Summary
DexCom, Inc. (DXCM) reported strong top-line growth in its third quarter and the first nine months of 2019, driven by significant increases in revenue. For the third quarter, revenues grew by 49% year-over-year, reaching $396.3 million, and for the nine-month period, revenues increased by 46% to $1.013 billion. This growth was primarily fueled by higher sales volumes of disposable sensors and durable systems, despite some pricing pressures and shifts in product mix. While revenue growth was robust, net income saw a slight decrease of 2% for the third quarter, amounting to $45.8 million, down from $46.6 million in the prior year's quarter. This was largely influenced by increased operating expenses, particularly in research and development and selling, general, and administrative functions, as well as higher interest expenses related to the issuance of new convertible notes. For the nine-month period, net income decreased significantly by 84% to $8.4 million, primarily due to a substantial increase in interest expense from the 2023 convertible notes and a prior year gain from an equity investment. Investors should monitor expense management and the impact of the convertible debt on future profitability.
Financial Highlights
49 data points| Revenue | $396.30M |
| Cost of Revenue | $149.40M |
| Gross Profit | $246.90M |
| R&D Expenses | $66.70M |
| SG&A Expenses | $124.20M |
| Operating Expenses | $190.90M |
| Operating Income | $56.00M |
| Interest Expense | $15.10M |
| Net Income | $45.80M |
| EPS (Basic) | $0.13 |
| EPS (Diluted) | $0.13 |
| Shares Outstanding (Basic) | 365.20M |
| Shares Outstanding (Diluted) | 370.00M |
Key Highlights
- 1Revenue demonstrated substantial year-over-year growth: 49% increase in Q3 2019 ($396.3M) and 46% increase for the nine months ended Sep 30, 2019 ($1.013B).
- 2Gross profit increased in dollar terms, reflecting higher sales volume, though gross margin percentage slightly decreased year-over-year due to channel strategy evolution and product mix.
- 3Operating income significantly improved, turning from a loss of $21.7M in the first nine months of 2018 to an income of $40.8M in the same period of 2019.
- 4Interest expense increased substantially due to the issuance of the 0.75% Senior Convertible Notes due 2023 in November 2018.
- 5Cash, cash equivalents, and short-term marketable securities stood at $1.43 billion as of September 30, 2019, indicating a healthy liquidity position.
- 6The company adopted ASC 842, Leases, resulting in the recognition of operating lease right-of-use assets and liabilities on the balance sheet.
- 7The company reported ongoing litigation with AgaMatrix, Inc. (now WaveForm Technologies, Inc.) regarding patent infringement, with recent rulings in favor of DexCom, though appeals are ongoing.