10-QPeriod: Q1 FY2016

DEXCOM INC Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 27, 2016For Securities:DXCM

Summary

DexCom, Inc. (DXCM) reported its first quarter 2016 financial results, showing significant revenue growth compared to the prior year. Total revenues reached $116.2 million, a substantial increase from $72.8 million in Q1 2015, driven by strong sales volumes of disposable sensors and durable systems, reflecting continued growth in their customer base for the G4 PLATINUM and G5 Mobile systems. Despite the revenue surge, the company reported a net loss of $19.2 million for the quarter, an increase from the $12.9 million net loss in Q1 2015. This widened net loss is attributed to increased operating expenses, particularly in research and development and selling, general, and administrative costs, which rose to support revenue growth and product commercialization. The company maintains a strong focus on product development and market expansion, including collaborations like the one with Verily Life Sciences, signaling a commitment to future innovation and growth, though it continues to operate at a loss.

Financial Highlights

48 data points
Beta

Revenue

$116.20M

64.6% Gross Margin

Net Income

-$19.20M

-16.5% Net Margin

EPS (Diluted)

$-0.06

Total Assets

$299.40M

Cash & Equivalents

$77.90M

Free Cash Flow

-$11.70M

Financial Statements
Beta
Revenue$116.20M
Cost of Revenue$41.10M
Gross Profit$75.10M
R&D Expenses$32.20M
SG&A Expenses$62.10M
Operating Expenses$94.30M
Operating Income-$19.20M
Interest Expense$100K
Net Income-$19.20M
EPS (Basic)$-0.06
Shares Outstanding (Basic)328.40M

Key Highlights

  • 1Revenue increased by 59.6% to $116.2 million in Q1 2016 from $72.8 million in Q1 2015.
  • 2Gross profit grew by 61.5% to $75.1 million, indicating improved profitability on sales.
  • 3Operating expenses increased significantly, with R&D up 62.6% and SG&A up 57.6%, reflecting investments in growth and commercialization.
  • 4The company reported a net loss of $19.2 million for the quarter, an increase from the $12.9 million net loss in the prior year's quarter.
  • 5Cash, cash equivalents, and marketable securities totaled $106.5 million as of March 31, 2016, with an accumulated deficit of $574.6 million.
  • 6Significant share-based compensation expense of $25.1 million was recorded in Q1 2016, up from $15.9 million in Q1 2015.
  • 7The company entered into a Collaboration and License Agreement with Verily Life Sciences for joint development of next-generation CGM products, including a $35 million upfront payment.

Frequently Asked Questions

DexCom reported a significant increase in revenue for the first quarter of 2016, reaching $116.2 million, up from $72.8 million in the same period of 2015. This represents a 59.6% year-over-year growth, primarily driven by higher sales volumes of both disposable sensors and durable systems.

While revenue and gross profit increased substantially, DexCom's net loss also widened to $19.2 million in Q1 2016 from $12.9 million in Q1 2015. This was due to significant increases in operating expenses, particularly in Research and Development ($32.2 million vs. $19.8 million) and Selling, General, and Administrative ($62.1 million vs. $39.4 million) costs. These increased expenses are attributed to investments in revenue growth, product commercialization, and international expansion.

As of March 31, 2016, DexCom had $106.5 million in cash, cash equivalents, and marketable securities, and reported working capital of $163.3 million. However, the company has a significant accumulated deficit of $574.6 million, reflecting its history of operating losses since inception. Management believes its current resources are sufficient to fund operations through at least March 31, 2017.

DexCom continues to focus on product innovation and strategic collaborations. A key development is the Collaboration and License Agreement with Verily Life Sciences (formerly Google Life Sciences) to jointly develop next-generation CGM products, which involved a $35 million upfront payment. The company also continues to commercialize its G4 PLATINUM and G5 Mobile systems and is investing in expanding its sales and marketing infrastructure.