Earnings call: Dexcom reports strong Q3 2023 results, reveals plans for new product launch

DexCom (NASDAQ:DXCM), a leading player in continuous glucose monitoring (CGM) technology, reported robust third-quarter results for 2023. The company’s organic revenue growth was 26% compared to the same period in 2022, which is slightly above the company’s reported Revenue Growth of 25.15% for Q2 2023, according to InvestingPro data. Dexcom (NASDAQ:)’s G7 sensor continues to attract new customers and prescribers, with nearly 18,000 physicians now prescribing Dexcom products. The company closed the quarter with over $3.2 billion in cash and cash equivalents, which aligns with InvestingPro Tips that highlight the company’s ability to cover its short-term obligations with its liquid assets.

Key takeaways from the call:

• Dexcom’s worldwide revenue hit $975 million, a 27% increase from Q3 2022.
• The company plans to launch a non-insulin product next summer.
• Dexcom has expanded its coverage, leading to more people having access to its CGM system.
• The company expects to spin off its non-diabetes business in early 2024.
• Dexcom raised its full-year revenue guidance to a range of $3.575 billion to $3.6 billion.

Dexcom’s expansion of coverage has led to more people having access to its CGM system, particularly with Medicare coverage for type 2 diabetes patients. The company has gained market share across all reimbursement channels and patient segments in the US and internationally. This is in line with the InvestingPro Tip that Dexcom’s stockholders receive high returns on book equity, indicating the company’s effective use of its resources to generate profits.

In terms of financials, Dexcom reported strong financial results in the third quarter, with revenue growth accelerating compared to the previous quarter. International revenue grew 33%, totaling $261 million, and international organic revenue growth was 30%. The company saw slower growth in its non-CGM business and relatively flat performance in Japan as it transitioned to direct sales.

Dexcom expects to close a deal to spin off its non-diabetes business in early 2024. Gross profit for the quarter was $630 million, representing a gross margin of 64.7%, slightly above the Gross Profit Margin of 63.94% reported by InvestingPro for Q2 2023. Operating expenses were $392 million, and operating income was $238.9 million, representing a margin of 24.5%.

The company also announced a $500 million share repurchase program, aligning with an InvestingPro Tip that highlights management’s aggressive buyback of shares. Dexcom raised its full-year revenue guidance to a range of $3.575 billion to $3.6 billion, representing growth of 23% to 24%. Dexcom expects its non-GAAP gross margin for the year to be approximately 64%, and its non-GAAP operating and adjusted EBITDA margins to be approximately 19% and 28%, respectively.

During the earnings call, Dexcom executives provided several updates and insights. Jereme Sylvain, the CFO, mentioned that the company expects to sell off a business in France in the first half of 2024, with an estimated annual revenue contribution of $30 million. Kevin Sayer, the CEO, discussed the company’s success in gaining market share across all reimbursement channels, including non-reimbursed channels.

Terry Lauver, the EVP of Strategy and Corporate Development, mentioned the potential for the company to expand coverage for non-insulin using patients with CGM and the positive impact of CGM on patient health. The executives also expressed optimism about the future growth and opportunities for the company.

Dexcom reported significant growth in the adoption of their CGM technology. The number of commercial payers covering Dexcom’s basal only CGM has increased, making it the most covered CGM with the lowest out-of-pocket copay. The company is focused on expanding coverage for this population and believes that a majority of people using basal insulin now have access to CGM technology. For more insights and tips like these, consider checking out the InvestingPro platform, which offers a wealth of additional tips and real-time metrics.

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