Summary
DexCom, Inc. (DXCM) reported its second quarter and first half 2019 financial results. The company experienced significant revenue growth, with a 39% increase year-over-year for the quarter to $336.4 million and a 45% increase for the first half to $616.9 million. This growth was primarily driven by higher sales volumes of their continuous glucose monitoring (CGM) system components, despite some pricing pressure and a shift in product mix. While revenue showed robust expansion, the company reported a net loss of $10.5 million for the quarter and $37.4 million for the first half, compared to a net income of $30.2 million and $6.0 million in the respective prior-year periods. This shift to a loss was influenced by increased operating expenses, particularly in research and development and selling, general, and administrative costs, as well as higher interest expenses related to recent debt issuances. The company's balance sheet reflects an increase in cash and cash equivalents, partially offset by strategic investments in marketable securities and property. A notable change was the adoption of the new lease accounting standard (ASC 842) at the beginning of 2019, which introduced operating lease right-of-use assets and liabilities onto the balance sheet. Management indicated that despite the reported net loss, they believe existing cash, cash equivalents, marketable securities, and their revolving credit facility are sufficient to meet operational needs for at least the next 12 months. The company also highlighted ongoing efforts to scale production capacity and expand internationally.
Financial Highlights
48 data points| Revenue | $336.40M |
| Cost of Revenue | $129.90M |
| Gross Profit | $206.50M |
| R&D Expenses | $69.00M |
| SG&A Expenses | $138.30M |
| Operating Expenses | $207.30M |
| Operating Income | -$800K |
| Interest Expense | $15.00M |
| Net Income | -$10.50M |
| EPS (Basic) | $-0.03 |
| EPS (Diluted) | $-0.03 |
| Shares Outstanding (Basic) | 364.40M |
| Shares Outstanding (Diluted) | 364.40M |
Key Highlights
- 1Revenue grew significantly, up 39% to $336.4 million for the quarter and 45% to $616.9 million for the first half of 2019, driven by strong sales volume of CGM components.
- 2The company reported a net loss of $10.5 million for Q2 2019 and $37.4 million for the first half, a reversal from the profitable periods in 2018, primarily due to increased operating expenses.
- 3Operating expenses rose, with R&D up 46% and SG&A up 24% year-over-year for the quarter, reflecting investments in growth and infrastructure.
- 4Gross profit increased in absolute dollars to $206.5 million for the quarter, but the gross margin percentage slightly decreased from 63% to 61% due to channel strategy evolution and product mix.
- 5Interest expense increased substantially due to the issuance of Senior Convertible Notes in late 2018.
- 6The company adopted ASC 842, the new lease accounting standard, which impacted the balance sheet by recognizing right-of-use assets and lease liabilities.
- 7Cash, cash equivalents, and marketable securities totaled $1.378 billion as of June 30, 2019, providing a strong liquidity position.