10-QPeriod: Q2 FY2013

DEXCOM INC Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:DXCM

Summary

DEXCOM INC (DXCM) reported its financial and operational results for the period ending June 30, 2013. The company, a medical device manufacturer focused on continuous glucose monitoring systems, demonstrated significant product revenue growth driven by the commercial launch of its Dexcom G4 PLATINUM system in late 2012. While revenue is increasing, the company continues to invest heavily in research and development and sales and marketing, leading to ongoing net losses. However, the company's cash position and access to credit facilities suggest sufficient liquidity to fund operations through at least mid-2014. Key challenges remain in securing broad third-party payer reimbursement and navigating a complex regulatory and competitive landscape.

Financial Highlights

47 data points
Beta

Revenue

$35.80M

61.2% Gross Margin

Net Income

-$10.10M

-28.2% Net Margin

EPS (Diluted)

$0.00

Total Assets

$102.30M

Cash & Equivalents

$28.20M

Free Cash Flow

-$1.10M

Financial Statements
Beta
Revenue$35.80M
Cost of Revenue$13.90M
Gross Profit$21.90M
R&D Expenses$11.10M
SG&A Expenses$20.70M
Operating Expenses$31.80M
Operating Income-$9.90M
Interest Expense$200K
Net Income-$10.10M
Shares Outstanding (Basic)283.60M
Shares Outstanding (Diluted)283.60M

Key Highlights

  • 1Product revenue increased by $14.0 million to $35.5 million for the quarter ended June 30, 2013, compared to $21.5 million in the same period of 2012, primarily due to increased sales of the G4 PLATINUM system.
  • 2Gross profit increased by $11.2 million to $21.8 million for the quarter ended June 30, 2013, driven by higher revenue and a favorable sales mix towards the higher-margin G4 PLATINUM system.
  • 3Research and development expenses increased by $1.1 million to $11.1 million for the quarter ended June 30, 2013, reflecting increased investment in product development.
  • 4Selling, general, and administrative expenses rose by $4.8 million to $20.7 million for the quarter ended June 30, 2013, primarily to support revenue growth and product commercialization.
  • 5The company had $46.4 million in cash, cash equivalents, and short-term marketable securities as of June 30, 2013, providing a solid liquidity position.
  • 6A $4.0 million grant was awarded in July 2013 from the Helmsley Trust to accelerate the development of the sixth generation of advanced glucose-sensing technologies.
  • 7The company is facing ongoing patent litigation with Abbott Diabetes Care, Inc., with reexamination proceedings for several patents still in progress.

Frequently Asked Questions

The primary driver of Dexcom's revenue growth is the increased sales volume of its durable systems and disposable sensors, particularly due to the commercial launch of the Dexcom G4 PLATINUM system in October 2012.

No, Dexcom has incurred net losses since its inception and anticipates continuing losses as it invests in commercialization, research and development, and expanding its infrastructure. The company reported a net loss of $21.2 million for the six months ended June 30, 2013.

As of June 30, 2013, Dexcom had $46.4 million in cash, cash equivalents, and short-term marketable securities, in addition to a $15.0 million revolving line of credit. The company believes these resources, along with projected contributions from partnerships, are sufficient to meet its needs through at least June 30, 2014.

Key risks include the need for widespread market acceptance of its products by physicians and patients, challenges in securing broad reimbursement from third-party payors, ongoing patent litigation with competitors like Abbott, regulatory hurdles for new product approvals, and the need to scale manufacturing efficiently while managing costs and supply chains.