DXCM - Earnings call transcript Q3 2020

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Operator

Welcome to the DexCom Third Quarter 2020 Earnings Release Conference Call. My name is Adrienne, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. call Sean the turn now over Christensen. to I'll Christensen, you begin. may Sean

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

I our by to hosting December we also that, fully discuss will its Before available long-term will statement. virtual detail. be event let's Investor a With This that be X, Day biannual am in, safe on Wednesday, harbor outlook in our business DexCom we will review more webcast. dive pleased and where announce

results. statements as on statements DexCom's could anticipated date subject to in detailed about based implied competition, expressed hereof, these any may The the forward-looking the forward-looking on required today's forward-looking and after Commission. make no Exchange will forward-looking law, differ statements. actual made the as statements, with those plans Report conform factors and statements available actual presentation of risks to various date filings and are presentation by results to such these and constitute operating statements in differ products, from of the and materially Except those forward-looking statements currently These that materially are obligation DexCom, in Some Form other or or update statements. in uncertainties, this cause information to and could from of to results future to we forward-looking any assume the reflect of included are this beliefs we by Annual intentions, strategies, management's call expectations events, All performance. XX-K Securities actual

in we Additionally, been that refer accordance to this directly isolation our earnings or reconciliation the considered a will a additional prepared to results our GAAP. measures comparable measures a to with to for financial for financial have results GAAP presented GAAP call, and their tables not Unless be all as on most in in presentation the Please The certain presentation quarter superior earnings measure. not with non-GAAP the with prepared slides otherwise references should discuss financial accordance substitute non-GAAP in cash-based are these results. our third metrics during basis. to accompanying noted, or of respect and information of release

turn Now, over will Kevin. to it I

Kevin Sayer

market chose Rick in our you today. Thank reports, say over have Rick any order and our is the you we've to am we pre-announced be for you, strength to announcement the Doubleday, Rick's that revenue Most this but the joining of past and in rate saw to provide more of pre-announcement Chief in business with uncertainty bit to our call. I We to very of notification with Officer. retirement. the of market later the with a conjunction our about remove us. Commercial XX usual close retirement about of compared accomplished conjunction Sean, thank got everyone, yesterday, hours I'll what earnings different revenue glad in you, after probably Well,

the to the a year-end. again of COVID navigate customer XX% revenue pandemic. our grew the CGM base, and prevented on the even in reflect the our once to quarter importance third results with patient as new growth continues performance, in quarter the to XXXX by the be we channels, past guidance growing of to are strong our strong growth Medicare the pleased resilience Based business position world Our growth in year. Total and continued the this the driven the DexCom raise This patient in over revenue strongest in by our quarter. third third our pharmacy exhibiting quarter, challenges

expectations see to to new a our pandemic. impact continue We of as relative to patients the result some

significant the we quarter indicates, second and as expected as on impact was However, call. our our communicated as guidance updated not

through support DexCom a as lost third also the saw We with a as quickly intensive people our for of and to the into patient people during our CGM increasing utilized small X have on buyers, to We've of amount have the it as may recently CGM diabetes extending therapy. material the performance. insulin We a the in access government impact type convenient customers will VA. trying progress allow for front U.S., access more eligible contract on the wide well our veterans. nearly the with now diabetes to CGM not of including all made did but on type entered having a DexCom people start contract of for We access our handful this access quarter, sale excellent quarter, coverage eligible officially DexCom introduced with CGM pharmacy who This at government facilitate to easier assistance it program time. X program the during

at how it to price. take easier their example control for diabetes patients we're of Another making an affordable of

our opportunity great economic CGM. we more knowledge will stand government DexCom continuing clear benefit bring glucose have U.K. of publication team doing the study feedback behalf with growth customer are who we effectiveness record of addition, GX that is to hopeful trend to wins able near-term showed that associated DexCom and like from the to a these, use drive recent on CGM to payers underway studies on extend levels. enhanced our of on benefits expand the people to work several their with at including basis. Based access levels, be global cost access to of diabetes outside In related with to the DexCom With of U.S., we initiatives people

a intensive extend For of press example co-marketing primary practicing of with including is rapid-acting with our CGM Eli team many boost and among of ultra should This announcing release great our of earlier GX strong with our Lilly's our efforts nice partnership to month, new a collaboration Dexcom physicians. this business, insulin. CGM clinicians, the you care provide efforts saw Lilly to our awareness likely our Lilly

type care CGM the well. annual CGM, We are to per for making member their great pilot nonintensive progress X to Intermountain using of approximately DexCom DexCom demonstrated as efforts savings to of first extend standard recently DexCom published fingersticks. cost which customers in relative of results our $X,XXX users Healthcare

We thrilled with expansion large this to well underway. are trial is Intermountain the of say now

their Level We they X program. of are excited the UnitedHealth with about extend rollout as our work

early in commercial we Although of teams are still kind working to is our patient well any it CGM experience the expect our systems. users that together very the for rollout, of ensure

also creation during several CGM potentially during pandemic, to early monitoring. published recently and hospitals frontline a collect positive, Along the the of allow lines, of expedite our patient to efficiently performance continue September, to product out hospital we this and In focused DexCom performance articles of during on data CGM the documenting on these pandemic. announced evidence the We to more DexCom the registry support generating about remain hospitals us reaching feedback help us the crisis. on for has approval including for with We to use of this CGM patients workers use time. XXX been than protect during CGM

timeline. forward initiatives in satisfaction steps mid-October. for customer previous press our our We internally around with This with great clinical focused are we approval GX. support commenced impact with the timing next remains GX intently to the COVID discussions GX, our these of teams a As trials on consistent with trial

experience all committed users. of that we you are us product right that the for ensuring are Although experience efficiently bring the that run to are this we market and in to doing best-in-class way DexCom a a eager customer trials delivers for and to GX,

key GX of the into to second during We expect markets launch several XXXX. half

growth it way. right studies, will into we to core of premarket in one GX with made have a scale change extend After and extensive markets the is we from to several these launch continue decision There evaluation our business GX expansion base, clear our GX the extend to as shortly. of to support markets the patient in previous XX-day the the discussions. the XXXX product wear Given to duration our of in pathway a versus manufacturing likely expanding all

we customers. DexCom ensure heavily lives are have our to customers' standards Our dependent meet CGM, high and that commitments to our we upon

good plus will over our enough for review. survival rates that, while example, a don't configuration For With demonstrates believe Quentin is in range, turn XX% we our this patients. I the to it financial XX-day for

Quentin Blackford

Thank you, Kevin.

today unless discussed be non-GAAP be today's reminder, website. as otherwise earnings financial a release our As can in noted, a metrics basis. found well will as GAAP Reconciliations on to presented IR the on

third the growth reported $XXX currency million, XX% constant XXXX, compared we of of worldwide to of revenue for reported of million a For quarter and quarter third XXXX, on $XXX.X basis. the representing both

performance XXXX. streamline three All the million we the totaled XX%. our in as last growth million contributed in the in $XXX.X and compared year-over-year the the for several the of despite The out quarter pharmacy contributors, comparison strategic our lap strongest to of growth third revenue to quarter efforts toughest over third as emphasis to and for growth strong the channels U.S. representing facing maintained our XXXX, with in quarter years. third the of XXXX standing U.S. business all Medicare customers of the the with U.S. of Our our for access in XX% $XXX.X quarterly quarter, line

our intensive our amongst to GX of in value knowledge. with system including the Promoter simplicity real-time CGM therapy, Scores record DexCom diabetes Type Net insulin particular, of approached customers Our X those the on in and Medicare levels a users, our testament

quarter business COVID acutely felt some as impact that end markets This quarter. new with the our our more international in Our $XXX.X restrictions. on on to prior have the international a case more primarily third second markets of rates and versus those core the from higher markets, to are the toward and year requirements COVID the basis increased XX% million increased grew experienced especially access is in continue starts international much related to summer pandemic which The administrative the difficult sequential technology, into of have patient XX% in the fall. be of

to administrative limited, markets in see burdens and Canada, out. especially However, continue with strong where we momentum and growth are U.K. standing the

quarter. continuing international into the we've our most including GX launches the the In at driven offering benefit to and markets, recent over from manufacturing to additional the past us the start year, Turkey of we increased fourth are enabling capacity addition, extend that to Belgium

million $XXX.X quarter increased compared to represents was profit in highest of that Despite revenue gross XXXX. of or XX% the GX XXXX. quarter we third gross about, been this pressure of we third have Our quarterly launched margin revenue since XX.X% the our talking in pricing

Our to as volume processes efficiencies teams to of terrific out our have a designing job cost driving in products addition and manufacturing manufacturing greater done continues increase.

the as GX points in invested in in about approximately QX primarily successfully environment a and QX navigate increase our reflects the take We line excited clinical access ahead. manufacturing spend finalizing more basis million momentum previous marketing the pharmacy we time, key the quarter. million in This our our into future awareness are an pushed launch. with some to products and expenses we for in are our cost development CGM sales our are Within of over $XXX.X ever lower in of customers where initiatives to and the of compared sales given the runway products through pricing to percent can research accompanies we to further profile of readiness that with is enabling the our XXXX increased to addition believe enable we were anticipation The prioritizing trials, GX focused efforts, on than of marketing, channel. our for XXX direct-to-consumer easier ability our commentary. $XXX.X as continued third adoption Operating XXXX,

our go-forward and we to as GX basis, efforts. campaigns expenses operating DexCom. excellent in early with an scale-up into a forward fourth anticipate XXXX, With to of move the trials, On we the manufacturing our delivering quarter results pivotal direct-to-consumer of return an elevated continue and level

continue XXXX, $XX.X income equivalents. to Net an administrative $X.XX $X.X compared position lever quarter XX.X% great was quarter and revenue to third million us a of the million third $XX.X a or for of in than strategy reflects to and income also improvement long-term GX quarter basis or per of with points. We revenue contemplate operating financial nicely cash more of quarter of the compared This with the plenty of of $XX.X million Adjusted for third was of $XXX.X Operating the EBITDA our investment as improvement XXXX. XXX liquidity year-over-year and technology. $XX we closed the demand, for XX.X% margin was basis in GX billion conjunction XXX expenses or of to while points initiatives with for quarter the quarter Importantly, XX.X% XX% cash the revenue This for the or in our for quarter. the third CGM opportunistic share. growing in capacity of revenue million expansion or quarter. in XXXX leaves growth in with same our in potential general million being continue

XXXX This from over represents of at previous year, of now over million from million to representing year two areas volatility expect increase quarter the an rise certain fall to of a position guidance of the approximately and rates are our operations outlook results, of past to billion, new the in COVID-case XX% COVID remainder growth we But and third anticipate $XX with midpoint fluctuates. the the outset We of the of year. be revenue our some continue for once raise as the quarter $XXX impact the the patients in global economy again of fiscal XXXX. from our and We the strong the quarters. fourth despite our guidance in to good $X.X

As Kevin down to ahead of pre-pandemic still anticipated year our starts that for were mentioned, the of levels expectations. we second second quarter on communicated the came new slightly although in the they relative half patient and our call,

impact quarter, approximately the before to starts original For fourth of XX% expect of the COVID. we new our be expectations patient

approximately exceed meet representing of versus Gross points the pharmacy an We the or have on pricing primarily to XXXX, despite we following to meet emphasis result as now XXX a following anticipate the increase Turning to margins. non-GAAP levels. margins results of XX%, the exceed or that pressures channel. basis realized our

approximately margins XX%, increase prior operating to an exceed or meet year. from basis the expect points XXX We of

exceed EBITDA margins XX% year, adjusted the points expand of increase that expect the we Finally, XXX or for year. approximately also will basis to meet from an prior

past ability reflecting our clearly the growth strong margin drivers. strong the operating our drive years strategic Our and revenue profile from is key over several to leverage

industry degree We We will have XXXX. practices. the to fourth year returns this benefits work certain and also benefited COVID-related operating other impacts some some to expense from in generate and anticipate with near-term a quarter investments of associated conferences to in clinical that the normal trials, begin

a up, and to spend long-term growth be In maximize continue COVID-related to will addition, will there we our for that believe invest we the restrictions free potential areas. certain return as in to

we've same strategic over margin With call the for cadence may that, turn to expect we predictability I will update. or of same the while magnitude as with expansion the now to Steve continue So, the organization this a seen progress, not at the continue year. to

Steve Pacelli

enhanced patients expansion opportunity. DexCom aggressively that in for left ongoing XXXX, COVID as pandemic Thank start The via you, DexCom the target the including are very teams they to Even that This pathways, the of our as remains our as tirelessly striving recently, marketing for, cared CGM. ability CGM usual. focused new we worked best great where with ever. offer ensure are glucose us to marketing means our that strategic impact communities, largely significant have care has on health our also means in of growth that the to in position direct-to-consumer the providers so to and benefits this our priorities executing our focus Quentin. as position to firsthand focused our on a empowered This DexCom of is patients, strategic on are samples business to important teams that experience core of their by capacity product control since can DexCom different time patients and on capitalize at

we COVID, we While position the support us our the additional provide September, Virginia, University look additional partners to in developing to data We use we inventory the my analytics offer of collaboration We'll these also agreement and take field for own of advance and to smart of research of experience managing these of our diabetes advantage and collective new tools to Charlottesville technology. In mater, This the with capabilities announced light our our new to force. the forward for customers. to simplify full our pump well for pen of X insulin-using investments look our core has artificial the value clinical resources diabetes, of of are customers as course. sales a five-year non-intensive intensive pregnancy, hospital impact we prediabetes, opportunities in type This outside as population. includes market. our collaboration our the being enables innovate customers team programs pancreas algorithm strategic for efforts demonstrate DexCom research and CGM our about of positioned efforts to

significant in diabetes value good VA, adds and X UnitedHealthcare, we growth we intensive X population, about CGM we X with this are community. type for type the for outcome excited great equally the driver will on that are demonstrate for non-intensive the be therapy. use the those recent Aetna, of making and work DexCom for broad insulin includes population. are conducting intensive of But This progress confident where the DexCom company a a contract extend nice type the in X far VA to the to others are Medicare, intensive our With X segment, CGM The progress type our We XXXX. the reimbursement continued thus now to DexCom type traction covering our efforts in

pilot we several fourth Intermountain of Kevin in to health digital work and our partners programs commercial our kick quarter. mentioned, off Healthcare, with LevelX key which will In addition with the

Our with devices delivery and outcomes insulin first on insulin momentum insulin partnership DexCom quickly driven the people to intensive more great strategy therapy. of this lead year and, position system. connected delivery importantly, both great to our diabetes by for the system support for DexCom has and toward generated automated automated the earlier technology continues companies became growth for shift Control-IQ Tandem's users

step integration we technologies. smart to first Lilly, both for Nordisk, and As solutions best-in-class pump the Insulet's launch patch And years the in that DexCom for to we I the Ypsomed with we are commercially our believe next XXXX, that arguably we Eli available DexCom important the represents excited well-positioned users as with closer tube This of and drop will and anticipated of work Omnipod systems in systems pen back system another X year. our With of for of pass are half will Kevin. have markets pump it insulin as ahead. Novo progressing core is for well, to support start that,

Kevin Sayer

Thanks Steve.

very solid our developed in what million I as Rick think to closing also our DexCom who continue to friend has period. XXXX, of extensively XXXX. our But us where has in leader a than execute XX-year a has sales talented at here to Doubleday, collation commercial of in we're examples a of can't great a is the sales to plan DexCom. of XX% this extend the year the end retire accomplished develop Officer, in and growth we launch system. organization consulting $XX to over He with many Rick and first take the a to Chief year Rick on into from worked greater Rick leading towards leader at $X.X and commercial approximately a billion team. XXXX, role that joined want my to XXXX has overseen that full I a companion head GX we Commercial through in of progress gratitude now. As is plans this a moment great who

So forward in in and we our we are goals press beyond. a on position great XXXX execute as to

open embraced will in Rick's join outstanding for expressing me now with best leadership at to So call time would his for his I family. appreciation like the he spent wishes up as you DexCom, hope Sean? I Q&A. well-deserved and

Sean Christensen

Instructions] Operator, [Operator provide Q&A the instructions. Kevin. you, please Thank

Operator

[Operator JPMorgan. Marcus Thank comes And first our Instructions] Robbie from you. question from

Your line is open.

Robbie Marcus

the I you to nice you a Thank is topic congrats the the environment most the on and Abbott. de Kevin, jure, and quarter. know and competitive investors between pricing environment, is focus now think particularly that you

I a We've in I both your updates, next moving and just You a today with here reiterate large now the and word competitor Thanks. I a out people put of product have and of price to before, got think into the ongoing there, the GX, the focus X market. both of talked increasing -- want trials launch the important about It's the think products but this from don't in pharmacy? How great for the XX-day products. differential from should with about to here a but options about think half year, know similarity product. you've given answer how it's the lot investors? second I know to

Kevin Sayer

how No. results a clearly deal well questions. as more process this moved we pharmacy I I into and demonstrate I'm into appreciate get managed more think Through channel, we that our very of business. get Quentin later With great pricing, will the that, sure as we've Robbie. to respect our

significantly prices proven as at with higher can that they than volumes as you before scale As and margins coming were look here. we are We've they truly great our down.

is how With the has now. respect and incredible to understand incredible has This start and definitely truly get nature, we we things that taken to get market need, and have that us has we and move while up manufacturing features let capacity and product before scale leader. a to It of been an we a works. and me it to GX. products that So features GX that with GX

competitors there. and With we and it here. hard gets our features are have future can't we products, to what There until what very speak GX many GX very to GX push And is respect GX what in competitively what so I does. our will today. I have. is know

We the XX-day with that because world. will to And exactly be did on to I We differentiation. committed to. want the patient reasons the experience to leads the call. it everybody for we delight the shared life not what's the what said be we really into went going have We this

We to is research, XX with us. have particularly making our deliver for thing the us that we most were extensive say. And it performed as longer out with algorithm at sensor, days, to saw And time, great our learned not wasn't enough too for great important it many it. them the we in getting we while what of

we shortened One So you where just the the difference concept last Where that all investing life is going systems. the at for longer. side. look can going to CGM be with is the time significant make now. experience changes We're work forward will confident not fits experience we over as very we're The make it AID to and on resources

are As users, have in migrated information different Type intensive and you experience. may life, X people look different want to that at who insulin later they CGM

GX, going features physical leads confident of want product, exactly we we be and can and we're that comfortable outcomes, the and is most what's the delivering to better patients where experience win keeps that that battle. with engaged them them, as get to the very think I we're very important

Steve Pacelli

product channel, our and just I pharmacy from on differently Ravi, of the recognize to Kevin's priced per a them less not our XX% of get basis. that $XX than hit of important respect to the for. think in month out-of-pocket that per month, add many on it's point to folks our on no Libre than are for to with the to patients out-of-pocket with what able at product is all on that to And coming Greater patients pharmacy,

it’s vary competitively. patient a from So perspective price

Operator

SVB comes from question Danielle Antalffy next our And from Leerink.

open. is line Your

Danielle Antalffy

question. guys. afternoon, so the much taking good Thanks for Hi,

the harp a pushing was Just your they specifically, – competitors, is, and as part saw did competitor whole, part guess, to landscape, Thanks did more today. I one not The just happening. could more that you future first second you so versus Europe constraint launch top how but give and competitive And competitive here? color the lot supply on on much of I'm is on of in you there of if a the ask mind bit could much. in sorry question of I'm question? bit real lower be than, will If I'll a of believe, question been Europe. us being doing little is a of slower on competitive in growth constrained if product as – And really investors the anything or GX that's I any a grew curious than as is of just little the and for you much a dynamics the what's

Steve Pacelli

Danielle, Sure. I'll take that.

From first. perspective, was OUS hit OUS with me in Let an performance expectations. our our in the line quarter right

in in though, through you some office. on, clear And those trends level. up and back of more look typically think if results saw though, off to that where be this QX the countries QX. I we certainly XX% business, train have with volumes to the of normal technology just go Canada, for is international bit there. a the process tremendous Contra example, at U.K., numbers new seasonal we COVID in and record in a growth be to in on our mixed office required, range, paperwork around at year seeing our e go QX physician in administrative place, were it, in midst certainly markets some required to patients have the the the coming country ability Clearly, b environment. e-commerce back where to platform to seen through that patients To coming historically in and we up XX% sequentially we that, uptick slower the we're getting that's that be COVID of to the this has all impacted in

be more are IIT commentary product. look you some in the in we're story looks across the in where out impacting happens there if well. I of like folks those back model today the the landscape, business, them who course COVID in and or So softness international the to over onto speak not patient's I to And a ability of the think the get terms for focused you and really heard of that it's competitive as of the some the you've how believe I is go think space, what more put international quarter, to our focused that's business been primarily which to

headwind front, dollar expectations. And making if at come look is for than what market-leading it. in a quarter, unit were the the think look with at seeing. the we XX% terrific anything we're That's of I terms now as in I marketplace in one bit in growing a the in with that even pharmacy right we of So ahead slower if at you up now. unit your out expectations. volume and what perspective. that was a quarter channel. start growth line growing to the mind, else about to competitors, right keep together into to better from on in market up, And think you down rate was overall it third have put I perspective, price To nearly believe than We Again, our the we unit feel in itself, particular, we're were to us growth good right step a saw our more point, in line through you revenue price of you move progress XX% navigating on put a our that

putting I up you when market think performance. bit at I unit leading look which really patients to us price, is and for a specific we're think So you adjust and volume,

Operator

Matthew question Our comes from next Stifel. from Blackman

is open. Your line

Mathew Blackman

the sampling. Thanks everyone. touch wanted afternoon, on comment just two topic. And the questions to the if on question. intertwined for I I'll have you indulge, Steve about on Good

you're And Xs? but we for or follow-on than home initiative? to is that The going first, practice expect first you to about would Type That impactful conversion begun ROI if a told something Xs? Type be the his you the for call versus gruffly think that And did his week then it, run customers. us like a us talk said, more Would of sampling Thanks. you this one sounds measure of to the was Type broadly time. should to XX% sampling it actually I'll Xs that help so on how impact Type like potential into patients very he true, be on how say doc we or last success is, new first XX had expected that understand Xs paying

Kevin Sayer

very longer. users able that Dexcom one. scale Well, that. intensive with be this because sample good a all only with constraints is do patients do And I diabetes to what gee, do thrilled not be do. Type want at in see we're be things and for a constraints X doing, resistant They a business to insulin it to patients this is try the Xs, have that. We're And and our to those point be our We board, as Kevin. given on that status work take doing a distribution but years, we removed in can might there bit going technology, manner the the around across could it's Type I to large one. And affect think ability We've to to through comment the that our time. were channel. believe very direct they've think dealing more your will really I wanted to been they we

If able you what becomes have the a easy. to GX this happens, see experience -- very being and having of wearing

really And so excited about it. we're

number to come have close physician But look, ability answer to beyond say, you. for for to an you for result the people revenue be and from results spectacular convert the us, a And the we if this recognition at program. think per us. full-time We look I at XX% have to to be a get use, for to you expect We that not spectacular year. good, don't for we patient the I is a the even fantastic. if If of that look these payback

important to Let's try big really this. and a year. it's this going us, It's initiative us for we think be to

Operator

question from Baird. next our Johnson comes And from Jeff

Your line open. is

Jeff Johnson

you maybe afternoon wanted points months. to I to anyway a guys just couple weave discussing single into force expand some dramatically might that your we Good coming been the be that looking all. over tangible evidence sales a think question, recently we've exist fairly

with wondering, I don't think And driver key is, anything anything typically of wasn't guess, on else more one, board organization? maybe all of that departure Two, a three, does sales I'm So is being we business in signal than in that sales. at what he or reps Rick's your true?

take over underway be So, months? what place it or coming to might if driving here the plan that expansion, Thanks. plant is

Kevin Sayer

that one. I'll take

working Let to the first. see to of to This while with year, anything, through he'll retire. If he be through deciding and the right efforts this nothing has us to the me does them Rick year-end. end address Rick issue with Rick's do sales all our -- now get are plans,

these So, unrelated. are completely events

provide team really has do who is on more But the there, speaking and of over in reveal need We're a we We front sales believe year. disagree in sales we are primary the who things as planning to is physicians lot of our some They We endocrinologists are benefit need them. voice. do and the the look the some and I patients. great would more do our out with several We the a are into many more community we them. all of of at as next And face geographies. company. what won't coverage field, more marketing cognizant particularly these you for and those seeing care to great access very and our are HCP of return we force of not need feet these you, on they us. sales company And our get

I disagree that So, with.

and to look board of on forward it. with forward results with going we're We are the what measuring fully

Operator

Wuensch next our question Citibank. from from Joanne And comes

line open. is Your

Joanne Wuensch

thinking volume? same the little pricing really question. And I headwind close a of is, the taking Good you looking of bit pause a Thank Can stage sort that through? part on at comments we were you. number think unit then do Is afternoon. Thank strength regarding in at shines stage, At that XXXX. volume over in one versus that second in that the so what pricing we're we you your about? the terms pricing gap $XXX unit million of for little

Quentin Blackford

this is Quentin. Yes, Joanne,

was last think That just navigate with north this I honest about had of it you, so about we $XXX year, million were spoke to referred the was starting coming to. we price through of as we old, a probably off $XXX As in you last quarter, for were year that talking something be year. example, the business, million were to we

that. than higher bit a was it So,

As made of have represented. seen we've price little terrific a million more side, bit the headwind actually progress than we've pharmacy be on a what $XXX would that

channel, it's up XX%. the what QX closer the the of the realized the various And And for at think for were easier from demonstrates the quite segment XX%, you levels is ability us. increases mix of can onto importantly, nearly $XXX do obviously, of embedded really in And a get It the amount channel business just impact result think be product of in through onto the aggressively. profitability will access, you in just in that XX%, while at the time, product it and going cost much profitable that pharmacy that for compete I pharmacy believe folks to much through volume saw of gross stronger product. quarter unit our seeing be represents million margin putting I reasons. year. come looking greatest get We perspective, more to to be us for price profile quarter. reach in makes that if that our opening the the was a being model is headwinds quarter in after to record of channel kind understand itself, long-term, over which majority But the we that as better the a patients to

terms speak how price it to to channel, that not point or of today. mix the pharmacy to going we're ultimately long of the takes to In get the

just into going, think channel we how very our seeing. where we Analyst pharmacy what are we we're more get They're terrific to you're and that with I making that as but hear far we're us see going progress. to from Day happy around

Operator

the And Stanley. comes from Morgan question from David next Lewis

is open. Your line

David Lewis

Hey thinking price should and than about incremental $XX momentum as quarter guide, the the exit perhaps the That's you quarter million Quentin, about out Anything XX points of thinking deceleration. out year. fourth points fourth you'd five of just in frankly, a of kind that be last it or into call just ex-U.S. follow-up sort we there, probably Thanks of it guided just the heavier quarter you U.S. much. so year? fourth reflects, basically

Quentin Blackford

Yeah. Thanks, David.

talk me into assumptions little as a we've QX. that bit the made Let we head through of

the of to we set around how ultimately operate we expectations. clarity And want in to deal environment to great an business. prudent continue we COVID think with and thoughtful where respect I a there's impact how to be those not is going

the as continues business pharmacy the foremost, to to and business going seasonal strong as move shift. as business more and impact a at into well Medicare First we more in grow the the model rate, is

show have scenario no to the You're not take incentivized on the met as to in they're already really the year. nearly going much see they product up a fourth and as patients exit up as might load advantage revenue longer going to deductible where quarter they of their

their ended put COVID if place of to then, in being patients the that to the in would didn't up other make put when couldn't the but worth Program. QX, we're upside but is their at they impact who business general. the typically this another in it started trends we period assistance second in seasonal they're business through product that would navigate the quarter, some three best saw us if to starts If the that's Assistance a Patient had started place bit to best be our into about next impact think happen to last of that at consider to the really a puts results in way, two estimate supply, estimate who or of they think to afford to point now for are of we making We to right would point So be scenario, successfully, we've the then a start just the to just our in a most patient or three And purchase that in when in yet. place coming go program it, unemployed And think months, so was of time going going impact you on see going to in that that which going look that take mix this fourth as the you more to different got I there's about be particular, to months thing quarter in hasn't shifts. COBRA that product. quarter. XX% material is fourth those place. the patients little in as fact And purchase, quarter's With on help them to in really take And COVID respect terrific, back the new it patient number, an overall but on time. a is the that the

is in more going belief that's our we've in quarters. quarter to other So impactful be seen fourth bit a than the what

you've you to I of right year-to-date. take them, try and quantify back seen were to those, what think in a those when rate you if line consideration you'd with when sorts exclude you growth into things see

Operator

Piper from the And from next O'Brien comes question Matthew Sandler.

Your line open. is

Matthew O'Brien

when can't sensor, Kevin, is comment wasn't hit to you designation? that it XX cheaper taking people. I sensor, you right? because that just GX the Thanks big you. is working? the a get is algo XX, for for exactly mean? know Was on a the to afternoon. XX not because day you adhesive wasn't And think Do for the going that what designation The What an XX-day from you days? out then Thank it going does quite iCGM seeing see Good day question. the wanted you're to iCGM factor about made this, to be have cost for gating to some you

Kevin Sayer

done at sensors cost. a we've upon a cost respect are with get doesn't whether buy me, three into sell negotiated get contracts So rebates you currently to Again, our or component. pricing transmitter prices on way contracts, and unit. with CGM very sensor, and XX-day start you It the the really two to Excuse particularly, look month, various monthly is the as sensors down let if receiver you is we much per these me based and pricing.

sensors us, reimbursed turn So to a for doesn't what this our way standards It's shutting is can really meet out getting get the make from that sensor we to for we solve. we the problem in as when we order individual days, isn't off algorithm but iCGM given to respect can we good the matter. what per shut cost we In that XX out and saw a data, believe, works, With XX now, month. needed for them to the is We wanted run off, that's necessarily just fine we better. more data to the at patients iCGM our perform that basically look we argue how we're standards. and we it. and enough sensors would right of Many when this than how we

and as on XX, the Quentin that, comfortable our going XX-day soon performance GX We've profile as GX with happy you like as now XX and we're cost team team, the filing. and with very we're ops forward it than trouble, reliability more have at rather As -- I our make go that that them XX, with we're issue It very with our sensor created. with look and to over cost have we'll XX We'd the XX% patients. to we be a with when anything said but on number earlier, our will a -- COGs for else XX work we'd the is days. less. can get XX time obviously of and get XX% we our enough that days But is good in better mind to not done

way. have the designation, everything we to by expect We iCGM an do

be off there backing on any that. So won't

Operator

our Bank of And America. from Steed comes question next Travis from

line Your open. is

Travis Steed

taking the Hi, question. thanks for

little timelines, that next markets falling in when U.S. bit the GX pivotal trial, more mentioned year. the enrolling? that going And in to finish Or be you a expect do of on on half get is the half? XXXX? Is then more to second key U.S. wanted actually the second color Just the you to

Kevin Sayer

a as go It's we're this other give approvals focused the out what more it's reasons past not is data doing. different very launches. a announce that started before. To a kind done be saying exciting rather actually, generating with in our has We're details for determined. means give of to building to studies. say for geographies, complexity places for through of be than the to as now, than a on big all single the studies did respect has on Right the multiple extent in of that we're we've been yet we details to every And we've to bunch our efforts, more international launch that. obviously anything there than in else, of competitive process line I change blast. to literally, But getting us for By those will approvals. is ready policy GX going time number

all the doing will and living of the that want not we be than That we be up And again. at manufacture so spent every have be But launch And give on launch our a getting these commercial fully few. to I and and of evolves. lines fairness running, are be automated. field, that about X it and the days will be timeframes color the to in. appropriate We in finished – goods, all rather delay we'll will team approvals to won't tens we're the getting in very – as ready millions situation factories things capacity of launch, the of and and just everybody completely comp in not 'XX it

Operator

from next Mark Kaczor And question our comes Blair. from William

is Your line open.

Mark Kaczor

transmitter, to structure matter of start the guys then through you of some as into ask annual my taking to those working going it launch for and you basis percent wait whether Are I and days Or guys. to payer revenue be further of don't been able that have follow-up where only? GX an on wanted afternoon, Thanks is GX going that. it that lack on I just of that's because good just or the they maybe life question. asking sales contracts? Hi, sensor the operationally, to cycle you to extend

Quentin Blackford

when the approved, ready vary team will for is And it bidding our time there will started be the gets not well GX to we've changeover all field as some cycle, to happens. be even as the the through will We do team inevitably, to until launch done. this We've GX us. negotiating we've a launch view contemplated anything, don't will board. in will flow contemplated the But approved, as GX big payers next the that though work the ever is since GX. wait If and want the across contracts GX, go we our policies we closer this more than who go pricing others product dual GX for

So to we be model have going a forward will that easy repeat.

Operator

next question Ray And Jefferies. comes from from Denhoy

open. Your line is

Raj Denhoy

gross step the you Maybe a you that, to And whether absorbing see is can which of for are has how in as expansion to of how at I I starts a we're thank -- change price. to been impressive margin. GX, Hey, there Is guess level, really gross going? long you. pricing to as GX kind go represents keep continues keep guys gross as that? It's And all up come doing down. and the going actually even one margin the question but you stop still the to direction long this Quentin pretty margin this appreciate about or does on

Quentin Blackford

our a and we levels to be able created more more we're company, record where for inventory Raj, for the avenues growth doing that just in time Yeah, we've the more where we've organization to which question. mind, been opened can that profile great and the And up start about excited We product. couldn't take of growth cost potential GX keep pursue. at

We're through to of keep I the runway cost GX. there's particularly as on of of a that. about in And we our at volumes lowest plant. excited us front out quite significant cost currently pushing we're So still point think respect take to that date with product, bit

get regardless we to cost you a As to lower cost GX I a mind the is the to can for whether GX profile, in that's at ability of cost or beginning than get believe time GX. than very $X and was of from with Keep designed that the profile mind, day less the in look GX. a cost product, profile

even believe our making we're while GX, GX to replicate something that in on with the ability we tremendous ability do so and to is that fully progress And better do.

But said, that will we're as cost for be capacity. early a Now will being the in be at scale, lower ramping it us than more profile GX stages expensive GX.

of cost on of of and take bit still we quite automated good So the a there's can runway The manufacturing are us. where front We're focused manual them cost product. redesigning efforts in I to driving out think We're teams the taken move advantage cost process that into points out. jurisdictions. larger utilize our they've and lower well logistics as redesigned renegotiated with we We've distribution moving as well, cost volumes of efforts. as model of taking we've vendors many

to To lets I will close headwinds that things. that to that So you're we're it anywhere least, very can continue having starting but see to But degree the combat high how margin all think navigate of somewhat gross of realized at sorts the go. don't just of it play those through. benefit us full the price through impact we yet,

the about excited where on we're side. cost So we're at

Operator

Company. from Steven Lichtman question next our Oppenheimer from And & comes

line Your is open.

Steven Lichtman

the Type wondering Are X Animal if intensive with Type I do where intensive commercial talked was on about you momentum the market United about side Hi, we on progress the Aetna an in you. with win you of Thank think penetration? are terms update guys. seeing you you CGM could X. on us now in recently,

Kevin Sayer

just I to use and technologies had always barrier market covered, it can to X We've are them. getting we're making the again, force to Steve anecdotally, much I our what it physicians hearing the penetration, those you think refer Medicare. And messaging patients or I'll sales intensive there. aware. to getting in getting these very everybody tell insulin In to Quentin talks is to as biggest recommend coverage expansion and Type respect, on patients was that

So with one. we're happy that

penetration side, Steve? the On

Steve Pacelli

intensive looking patients, European is What So U.S., update where bigger. markets. pushing million looking business that XX% we in patient U.S. a of the – don't we’re looking even to a patient the X the the opportunity probably we the the X want business market the was just the like that I that base. million we're maybe a said at U.S., think the would today. point I other you're – right? used Type the lot like market I number even exceeding other last on at X.X is is make of prepared that the or use or simply we data In we're on think our X have foreign – our to suggested that opportunity is you're at the addressable to But call whether Type space larger,

intensive So look while expand penetration, certainly insurance the market I and a progress think front, to that on opportunity business. the to making we huge great it's we're continue as

Operator

And Guggenheim. our from from next comes question Chris Pasquale

Your open. line is

Chris Pasquale

U.S., actually bit in be worse me. counts little to the the international. a due have I'm more bit places? I significance I virus Or what impact contract as Two And business? is Thanks. for ones in if if the about in curious quick Thanks. follow-up might you think on those just was COVID? little give that XQ have in government of you countries that you that a on could of could the the hoping case some One, increase just on lagged the the then situation improving us mentioned here want to question

Kevin Sayer

a The that government contract to for of able higher zero the get pharmacy patients group. co-pay, a a at benefit is population. really group there's the us, important general GX much we is through wonderful with on side, access of think to Being to particularly VA diabetes that than instance benefit regular

continue the grow. blocking to it's think that part we do of tackling to just I general and

this past piece. than before. to the you've I'll we So have the are forward I and DexCom over seen patient much let easier types international serving about generate looking are the we several base that can't of talk Quentin it. wins years, quantify These

Quentin Blackford

respect With the to the to they signs to to back to are up point clearly, trend starting starting them used step that at, we new to, would the back are not over start back international, way at to expect those be numbers Yes. up, early we seeing fact patient are but time. levels

good that's that are bit markets upon have terrific you're those clearly, that seen heavier where in And some platform, administrative burdens like seeing results there. placed e-commerce there. the utilizing we're those the So progress in markets we've something

Operator

Cooley Stephens. Chris from our question from And comes next

line is Your open.

Chris Cooley

questions. the taking for Thanks evening. Good

Just and already DexCom UVA point and the you analytics, from maybe the this me data the interested, through essentially you think Steve, when owns about controls advanced about talked collaboration the generation.

that algorithms further have want in an revenue other How's of could management to profile ways data the streams term? that further type some future whether IT place. You the the call from there have in-house or on you this we margin to the leverage enhance longer now maybe you

Steve Pacelli

we the ways them we exploring from next-generation back. Yes. and/or the algorithms, in the provide guys do the Really, be to patients think know partners which and when we're more today. That particular, UVA, we years And monetize at expand capture provide we our to at we the tandem you would our few great The particular, product automated in patient it's to pre-diabetes, to even TypeZero, broadly, in this more at happy with competitive patients Or bought is our an spent Control-IQ frankly, who wellness, that a date. that, with patient insulin beyond don't even opportunities delivery, the in data to pretty be even perspective, use a quite insulin just probably and all they help I retention beyond pump folks that. question. point, for and a that algorithm, hospital. be No, look collaboration, would to UVA algorithms TypeZero. in we it's conjunction whether health to insulin Type it's intensive to time whether really can X commercialized We've with extent at

closely years. at these developing the really over folks So ample our has who with work five we're been of looking kind UVA, TypeZero opportunity next algorithms. To responsible at for together with best-in-class

Operator

our And comes Canaccord. question from next Rose Kyle from

open. Your line is

Kyle Rose

taking questions. for you Thank Great. the

for Just side. two me, commercial both the on

on at maybe effectiveness investment Can investments some secondarily, realizing you you the with out value where with guess, ongoing DTC the return changes the on more the talked referring to salesforce you and program. the seeing physician help mix. from you're rolling the to of move non-endos. and And and your Obviously, those understand, program I into us respect First, making it then you investments? about are DTC respect as

Just needs? channels to trying those how sales marketing different to understand different and have

Kevin Sayer

Well, strong and quarter. to very going we here that in we're out, rolled the have with respect fourth DTC,

has our been on date. return good investments DTC to very, very Our

fact, extremely still. companies, returns to in In compared we've ones other other high our seen are

that effectiveness. far has not So program capped as as

and to us the more So, going investigate we'll from next first you see this and continue quarter will year. of forward

more this physicians things patient front. DTC and tremendous Quentin lot quarter. had earlier, we planned you to again, channels a fun have referring for With as said respect We on of numbers the new

So, the visit better in to treat community them where we're obviously still just with professionals help referrals, endocrinology deeper healthcare and we serve. their to the Traditionally, and go getting more communities we patients end and feel well. the as need

group get become who screen, get up if had our message the a COVID do as need have One been clarity physicians haven't system or access large it. of the mobile they employments And respect clarity things there. out can out to learned and from -- physicians we We to of those on very don't clarity effective. learned using data or we there's from appointments, appointments our tele with to pull to

plan. and our those where to territories more So, help deeper It work. go that's people our on will they focus

Operator

question James. And from Jayson Bedford comes from our next Raymond

Your line is open.

Jayson Bedford

hate say third I comment. to a afternoon. I thought Kevin that And here, growth yes, to heard granular the I Good that interpret there's couple get continued ways patient new of but in quarter.

is, question XXXX XQ did add in my you XQ in new you XXXX? did more So, patients than

Kevin Sayer

us. to ads record nutrition Yes, was QX a Jayson, just for of be number XXXX

the add in of was quarter new it highest history. our So, patient quarterly any

Operator

question next Ravi from Misra Berenberg Capital. the And comes from

open. Your line is

Unidentified Analyst

Ravi. Iris for calling [ph] is this there, Hi

So, if you can talk a coverage under bit about CGM Medicaid.

macro economy, unemployment high, the to Medicaid are maybe think people is So and insurances. other moving from there more the rate as we about

CGM Medicaid to patients' think would CGM you So, shift And to can the or Thanks. pressure? pricing do you coverage talk increased Medicaid? under reduce about access

Kevin Sayer

is this that. will Yes, I Kevin. take

there. XX and full the We the it – if make in they would pricing very range pricing It's arrangements have disclosure. There's we equal that. XX to do XX sort get very really worried saves, believe else. getting We they're whereby about our in But patients to than I states, budget has it's is technology. as device And they're now. today. spending coverage as of -- been everything hard Medicaid the spotty of in ends lower here And believe every in to in patients of a prepared dollars. we're as throughout business, across in we Medicaid wide and access can technology all very in right coverage various approximately some challenge were just well. states. hard sit states a the We for be have pricing easy the up these everything don't too it's us conscious, had And we all almost manner some line and it being I states finish

We share been so deserve DexCom really children access in keep out. and state are states thing and to thing a But Medicaid of that I all a because particularly we things we we me -- other just there coverage we trying where then for offer. frustrating better. they've of those get major have on get and and front. are many legislature there's patients the door It's thrown line, knocking and that couple on very attached where be had keep to finish the across and and And are hard the to we've the and mean, some some some CGM, fall the to states wins deserve access

sure We're patients Medicaid I competitively can we every We the to make that we'll and give So not going to continue battle. side. have the that pricing up. in hope state, us. on to have fight we access compete want to we business it

Operator

from question our And Blicker Ryan comes next Cowen. from

Your line is open.

Ryan Blicker

thanks for Hi, question. taking my

software clearly with again, But about can You're if XXXX? and point the said some of time collaboration. do differentiate And X UVA you. competitors DexCom making you long-term? of close gap CGM connectivity can pipeline? believe instead demonstrated to since some software that so, via at its will software product when the degree over around premium competitors over we the your differentiation always and the at You've some on more you here do significant DexCom next DexCom enjoyed to point, price start hear assuming accordingly performance hardware as via sustain will happens differentiate investments and believe TypeZero this you've X and years, the to versus versus Thank

Kevin Sayer

we've connectivity time. still launch Well, those things. devices you'll going hear pipeline it more us support. time has and long interoperability we costs we gap clear That products hasn't. data the of close, build, about let's infrastructure in all lead is to product And on side, that sharing our software be a it and and and differentiate said connectivity lot over to and while multiple And as to taken still and those a hardware

the me over think long years, be several I size looked you we and was will outcome. with experience and don't software time the patient no, at that provide about next keep don't. delivering experiences, a a the wait fits key one so a think all talking the and great a a will patient I dinner said, engaged minute, other at I thing, to started guy night, them and goes, diabetes

see some time, from I in you'll different software see you'll -- point think know I offerings. at DexCom,

on, So stay tuned on that one.

scale. the through understand over is And just years, out everybody also about next as the we challenge other this thing market, I lived of we've needs that think to the look several this.

to As us invest took factories, in heavily GX we now out in of couple much built and GX. a years, we've That continue got pretty now. investing we're

do be will but as that at can so also volumes deliver the well. be difficult. scale, at a to this products these to our that where to that's basis in investment looking be, get If and they needs billion the going And automated need at investing get $X.X on part to capital that aren't to between You're $X differentiator billion and in to somewhere cost need. we we to it scale, be companies

software time, to experience we going higher still on But believe we to is based the over and we that patients experience out differentiator. our create and provide, over can look are mentality we close everybody I as we the a the as connectivity that be best-in-class So we'll really be else. as have

in higher very at end. alluded things, this that to are far that's will other models continue shift would. as And becoming pharmacy, that way As premium pricing CGMs our are looked much we and many as is thought in than more price the may a that pricing to well worth me conversely some experience. to future, over that with I to they earlier, think to – Quentin an our be in personally, in I do and pricing that have done just We've work other there we worth have patients our of things. do, it's the pricing I as This experience time, as Medicare, schemes as towards -- than worth see do we now our moved other that we some charge the as experiences not what the today.

that. tuned evolving years now, to as of industry somebody fun XXXX – on as and several be to we've the kind I this going mentioned the other well. So to We stay from day, over next it's created

Operator

from Fargo. next And Biegelsen from Larry comes Wells question the

open. is line Your

Larry Biegelsen

we me of XXXX color than XX% on for think Quentin, XXXX XXXX in thoughts? the the XX%, guiding growth high level taking about question. greater or relative to in. should Thanks how the margin for guys. any you're fitting operating top to Hey, – thoughts line any and preliminary Thanks XXXX,

Quentin Blackford

tremendous that Yes, of just opportunity around we be awareness We're talk believe on to Larry. call us, the product. for our in growth the there's there's going not today. about continue had to front Clearly, XXXX so much fact to given

make been think we've open and We're but in this we profitability going I we're to, not need future. the from clear the into that for to right channels that will investments growth we're disciplined be be ultimately going a to all where today. going do new of guidance side. to up to XXXX, we And contemplated in end the that organization, providing up

Operator

call the And remarks. that the over question-and-answer session. concludes Sayer final turn for back to Kevin I'll

Kevin Sayer

emphasize again, it had out creative how to three you. limited strongly participating to incredibly be message field teams to can't the at quarters. straight guidance had for worldwide to earnings performed We've I, figure our billion teams to patients. out time access to call have sales raised very $X.X when our the unstable clinicians, in very these enough times. and during really now get on how want everybody today. I for our Thank our thank quarterly

last margins with they have price more than a than combined XX% during higher this being what year period volumes ago significantly We reduction, of two and managed at approaching were time. gross unit double years

customer had We highs, operating satisfaction all-time than competitors. of a ever we've are of in excess at our during and period our have also far net when income scores before, higher levels those

I’ve are to best Innovation doing technology years than We thrive continues our the about any more of XXXX sensor on to here. commitment learn here. been our I personally other our patients. in

to All or of of this other is partners do some things, new see never are are coming and forward. pushing our our we about bullish data coming the be this partners and what's to future. innovation our towards more And going going the with tremendous forward, applications of to as going down. payer And innovation CGM use of the in and barriers data some markets able been

those. future, markets address the through to about Steve efforts we've experience making navigated there, we're learn way so our program in our hospital for X As earlier, be Type and we'll progress talked the with able multiple the

everybody. going family to a everybody to express You or thing, team. get from Thank are of and can’t very DexCom here. but of without we to beginning only remind faster do things gratitude all remarkable these still my at this the on it's everybody want journey, I'll at I you, this the time, one

Operator

conference. today's for disconnect. you may you, and This Thank you and gentlemen. Thank concludes now ladies participating,

DexCom (DXCM) 27 Oct 202020 Q3 Earnings call transcript