Dexcom Reports First Quarter 2023 Financial Results
First Quarter 2023 Financial Highlights:
-
Revenue grew
18% versus the same quarter of the prior year to on a reported basis and$741.5 million 19% on an organic1 basis. -
U.S. revenue growth of17% and international revenue growth of21% on a reported basis. International revenue growth was27% on an organic1 basis. -
GAAP operating income of
or$47.2 million 6.4% of revenue, a decrease of 20 basis points compared to the first quarter of 2022. Non-GAAP operating income* of or$78.6 million 10.6% of reported revenue, an increase of 260 basis points compared with the same quarter of the prior year.
First Quarter 2023 Strategic Highlights:
-
Initiated the launch of Dexcom G7 in
the United States , bringing the industry’s most accurate2 CGM to the company’s largest market -
Broadcasted the company’s second-ever
Super Bowl commercial starringNick Jonas to announce the arrival of G7 inthe United States and promote greater awareness of CGM technology -
Finalized coverage for Dexcom G7 with the
US Centers for Medicare & Medicaid Services , providing Medicare beneficiaries reimbursed access to Dexcom’s latest generation technology - Published annual Sustainability Report, which provided enhanced reporting on the company’s environmental initiatives and significant additions to human capital disclosure
“Dexcom is off to a great start in 2023, executing on several key initiatives including the launch of Dexcom G7 in the United States,” said
1 |
First quarter of 2023 organic revenue is |
2 |
2023 Annual Guidance
The company is updating fiscal year 2023 revenue guidance, and reiterating guidance for Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin and Adjusted EBITDA Margin at the following levels:
-
Revenue of approximately
- 3.515 billion (17$3.40 0-21% growth) -
Non-GAAP Gross Profit Margin of 62
-63% -
Non-GAAP Operating Margin of approximately
16.5% -
Adjusted EBITDA Margin of approximately
26%
First Quarter 2023 Financial Results
Revenue: In the first quarter of 2023, worldwide revenue grew
Gross Profit: GAAP gross profit totaled
Non-GAAP gross profit* totaled
Operating Income: GAAP operating income for the first quarter of 2023 was
Non-GAAP operating income* for the first quarter of 2023 was
Net Income and Net Income Per Share: GAAP net income was
Non-GAAP net income* was
Cash and Liquidity: As of
* 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
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
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
Table A Consolidated Balance Sheets (In millions, except par value data) (Unaudited) |
|||||||
|
|
|
|||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
623.2 |
|
|
$ |
642.3 |
|
Short-term marketable securities |
|
1,943.8 |
|
|
|
1,813.9 |
|
Accounts receivable, net |
|
636.8 |
|
|
|
713.3 |
|
Inventory |
|
366.0 |
|
|
|
306.7 |
|
Prepaid and other current assets |
|
197.6 |
|
|
|
192.6 |
|
Total current assets |
|
3,767.4 |
|
|
|
3,668.8 |
|
Property and equipment, net |
|
1,075.5 |
|
|
|
1,055.6 |
|
Operating lease right-of-use assets |
|
78.0 |
|
|
|
80.0 |
|
|
|
25.7 |
|
|
|
25.7 |
|
Intangibles, net |
|
163.6 |
|
|
|
173.3 |
|
Deferred tax assets |
|
349.1 |
|
|
|
341.2 |
|
Other assets |
|
56.6 |
|
|
|
47.1 |
|
Total assets |
$ |
5,515.9 |
|
|
$ |
5,391.7 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
965.2 |
|
|
$ |
901.8 |
|
Accrued payroll and related expenses |
|
94.8 |
|
|
|
134.3 |
|
Current portion of long-term senior convertible notes |
|
773.2 |
|
|
|
772.6 |
|
Short-term operating lease liabilities |
|
22.2 |
|
|
|
20.5 |
|
Deferred revenue |
|
9.6 |
|
|
|
10.1 |
|
Total current liabilities |
|
1,865.0 |
|
|
|
1,839.3 |
|
Long-term senior convertible notes |
|
1,198.5 |
|
|
|
1,197.7 |
|
Long-term operating lease liabilities |
|
89.7 |
|
|
|
94.6 |
|
Other long-term liabilities |
|
129.7 |
|
|
|
128.3 |
|
Total liabilities |
|
3,282.9 |
|
|
|
3,259.9 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
0.4 |
|
|
|
0.4 |
|
Additional paid-in capital |
|
2,305.6 |
|
|
|
2,258.1 |
|
Accumulated other comprehensive loss |
|
(6.5 |
) |
|
|
(11.6 |
) |
Retained earnings |
|
528.5 |
|
|
|
479.9 |
|
|
|
(595.0 |
) |
|
|
(595.0 |
) |
Total stockholders’ equity |
|
2,233.0 |
|
|
|
2,131.8 |
|
Total liabilities and stockholders’ equity |
$ |
5,515.9 |
|
|
$ |
5,391.7 |
|
Table B Consolidated Statements of Operations (In millions, except per share data) (Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2023 |
|
|
|
2022 |
|
Revenue |
$ |
741.5 |
|
|
$ |
628.8 |
|
Cost of sales |
|
278.9 |
|
|
|
230.7 |
|
Gross profit |
|
462.6 |
|
|
|
398.1 |
|
Operating expenses: |
|
|
|
||||
Research and development |
|
119.0 |
|
|
|
135.9 |
|
Amortization of intangible assets |
|
1.8 |
|
|
|
2.0 |
|
Selling, general and administrative |
|
294.6 |
|
|
|
218.9 |
|
Total operating expenses |
|
415.4 |
|
|
|
356.8 |
|
Operating income |
|
47.2 |
|
|
|
41.3 |
|
Interest expense |
|
(4.6 |
) |
|
|
(4.6 |
) |
Income from equity investments |
|
— |
|
|
|
0.2 |
|
Interest and other income (expense), net |
|
21.9 |
|
|
|
(0.8 |
) |
Income before income taxes |
|
64.5 |
|
|
|
36.1 |
|
Income tax expense (benefit) |
|
15.9 |
|
|
|
(61.2 |
) |
Net income |
$ |
48.6 |
|
|
$ |
97.3 |
|
|
|
|
|
||||
Basic net income per share |
$ |
0.13 |
|
|
$ |
0.25 |
|
Shares used to compute basic net income per share |
|
386.7 |
|
|
|
388.9 |
|
Diluted net income per share |
$ |
0.12 |
|
|
$ |
0.23 |
|
Shares used to compute diluted net income per share |
|
418.5 |
|
|
|
428.7 |
|
Table C Revenue by Geography (Dollars in millions) (Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2023 |
|
|
|
2022 |
|
|
$ |
526.0 |
|
|
$ |
451.2 |
|
Year over year growth |
|
17 |
% |
|
|
18 |
% |
% of total revenue |
|
71 |
% |
|
|
72 |
% |
|
|
|
|
||||
International revenue |
$ |
215.5 |
|
|
$ |
177.6 |
|
Year over year growth |
|
21 |
% |
|
|
43 |
% |
% of total revenue |
|
29 |
% |
|
|
28 |
% |
|
|
|
|
||||
Total revenue (1) |
$ |
741.5 |
|
|
$ |
628.8 |
|
Year over year growth |
|
18 |
% |
|
|
25 |
% |
(1) |
The sum of the revenue components may not equal total revenue due to rounding. |
Table D Revenue by Component (Dollars in millions) (Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2023 |
|
|
|
2022 |
|
Sensor and other revenue (1) (2) |
$ |
651.9 |
|
|
$ |
543.2 |
|
Year over year growth |
|
20 |
% |
|
|
28 |
% |
% of total revenue |
|
88 |
% |
|
|
86 |
% |
|
|
|
|
||||
Hardware revenue (1) (3) |
$ |
89.6 |
|
|
$ |
85.6 |
|
Year over year growth |
|
5 |
% |
|
|
6 |
% |
% of total revenue |
|
12 |
% |
|
|
14 |
% |
|
|
|
|
||||
Total revenue (4) |
$ |
741.5 |
|
|
$ |
628.8 |
|
Year over year growth |
|
18 |
% |
|
|
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. |
Table E Itemized Reconciliation Between GAAP and Non-GAAP Financial Measures (In millions, except per share data) (Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2023 |
|
|
|
2022 |
|
GAAP gross profit |
$ |
462.6 |
|
|
$ |
398.1 |
|
Amortization of intangible assets (1) |
|
7.2 |
|
|
|
— |
|
Non-GAAP gross profit |
$ |
469.8 |
|
|
$ |
398.1 |
|
|
|
|
|
||||
GAAP operating income |
$ |
47.2 |
|
|
$ |
41.3 |
|
Amortization of intangible assets (1) |
|
9.0 |
|
|
|
2.0 |
|
Business transition and related costs (2) |
|
1.1 |
|
|
|
— |
|
Intellectual property litigation costs (3) |
|
21.3 |
|
|
|
7.0 |
|
Non-GAAP operating income |
$ |
78.6 |
|
|
$ |
50.3 |
|
|
|
|
|
||||
GAAP net income |
$ |
48.6 |
|
|
$ |
97.3 |
|
Business transition and related costs (2) |
|
1.0 |
|
|
|
— |
|
Depreciation and amortization |
|
41.6 |
|
|
|
36.8 |
|
Intellectual property litigation costs (3) |
|
21.3 |
|
|
|
7.0 |
|
Income from equity investments (4) |
|
— |
|
|
|
(0.2 |
) |
Share-based compensation |
|
35.2 |
|
|
|
29.1 |
|
Interest expense and interest income |
|
(17.7 |
) |
|
|
3.6 |
|
Income tax (benefit) expense |
|
15.9 |
|
|
|
(61.2 |
) |
Adjusted EBITDA |
$ |
145.9 |
|
|
$ |
112.4 |
|
|
|
|
|
||||
GAAP net income |
$ |
48.6 |
|
|
$ |
97.3 |
|
Amortization of intangible assets (1) |
|
9.0 |
|
|
|
2.0 |
|
Business transition and related costs (2) |
|
1.1 |
|
|
|
— |
|
Intellectual property litigation costs (3) |
|
21.3 |
|
|
|
7.0 |
|
Income from equity investments (4) |
|
— |
|
|
|
(0.2 |
) |
Adjustments related to taxes (5) |
|
(11.5 |
) |
|
|
(73.8 |
) |
Non-GAAP net income |
$ |
68.5 |
|
|
$ |
32.3 |
|
|
|
|
|
||||
GAAP net income |
$ |
48.6 |
|
|
$ |
97.3 |
|
Interest expense on senior convertible notes, net of tax |
|
1.6 |
|
|
|
2.8 |
|
GAAP net income used for diluted EPS, if-converted (6) |
$ |
50.2 |
|
|
$ |
100.1 |
|
|
|
|
|
||||
Non-GAAP net income |
$ |
68.5 |
|
|
$ |
32.3 |
|
Interest expense on senior convertible notes, net of tax |
|
1.2 |
|
|
|
— |
|
Non-GAAP net income used for diluted EPS, if-converted (6) |
$ |
69.7 |
|
|
$ |
32.3 |
|
Table E (Continued) Itemized Reconciliation Between GAAP and Non-GAAP Financial Measures (In millions, except per share data) (Unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
|
2023 |
|
|
|
2022 |
|
GAAP diluted net income per share (6) |
$ |
0.12 |
|
|
$ |
0.23 |
|
Amortization of intangible assets (1) |
|
0.02 |
|
|
|
— |
|
Business transition and related costs (2) |
|
— |
|
|
|
— |
|
Intellectual property litigation costs (3) |
|
0.05 |
|
|
|
0.02 |
|
Income from equity investments (4) |
|
— |
|
|
|
— |
|
Adjustments related to taxes (5) |
|
(0.03 |
) |
|
|
(0.18 |
) |
Impact of adjustment to GAAP diluted shares (7) |
|
— |
|
|
|
0.01 |
|
Non-GAAP diluted net income per share (6) (8) |
$ |
0.17 |
|
|
$ |
0.08 |
|
|
|
|
|
||||
GAAP diluted weighted-average shares outstanding |
|
418.5 |
|
|
|
428.7 |
|
Non-GAAP diluted weighted-average shares outstanding |
|
407.6 |
|
|
|
401.7 |
|
|
|
|
|
||||
Reconciliation of non-GAAP diluted weighted-average shares outstanding: |
|
|
|
||||
GAAP diluted weighted-average shares outstanding |
|
418.5 |
|
|
|
428.7 |
|
Adjustment for dilutive impact of senior convertible notes due 2023 (9) |
|
(18.9 |
) |
|
|
(19.0 |
) |
Adjustment for dilutive impact of senior convertible notes due 2025 (9) |
|
8.0 |
|
|
|
(8.0 |
) |
Non-GAAP diluted weighted-average shares outstanding |
|
407.6 |
|
|
|
401.7 |
|
(1) |
Represents amortization of acquired intangible assets. |
(2) |
For the three months ended |
(3) |
Represents costs related to a patent infringement lawsuit. |
(4) |
Represents a gain from the sale of an equity investment. |
(5) |
For the three months ended |
(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 adjustment for the three months ended |
(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
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
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
- 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 business transition and related costs, COVID-19 costs, litigation settlement costs, and intellectual property litigation costs.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230427005220/en/
INVESTOR RELATIONS CONTACT:
Vice President - Finance and Investor Relations
investor-relations@dexcom.com
(858) 203-6657
MEDIA CONTACT:
(619) 884-2118
Source: