Dexcom Reports Fourth Quarter and Fiscal Year 2018 Financial Results
SAN DIEGO--(BUSINESS WIRE)--Feb 21, 2019--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:
Full Year 2018 Highlights:
“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:
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.
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.
(1) The sum of the revenue components may not equal total revenue due to rounding.
(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.
(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.
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CONTACT: INVESTOR RELATIONS CONTACT:
Steven R. Pacelli
Executive Vice President, Strategy and Corporate Development
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: HEALTH DIABETES MEDICAL SUPPLIES
SOURCE: DexCom, Inc.
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PUB: 02/21/2019 04:10 PM/DISC: 02/21/2019 04:10 PM