Dexcom sees revenue growth in Q2 2020 despite COVID-19 uncertainties

Delays in Dexcom G7 trials and manufacturing have pushed the potential launch date beyond 2020.
By Mallory Hackett
12:44 pm
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Dexcom President and CEO Kevin Sayer is “incredibly proud” of what the company is calling “resilient growth” in the second quarter of 2020, according to an earnings call on Tuesday.

Despite having some uncertainty in the impacts of the COVID-19 pandemic, Dexcom was able to produce significant year-over-year growth in Q2 2020.

Sayer attributes much of the growth to a steady increase in knowledge of the company’s continuous glucose monitor (CGM), the Dexcom G6, among patients.

“Even with rising CGM awareness, there remain many people who continue to rely on fingersticks to manage diabetes, and we believe that there remains a significant opportunity for growth ahead in our core Type 1 and Type 2 intensive markets,” he said in the earnings call.

TOP LINE

This quarter, Dexcom raked in $451.8 million in total revenue, a YoY increase of 34% from $336.4 million in 2019. A majority of the revenue in Q2 2020 ($367.1 million) came from the U.S. market. The adjusted EBITDA was $122.6 million.

The second-quarter gross profit totaled $289.7 million or 64.1% of revenue compared to 61.4% of the revenue the same time last year. The net income was $77.1 million, or $0.79 per share.

Dexcom also boasted success in doubling G6 capacity in the first half of the year, which could be attributed to the fact that the systems were made available in the U.S. for use in hospitals and other healthcare facilities to assist frontline workers during the COVID-19 pandemic.

ON THE RECORD

“As an organization, we continue to make great strides as we invest in the initiatives that will drive Dexcom's long-term growth, while also remaining disciplined as an organization – and this is evident in our second-quarter results,” Quentin Blackford, Dexcom's COO and CFO, said in the earnings call.

LOOKING AHEAD

For the remainder of 2020, Dexcom hopes to reach about $1.850 billion in revenue; meet non-GAAP gross and operating margins of 65% and 14%, respectively; and have an adjusted EBITDA of at least 24%.

Additionally, the company has several strategic goals surrounding the eventual G7 launch.

“We plan for numerous customer experience and product enhancement, as well as new market, opportunities for this platform over the next two years, and many of these initiatives will be incorporated into the G7 platform going forward,” Sayer said.

The G7 launch has been sidetracked by the pandemic due to delays in clinical trials and manufacturing. As a result, Sayer announced there would not be a limited launch of the new system in 2020.

“Such a launch would not provide a meaningful financial impact, and rushing to accommodate such a launch would ultimately delay our long-term plans,” he said.

Despite those setbacks, Dexcom plans to invest in G7 clinical trials, G7 manufacturing scale-up, new market efforts and direct-to-consumer advertising as the year progresses.

LOOKING BACK

Notably from the April call, Dexcom launched a service to get patients who lost their insurance up to two 90-day supplies of CGMs for only $45 each. It also received an allowance from the FDA for Dexcom CGM to be used in hospitals during the pandemic.

The company also recently began shipping out its G6 Pro, which allows for blinded and unblinded modes of use and can read glucose values as often as every five minutes.

“First of all, the G6 Pro is going to be able to give physicians the opportunity to give patients, if you will, a CGM checkup in two different ways. One of them is they can blind it; so, they can put [it] on the patient and they can wear it blinded,” Sayer said in an interview with MobiHealthNews in June. “The patient says 'I take my meds every day,' 'I don’t eat too much,' or whatever. They’ll wear a CGM for 10 days and the physician will be able to watch and see what is going on and go back and point it out to them.”

There have also been some obstacles in Dexcom’s way, with multiple customers noticing that some of the G6 devices' applicators were getting stuck to the wearable. The company acknowledged that the issue has impacted what it is calling a “small percentage” of the sensors, and said it has worked to solve the issue.

 

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