Dexcom Reports Revenue Growth of 49%

SAN DIEGO–(BUSINESS WIRE)–Nov. 6, 2019– DexCom, Inc. (Nasdaq: DXCM) today reported its financial results as of and for the quarter ended September 30, 2019.

Third Quarter 2019 Highlights:

• Revenue grew 49% versus the same quarter of the prior year to $396.3 million
• U.S. revenue growth of 53% and international revenue growth of 36%
• GAAP operating income of $56.0 million or 14% of revenue, an increase of 890 basis points compared to the third quarter of 2018. Non-GAAP operating income* of $59.1 million or 15% of revenue, an increase of 940 basis points over the third quarter of 2018.
• 3-Year COMISAIR¹ study results continued to demonstrate the value proposition of Dexcom’s real-time CGM:
  • Significant improvements to A1C and time in range for Dexcom CGM subgroups regardless of one’s method of insulin delivery
  • Time in range increased by more than 20% for CGM use in conjunction with both MDI and pump cohorts, nearly 5 hours per day of additional glycemic control

“Dexcom maintained its robust revenue growth momentum in the third quarter, leading to another significant increase to our full year revenue outlook,” said Kevin Sayer, Dexcom’s Chairman, President and CEO. “Our team is working hard to meet demand and ensure an exceptional experience for our customers, and we look forward to a strong close to 2019.”

2019 Annual Guidance

Dexcom updated its revenue, operating margin, and adjusted EBITDA expectations and brought gross profit guidance slightly below the previous range for full fiscal year 2019:

• Revenue of $1.425 billion to $1.450 billion (38% – 41% growth) compared to previous expectations of $1.325 billion to $1.375 billion (28% – 33% growth)
• Gross profit margin of approximately 63% compared to previous expectations of 64% to 65%
• Non-GAAP operating margin of approximately 9% versus previous expectations of 7%
• Non-GAAP adjusted EBITDA margin of approximately 19.5% versus previous expectations of 18.5%

Third Quarter 2019 Financial Results

Revenue: In the third quarter of 2019, worldwide revenue grew 49% to $396.3 million, up from $266.7 million in the third 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 $246.9 million or 62.3% of sales for the third quarter of 2019, compared to $168.6 million or 63.2% of sales in the third quarter of 2018.

Operating Income: GAAP operating income for the third quarter of 2019 was $56.0 million, compared to a GAAP operating income of $13.9 million for the third quarter of 2018.

Non-GAAP operating income* for the third quarter of 2019 was $59.1 million, compared to a non-GAAP operating income of $14.7 million for the third quarter of 2018. The third quarter 2019 non-GAAP amount excludes $2.8 million of business transition and related costs and the third quarter 2018 non-GAAP amount excludes $0.8 million of such costs.

Net Income and Net Income per Share: GAAP net income was $45.8 million, or $0.50 per diluted share, for the third quarter of 2019, compared to GAAP net income of $46.6 million, or $0.52 per diluted share, for the same quarter of 2018. GAAP net income for the third quarter of 2018 included $34.9 million of income from equity investments.

Non-GAAP net income* was $60.4 million, or $0.65 per diluted share, for the third quarter of 2019, compared to a non-GAAP net income of $15.9 million, or $0.18 per share, for the same quarter of 2018. The third quarter 2019 non-GAAP amount excludes $2.8 million of business transition and related costs and $11.5 million of non-cash interest expense related to Dexcom’s senior convertible notes. The third quarter 2018 non-GAAP amount excludes $0.8 million of business transition and related costs, $3.4 million of non-cash interest expense related to DexCom’s senior convertible notes, and $34.9 million of income from equity investments.

Cash and Liquidity: As of September 30, 2019, Dexcom held $1.430 billion in cash and marketable securities and our revolving credit facility remains undrawn. The cash balance includes the net proceeds from Dexcom’s fourth quarter 2018 convertible notes offering and 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.

¹ Data presented at the European Association for the Study of Diabetes annual meeting in September 2019 and subsequently published online by Diabetes Care on October 10, 2019. Soupal J, Petruzelkova L, Grunberger G, et al. “Glycemic Outcomes in Adults With T1D Are Impacted More by Continuous Glucose Monitoring Than by Insulin Delivery Method: 3 Years of Follow-Up From the COMISAIR Study.” Diabetes Care. 2019.

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 IR 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, 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.