10-QPeriod: Q1 FY2017

DEXCOM INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 2, 2017For Securities:DXCM

Summary

DexCom, Inc. (DXCM) reported its first quarter 2017 results, showing a significant increase in revenue, up 22.5% year-over-year to $142.3 million. This growth was primarily driven by strong sales of disposable sensors and durable systems, reflecting the expanding installed base of their continuous glucose monitoring (CGM) systems, particularly the G4 PLATINUM and G5 Mobile models. Despite revenue growth, the company continued to operate at a net loss, which widened to $41.7 million for the quarter, compared to $19.2 million in the prior year period. This increased loss is largely attributable to substantial investments in research and development ($48.1 million) and selling, general, and administrative expenses ($86.4 million), both of which saw significant increases as the company scaled operations and commercialization efforts.

Financial Highlights

48 data points
Beta

Revenue

$142.30M

66.1% Gross Margin

Net Income

-$41.70M

-29.3% Net Margin

EPS (Diluted)

$-0.12

Total Assets

$467.20M

Cash & Equivalents

$153.50M

Free Cash Flow

-$22.60M

Financial Statements
Beta
Revenue$142.30M
Cost of Revenue$48.20M
Gross Profit$94.10M
R&D Expenses$48.10M
SG&A Expenses$86.40M
Operating Expenses$134.50M
Operating Income-$40.40M
Interest Expense$500K
Net Income-$41.70M
EPS (Basic)$-0.12
EPS (Diluted)$-0.12
Shares Outstanding (Basic)340.80M

Key Highlights

  • 1Revenue increased by 22.5% to $142.3 million in Q1 2017, primarily due to higher sales volumes of disposable sensors and durable systems.
  • 2Net loss for the quarter widened to $41.7 million, compared to $19.2 million in Q1 2016, indicating continued investment in growth.
  • 3Research and development expenses increased by 49.4% to $48.1 million, reflecting investment in future product generations.
  • 4Selling, general, and administrative expenses rose by 39.1% to $86.4 million, supporting expanded sales and customer support efforts.
  • 5Cash and cash equivalents increased significantly to $153.5 million at the end of the quarter, up from $94.5 million at the end of 2016, bolstered by a $75 million short-term borrowing.
  • 6The company secured a $200 million revolving credit facility and had $125 million available as of March 31, 2017, providing liquidity.
  • 7DexCom expressed confidence in its ability to fund operations through at least March 31, 2018, with existing resources and the credit facility.

Frequently Asked Questions

Revenue growth was primarily driven by increased sales volume of disposable sensors and durable systems, reflecting the continued expansion of DexCom's customer base using its G4 PLATINUM and G5 Mobile continuous glucose monitoring (CGM) systems.

The net loss widened due to significant increases in operating expenses, particularly in research and development and selling, general, and administrative costs. These investments are aimed at scaling commercialization efforts, developing next-generation products, and expanding market reach.

DexCom has a combination of cash, cash equivalents, and marketable securities totaling $181.1 million as of March 31, 2017. Additionally, they have a $200 million revolving credit facility, with $125 million available. The company believes these resources are sufficient to fund operations through at least March 31, 2018.

AgaMatrix filed a patent infringement lawsuit against DexCom, which has been largely stayed pending inter partes reviews of the asserted patents by the Patent Trial and Appeal Board. DexCom has also filed its own patent infringement lawsuit against AgaMatrix. As of March 31, 2017, no amounts had been accrued in respect of this litigation.