DXCM - Earnings call transcript Q3 2019

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Operator

Welcome to the DexCom Third Quarter 2019 Earnings Release Conference Call. My name is Erin and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded.

the to turn Christensen. now will call Sean over I Sean, begin. you may

Sean Christensen

DexCom's and XXXX operator, you, third welcome Thank to quarter earnings call.

Our Chairman, Steve Executive Strategy President, CFO; and a Kevin Pacelli, from Quentin Sayer, our who and a COO financial with Corporate quarter, and provide and our a the summary agenda will of of strategic outlook Vice by review then President Blackford, and Development. begins CEO, followed DexCom's update from

for will on to note we for At open on we remarks, your prepared available DexCom up analysts themselves questions. today. that Relations time, call limit page. can Events our slides performance also one the Investor related ask we Please the Following Presentations are everyone participating opportunity that and our the to quarter so website there provide to an question third

our that, Harbor With Safe review let's statement.

statements the competition, statements of may These today's in statements. about Some events, forward-looking expectations intentions, will constitute and performance. we and operating plans future management's call reflect make beliefs products, strategies,

could anticipated included on statements. in based as materially the uncertainties, made of this risks are actual are those forward-looking to presentation hereof, and and results statements to from various currently date subject in available information the forward-looking DexCom, differ All

statements to filings Except statements DexCom's The forward-looking other in any and implied annual such date forward-looking presentation of these from actual to XX-Q the we actual with report required by update conform the to quarterly and factors that Form obligation assume Securities on Exchange Commission. statements or no law, as results after results. or Form detailed could by this on materially those any forward-looking expressed cause to differ are of reports these XX-K,

or respect have references discuss in not otherwise our certain for as results all information in metrics call, GAAP. presentation The of to noted, Unless additional with the superior non-GAAP to with this to considered are presented be not GAAP we results that on financial or during a isolation Additionally, cash should prepared and a with results. in prepared accordance non-GAAP basis. based been accordance substitute measures financial will

the earnings our slides quarter comparable most a these refer release reconciliation measures Please GAAP and accompanying in their to of our for presentation financial directly to the earnings measure. third tables

will I over turn it Now, Kevin. to

Kevin Sayer

you, thank us everyone, and Thank Sean, you, for today. joining

are quarter third that There we The strength business. another let growth highlight that the to our give DexCom. many statistics today, could great of you three for of was period me key but point things

the represents the first quarter smaller. business when third much The our quarter U.S. rate since of growth was XXXX highest

highest third quarter the million increasing XXXX. first ever the the quarter absolute third $XXX third history company of of GAAP The profitable we nine months both on the through included for are only achieved non-GAAP over a profitability in time in not dollar quarter, and but We nearly the growth our basis.

The growth work and needs. performance explanation the core our people But the years and the their value highlight to more and access people of GX remains real-time with product simple. right the relatively meet often we have aware becoming CGM We DexCom's for of More this are to that DexCom of we result from big. value for this awareness answers think of many embracing are is as It the primary of result team. experiencing. the the is

big shareholders. device big we the our integration serve design our expectations our think and business our patients, our our meet long-term profitability. the about way empowering way we thinking patients, We and Thinking the we choice, in of the employees products, structure user our includes way to and to approach

mindset, profitable on As we even and year. both this to supply on we non-GAAP embraced But of I earlier, as year stated and GAAP months basis profitable our the through the first way visionary ourselves our nine first leave a find come has been than much ramp limits. infrastructure constraints, not does facing tighter to capacity customer and stretched levels growth continues its supply of we This our because it without these as to challenges. we expected explosive

As I beyond, you assure Quentin about as in we our think opportunities diabetes we to and considers big. will can DexCom's guidance that these are later, think challenges. explain continuing

In with nationwide that officially addition, their prescriptions to retail Medicare this response as our a have patients over few Medicare all many we in can this DexCom Walgreens we are recently developments began In began GX to for locations. In the CGM some any ensure of had of key we've past Canada you and shipping have Toward partnering Walgreens October, months. end patients. fill GX we to September through early launch. seen seen, selling great

This is an improve and channel. primary our pharmacy long-term for our wonderful patients to as the opportunity upon important experience our Medicare distribution the provides a in to step DexCom

with As the our with thinking and we we that our value patients are around experience on you we can in innovating are see, work create or great partners, interest product directly mind. product. beyond customer design the Whether this DexCom focusing of involves the

We continue our progress delivery excellent insulin to make with partners.

user on Tandem will factor. top their is of a Control-IQ that, unique form said of As of on closed-loop they advanced verge insulin call, integration. provide GX The and combination making insulin progress pump great and hybrid experience DexCom and closed their their with the Diabetes Horizon with are compelling with launching DexCom loop On System.

the exceeding businesses plan intensive our out playing expectations. insulin is initial to for our Our according fact, strategy in and delivery vastly

insulin pursue continue of gather on As outside markets future, we to we to core data look intensive our the business. to

CGM in Time We professionals has our that all our are are new and the outcomes the an learning use in product improve impact again investment to time future. healthcare environment. on team are to over patient we world Doctors hospital clamoring investing this expect markets. and workflows markets these in this for and strategy streamline for in incredible there increase execute to real-time in the

of studies believe respect pregnancy the potential in opportunity independent for reductions finally, importance And non-intensive will II am the data several to CGM this world with I promising that around group. continue to costly and in progress population. of of to expanded patient CGM DexCom that for cost significant. We use demonstrate type from the is continues prediabetes, usage long-term diabetes outcomes, patient point to this including aware

reminds intensive where for of here CGM First market. years campaign we insulin the our when us many started were experience ago we The

there size outcomes be and and many know these populations, While II believe primary that non-intensive CGM may use the cases to these the for improved be type all markets. prediabetes patients, we the of will drive we tool in

Based quarter margin targets. and results, as outlook EBITDA increase to full-year third continues XXXX exceed to our able as our our adjusted operating be revenue the Overall to on expectations. again are pleased strong we well

turn who well this provide of now as Quentin, to call will detail the over Quentin? review I on a will financials. outlook our as

Quentin Blackford

you, Thank Kevin.

presented on financial the a basis. a our discussed unless Reconciliation As website. noted, release today non-GAAP will as to GAAP IR can well reminder, earnings on today's otherwise be in as be metrics revenue on in worldwide $XXX.X and $XXX.X XXXX the reported of a both constant we representing compared XXXX growth Today of currency third to the same XX% quarter basis. for million reported quarter million for found

patient has GX. Our momentum new driven continued additions customer satisfaction and with by stronger

the of business in the space we've The drove new exceed to DexCom major U.S. XX% this above versus been channels mentioned, As a prior across grew for absolute CGM fastest at of seen and dollar anything these the early U.S. the million factors driver record continues third significantly growth and the year, all nearly our the $XXX Kevin in the quarter, rapid year. XXXX since primary has our our expectations adoption in performance of past.

pharmacy and commercial in including new We customer business to the our access barriers prioritize growth. remove upfront channels in traction continue to effort believe across contributing to are our our patient efforts gain that all

Our to with in XX% third Despite highest In at we past OUS and grow board we growth direct a XX% able comp year-over-year a the ahead were the of basis markets. of growth XX% the nice the six very OUS basis, with constant across uptick currency or up still both in solid reported on quarter, quarter that, increases distributer represented for against XXXX. came on a our expectations. to business which well of both sequential years grow internal continues our our third

Our third in that of XX noted with third line was second in QX we call. sales sequential The $XXX.X the quarter sales of XXXX. gross the or of expectations profit on million basis points XX.X% quarter improvement of was our compared to XX.X% quarter

our While of design, pricing with one cost sensor remains with production did the consistent challenges experience production the new our levels. expectations benefit transmitter we lines in are temporarily third and automated lowered our gaining GX quarter which late we of

demand, combined quarter. output, strong production levels tight lower with product the we fourth head left have into as a This inventory

the expect slightly We our As fourth XX% channels remaining lower business full be margin a sequential result, less certain now improvement GX still a but expect prior for gross original transition originally will to expectations. anticipated. magnitude GX in gross approximately the margin from in year than than of be will slower guidance. strong quarter, than the We

Operating XXXX increase growth were leverage more operating exceeding for QX third $XXX.X The revenue reflects $XXX.X in XX% expenses million operating expenses growth once million an in demonstrate Xx. of excellent to This continues compared again business with XXXX. to than QX year-over-year. by quarter the

process on of improvement, while in focus maintaining increasing Manila investments market investments of leverage our to in achieving research business opportunities. and and location, operational we our core are result development commitment robotics, a As in automation discipline continued while also our new

XXXX $XX operating of million revenue or XXXX million in compared $XX.X XXX the margins third reflects revenue points for was was $XX.X year-over-year revenue in or for of $XX.X of at Adjusted improvement same of or quarter to income of XX.X% a XXXX. million to EBITDA or of third of quarter the the of quarter. compared quarter XX% the quarter Operating XXXX. million This for X.X% third revenue the in XX.X% basis

first our progress third cash adjusted profitability nine GAAP income long-term Net history to towards $X.XX we of now our track these or potential the making the our the are million As first indicators of great of GAAP and first the are margin and full share. are year the year profitable quarter EBITDA are for company's for per $XX.X profitability. in see was ever our the we months business. operating indicate, targets on Through flow and deliver strong margin time for we we

We cash strong on the the equivalents billion and with greater of remain quarter. in third sheet balance $X.X end the of cash position a than at cash

capacity production preparation expansion in immediate as GX the GX. our well priority of the investment of for remains capital eventual as launch Our

our our to investments we new our also invest including flexibility We team. runway of continue markets support to as have lengthen in growth

we to greater midpoints that than of Turning increase XXXX given $XX our $X.XXX to year, guidance, nine first an have of total billion, billion we incredible of anticipate prior the the $X.XXX respectively. now incurring revenue at the of months the growth million experienced through guidance

fourth the guidance for size. this Importantly, and guidance, for impressive capability of XX% growth is to a that contemplates company annual we anticipate The XX% prior of revised which number production quarter. revenue unlike our growth the currently an organic implies

better As and improving cost XXX transmitter. expect I realize of from gross basis mentioned our expect full now low of approximately adjusted reflecting the the now our in light we approximately revenue X% growth, full guidance. XXX to sequentially of fourth we of approximately XX.X% a operating year points margins margins new respectively start of XX% quarter prior margin than of points as increases and of quarter benefit our expected EBITDA In we previously, basis

Steve that, now update. over to call the turn With strategic a I will for

Steven Pacelli

Quentin. Thanks,

advantage opportunity. efforts Our of growth of take our third validation a strategic well-positioned the in results quarter to long-term our and are we remain great

day As Conference insulin of our drove are when at increase the an stay. first to and some COMISAIR DexCom of That three-year nearly you per range. results full may connected hours showed clear as devices or is CGM another line CGM validation of and than have defense Barcelona, people time CGM paired average that with glycemic either to that Study the pumps of pens for EASD X of control more September's XX% improved in DexCom with diabetes seen here

Our Partners CGM Insulin enabled continue Delivery to integrated systems. on make progress

market we their to with and closed commending and bring reality. best be are approval dedication their our Control-IQ in them launch hybrid thrilled on technology first mentioned, to to date and advanced to progress to this loop As class bringing platform pending of the Kevin

this Novo for efforts the is pens. DexCom the tools Companion Medical during XX% the algorithm all Together, to study. in help provide connected keep to progress time their the Lilly, loop CGM these Eli and commercialize in Similarly, of mode pivotal technology proud enabling making Nordisk are and AP system closed to platform. smart

leader and the more more demonstrated value recognize we seeing are delivery in of additional companies be to from interest We to connectivity will continue CGM efforts. the insulin these and that

we We GX, a which on launch to are as later exciting GX the to on plan limited expand support in XXXX. way taking we still demand in more basis simultaneously we steps anticipated GX broadly the the of of the very this necessary be for new infrastructure As the rollout thoughtful XXXX and platform. to for to prepare rollout intend we scale

ICGM announced opportunity and strong represents the process real-time use. is product products FDA the On product designation, the different CGM early our of the we that another approval review segments. enabled The its to example by announce were GX GX us or submission pleased professional indicated the quickly giving streamline blinded either knees to for call, we previous to iterate unblinded of first our is Pro This of Pro our serve disposable October. in customer

GX activity, levels. optimize and all on people indication for ages range. impact food into factors patients and tool introduce X Pro mode, based peoples' also and of on X In blinded provides to valuable treatment up. diabetes patterns unblinded to a other It people medications observable and options choices, with and insights wonderful is their ages glucose provide the adjust mode, available real-time or In up. time to all is and for the CGM product Both clinicians

intensive cost this length of start to year spoken whether to patients' advocating type for We've for the [indiscernible] CGM. for hurdles improve at for patients, our access patients, reduce to to removal II administrative our about upfront coverage on the ways for for patients, pushing efforts our

to data making progress are good sources, see can business pharmacy of time long various we private from transition with U.S. the public channel. and the you the As

complex As is a this we've noted previously, task.

We their have our our long-standing to DME many distributors process the DME relationships with accustomed of and have channel. patients though grown

challenges channel. forward noted, pharmacy and look to these the With doing continued team field work expansion our through we is solid

you that is as of comment here and payers we say, many good customer. Specific CGM this understanding seen, to what and as of our formulary to PBMs every to our speaks operations. we plan continue to brings normal in have product DexCom's the a itself momentum win on business of The don't efforts. placement, will likely part is we our their contract for demonstrate of value What have

I that, back to pass With it Kevin. will

Kevin Sayer

third launch was you, DexCom Thank is to the mission we to since take hard put empower and GX control of growth Steve. continue stated no the that to certainly seen of words to the At diabetes. It the people we have quarter exception. have

that As It day demonstrate quality that. help. continue fear Children overall living improving, being their people confidence of stories this and and clinical people gaining is empowered. with are the quarter just stories studies like we COMISAIR these and enabling do to like of every we with have patients lives less seems hear a of product people to

ahead. we has strong. XXXX To the To road for wrap up, thus remain far a the wonderful year team, to long finish the let's proven be and year DexCom excited

for call Sean? open to the I like up would Q&A. now

Sean Christensen

you, Thank Kevin.

audience As the if and instructions. to Operator, themselves question Q&A please queue only time a then reminder, provide limit to the reenter we at ask this necessary. our

Operator

question [Operator with Antalffy Instructions] And comes your from SVB first Leerink. Danielle

Your line is open.

Danielle Antalffy

for give you so some additional you the much guys, the year how Kevin, the some thanks Hey Congrats meeting what your going Can as keep line in remainder to that about quarter. questions. and it good why capacity it Thanks much. quarter. the down be taking aren’t on went to and phenomenal demand so can mentioned question. forward? above one the during concerned only increasing described on factors keep challenges instruction afternoon you I'll a into that guidance of for color

Kevin Sayer

year we and ago planned a ever earlier started. this and it question we since Danielle. chasing we been launched little the than a To for launched Thanks GX history we we've here, give

As million you quarters million quarter. the XXXX, last look three in the $XXX $XXX at a first we've over in grown and

by doing this for while fairness, meet the in year we've doubled to And we place GX build the can capacity capacity experienced past, growth quarter. large and had put capacity doubling exit committed demand than year all in the we've we We the our percentages to will the additional to we have everything before. in experienced time product fourth like. to the never we anything We're

worst manufacturing up, that went on third if and for up, some That's to quarter there there. about, in production do plan some our that assume we see in going in some fourth we on in As that can we making early in our upside some the September talked our going is can't today. make to We levers we We down make board December. guidance come line late quarter. we're some the and time pull to and up we're but year might in have upside this that that not case do not to things

XXXX, our you year, automated I So some more time the lines confident exit and again to go and we we middle the We the by the you you. from serve then to more we the capacity well, an will we enough of have time everybody. GX go that if opportunity more second certain meet we quarter, we'll point have have the get we the doubled in will and things there. have tell our able to be given capacity do capacity quarter the can in first believe numbers We're we've by coming to doubled on to have

Operator

comes Blair. Kaczor And from William your with question next Margaret

line open. Your is

Margaret Kaczor

the good for guys, Hey, taking question. afternoon, and thanks

me, that seeing. of and one from taggy Danielle's demand are a the it's answer in First bit you terms from little marketplace

educated to and you assume versus still constraints that the the capacity the true? same we revenue seeing they going I then I than push actually you're are that better trying a should are have, And assume U.S. growth growing is lot you the and is pace out of add change Thanks. growth reaching growth them, at you convince or patients that [indiscernible] is Given patient mean, to forward? that driven. so

Kevin Sayer

let We want change has they what they so patterns seen what, had start a can. respect me when our to was not reordering, insurance ordering with an we that have to QX. With and very With know You to very to patients, re-ordering QX patient and issue. new can and if reimburse Steve, that, a patients; jump and their good quarter for in, Quentin and them. when from respect they are new third been not patients will in comparable

no difference as we've reality, the what in is experiencing there them to here through as while working real we're out getting quickly So experienced to In as we can. what past. product is

doing Sometimes day for to a as extra like have discretion our more to at long to we're as they get it's getting week. wait just sooner are to product, with and we'd But and we we're it product the We'd well. everything here, up keeping like an sometimes everybody. but them

Steven Pacelli

would both, I do team only device way just of technology think, more Margaret, and commercial an continues find to opportunities patients up-creating it's mean clearly more aware and their and right. the continue add the thing well. to of combination the I our become I a is, job to of as outstanding

and continue it's both of revenue to outpace the overall additions bit So growth. a patient new

the strong business of is it's So a indicator where heading.

Margaret Kaczor

guys. you, Thank Perfect.

Operator

comes from And Johnson your with question next Jeff Baird.

open. is line Your

Jeffrey Johnson

to but lot seen guys. you. - XXXX to Steve positive few on with Good you sizable going to said placement. a DexCom's know payers you're ask I afternoon, we've status, say not a Thank formulary regards I wanted for

are your price And as wondering you. tiering compare the$XXX some still you million move of for favorable big into Thank to how higher treatment So your push does bit what's headwind driving into for next next year year, to little $XXX to with trade-off volume? that Quentin, million I'm that placements competitor? these a comfortable pricing lower-priced or maybe year expectation wins, give in maybe, pharmacy up next of you some

Steven Pacelli

prepared we So do, would cheek, you you Quentin I time not you I'll going but our remark this it is win, off on Yes, executing was a press told the told that and start been executing to we this this then would new look, somewhat we're you a exactly and We're tongue every to respect we is over numbers. put we We've guys. do why turn would get release I'll plans to do. we're you mean, and the we and told which can comment? we what pharmacy pricing, with what it Quentin is on we what out telling on

Quentin Blackford

to put with no, we what the point Yes, have I there. kind revise at line need in it's always Jeff. don't we right this anticipated, see out of any expectation

I throughout is we we'll to $XXX of that of that aren't next our here. year. million But strategy the to course something continue $XXX think see headwinds million changing

been it are products we're demonstrated premium that it I they for there. effective, so and the and payers doors, our change the of plan think is it's has the opening what's working is our value no product been that understand seeing and

Operator

Cowen. And your from with question next is Ryan Blicker

Your open. line is

Ryan Blicker

for Hi, my questions. taking thanks

For GX, your still your GX and processes the steps what amount manufacturing the few down nailing for how development hope next process biggest months there Thank few months? process? accomplish the much manufacturing progress past have work in the is you. you made are you to overall, then to done over be a over And of exact working on automating significant

Kevin Sayer

on now we put with together take sit is on GX as schedule this that. right will Hi, that I the schedule, fronts. is we Kevin. all

of We point down that this algorithm lock to when some none of sensor we've design process configuration of will the got always, we to is the a down The are we've the the locked the tweaks - effort to and sensor, evaluating as configuration in the and to entire what's design. slow some that majority now final the study. but do, then to down, exact be get clinical in going got but

great at see to that put because the launch careful ourselves a in to success. limited great, Steve, going with automation as XXXX We want don't can we we With world truthfully today, how a respect are great, that we the a very, do XXXX. GX plant, position said we be the in and very launch at great market in about total we're to to product talking

design. are which you things we lines as completely processes several months automated So in isn't lines get us like are expenditures these of [indiscernible] over being will a happening. and and time the built. because long yet next not significant The running. things in up that equipment by They're have nature see is ordering all capital And lead done, the but

We to They have manufacturable we than automation that a adjusted The the great be be team product designed processes counting we're more have will more certainly product on. good was becomes as mature. GX.

So we think these processes could be simpler over time.

And just one GX as we're at GX, other I'll both Mesa guys time, assembly of to Diego and our same add in automating just facility. are thing, the automated in for not at well asking have GX automate our factory product we the going San they lines the the as

plate what on progress the and product. with expect got guys manufacturing-wise. lot a we're We're we've a confident making So are successful with doing launch the our very in

Operator

And from Morgan Lewis next comes with question Stanley. David your

open. is line Your

David Lewis

typically to of a on terms quarter. just the fair - in fourth sequential precedent. kind amount guide guidance, and deceleration great you line of with historical Quin, just afternoon a congrats quarter in Good of

pull it's little a coming perspective worth out? timing very fourth Is heavier normal there fourth a than the know, forward that's quarter perspective the third strong anything You from quarter, very, for quarter. a off calling or

Quentin Blackford

I is give think business. changes you for is more Let There in is or a fourth in little sequential rest choppy me impact quarter second trends of just thing it. color bit OUS of timing terms QX. to the the on and The through one move bit. a that keep than mind business QX nothing a of of can bit there the around little a talk either significant our But the

down and we out continue will international fourth quarter typically expect historically, slightly been to If you look year. it the flat to play has how that's in this

than the keep more to throughout think model, that the other history. continue as a year the seen toward we the is move more and we've I historic seasonality mind business differently play to going a bit current of in little is in thing what to subscription-based

we're that to So model trying well. as

up us. remarkable other keep mind truly I QX just QX we've quarter is, think We thing up from been the a XX%. to sequentially to historically, for was XX%, were whereas in X%

that then quarter, to and we're same want just experience We of that than this the anticipate So to XX at days' a the at a see increase that's to out it in look for going into worth little call see the third us bit trend fourth sequential a play quarter. bit premature. longer and

to of we're mindful be trying So that.

I pull the think if just what the we often at we Kevin get that upside. of then brought terrific. is incremental on those early hit And thing are and of then worth our case the in noting for. production point. terms forward of forward we're can to the other potential we is it, going capacity what lines, range But guidance expectation exceed end scenario there's that There's running - in be has opportunity Worst come those to capacity and some set if lines up top we these and opportunities in January the very part of can

Operator

Robbie from Marcus And your next question JPMorgan. comes with

Your line is open.

Robert Marcus

barriers out could Clearly wondering help the down DME breaking having were. on parse great congrats a on you big helpful. you. cost what was Thank the the a growth pharmacy really drivers would of quarter. impact, but anything of Medicare versus be is you pharmacy versus and I Thanks just can if at add

Kevin Sayer

U.S. was commercial the Our this big business. quarter driver

over was U.S. primary our is know faster seen - shift quarter, that good, not to grew Medicare and commercial at U.S quarter pent-up the there our U.S. but we've ever and growth to patients some the a demand in rate than commercial continues third driver. any patients we business Our be all Medicare, GX. commercial for to revenues but fairness, in

a Quentin XX% quarter. great still sequentially very get talked growth a to quarter and really we Medicare year strong. We make over our grew to The roll that was fact there next and delivery last take over mechanism expect them it easier we International out much Walgreens for patients for and them Medicare pharmacy GX. number. was and the year to also growth internationally about we're XX% as comparing that the off

DME were tell So it's you well. the whether pharmacy it. markets international as that's really can't I or driving good

the for drive and becoming of can think just that have. are do it them CGM I and more what having is and we much people experiences awareness with aware the products great

Operator

next Rose from Kyle your Canaccord. And comes with question

line open. Your is

Kyle Rose

you congrats the terrific on taking questions Thank much quarter. Great. for and very a

understand in making just now from prep OUS of You other from your infrastructure somewhat you think you. you've back perspective, just new And this perspective, Thank back or you offshore you support constrained manufacturing XXXX at then and know, a changes also and if beyond? we customer the maybe or a currently been also I'll GX support I from GX growth for of the length in went bit some last with support some in of customer to at us capacity two from talked some what -- about the that perspective, some the help look a year, patient XXXX had, but the perspective, then and about of both hop investments in little growth a given earlier queue. surging in you're a years you've but

Kevin Sayer

ours. has Manila the we've asset corporate certainly operation well, up Yes, set turned of in real into a that

honestly what more we're we the to think you we're that and we demand historically highest ever that's both I the have the that some than performance allowing in we've scale and seeing levels aggressively the are a seen increasing there Quite if us at see. address of perspective. some quantitative history, from qualitative look company's that operating at of

finding aspects processes those, tremendous are I our call to capabilities automation time opportunities doing labor-intensive incredibly, just in that team or amount patients more robotic and we thing processes that really on can in that around better the and RPA and much are think organization those those of even focus another spend folks in of the the is who value-added looking a those things a or taking organization we for the way. serving automating so what commercial

some last path start highest NPS down things encouragingly, in scores And we're of to we've than the into over here even Philippines. I their the taking started the reach the what to weeks think the before levels we outside seeing seen recent XX XX months of of and States some

what by seeing. we're encouraged we're So

ways. those We continue in investments to make

I the the automate end of the us to to for need the experience be phone and the the going think to ability greater. continue experience eliminate scale can into as a an We're with every have person way. the on we future more improve live the call we other patient head along to and patient

the it. on. and that has doing put growth challenge be focused been we're it We're what ahead truthful, out on things we to really time it are we're seeing, a fair over the stay we're to those encouraged pressure everything can by and the of but has So

Steven Pacelli

just one thing. I'll other add

their what will GX Again We and Walgreens us us have monthly to the be phone an can opportunity to Medicare with GX the to our going whereby and patients on us GX reimbursement distribution or and patients a distributors and its light rather put the supplies sure win. with is will get patients go to calling Walgreens it. as able announcement Everything to we accessible major with with doing are channels with how is positioning our bar being to get right interact patients reset than to to to we're most pursue. make Medicare

big couple or his a referring of explained paperwork, we're thinking Medicare ask weeks physician I that the And was think make part just all of all can frustration on me make we phone was for patients in move. to, and with, our efficient this us this much ourselves more going and the with we and with us, easier. different to to we that's have three for of innovation I ago four he of three distributors

into not - become And is million right several there's we preparing it's fly a and company are with so to that's, GX GX we're patients just thousand. everything to hundred going doing several

Operator

And your next question with comes Jayson Raymond Bedford James. from

Your line is open.

Jayson Bedford

and afternoon. Thanks, good

given it with So I growth, traction think Type the and diabetes. U.S. the around insulin question dependent begs II people guess I just

on on So penetrating seeing can has had opportunity? the the you comment impact you're population just and what this this pharmacy in patient

Kevin Sayer

that, Jayson. take I'll

what using time. continue using contracts, come growing insulin patients grow have we so our access have with to along that We some for pharmacy covers to think as sometimes our of that patients are payers But the not will it and and We fairness, some limitations reimbursement desire. technology. are over even have Medicare do them there those in have all we can not. Type of but to the Insulin in broad patients space, II

that. negotiating are through We

even population We to in are majority will willing But we go certainly those price patients this Medicare have still and willing coverage of after that's for to large - It's be still they if and still is to a give to those us. will our cover give - do portion not, a and the point have not opportunity example, for get patients majority where great able business, our growth it exists the Medicare a of covered them. it's The at this patients of chore it's and time. them.

Operator

next question with your Travis Steed Bank And from America. comes of

Your line is open.

Travis Steed

outstanding an quarter. on congratulations Hi,

last what love in at non-core of different on been market the and business you at I'd you've the your any year. Day team If on almost anything terms research there. to you've since you dedicated opportunities of the just learned it's different or there? over year that So there's hear got Analyst market out laid elaborate looking a sizes a various can and models views doing kind

Kevin Sayer

because let I'll Kevin. Steve Quentin and all a had that is experiences. take more interesting too, this little of we've Yes,

how thing to has having this to program we've other to to the go. model as going is So complicated we're gone type from using around payers evolved, II going have to a programs this

better there and is, that is it you learning I've I'll drives and And opportunities CGM directly to with matter what manage these vary directly from one that entities, I doesn't see model. think what with to with seen patients board payers, directly the the the the with across will CGM model you employers, clinics to be directly going model with it share usage is programmatic is;

who I play but them drugs look patients. such of get for recent that amount size out, the at of their need the patients number and at results. dollars the year, of you it market we specific good look to per a all time to but those those going talked taking the group the cost it's because Look and spent some think how put care just on are said, most of I There We again effectiveness. don't know at

greater type add cost got savings right we right know, what a all can if be Quentin, is than get is I space said groups. I we're algorithms that the don't done Steve, even to here space saving there and the in play into think might to anything? you and when develop We the intensive using insulin

Quentin Blackford

No, no.

You just hit right. is

Operator

your Piper comes question And with next from McKim JP Jaffray.

line Your open. is

Unidentified Analyst

Good and for is thanks Matt afternoon, JP. This for taking on questions. actually my

five five of per line the So last business faster as the I any much, year. than guys over much look back last last haven't been years, XX% grown it's two, less top those at than you the on and that. In

think capacity you've we you've bit, it in know I but lot forward the the seems like the of a as So of bit got got pharmacy side. in a side little Medicare constraint a at here little moment, tailwinds

level as look anything growth we there is forward? that specifically of So that keep you from could

Kevin Sayer

larger to than of large under the and pressure. more continues anything Matt, business think, else, law you rate I that Yes, come into the as numbers growth of get kind gets

at of bit at slower grew look a about I the we're of $XXX This but year, year-over-year year at terms little $XXX growth, million levels, million dollar growth. we the think yet dollar talking in that rate absolute still you growth last arguably slower. absolute midpoint elevated arguably is

think a But front on hit in bullish going to be comps the you head. sit is be into lot that have of and bullish nail larger be to we we couldn't that more the move There business. is we pressured to around opportunities about base the I us. the that of the tougher from tougher and and future, the as just continue rate So

our business I core what and CGM more enormous, opportunity the up mean it more opportunities, I really opens the - that comes either patient's might markets right are impact end alternative and learn a at these improve day itself, is be every it the to the day, whatever device. think to the market life, Within device we of back that cost,

ourselves. every couldn't one ahead can. but same at be to of be bullish future, about growth we're but we hard as those as pursue we to more get to time, So going the going not opportunities of We're we're thoughtful, the going

Operator

your question Blackman Stifel. comes with And from Mathew next

Your open. line is

Mathew Blackman

Good afternoon, everyone.

funding spend you a pharmacy could access. a answering pricing pharmacy. lot was the about implications the profitability of You talk the questions potential of bit guys implications mix through or I about time Thanks. increasing hoping you

Quentin Blackford

physician more Obviously, channel business through attractive a has We us. on think our so from is and here to for technology, model But to staff it's I patient work from also the it's profit Yes, pharmacy, the to through firmly very dollars very the the DME back patient it per can believe attractive perspective. the can reduces profitability pharmacy a that perspective. than burden patient that a attractive we we through make a that even and very, a office get channel.

the amount by opens and and - it reducing of market. way opportunity office onto patient the more up product comes the the by easier then So just that the clearly back address access having takes get of reducing and effort that time to much of that to it of

to a going us, those from it's So attractive pharmacy deliver all very the that patient than on per are for to a profitability dollars but basis higher perspective, reasons, DME is profit channel.

Operator

comes Steven with open. your question Oppenheimer. line Steven, And Lichtman is your next from

Steven Lichtman

you. outside in any big was Hi, some strong the focused it new the Thank there on you're up of on U.S.? international - stood what are of the performance. just guys. Yes, following board? was opportunities across the ahead very Were that Thanks. out And or particular stand-outs what

Quentin Blackford

maybe speak country any one across in was away our Steve direct was pretty that I wasn't in itself. the was quarter, pack. it's speak I mean, way quarter it and far simple it either. to very and within or regions. across one will widespread. can a markets, wasn't to across our country but the the pack far opportunities, any There It behind Kevin the was particular was markets distributor There that the and all the of led it

job remarkable doing each a and markets the are with teams every broad our So it it. across continues very one based to strength of be and

Kevin Sayer

December geography, mean, I'll Canadian UK. Canadian September is then pretty grow ever great about and our it's the I'll a to is September just win had regional, done one spoke far pretty was is in had we other proud there month have I If and - and reimbursement a I in in much pick hit exceeded get we market team. and the bit that in can exceeded just a I they one launch email, and UK, greater launch we success and add, the pay. a we're the cash that their a lot exciting, results. in of far UK. - out we because anything had the call got They us. that for becomes reimbursement We mark of There this as an is widespread we hey, don't this for And think widespread

So, the team UK well. kudos as to

Steven Pacelli

spent Kevin anything significant just and Yes, over time this think guys you as and only models, I from the from are year final would of don't build detailed Japan. add in be, But, some kind me I GX. building Japan

first to of year. there around excitement For it expect that GX half And next in real some and launch probably is is there time Japan product. filed the the we first

So still this when updated time comes, a point. that's but us the you really we'll non-existent market guys for get at

Operator

Guggenheim. Chris [Operator Instructions] with Your next Pasquale question comes from

open. is line Your

Christopher Pasquale

Can the congrats as and was EBITDA may didn't You quite Thanks the guidance leverage the I sustainability raise talk quarter Quentin, quarter. have the much this you you thought that? impressive. SG&A this quarter, of given on progress very guys. by about as and

shifted was into spend So and from I'm have dollars terms may of in if wondering XQ? just anything timing XQ there of some

Quentin Blackford

particularly although of to these see incremental the we're automating going to efforts specific GX around fourth quarter, in of spend, you spend, start lines. the timing some tell nothing around development will No, I

what conceptually, lines dialed need pretty and what in all need We terms know its look now to well have the produce. lines design, in, the they about these to it's we product like, designing of

that fine-tuning making ready sure and it's Now them start roll. up to we have to work that

quarter coming got in third you through quarter. the have that cost that that in necessarily you've the fourth So didn't

were see operating what OpEx profitability tremendous and a points, both might been a To traction a year-to-date still on from raised full tremendous X,XXX going your even margin on leverage made not basis, have incredible line It's with margin, though expecting. basis point, EBITDA improvements. basis, and is you perspective. from we're it year we've to an levered in over

I to has that perform that. There's structurally what you you it do able think model tells that the being nothing the us very at appealing profitability business capability in business this to if will. is measures, keeps from

continue to opportunities do is I what more become to balance want think be we investments are that these growth to new able convicted all we to real. open the that going up are

we time, we're going that long-term making We're so today. we've to remain over balance to goals but we're profitability committed And tremendous where about good towards laid at those and out. progress them feel

been progress So made. pleased with the has we're that

Operator

time. And this there at questions are no

Kevin Sayer

ever. We million to In going this to I contribution right, I'm best All this as want results quarter. I call at usually of our team quarter do. $XXX this in in want everybody close with the combined for to members acknowledge to our point; financial get of all up, thank closing, participating to growth this Kevin. the on is

quarter like above people asked beyond a and we've XXXX these this and achieve to our delivered never We've go to things.

keep it's at all that the of year While is our light XX%, growth number. not growth up all hoped you can while the quickly a for. revenue we we've components had just tunnel, end as running and I see our of as product year-to-date volume near And all been assure we that exceeds far to

all us on strong continues opportunity awareness remains year. going cylinders growth to for forward great have and a and access global this teams as International commercial Our hit improve.

over relationships We the contract wins course our reimbursement team year. U.S. the channels also with talked distribution us of and nothing been our efficient positioning effectiveness more the channels have shift the distribution but throughout our to of strengthened numerous enabling about future for our and

supply Many accomplishments anywhere. U.S. measured can't constraints. with our difficult better isn’t engaged external, our by some group sales finally, effective; they've both They'll situations year be remain and this numbers. There very a navigated to and internal through respect team And of our

emails in DexCom to lives we've the in had that is you. past demonstrate who and commitment of is of a up future. success We All the nearly always made have standing it over and the and months business who letters to that that's Philippines Thank workforce this committed changed, we've grown in today. that everybody States the a company people facility the XXX-person to here nine patients company have of that the forward to the continuing look the

Operator

participating. today's and gentlemen, for this Ladies concludes you. you Thank Thank conference.

You disconnect. may now

DexCom (DXCM) 6 Nov 192019 Q3 Earnings call transcript