10-QPeriod: Q2 FY2011

DEXCOM INC Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 3, 2011For Securities:DXCM

Summary

DEXCOM INC. (DXCM) reported its Q2 2011 financial results, showcasing strong revenue growth and significant improvements in gross margin. For the quarter ended June 30, 2011, total revenue increased by 81.7% year-over-year to $21.4 million, driven by a 67.8% increase in product revenue to $15.2 million. This growth was fueled by increased sales volume of their durable systems and disposable sensors, along with higher average per-unit selling prices. The company also benefited from a substantial increase in development grant and other revenues, largely due to a $4.0 million milestone payment received from Animas. Gross margin improved significantly to 55.4% from 38.3% in the prior year's comparable quarter, reflecting increased revenue and better manufacturing absorption. Despite the strong top-line performance and improved profitability at the gross level, the company continued to operate at a net loss, reporting a net loss of $7.4 million for the quarter. Operating expenses, particularly research and development and selling, general, and administrative costs, increased to support product development and commercialization efforts. The company's cash position remains robust, with $105 million in cash, cash equivalents, and marketable securities, providing sufficient runway for operations through at least June 30, 2012. Investors should note the ongoing legal battle with Abbott Diabetes Care and the company's reliance on third-party reimbursements for product adoption.

Financial Highlights

42 data points
Beta

Revenue

$21.40M

55.6% Gross Margin

Net Income

-$7.40M

-34.6% Net Margin

EPS (Diluted)

$-0.03

Total Assets

$136.37M

Cash & Equivalents

$33.89M

Free Cash Flow

-$3.69M

Financial Statements
Beta
Revenue$21.40M
Cost of Revenue$9.55M
Gross Profit$11.90M
R&D Expenses$7.02M
SG&A Expenses$12.24M
Operating Expenses$19.30M
Operating Income-$7.39M
Interest Expense$3K
Net Income-$7.40M
EPS (Basic)$-0.03

Key Highlights

  • 1Total revenue for the quarter increased 81.7% year-over-year to $21.4 million.
  • 2Product revenue grew 67.8% to $15.2 million, driven by increased sales volume and higher average selling prices.
  • 3Gross margin significantly improved to 55.4% from 38.3% in the prior year's quarter.
  • 4Net loss for the quarter was $7.4 million, a decrease from $11.7 million in Q2 2010.
  • 5Cash, cash equivalents, and marketable securities totaled $105 million as of June 30, 2011.
  • 6Received a $4.0 million milestone payment from Animas related to CE Mark approval.

Frequently Asked Questions

DEXCOM reported a total revenue of $21.4 million for the quarter ended June 30, 2011, representing an 81.7% increase compared to $11.8 million in the same period of 2010. Product revenue specifically grew by 67.8% to $15.2 million.

The company significantly improved its gross margin to 55.4% from 38.3% in Q2 2010. However, due to increased operating expenses in research and development and selling, general, and administrative functions, DEXCOM reported a net loss of $7.4 million for the quarter, an improvement from a net loss of $11.7 million in the prior year.

As of June 30, 2011, DEXCOM had $105.0 million in cash, cash equivalents, and short-term marketable securities. The company stated that these resources are sufficient to fund operations through at least June 30, 2012. They also reported working capital of $110.2 million.

DEXCOM is involved in a significant patent infringement lawsuit with Abbott Diabetes Care, Inc. Additionally, the company's products, particularly the SEVEN PLUS system, face regulatory considerations, including the lack of FDA clearance as a replacement for finger-stick devices and the ongoing reliance on third-party payor reimbursement policies for widespread adoption.