SAN DIEGO / Feb 08, 2024 / Business Wire / DexCom, Inc. (Nasdaq: DXCM) today reported its financial results as of and for the quarter and fiscal year ended December 31, 2023.

Fourth Quarter 2023 Financial Highlights:

• Revenue grew 27% versus the same quarter of the prior year to $1.03 billion on a reported basis and 26% on an organic¹ basis.
• U.S. revenue growth of 27% and international revenue growth of 27% on a reported basis. International revenue growth was 23% on an organic¹ basis.
• GAAP operating income of $216.9 million or 21.0% of revenue, an increase of 560 basis points compared to the fourth quarter of 2022. Non-GAAP operating income* of $242.7 million or 23.5% of reported revenue, an increase of 240 basis points compared with the same quarter of the prior year.

Full Year 2023 Financial Highlights:

• Full year revenue grew 24% versus the prior year to $3.62 billion on a reported basis and 24% on an organic² basis.
• U.S. revenue growth of 23% and international revenue growth of 30% on a reported basis. International revenue growth was 30% on an organic² basis.
• GAAP operating income of $597.7 million or 16.5% of revenue, an increase of 310 basis points compared to 2022. Non-GAAP operating income* of $718.6 million or 19.8% of revenue, an increase of 310 basis points over the prior year.

Fourth Quarter 2023 Strategic Highlights:

• Submitted Stelo, Dexcom’s new glucose sensor for people with type 2 diabetes who do not use insulin, to the FDA for review.
• Advanced pump connectivity with the integration of Dexcom G7 and Tandem Diabetes Care’s t:slim X2 insulin pump software, as well as the iLet Bionic Pancreas from Beta Bionics, supporting greater customer choice in insulin delivery.
• Submitted Dexcom’s direct-to-watch feature, which will enable customers to use a smartwatch as their primary receiver, to the FDA for review.
• In support of National Diabetes Month, partnered with several Dexcom Warriors in a global awareness campaign to advocate for greater access to diabetes technology.

“2023 was an incredible year for Dexcom with significantly expanded access, another year of record new customer starts, and growing momentum behind our global rollout of Dexcom G7,” said Kevin Sayer, Dexcom’s chairman, president and CEO. “We are looking forward to another great year in 2024 as we strive to improve the health of significantly more people around the world with Dexcom CGM technology.”

2024 Annual Guidance

The company is reiterating fiscal year 2024 guidance for Revenue, Non-GAAP Gross Profit Margin and Non-GAAP Operating Margin, and establishing Adjusted EBITDA Margin guidance at the following levels:

• Revenue of approximately $4.15 - 4.35 billion (16 - 21% organic growth³)
• Non-GAAP Gross Profit Margin of approximately 63 - 64%
• Non-GAAP Operating Margin of approximately 20%
• Adjusted EBITDA Margin of approximately 29%

Fourth Quarter 2023 Financial Results

Revenue: In the fourth quarter of 2023, worldwide revenue grew 27% to $1.03 billion on a reported basis, up from $815.2 million in the fourth quarter of 2022. Volume growth in conjunction with strong new customer additions continues to be the primary driver of revenue growth as awareness of real-time CGM increases.

Gross Profit: GAAP gross profit totaled $656.6 million or 63.5% of revenue for the fourth quarter of 2023, compared to $541.3 million or 66.4% of revenue in the fourth quarter of 2022.

Non-GAAP gross profit* totaled $663.8 million or 64.2% of revenue for the fourth quarter of 2023, compared to $543.7 million or 66.7% of reported revenue in the fourth quarter of 2022.

Operating Income: GAAP operating income for the fourth quarter of 2023 was $216.9 million, compared to GAAP operating income of $125.4 million for the fourth quarter of 2022.

Non-GAAP operating income* for the fourth quarter of 2023 was $242.7 million, compared to non-GAAP operating income of $172.1 million for the fourth quarter of 2022.

Net Income and Diluted Net Income Per Share: GAAP net income was $256.3 million, or $0.62 per diluted share, for the fourth quarter of 2023, compared to GAAP net income of $91.8 million, or $0.22 per diluted share, for the same quarter of 2022.

Non-GAAP net income* was $202.8 million, or $0.50 per diluted share, for the fourth quarter of 2023, compared to non-GAAP net income of $136.3 million, or $0.34 per diluted share, for the same quarter of 2022. The fourth quarter 2023 non-GAAP net income excludes $10.1 million of amortization of intangible assets, $2.0 million of business transition and related costs, $13.7 million of intellectual property litigation costs, $0.9 million of income from equity investments, and $78.4 million of tax adjustments.

Cash and Liquidity: As of December 31, 2023, Dexcom held $2.72 billion in cash, cash equivalents and marketable securities and our revolving credit facility remains undrawn. The cash balance represents significant financial and strategic flexibility as Dexcom continues to expand production capacity and explore new market opportunities.

* See Table E below for a reconciliation of these GAAP and non-GAAP financial measures.

Conference Call

Management will hold a conference call today starting at 4:30 p.m. (Eastern Time). The conference call will be concurrently webcast. The link to the webcast will be available on the Dexcom Investor Relations website at investors.dexcom.com by navigating to “Events and Presentations,” and will be archived for future reference. To listen to the conference call, please dial (888) 414-4585 (US/Canada) or (646) 960-0331 (International) and use the confirmation ID “9430114” approximately five minutes prior to the start time.

Statement Regarding Use of Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), please see the section of the accompanying tables titled “About Non-GAAP Financial Measures” as well as the related Table E. We have not reconciled our total Revenue, Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin and Adjusted EBITDA Margin estimates for fiscal year 2023 because certain items that impact these figures are uncertain or out of our control and cannot be reasonably predicted. Accordingly, a reconciliation of total Revenue, Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin and Adjusted EBITDA Margin is not available without unreasonable effort.

About DexCom, Inc.

DexCom, Inc. empowers people to take real-time control of health through innovative continuous glucose monitoring (CGM) systems. Headquartered in San Diego, Calif., and with operations across Europe and select parts of Asia/Oceania, Dexcom has emerged as a leader of diabetes care technology. By listening to the needs of users, caregivers, and providers, Dexcom works to simplify and improve diabetes management around the world. For more information about Dexcom CGM, visit www.dexcom.com.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements that are not purely historical regarding Dexcom’s or its management’s intentions, beliefs, expectations and strategies for the future, including those related to Dexcom’s estimated total Revenue, Non-GAAP Gross Profit Margin, Non-GAAP Operating Margin, and Adjusted EBITDA Margin for fiscal 2024, as well as expected growth rates as compared to the year ended December 31, 2023. All forward-looking statements included in this press release are made as of the date of this release, based on information currently available to Dexcom, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward-looking statements. The risks and uncertainties that may cause actual results to differ materially from Dexcom’s current expectations are more fully described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Dexcom’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings filed with the Securities and Exchange Commission. Except as required by law, Dexcom assumes no obligation to update any such forward-looking statement after the date of this report or to conform these forward-looking statements to actual results.

ABOUT NON-GAAP FINANCIAL MEASURES

The accompanying press release dated February 8, 2024 contains non-GAAP financial measures. These non-GAAP financial measures include organic revenue, non-GAAP gross profit margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted net income per share, and non-GAAP diluted weighted average shares outstanding, as well as adjusted EBITDA.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that they provide useful information about operating results, enhance the overall understanding of our operating performance and future prospects, and allow for greater transparency with respect to key metrics used by senior management in our financial and operational decision making. Our non-GAAP financial measures exclude amounts that we do not consider part of ongoing operating results when planning and forecasting and when assessing the performance of the organization and our senior management. We compute non-GAAP financial measures using the same consistent method from quarter to quarter and year to year. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. We therefore report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles, differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. We believe that non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliations between these presentations, to more fully understand our business.

Management believes organic revenue is a meaningful metric to investors as it provides a more consistent comparison of the company’s revenue to prior periods as well as to industry peers. We exclude the following items from the non-GAAP financial measure for organic revenue:

• The effect of non-CGM revenue acquired or divested in the trailing twelve months.
• The effect of foreign currency fluctuations.

Management believes that the presentation of operating results that excludes these items provides useful supplemental information to investors and facilitates the analysis of our core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing our past and future operating performance.

Table E reconciles the non-GAAP financial measures in the press release to the most directly comparable financial measures prepared in accordance with GAAP.

We exclude the following items from non-GAAP financial measures for non-GAAP gross profit, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted net income per share:

• Amortization of acquired intangible assets
• Business transition and related costs associated with acquisition and divestiture, integration and business transition activities, including severance, relocation, consulting, leasehold exit costs, third party merger and acquisition costs, and other costs directly associated with such activities
• Income or loss from equity investments
• Third party intellectual property litigation costs in connection with the Company's patent infringement litigation against Abbott Diabetes Care, Inc.
• Litigation settlement costs
• Gain or loss on extinguishment of debt
• Adjustments related to taxes for the excluded items above, as well as excess benefits or tax deficiencies from stock-based compensation, and the quarterly impact of other discrete items

Adjusted EBITDA excludes non-cash operating charges for share-based compensation, depreciation and amortization as well as non-operating items such as interest income, interest expense, gain or loss on extinguishment of debt, income or loss from equity investments, and income tax expense or benefit. For the reasons explained above, adjusted EBITDA also excludes business transition and related costs, litigation settlement costs, and intellectual property litigation costs.