DexCom, Inc. (Nasdaq: DXCM) today reported its financial results
as of and for the quarter ended March 31, 2022.
First Quarter 2022 Financial Highlights:
- Revenue grew 25% versus the same quarter of the prior year to
$628.8 million on a reported basis and 22% on an organic1
basis.
- U.S. revenue growth of 18% and international revenue growth of
43% on a reported basis. International revenue growth was 33% on an
organic1 basis.
- GAAP operating income of $41.3 million or 6.6% of revenue, a
decrease of 250 basis points compared to the first quarter of 2021.
Non-GAAP operating income* of $50.3 million or 8.0% of revenue, a
decrease of 120 basis points compared with the same quarter of the
prior year.
Strategic Highlights:
- Secured CE Mark for the Dexcom G7 CGM System for people with
diabetes age two years and older and initiated a limited launch of
G7 in Europe.
- Granted Breakthrough Device Designation by the FDA for the
Dexcom CGM Hospital System, providing a more efficient and
streamlined review pathway for inpatient Dexcom CGM use.
- Announced the launch of Dexcom ONE in the United Kingdom and
Spain, setting up these regions to be Dexcom’s first multi-tiered
product markets.
- Advanced access to Dexcom CGM for people with diabetes,
including new coverage by the Ontario government for people with
type 1 diabetes and TRICARE® adding Dexcom G6 as a brand-name
formulary pharmacy benefit.
“Dexcom is off to a great start in 2022, advancing a number of
strategic initiatives that strengthen our foundation for long-term
growth,” said Kevin Sayer, Dexcom’s chairman, president and CEO.
“We are very excited about our initial launch of G7 internationally
and look forward to bringing this product to many more people
globally over the course of the year.”
____________________ 1 Excludes non-CGM revenue acquired in
conjunction with Dexcom’s acquisition of its distributor in
Australia and New Zealand.
2022 Annual Guidance
The company is reiterating guidance for fiscal year 2022
revenue, Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin,
and Adjusted EBITDA Margin at the following levels:
- Revenue of approximately $2.82 - 2.94 billion (15-20%
growth)
- Non-GAAP Gross Profit Margin of approximately 65%
- Non-GAAP Operating Margin of approximately 16%
- Adjusted EBITDA Margin of approximately 25%
First Quarter 2022 Financial Results
Revenue: In the first quarter of 2022, worldwide revenue
grew 25% to $628.8 million, up from $505.0 million in the first
quarter of 2021. Volume growth in conjunction with strong new
customer additions continues to be the primary driver of revenue
growth as awareness of real-time CGM increases.
Gross Profit: Gross profit totaled $398.1 million or
63.3% of revenue for the first quarter of 2022, compared to $343.9
million or 68.1% of revenue in the first quarter of 2021.
Operating Income: GAAP operating income for the first
quarter of 2022 was $41.3 million, compared to GAAP operating
income of $45.9 million for the first quarter of 2021.
Non-GAAP operating income* for the first quarter of 2022 was
$50.3 million, compared to non-GAAP operating income of $46.4
million for the first quarter of 2021.
Net Income and Net Income per Share: GAAP net income was
$97.3 million, or $0.93 per diluted share, for the first quarter of
2022, compared to GAAP net income of $56.5 million, or $0.56 per
diluted share, for the same quarter of 2021.
Non-GAAP net income* was $32.3 million, or $0.32 per diluted
share, for the first quarter of 2022, compared to non-GAAP net
income of $32.5 million, or $0.33 per diluted share, for the same
quarter of 2021. The first quarter 2022 non-GAAP amount excludes
$2.0 million of amortization of acquired intangible assets, $0.2
million of income from the sale of equity investments, $7.0 million
of intellectual property litigation costs, and $73.8 million of tax
adjustments primarily related to excess tax benefits from stock
compensation vesting.
Cash and Liquidity: As of March 31, 2022, Dexcom held
$2.69 billion in cash, cash equivalents 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 “50233347” 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, timing or acceptance of regulatory approvals
and commercial launch of G7 and our outlook for the full year 2022.
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 March 31, 2022, as filed
with the Securities and Exchange Commission on April 28, 2022.
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)
(Unaudited)
March 31, 2022
December 31, 2021
Assets
As Adjusted*
Current assets:
Cash and cash equivalents
$
716.0
$
1,052.6
Short-term marketable securities
1,972.2
1,678.6
Accounts receivable, net
544.5
514.3
Inventory
342.2
357.3
Prepaid and other current assets
171.7
81.6
Total current assets
3,746.6
3,684.4
Property and equipment, net
856.5
801.8
Operating lease right-of-use assets
82.3
88.1
Goodwill
26.6
26.5
Intangibles, net
31.4
31.5
Deferred tax assets
290.8
290.5
Other assets
22.8
10.5
Total assets
$
5,057.0
$
4,933.3
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
603.1
$
573.0
Accrued payroll and related expenses
84.7
125.2
Short-term operating lease liabilities
20.9
20.5
Deferred revenue
2.7
2.1
Total current liabilities
711.4
720.8
Long-term senior convertible notes
1,965.9
1,981.8
Long-term operating lease liabilities
93.3
98.6
Other long-term liabilities
97.1
90.0
Total liabilities
2,867.7
2,891.2
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 5.0
million shares authorized; no shares issued and outstanding at
March 31, 2022 and December 31, 2021
—
—
Common stock, $0.001 par value, 200.0
million shares authorized; 98.2 million and 98.1 million shares
issued and outstanding, respectively, at March 31, 2022; and 97.8
million and 97.0 million shares issued and outstanding,
respectively, at December 31, 2021
0.1
0.1
Additional paid-in capital
1,996.6
2,109.0
Accumulated other comprehensive income
(loss)
(6.1
)
0.5
Retained earnings
236.0
138.7
Treasury stock, at cost; 0.1 million
shares at March 31, 2022 and 0.8 million shares at December 31,
2021
(37.3
)
(206.2
)
Total stockholders’ equity
2,189.3
2,042.1
Total liabilities and stockholders’
equity
$
5,057.0
$
4,933.3
*
We adjusted our 2021 amounts to reflect
the simplified convertible instruments accounting guidance (ASU
2020-06), which we adopted on a full retrospective basis.
DexCom, Inc.
Table B
Consolidated Statements of
Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended
March 31,
2022
2021
As Adjusted*
Revenue
$
628.8
$
505.0
Cost of sales
230.7
161.1
Gross profit
398.1
343.9
Operating expenses:
Research and development
135.9
109.4
Selling, general and administrative
220.9
188.6
Total operating expenses
356.8
298.0
Operating income
41.3
45.9
Interest expense
(4.6
)
(4.7
)
Income from equity investments
0.2
—
Interest and other income (expense),
net
(0.8
)
0.1
Income before income taxes
36.1
41.3
Income tax benefit
(61.2
)
(15.2
)
Net income
$
97.3
$
56.5
Basic net income per share
$
1.00
$
0.59
Shares used to compute basic net income
per share
97.2
96.3
Diluted net income per share
$
0.93
$
0.56
Shares used to compute diluted net income
per share
107.2
104.6
*
We adjusted our 2021 amounts to reflect
the simplified convertible instruments accounting guidance (ASU
2020-06), which we adopted on a full retrospective basis.
DexCom, Inc.
Table C
Revenue by Geography
(Dollars in millions)
(Unaudited)
Three Months Ended
March 31,
2022
2021
U.S. revenue
$
451.2
$
381.2
Year over year growth
18
%
30
%
% of total revenue
72
%
75
%
International revenue
$
177.6
$
123.8
Year over year growth
43
%
10
%
% of total revenue
28
%
25
%
Total revenue (1)
$
628.8
$
505.0
Year over year growth
25
%
25
%
(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
March 31,
2022
2021
Sensor and other revenue (1) (2)
$
543.2
$
424.3
Year over year growth
28
%
31
%
% of total revenue
86
%
84
%
Hardware revenue (1)(3)
$
85.6
$
80.7
Year over year growth
6
%
1
%
% of total revenue
14
%
16
%
Total revenue (4)
$
628.8
$
505.0
Year over year growth
25
%
25
%
(1)
Includes allocated subscription
revenue.
(2)
Includes services, freight, accessories,
Non-CGM acquired revenue, 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
March 31,
2022
2021
As Adjusted*
GAAP operating income
$
41.3
$
45.9
Amortization of acquired intangible
assets
2.0
0.5
Intellectual property litigation costs
(1)
7.0
—
Non-GAAP operating income
$
50.3
$
46.4
GAAP net income
$
97.3
$
56.5
Depreciation and amortization
36.8
20.9
Intellectual property litigation costs
(1)
7.0
—
Income from equity investments (2)
(0.2
)
—
Share-based compensation
29.1
28.0
Interest expense and interest income
3.6
4.2
Income tax benefit
(61.2
)
(15.2
)
Adjusted EBITDA
$
112.4
$
94.4
GAAP net income
$
97.3
$
56.5
Amortization of acquired intangible
assets
2.0
0.5
Intellectual property litigation costs
(1)
7.0
—
Income from equity investments (2)
(0.2
)
—
Adjustments related to taxes (3)
(73.8
)
(24.5
)
Non-GAAP net income
$
32.3
$
32.5
GAAP net income
$
97.3
$
56.5
Interest expense on senior convertible
notes, net of tax
2.8
1.7
GAAP net income used for diluted EPS,
if-converted
$
100.1
$
58.2
GAAP diluted net income per share
(4)
$
0.93
$
0.56
Amortization of acquired intangible
assets
0.02
0.01
Intellectual property litigation costs
(1)
0.07
—
Income from equity investments (2)
—
—
Adjustments related to taxes (3)
(0.74
)
(0.25
)
Impact of adjustment to GAAP diluted
shares (5)
0.03
0.01
Non-GAAP diluted net income per share
(6)
$
0.32
$
0.33
GAAP diluted weighted-average shares
outstanding
107.2
104.6
Non-GAAP diluted weighted-average shares
outstanding (7)
100.4
99.4
Reconciliation of non-GAAP diluted
weighted-average shares outstanding:
GAAP diluted weighted-average shares
outstanding
107.2
104.6
Adjustment for dilutive impact of senior
convertible notes due 2023 (7)
(4.8
)
(5.2
)
Adjustment for dilutive impact of senior
convertible notes due 2025 (7)
(2.0
)
—
Non-GAAP diluted weighted-average shares
outstanding (7)
100.4
99.4
*
We adjusted our 2021 amounts to reflect
the simplified convertible instruments accounting guidance (ASU
2020-06), which we adopted on a full retrospective basis. The
adoption eliminates the non-cash interest expense related to the
conversion features of the convertible notes beginning in the first
quarter of 2020.
(1)
Represents costs related to a patent
infringement lawsuit.
(2)
Represents a gain from the sale of an
equity investment.
(3)
For the three months ended March 31, 2022,
tax adjustments were primarily related to the excess tax benefits
from employee stock compensation vesting and the Verily milestone
payment. For the three months ended March 31, 2021, tax adjustments
were primarily related to the excess tax benefits from employee
stock compensation vesting.
(4)
Net income used for calculating diluted
earnings per share for the three months ended March 31, 2022 and
March 31, 2021 includes an interest expense add back, net of tax,
under the if-converted method for our senior convertible notes.
(5)
The adjustment for the three months ended
March 31, 2022 and March 31, 2021 is for the transition from GAAP
diluted net income per share, which excludes diluted shares, to
non-GAAP diluted net income per share, which includes diluted
shares.
(6)
The sum of the non-GAAP diluted net income
per share components may not equal the totals due to rounding.
(7)
The non-GAAP diluted weighted-average
shares outstanding for the three months ended March 31, 2022
excludes 4.8 million shares and 2.0 million shares related to our
2023 and 2025 senior convertible notes, respectively, which were
dilutive for GAAP due to the tax benefit. The non-GAAP diluted
weighted-average shares outstanding for the three months ended
March 31, 2021 excludes 5.2 million shares related to our 2023
senior convertible notes, which were dilutive for GAAP due to the
tax benefit. As the tax benefit is excluded from non-GAAP net
income, we exclude the dilutive impact of the senior convertible
notes from non-GAAP dilutive weighted-average shares outstanding.
The 2023 senior convertible notes are also hedged through an
anti-dilutive bond hedge arrangement.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated April 28, 2022 contains
non-GAAP financial measures. 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.
We use these non-GAAP financial measures for financial and
operational decision making and as a means to evaluate
period-to-period comparisons. We believe that they provide useful
information about operating results, enhance the overall
understanding of our operating performance and future prospects,
and allow for greater transparency with respect to key metrics used
by senior management in our financial and operational decision
making. 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. 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 report non-GAAP financial measures in addition to, and not as
a substitute for, or superior to, measures of financial performance
prepared in accordance with Generally Accepted Accounting
Principles (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.
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.
Table E reconciles the non-GAAP financial measures in the press
release to the most directly comparable financial measures prepared
in accordance with Generally Accepted Accounting Principles
(GAAP).
We exclude the following items from non-GAAP financial measures
for non-GAAP gross profit, non-GAAP operating income (loss),
non-GAAP net income (loss), and non-GAAP net income (loss) per
share:
- Amortization of acquired intangible assets
- Collaborative research and development fees associated with
milestone and incentive payments under our collaborative research
and development arrangements paid or payable by issuing shares of
our common stock
- Business transition and related 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
- COVID-19 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. Costs incurred include
items like incremental payroll costs, consulting support, IT
infrastructure and facilities related costs
- Income or loss from equity investments
- Intellectual property litigation costs
- Litigation settlement costs
- Loss on extinguishment of debt associated with our senior
convertible notes
- Adjustments related to taxes for the excluded items above, as
well as excess benefits or tax deficiencies from stock-based
compensation, and the quarterly impact of other discrete items
Adjusted EBITDA excludes non-cash operating charges for
share-based compensation, 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 or benefit. For the reasons explained above,
adjusted EBITDA also excludes non-cash collaborative research and
development fees, business transition and related costs, COVID-19
costs, litigation settlement costs, and intellectual property
litigation costs.
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INVESTOR RELATIONS CONTACT: Sean Christensen Senior Director -
Investor Relations and Corporate FP&A
investor-relations@dexcom.com (858) 200-0200
MEDIA CONTACT: James McIntosh (619) 884-2118
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