DexCom, Inc. (Nasdaq: DXCM) today reported its financial results
as of and for the quarter ended September 30, 2023.
Third Quarter 2023 Financial Highlights:
- Revenue grew 27% versus the same quarter of the prior year to
$975.0 million on a reported basis and 26% on an organic1
basis.
- U.S. revenue growth of 24% and international revenue growth of
33% on a reported basis. International revenue growth was 30% on an
organic1 basis.
- GAAP operating income of $205.5 million or 21.1% of revenue, an
increase of 190 basis points compared to the third quarter of 2022.
Non-GAAP operating income* of $238.9 million or 24.5% of reported
revenue, an increase of 360 basis points compared with the same
quarter of the prior year.
1 Third quarter of 2023 organic revenue is $969.1 million and
excludes $5.9 million of foreign exchange impact.
Third Quarter 2023 Strategic Highlights:
- Secured reimbursement for Dexcom ONE in France for all people
on intensive insulin therapy, significantly expanding access to
Dexcom CGM in the French market.
- Received regulatory clearance of Dexcom G7 in Canada, and
launched into the Canadian market subsequent to quarter-end.
- In early October, added to significant body of clinical
evidence at the EASD 59th Annual Meeting, including new data around
long-term Dexcom CGM use in the 7-year COMISAIR study. This was the
longest prospective real-world CGM study ever conducted and
demonstrated high adherence, sustained reduction in A1c levels, and
a significantly lower risk of retinopathy with Dexcom CGM.
“Our teams executed incredibly well in the third quarter,
delivering solid financial results while further advancing global
access to Dexcom CGM,” said Kevin Sayer, Dexcom’s chairman,
president and CEO. “Our continued momentum has left us in a great
position to again raise our full-year revenue and margin guidance
and finish a strong 2023.”
2023 Annual Guidance and Announcement of $500 Million Share
Repurchase Program
The company is increasing fiscal year 2023 guidance for Revenue,
Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin, and
Adjusted EBITDA Margin at the following levels:
- Revenue of approximately $3.575 - 3.600 billion (23-24%
growth)
- Non-GAAP Gross Profit Margin of approximately 64%
- Non-GAAP Operating Margin of approximately 19%
- Adjusted EBITDA Margin of approximately 28%
The company also announced a $500 million share repurchase
program in conjunction with its third quarter results.
Third Quarter 2023 Financial Results
Revenue: In the third quarter of 2023, worldwide revenue
grew 27% to $975.0 million on a reported basis, up from $769.6
million in the third quarter of 2022. 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: GAAP gross profit totaled $623.3 million or
63.9% of revenue for the third quarter of 2023, compared to $494.2
million or 64.2% of revenue in the third quarter of 2022.
Non-GAAP gross profit* totaled $630.4 million or 64.7% of
revenue for the third quarter of 2023, compared to $494.2 million
or 64.2% of reported revenue in the third quarter of 2022.
Operating Income: GAAP operating income for the third
quarter of 2023 was $205.5 million, compared to GAAP operating
income of $147.5 million for the third quarter of 2022.
Non-GAAP operating income* for the third quarter of 2023 was
$238.9 million, compared to non-GAAP operating income of $160.8
million for the third quarter of 2022.
Net Income and Diluted Net Income Per Share: GAAP net
income was $120.7 million, or $0.29 per diluted share, for the
third quarter of 2023, compared to GAAP net income of $101.2
million, or $0.24 per diluted share, for the same quarter of
2022.
Non-GAAP net income* was $202.8 million, or $0.50 per diluted
share, for the third quarter of 2023, compared to non-GAAP net
income of $111.9 million, or $0.28 per diluted share, for the same
quarter of 2022. The third quarter 2023 non-GAAP amount excludes
$8.8 million of amortization of intangible assets, $1.1 million of
business transition and related costs, $23.5 million of
intellectual property litigation costs, $1.0 million of income from
equity investments, and $49.7 million of tax adjustments.
Cash and Liquidity: As of September 30, 2023, Dexcom held
$3.24 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 (888)
414-4585 (US/Canada) or (646) 960-0331 (International) and use the
confirmation ID “9430114” 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. We have not reconciled
our total Revenue, Non-GAAP Gross Profit Margin, Non-GAAP Operating
Margin and Adjusted EBITDA Margin estimates for fiscal year 2023
because certain items that impact these figures are uncertain or
out of our control and cannot be reasonably predicted. Accordingly,
a reconciliation of total Revenue, Non-GAAP Gross Profit Margin,
Non-GAAP Operating Margin and Adjusted EBITDA Margin is not
available without unreasonable effort.
About DexCom, Inc.
DexCom, Inc. empowers people to take real-time control of health
through innovative continuous glucose monitoring (CGM) systems.
Headquartered in San Diego, Calif., and with operations across
Europe and select parts of Asia/Oceania, Dexcom has emerged as a
leader of diabetes care technology. By listening to the needs of
users, caregivers, and providers, Dexcom works to simplify and
improve diabetes management around the world. For more information
about Dexcom CGM, visit www.dexcom.com.
Category: IR
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 those related to Dexcom’s estimated total Revenue,
Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin, and
Adjusted EBITDA Margin for fiscal 2023, as well as expected growth
rates as compared to the year ended December 31, 2022. All
forward-looking statements 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, 2022, as filed with the Securities and
Exchange Commission (SEC) on February 9, 2023, and our most recent
Quarterly Report on Form 10-Q for the quarter ended September 30,
2023, as filed with the SEC on October 26, 2023. 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)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
643.7
$
642.3
Short-term marketable securities
2,596.6
1,813.9
Accounts receivable, net
785.7
713.3
Inventory
498.6
306.7
Prepaid and other current assets
173.8
192.6
Total current assets
4,698.4
3,668.8
Property and equipment, net
1,078.9
1,055.6
Operating lease right-of-use assets
73.4
80.0
Goodwill
25.3
25.7
Intangibles, net
144.5
173.3
Deferred tax assets
501.3
341.2
Other assets
74.4
47.1
Total assets
$
6,596.2
$
5,391.7
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
1,373.1
$
901.8
Accrued payroll and related expenses
151.3
134.3
Current portion of long-term senior
convertible notes
124.2
772.6
Short-term operating lease liabilities
21.0
20.5
Deferred revenue
9.0
10.1
Total current liabilities
1,678.6
1,839.3
Long-term senior convertible notes
2,432.4
1,197.7
Long-term operating lease liabilities
83.4
94.6
Other long-term liabilities
133.9
128.3
Total liabilities
4,328.3
3,259.9
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 5.0
million shares authorized; no shares issued and outstanding at
September 30, 2023 and December 31, 2022
—
—
Common stock, $0.001 par value, 800.0
million shares authorized; 405.5 million and 386.4 million shares
issued and outstanding, respectively, at September 30, 2023; and
393.2 million and 386.3 million shares issued and outstanding,
respectively, at December 31, 2022
0.4
0.4
Additional paid-in capital
3,618.0
2,258.1
Accumulated other comprehensive loss
(35.6
)
(11.6
)
Retained earnings
765.1
479.9
Treasury stock, at cost; 19.1 million
shares at September 30, 2023 and 6.9 million shares at December 31,
2022
(2,080.0
)
(595.0
)
Total stockholders’ equity
2,267.9
2,131.8
Total liabilities and stockholders’
equity
$
6,596.2
$
5,391.7
DexCom, Inc.
Table B
Consolidated Statements of
Operations
(In millions, except per share
data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
975.0
$
769.6
$
2,587.8
$
2,094.6
Cost of sales
351.7
275.4
955.5
752.8
Gross profit
623.3
494.2
1,632.3
1,341.8
Operating expenses:
Research and development
131.4
110.3
369.7
367.9
Amortization of intangible assets
1.7
1.8
5.2
5.7
Selling, general and administrative
284.7
234.6
876.6
702.4
Total operating expenses
417.8
346.7
1,251.5
1,076.0
Operating income
205.5
147.5
380.8
265.8
Income from equity investments
1.0
—
1.0
0.2
Other income (expense), net
33.9
(1.3
)
82.4
(8.4
)
Income before income taxes
240.4
146.2
464.2
257.6
Income tax expense
119.7
45.0
179.0
8.2
Net income
$
120.7
$
101.2
$
285.2
$
249.4
Basic net income per share
$
0.31
$
0.26
$
0.74
$
0.64
Shares used to compute basic net income
per share
386.6
389.8
386.7
390.4
Diluted net income per share
$
0.29
$
0.24
$
0.69
$
0.60
Shares used to compute diluted net income
per share
426.8
425.8
428.3
428.0
DexCom, Inc.
Table C
Revenue by Geography
(Dollars in millions)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
U.S. revenue
$
713.6
$
573.4
$
1,856.2
$
1,535.6
Year over year growth
24
%
17
%
21
%
15
%
% of total revenue
73
%
75
%
72
%
73
%
International revenue
$
261.4
$
196.2
$
731.6
$
559.0
Year over year growth
33
%
22
%
31
%
34
%
% of total revenue
27
%
25
%
28
%
27
%
Total revenue (1)
$
975.0
$
769.6
$
2,587.8
$
2,094.6
Year over year growth
27
%
18
%
24
%
20
%
(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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Sensor and other revenue (1) (2)
$
873.8
$
666.6
$
2,303.7
$
1,807.5
Year over year growth
31
%
22
%
27
%
23
%
% of total revenue
90
%
87
%
89
%
86
%
Hardware revenue (1) (3)
$
101.2
$
103.0
$
284.1
$
287.1
Year over year growth
(2
)%
1
%
(1
)%
1
%
% of total revenue
10
%
13
%
11
%
14
%
Total revenue (4)
$
975.0
$
769.6
$
2,587.8
$
2,094.6
Year over year growth
27
%
18
%
24
%
20
%
(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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP gross profit
$
623.3
$
494.2
$
1,632.3
$
1,341.8
Amortization of intangible assets (1)
7.1
—
21.4
—
Non-GAAP gross profit
$
630.4
$
494.2
$
1,653.7
$
1,341.8
GAAP operating income
$
205.5
$
147.5
$
380.8
$
265.8
Amortization of intangible assets (1)
8.8
1.8
26.6
5.7
Business transition and related costs
(2)
1.1
1.6
2.9
15.4
Intellectual property litigation costs
(3)
23.5
9.9
65.6
26.1
Non-GAAP operating income
$
238.9
$
160.8
$
475.9
$
313.0
GAAP net income
$
120.7
$
101.2
$
285.2
$
249.4
Business transition and related costs
(2)
1.0
1.6
2.6
15.4
Depreciation and amortization
48.2
39.2
133.5
119.6
Intellectual property litigation costs
(3)
23.5
9.9
65.6
26.1
Income from equity investments (4)
(1.0
)
—
(1.0
)
(0.2
)
Share-based compensation
39.0
30.8
113.9
92.5
Interest expense and interest income
(36.6
)
(1.1
)
(85.8
)
3.5
Income tax expense
119.7
45.0
179.0
8.2
Adjusted EBITDA
$
314.5
$
226.6
$
693.0
$
514.5
GAAP net income
$
120.7
$
101.2
$
285.2
$
249.4
Amortization of intangible assets (1)
8.8
1.8
26.6
5.7
Business transition and related costs
(2)
1.1
1.6
2.9
15.4
Intellectual property litigation costs
(3)
23.5
9.9
65.6
26.1
Income from equity investments (4)
(1.0
)
—
(1.0
)
(0.2
)
Adjustments related to taxes (5)
49.7
(2.6
)
31.4
(82.7
)
Non-GAAP net income
$
202.8
$
111.9
$
410.7
$
213.7
GAAP net income
$
120.7
$
101.2
$
285.2
$
249.4
Interest expense on senior convertible
notes, net of tax
3.0
2.8
9.6
8.3
GAAP net income used for diluted EPS,
if-converted (6)
$
123.7
$
104.0
$
294.8
$
257.7
Non-GAAP net income
$
202.8
$
111.9
$
410.7
$
213.7
Interest expense on senior convertible
notes, net of tax
1.2
1.2
3.7
3.6
Non-GAAP net income used for diluted
EPS, if-converted (6)
$
204.0
$
113.1
$
414.4
$
217.3
DexCom, Inc.
Table E (Continued)
Itemized Reconciliation
Between GAAP and Non-GAAP Financial Measures
(In millions, except per share
data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP diluted net income per share
(6)
$
0.29
$
0.24
$
0.69
$
0.60
Amortization of intangible assets (1)
0.02
—
0.07
0.01
Business transition and related costs
(2)
—
—
0.01
0.04
Intellectual property litigation costs
(3)
0.06
0.02
0.16
0.06
Income from equity investments (4)
—
—
—
—
Adjustments related to taxes (5)
0.12
(0.01
)
0.08
(0.20
)
Impact of adjustment to GAAP diluted
shares (7)
0.01
—
0.01
0.01
Non-GAAP diluted net income per share
(6) (8)
$
0.50
$
0.28
$
1.02
$
0.53
GAAP diluted weighted-average shares
outstanding
426.8
425.8
428.3
428.0
Non-GAAP diluted weighted-average shares
outstanding
407.2
406.9
407.6
409.1
Reconciliation of non-GAAP diluted
weighted-average shares outstanding:
GAAP diluted weighted-average shares
outstanding
426.8
425.8
428.3
428.0
Adjustment for dilutive impact of senior
convertible notes due 2023 (9)
(11.9
)
(18.9
)
(16.5
)
(18.9
)
Adjustment for dilutive impact of senior
convertible notes due 2028 (9)
(7.7
)
—
(4.2
)
—
Non-GAAP diluted weighted-average shares
outstanding
407.2
406.9
407.6
409.1
(1)
Represents amortization of acquired
intangible assets.
(2)
For the three and nine months ended
September 30, 2023 and three months ended September 30, 2022,
business transition and related costs are primarily related to rent
for vacated office space in San Diego, California. For the nine
months ended September 30, 2022, business transition and related
costs are primarily related to consulting fees and expenses as a
result of vacating a portion of the San Diego office space,
including accelerated depreciation of tenant improvements.
(3)
We have excluded third party attorney’s
fees, costs, and expenses incurred by the Company exclusively in
connection with the Company’s patent infringement litigation
against Abbott Diabetes Care, Inc., as further described in the
section titled “Legal Proceedings” appearing in the Company’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2023.
(4)
Represents a gain from the sale of an
equity investment.
(5)
For the three and nine months ended
September 30, 2023, tax adjustments are primarily related to the
tax effect of non-GAAP adjustments, including the intra-entity
transfer of certain intellectual property and excess tax benefits
from share-based compensation for employees. For the three months
ended September 30, 2022, tax adjustments are primarily related to
the tax effect of non-GAAP adjustments. For the nine months ended
September 30, 2022, tax adjustments are primarily related to excess
tax benefits from share-based compensation for employees and the
Verily regulatory milestone payment.
(6)
When our senior convertible notes are
dilutive on a GAAP or non-GAAP basis, net income used for
calculating GAAP and non-GAAP diluted net income per share includes
an interest expense add back, net of tax, under the if-converted
method. In loss periods, basic and diluted net loss per share are
the same since the effect of potential common shares is
anti-dilutive and therefore excluded.
(7)
The adjustments are for the transition
from GAAP diluted net income per share to non-GAAP diluted net
income per share due to our senior convertible notes.
(8)
The sum of the non-GAAP per share
components may not equal the totals due to rounding.
(9)
We adjust for the dilutive effect of our
senior convertible notes when the effect is not the same on a GAAP
and non-GAAP basis for a given period.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated October 26, 2023 contains
non-GAAP financial measures. These non-GAAP financial measures
include organic revenue, 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 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 organic revenue is a meaningful metric to
investors as it provides a more consistent comparison of the
company’s revenue to prior periods as well as to industry peers. We
exclude the following items from the non-GAAP financial measure for
organic revenue:
- The effect of non-CGM revenue acquired or divested in the
trailing twelve months.
- The effect of foreign currency fluctuations.
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.
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
- 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
- Third party intellectual property litigation costs in
connection with the Company's patent infringement litigation
against Abbott Diabetes Care, Inc.
- Litigation settlement costs
- Gain or loss on extinguishment of debt
- 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, gain
or loss on extinguishment of debt, income or loss from equity
investments, and income tax expense or benefit. For the reasons
explained above, adjusted EBITDA also excludes business transition
and related costs, COVID-19 costs, litigation settlement costs, and
intellectual property litigation costs.
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version on businesswire.com: https://www.businesswire.com/news/home/20231026774016/en/
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