transition and related costs
(3)
1.1
0.8
14.5
6.3
(Income) loss from equity investments
(4)
—
4.9
4.2
(80.1
)
Interest expense and interest income
8.4
3.9
31.9
12.2
Income tax expense
1.6
2.8
3.1
0.6
Adjusted EBITDA
$
141.7
$
83.6
$
306.2
$
160.6
GAAP net income (loss)
$
92.7
$
(179.7
)
$
101.1
$
(127.1
)
Non-cash collaborative research and
development fee (2)
—
217.7
—
217.7
Amortization of intangible assets
0.8
0.5
1.8
0.5
Business transition and related costs
(3)
1.3
0.8
17.2
6.3
Non-cash interest expense (5)
11.7
6.0
45.8
16.0
(Income) loss from equity investments
(4)
—
4.9
4.2
(80.1
)
Tax effect of adjustments (6)
—
—
—
—
Non-GAAP net income
$
106.5
$
50.2
$
170.1
$
33.3
GAAP diluted net income (loss) per
share
$
1.00
$
(2.03
)
$
1.10
$
(1.44
)
Impact of diluted shares on net income
(basic net loss) per share (8)
—
0.04
—
0.01
Non-cash collaborative research and
development fee (2)
—
2.41
—
2.44
Amortization of intangible assets
0.01
0.01
0.02
0.01
Business transition and related costs
(3)
0.01
0.01
0.19
0.07
Non-cash interest expense (5)
0.13
0.07
0.50
0.18
(Income) loss from equity investments
(4)
—
0.05
0.05
(0.90
)
Tax effect of adjustments (6)
—
—
—
—
Non-GAAP net income per share
(7)
$
1.15
$
0.56
$
1.84
$
0.37
Shares used in GAAP diluted per share
calculations:
92.8
88.7
92.3
88.2
Shares used in non-GAAP per share
calculations:
92.8
90.4
92.3
89.1
(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)
Non-cash collaborative research and
development fee under our 2018 collaboration and licensing
agreement with Verily Life Sciences.
(3)
Business transition costs are primarily
related to the Restructuring Plan that DexCom announced on February
21, 2019.
(4)
(Income) loss from equity investments is
related to our investment in Tandem Diabetes Care, Inc.
(5)
Non-cash interest expense represents
accretion of the debt discount associated with our 2022 and 2023
Senior Convertible Notes.
(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 non-GAAP net income (loss)
per share components may not equal the totals due to rounding.
(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.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated February 13, 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 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/20200213005742/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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