Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DexCom Inc (DXCM, Financial) reported third quarter organic revenue growth of 3%, reaching the high end of their guidance.
- The company expanded its US sales force, resulting in improved productivity metrics and record levels of new customer starts.
- International revenue grew by 12%, with significant contributions from the expanded availability of G7 and Dexcom One Plus product platforms.
- DexCom Inc (DXCM) launched its new product, Sello, in the U.S. market, targeting adults with prediabetes or type 2 diabetes not on insulin.
- The company submitted its DexCom G7 15-day CGM system to the FDA, aiming to enhance customer experience and cost efficiency.
Negative Points
- US revenue declined by 2% due to slower new customer starts and a decline in revenue per customer from shifting channel dynamics and higher rebate eligibility.
- The DME channel experienced share loss, although trends stabilized late in the quarter.
- Operating income decreased to 21.3% of revenue from 24.5% in the same quarter of 2023.
- DexCom Inc (DXCM) incurred a non-cash charge of $24.6 million on inventory related to build configurations not suitable for commercial launch.
- The company is navigating leadership transitions, with the Chief Commercial Officer planning to retire, potentially impacting commercial strategy execution.
Q & A Highlights
Q: Can you provide more color on the progress made in the third quarter, particularly regarding sales force productivity and DME partnerships?
A: Kevin Sayer, CEO: The sales organization showed significant improvement as familiarity with territories and physician relationships increased. New patient starts reached record levels, especially in the latter half of August and September. We added 35,000 new prescribers, which sets us up well for future growth. On the DME side, we saw stabilization in September after losing some share earlier in the quarter. We are working to be more channel-agnostic and improve relationships with DME partners.
Q: How do you view the current growth rate of the U.S. CGM market, and do you expect it to improve?
A: Kevin Sayer, CEO: While the U.S. CGM market growth appeared to slow to about 10% in Q3, we believe this is not indicative of long-term trends. We are optimistic about the category's potential and expect market growth to accelerate as we address execution issues and expand access.
Q: Can you discuss the impact of the 15-day G7 sensor filing and its potential financial implications for 2025?
A: Kevin Sayer, CEO: We have submitted the 15-day G7 sensor to the FDA and expect a positive reception based on our data. The financial impact will depend on the launch timing and customer adoption. Jeremy Sylvain, CFO, added that this product could be a significant cost lever, contributing to our long-term margin targets.
Q: What are your expectations for the U.S. market recovery in 2025, and does it include contributions from the new product, Stella?
A: Jeremy Sylvain, CFO: We anticipate stable market conditions and continued growth in the U.S. in 2025, with Stella contributing to this growth. We expect to maintain stable trends in the DME channel and capitalize on new opportunities, including the first-ever U.S. OTC holiday season for Stella.
Q: How are you addressing the leadership transition in the U.S. commercial team, and what are your plans for Stella's expansion in 2025?
A: Kevin Sayer, CEO: We have a strong leadership team and are confident in our commercial strategy moving into 2025. For Stella, we plan to enhance the app experience and expand distribution channels. Our sales force will continue to promote Stella, increasing familiarity and driving growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
