DexCom (DXCM) 8 Feb 242023 Q4 Earnings call transcript

Company Profile

Participants

Sean Christensen	executive
Kevin Sayer	executive
Jereme Sylvain	executive
Robert Marcus	analyst
Danielle Antalffy	analyst
Larry Biegelsen	analyst
Mathew Blackman	analyst
Marie Thibault	analyst
Jeffrey Johnson	analyst
Matthew Taylor	analyst
Travis Steed	analyst
Joanne Wuensch	analyst
Matthew O'Brien	analyst
Margaret Kaczor	analyst
Jayson Bedford	analyst
William Plovanic	analyst
Michael Polark	analyst
Christopher Pasquale	analyst
Joshua Jennings	analyst
Michael Kratky	analyst
Steven Lichtman	analyst
Matthew Miksic	analyst

Call transcript

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Operator

Ladies and gentlemen, welcome to the DexCom Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. My name is Abby, and I will be your operator for today's call. [Operator Instructions] As a reminder, the conference is being recorded. And I will now turn the call over to Sean Christensen, Vice President of Finance and Investor Relations.

You may begin.

Sean Christensen

welcome Call. Fourth and Year and Abby, Earnings XXXX you, to Quarter DexCom's Fiscal Thank

begins Kevin and agenda outlook will followed Our with a from summarize CEO, President by Chief our who Jereme and Sylvain, recent Financial review highlights financial ongoing our initiatives, Sayer, strategic and DexCom's Officer. Chairman,

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

our harbor safe review statement. that, With let's

made in and we differ date to call various of events, are in subject statements These uncertainties, actual and All make and of statements. forward-looking this the and intentions, from plans are statements on could future those included expectations reflect statements. results hereof information about constitute operating performance. Some available the statements products, anticipated the may DexCom, risks management's strategies, presentation forward-looking in as materially currently competition, beliefs to today's will forward-looking based

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

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

Now turn over to will I Kevin. it

Kevin Sayer

Thank last XXXX, $XXX and to . In accomplishments. some joining on more like DexCom, you, our year Sean, customer of base coverage to translates another of Total and was of globally. key performance organic ended for record basis, us. as I'd through we and an than over revenue driven starts. grew This DexCom of the for and our by million revenue year, momentum expansion commercial reviewing year year added X.X into by everyone, by start customers we thank recent incredible organic million compared XX%, you, with strong approximately XXXX to systems. CGM an DexCom's XXX,XXX built growth the users

cost will yields our on to this and facility growth our U.S. help at is Production midyear. ambitions already facility site key ramping years team the enhancing is was around while of delivered established our come. of of facilities. for support level opening quickly, delivering This more A and manufacturing we par Malaysia efficiency and with growth Importantly, the again, this our here operations. scale milestone

QX $X As billion we not of revenue. in only our generated for a success XXXX, measure

investing of a to nearly pathways striking we in balance culture strategically By advance, EBITDA We which XXXX. billion in to growth years also delivered are significant $X establishing progression, disciplined flow, the the and up XX%, still while free generated support year for record of that cash adjusted right opportunities. in cost levels our compared focuses is margin

company's go launched will From transformational global will perspective, of down into access and the of our work in key years strategic most the expanding markets. technical clinical XXXX the and GX one We advancing provide multiple foundation and that our new history. for as Significantly DexCom. a DexCom ONE future

and proposition provides. started February. Customers of launched establishing GX coverage thrilled that payers the GX and with GX as use in wasted been the accurate have market's value no clinicians ease recognize This reception CGM been and with the is form the and product rollout new most exceptional. to factor, the in U.S. GX clear ever time the they performance of has

a see Basal risk. this insulin to in hypoglycemia with well followed U.S. once This became trend with Basal the for as as certain the the diabetes, only, coverage this using largest started the of markets, pronounced our broad in company's coverage expansion more the immediately market. mid-April, In reimbursed our effectively have prescribing in market the as changed reached live we quickly we went Between individuals doubled people for commercial product population patterns, has U.S. change the Medicare completely and history. in We coverage that using X non-insulin type even And landscape this decision completed

With broader new the new clinicians our of product ecosystem. coverage greatly available prescribing sizable we've that cohort process, attracted a and simplifies to a

expanded and our XXXX, we're In by prescriber XX%, we base not stopping approximately there. fact, in

our are primary our new has market. years the this would increasingly result as of than are care tailored Care been evolves. of by business has written scripts direct known that now Primary physicians. XX% in the team become that Commercial our as recent And we being important always to of the have effort, Much seeing done We work more channel

we individuals, with beyond. we this on a help millions also the and future excited sales of have Based not but When reach investment our of diabetes, with U.S. XXXX These we in year. are who prescribers, our success have to on are magnitude started our millions these opportunities, prediabetes the team X us presence continue in CGM, the to force yet of win. critical and tens only type insulin the of not relationships using broader

Now it expand up us that continue is to to pool. prescriber to

Stelo they later earlier patients' outcomes first Stelo, to why be needs care this will is product, This with to greater into plans, built We custom are that specifically change, our more unique and sensor accountability. on this sustainable CGM to DexCom experience insulin. behavior leading population. tailored already platform, our software design who incorporate summer. thrilled are the as recognize drive not we seeing of is the diabetes, introducing to a newest are for clinicians our CGM, X we have ability people be Leveraging type want

evidence launches diabetes. our while coverage. product product add track with We also summer. opportunity to currently bolster is case collection feature in payers of with build will DexCom's greater our ability our we for real-world growing the Stelo to impact having us leaving a launch highly well body presents pay with on all and drive continue we will broader a XXXX, time of for a The XX-day large launch filed our quarter the the great to Stella this of with anticipated on health customers. several unique Stelo as FDA evidence and trials data, the a this see With cash fourth economic people we demonstrating of outcomes to wear underway, for

of to future our portfolio our a company. product greater continues it glimpse provides As grow, potential into the

provide solutions creative a can customize for we built to technology platform have populations. We different that

and this, advantage position. component FDA of is much connectivity. watch enables redesigned the leadership always greater distinct to with our been pump we a further Our iteration key Connectivity this filing infrastructure it DexCom. And and software integrations, to direct new are with as advancing has quicker a for recent GX

continue also innovating all technology, with product on current extended launching efforts our offerings. our sensor an across will our We focused hardware on wear of

are excited ahead as we've the we us, of significant As ever as look we at opportunity been.

at now Jereme started. this that, are Investor fourth As summer, past our a said the to of just we quarter turn I financials. review will it With I for Jereme? Day getting over

Jereme Sylvain

Thank you, Kevin.

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

of revenue XXXX, to of For and the of XX% quarter for compared $X.XXX basis on growth worldwide million organic on reported the reported billion, representing we XX% an fourth fourth of basis. XXXX, quarter $XXX a

organic a in or revenue revenue trailing excludes months. divested XX definition of currency acquired addition in reminder, to non-CGM the our As

the totaled revenue business $XXX the quarter of Between and U.S. in grow. our Representing in million to continues fourth for our XXXX. the growth U.S. compared of XX%. million significantly access to momentum recent fourth of in $XXX quarter, GX months, the improved success ongoing

In fact, as a XXXX, our since quarterly delivered in accelerated third we U.S. the rate the row. beginning growth quarter revenue of for our fastest

was XX% XX%, totaling International $XXX organic quarter. million grew fourth in revenue the quarter. the for growth International fourth revenue

have product and again footprint access across We QX, helped continue reach execute our and many share very in to strategy as broaden work markets. global our International our well took in portfolio

profit or mix to decline gross our million QX, larger Our XX.X% This was to revenue, and percent quarter fourth margin $XXX year-over-year gross of the of in expected, a in much of XXXX. was XX.X% GX a revenue in of fourth was as product quarter customer compared year compared ago.

but greater volume in GX this than we GX to the a we drive As a lines. profile expect through GX has quarters, higher change today cost coming reminder, as our

to expect that As upon it of continue to our reaches scale, GX's improve profile platform. margin we GX

QX for million $XXX of expenses in QX $XXX to were Operating compared XXXX, XXXX. million

being disciplined with another and was quarter This of to our thoughtful commitment our demonstration spend.

Our of XXX rate grew leverage. XXX we extended the straight streak points leverage half points operating of of year. basis at revenue to of X delivered least This quarter, operating and nearly year-over-year expense quarters OpEx basis to at last expenses this compared our

financial cash $X.XX Operating billion million million share. the quarter Adjusted quarter fourth for $XXX.X XXXX, XXXX. $X.X was of in remain for XX.X% to compared with of the great in to XX.X% or XX.X% of was million and of equivalents. year quarter of million or $XXX.X We the income cash $XXX.X Net or XXXX. same the revenue quarter $XXX.X in greater fourth or third the revenue the revenue position, or closing revenue income XX.X% of fourth than a quarter, was per EBITDA of compared million for $XXX.X of

QX related while maturing allows we offset we share the in an what of were the $XXX able transaction, dilution purchasing on attractive executed take this to our converts, flexibility Case organization at stock financial Having XXXX accelerated as Through we price. results. view remaining point, to advantage our to our program the repurchase mentioned opportunities. million

more XX% XXXX, as mentioned business to earlier, grew free our flow Kevin in become As continues scale cash by and efficient. our

us of strategic As capital it opportunity, to on to assessing grow, while growth allows our significant our cash invest organic continues flexibility. This continue meaningful to basis. uses behind ongoing flow our profile financial to an only adds

guidance. XXXX to Turning

to launch XX% be anticipate of month, for momentum This stated of organic of we around the continued last range new $XX expansion DexCom into business this geographies the GX It revenue XXXX. the represented XXXX. ONE billion representing the quarter, year. As to divestiture U.S., New X total assumes the of the in we billion, of the $X.XX on distribution of the in in and summer non-diabetes which of in Basal-only Stelo to also revenue XX% guidance in our $X.XX Australia and type million growth the Zealand population assumes in platform

we EBITDA gross full and of perspective, approximately margin margin profit margin adjusted to profit XX%. XX% a of be From a to XX%. to non-GAAP in year be Operating approximately range expect XX%

margin, ongoing behind conversion gross guidance to we'll opportunities. I multiple scale to while very customer process. diligent the within strategically that, to margin our will growth in comes it GX be that with GX Kevin. the spend associated our pass With reflects continue gross back that investing XXXX, and Below base, Our with from

Kevin Sayer

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

Sean Christensen

you, Kevin. Thank

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

Operator

from Instructions] we will question Robbie take JPMorgan. with [Operator first And our Marcus

Robert Marcus

up Congrats for really together. wanted on second time. ideas X the good to a quarter. offer I'll I tie

operating XX-day deck, updates the sensor. we And slide first great any progress have is on frame the how future? XX-day year really to where you've think good time up G-Series the next here in making presentation, well street. the the in you in margins of The the could take guided approved? And the slide that really, that really sensor one, on will the put about in and here the when it is came where question and saw about be you operating for above that And take the margins could what fourth quarter,

Kevin Sayer

this XX-day is I'll and the timing, Robbie, sensor Kevin. the on going forward. Jereme and operating then Thanks, talk take numbers effect can margins the about

fundamental of evaluation it that period. clinical in XX-day of said earlier changes science middle the some year, testing reliable make As we've that and will this to scientific sensor, we're more for the

so days done of that certain that XX-day to but One we tell people from a is we reasons and deliver going experience sure fact of the every to with performance and the get combined to them our the well, our expect make sensor offer of the bit sensor . And good that time, as we XX-day sensor experience of things: do. accuracy the over X what a now. amount we've we're want we is

approval. So we're changes science filed, and we right to we're towards that, certainly file making a But a on few we [indiscernible] We now, run evaluating see approve. still study, slight we're on basis. were you a path would and expect a clinical

Jereme Sylvain

the leverage job you longer big gross opportunity maybe the been to operating of product. a profile. we've creating both to little achieve, profitably grow XX it profile, then to but able done when us in And to provides operating question that and the of real to your been margins, the line, the really of some the day, despite opportunities business also maintain then XX-day within a our a think to for term gross done we've scale around it operating nice bit mix think challenge a areas a but of be in And lot design a based about and leverage made margin that with moves date, we've a margin able more on about would on and Yes. opportunities margin from we've changes top work value to margin, channel on lot we've a

over of it continue a, deliver the that margins grow going to lots class So be can is on organization. provide #X absolutely the business; either, effort or in to world flexibility us It the operating does time. b,

to to not that shareholders So LRP. we'll lot ready opportunities real We're And there's advantage of to obviously it do think longer that, I take lay to deliver particularly back this a for term, I We've opportunities think execute opportunities XXXX provides what is. globally. of long-term but there. our given company and

Operator

Danielle next take We from will with Antalffy our question UBS.

Danielle Antalffy

much strong going -- And to to more really about It's I'm that DexCom highlight built. don't is just year. this a for us the end on competition bring competitive the market. maybe about competitor great love, to to Obviously, hearing if could I market. Kevin, we see. you planning has ask moats about know what to this we're coming to Congrats potential question would

just competition defensible So a -- where but think highlight from maybe you is if how and your you here? perspective is could share DexCom

Kevin Sayer

No, I appreciate that question.

We First and our we've got there. have We've fundamental performance years, with very the here start as connectivity. The well technology has for built and company. great example, beliefs and outcomes can centers platforms of systems X core with foremost, a on unparalleled. been over who the patients AID million we and had our done

kind of at up engineers not I've lot to time One have X and time. connectivity connect the patients. the engineer. a about of of it's is of We complained our This type to it the took a our to into very that's and talked put important about devices that competitors their future can that with platforms, features same the because

we Which is example, features with why just the reason, FDA. direct-to-watch filed the for our

they and us where certainly things think all We going been across medical other pipeline the device of better over evolution being And organization, of past stay. new to being it's software for investment. they we're We're to big world-class a We've not. us evolve our side, has years. fronts this investments. from to connectivity technology as and couple software look a been the about on at literally an it competition communications, efforts today, thinks had a the One is company have software

stronger at So we've there. ourselves the to areas looked made make invest to and investments

Now on the that's technology side.

just and and in on the our Ireland automated other factories automated ground hundreds here will Malaysia getting in next that XXXX. millions that out and over spent this. those open But piece factory world-class turned factory, X the we be both United and the that fully of lines midyear, new what over We've we years, past up Here's a there, in would facility. opened is in tremendous States built dollars of of our running

to that at as in business particularly that a done a forward, going those investment There's made evolved the be made huge has And and to and CGM play those performance the now. see things company. and the scale we we've investments

we'll right the we But done positioned, see me else we're we're very comes. things. well think comfortable. we've never But everybody we rephrase all and believe we're where Well, comfortable. that, So let

Operator

our take Wells next with Biegelsen from we will question And Larry Fargo.

Larry Biegelsen

focus wanted I on to Stelo.

product your $XX which is I approximately, think, growth this almost in in million X add to expect points to XXX You basis months. 'XX,

Kevin, margin this number How a informing year. time? So in launch? that's product the your the And confidence over implications? pretty a only half for healthy could are what what's big be

Kevin Sayer

product thanks Larry, and of X% to we number, The question. models others product designing And we're targeting we that. at and non-insulin right after have we X build is the purpose have that this support to guided go as certainly And that. for And believe launch out the user the at revenue here that in type get segment for this this we of X%. learn. that and look

become back our is a of Stelo this most that Our this out confident a our over and very and and portion business, very, if our grow guidance would this I learn, love a This and need there model We're all for segment within market. important else. either. the can develop we be to starting lessons getting to that wording, breaker we very large exceed And learning company in than markets. is all with experience our learn large product about anything it new more year's is to time But this can it. X%. we that for launch a not have

product is learn thing than there important most the and get to more the else. So out to anything

Jereme Sylvain

margin, your release an will going to something And on That not come then we around we're is perspective. when start Larry. in in. necessarily to margin, a we're this to talking invest more margin it question it, operating yes, gross From from about time, details

to And launching it's so in we in marketing, invest we're some from an will it investment company going when going certainly, but so you invest and the in to margins margins, make still because as that this in make think we future, product year. going investment this this sales believe we And and a there we're we're operating to overall company. an expand it, and and do be about as

be is you to be the our part still safe while we've this very but profitability. as So investments an aside can how organization, careful going know about we're set and that we measured invest again, very, that dollars, improving of

Operator

We Matthew with from will our take Stifel. question next Blackman

Mathew Blackman

mean you obviously at frame this these that Jereme, to your of in to What terms Maybe to of then us, how sales mentioned channel for more incrementally any importantly, Salesforce leaning that spend force kind much what channel. Kevin, are the in you expecting least comments, today, sort you're other and coverage Can year? trying with And way have? you investments Kevin accomplish? and you investing, And or into about does spend remind timing? coverage more magnitude, add what just PCP PCP of

Jereme Sylvain

Yes.

for Matt. the thanks So question,

opportunity an good on was coverage to investment, as about we coverage. force. Care of expand. to are entirety that expand we space. we certainly out It's and of there to tens have thousands But about horizon, sales amount predominantly think when you today, to continue of the opportunity of Stelo the you a Primary of Basal the start the the ahead endocrinologist physicians expanding, going us think So found And

CGM, their important know, CGM, as very helpful. And having know DexCom diabetes. can we is manage We in how that call role play points specifically a folks those

of the few there, out So There's look you take openings size expand, quite a amount. it. and LinkedIn we to are of for can in at a the terms going

So we'll get coverage. we expand sales our more will force, and

now, right then of the In hire through half the LinkedIn year, place so are terms first you'll associated out there Obviously, back will reps the course take with Reps burden of see of the quarter. fully QX. the cadence, so us over QX -- those the over the loaded

cadence contemplated So to about operating again, that. But guidance all in of provided, that's how the we've think the that's the overall XX% margin.

course work of if that we rate then ramp balance expect really typical do where of in be to it run But of you're hires part QX, course first a of part be we the and the the and business investing the need to creating the over the as our up expected through over around cadence leverage year, So for thinking for And to. quarter. folks made the year. about the of

Operator

will And Thibault next Marie our we BTIG. take from question with

Marie Thibault

question International. here on I wanted to ask a

selling I the just reminded DexCom Australia us to you comments international sort versus QX in there. could And for direct rest going you'll year? understand make the Japan. think you've ONE that on also, platform, and Wanted the an any in also non-CGM a all-around of on question business be GX, being cadence of the

Jereme Sylvain

Marie. you Thanks, context. some give we'll Sure. And

non-CGM the So that has point. at gone this effectively business,

why So comfortable and pulling it we've it out talking about to that's organic. been

you business up out ] allocation that about back contribution on we a course and as most a nill by the it first start expect of can that . And certainly think year. that the can book second to the $XX-ish expect -- quarter of the expect then I'd over as or in quarter, [ so as of start type business similar part. japan live talked QX thing. being quarter. it to in the do in year. for effectively quarter. of we about build take in And So and last The business contribute, the similar that quarter, math to kind the That's this that, we talked million you -- We about point, this

international the So really are those of kind timing.

as through in QX So we will transition burden, of be heaviest terms the that.

released great we it X couple have press days launched. news countries a ago, pertains to DexCom GX, ONE of it I is, think As on

out. cadence It first X The come we really countries. from out has is course the we're a GX of that and our on ONE form year. adopters now those there of the factor, of Those have today. early a over foray, launches countries getting great so feedback within And DexCom is expectation

launching expect but to take a releases lot long a So course confidence a the place being that more gives I'd over the expect where really the that, we're in around of press when incredible term. year, and DexCom growth really again lot for driver which of us ONE

Operator

our question We from will take next Jeff Johnson with Baird.

Jeffrey Johnson

Maybe that just International keep point. on it

think while I last the gone seen the think I growth is quarters, the this below on first And rate. in growth. here XX%, back the XX% growth we've organic International quarter a U.S. look you've XX%, if few I

understand other? of competitive competitive happened we over a with approvals, us that XXXX? Does continue Would about to similar that expect settle have of out growth think in versus with might AID be reason? CGM. them slow Europe, U.S. in help Just the for some And International international where here each I to as especially to kind any

how are versus your for of AID Just base on stability the you the side installed new maybe over win there rate systems AIB there? thinking about

Jereme Sylvain

Jeff. Thanks,

as International. So for so think the on question about -- the thanks you cadence

and we by a course about effectively revenues by really were that say, bit think little transition. cadence QX I'd down, Japan the over year, We business things. I of different a guess, make a you the few certainly the or about as -- was earlier about nill, few different talked the way the As buoyed

the grower that's quarter. a And in negative so

the flat. And Nondiabetes business then was really

business And a significant to those well. quite pull so being think as we down, still you when grower the pretty growing you exclude start those things, you about historically are

continue Germany, QX, between the QX, and relatively flows. today, where ebbs all should operate well. fact, those all consistently some most There of to part, we In U.K., QX. the are et grow for do cetera, Australia, all businesses, core But

than XX-XX. OUS about that think be XXXX will percentage forward? revenue is today stance of business, today, the our going International by end is about a bigger X/X, more as We changed haven't XX-XX split X/X, So like business, of where what you when or does the it that that mean

we So I opportunity on we're to business faster the think expect years. coming business whole, today, U.S. over That's on there, underpenetration business. International that to the all certainly the U.S. than grow not with have out the the of that not the say of with we incredibly the bullish

Look, But least that's those, if of the we'll on do at we LRP. in can outperform work on our both both.

As in we to and we are competitive AID, about systems offer. have you highly think confident what

Our product, there's example different is that there. believe alluded Kevin reasons we little an just is special connectivity earlier multiple a why product one. it give you to Bluetooth space. about I'll our bit around in

can their Someone can application, one can talk product. all our while be on offer a No to pump, and on phone be a can on direct-to-watch else that.

that to as is the a which differentiator and differentiator forward. diabetes, believe you manage We meaningful only we this that one technology that. do going and And that, think are can a the about population, really needs deserves their frankly, quite

front and a post we child physician, that, that the in an we'll that of parent, well of system, sure we competitive feel millions battle that continues that a We'll sit these to front needs message feel a even out feel there. of think about choice. launch and incredibly International and years highly in confident the confident to confident make we are there. do book a AID to we business, very that of continue we when that, endocrinologist continue But go on we in we're front sit of an to of we compiling Add we millions that systems, sit as system,

Operator

Matt take our question Taylor from will with next Jefferies. We

Matthew Taylor

hoping from before, could not from around you year, to that on or GLP-X anything us the Stelo, come see I cadence are the upcoming expect or only -- or see from that data also on could launch? this was you you to going we then And after update mentioned investigators. conferences of data we on that could at before, you during

Kevin Sayer

of this X Kevin. a need We as is to and type you diabetes world glucose lot talk on approved. monitoring, take No, reference investigators to really course use getting Stelo, a that. is And of published the don't -- of as In product systems. for far over continuous data that. that months. next several that we'll we'll trial There by this that, I'll we don't clinical particularly DexCom the we about

we're where And We large. know that ongoing our list drive of studies better very out With this time. in a good those there the CGM -- with because money. And over to Stelo GLP-Xs, are have respect the patients is or are we've have we system studies again, seen saving healthier. outcomes outcomes studies all comes hoping to data element. where We end idea up very the an is

we Again, when without same to the But talked a study result, studies it. year. that the published GLP-X than we of over provides don't we the with they're expect investigators. demonstrate we've expect course better over time, those those about we control CGM good And the studies of published the that before use the things data a those

Operator

with of will We question America. Travis Bank Steed next take our from

Travis Steed

would done the and product that or UnitedHealthcare? you be a next pathway guess you you be if could like could I think with traditional look to I reimbursement how more could look think of think understand up a give Stelo done wanted do is think more some you reimbursement clarity more, years, of to of couple open little it over needed for if Kevin, more way that in it the would how bit program do one-off you kind on levels for what

Kevin Sayer

do to for in is time. more goal this a traditional Our

product pay that and earlier, a product. cash pay option, product a the launch pay a cash people have as cash and said the purchase we've can into get As we'll

a ultimately again over that see there reimbursement users case for the We data out for build will trials those product. and accumulate time. data clinical this accumulate from from we We'll

CMS type X an expect with covered of I over time, nature. money think have that less of is who go people at on to grew Care to insulin few goal to we outcome point and and certainly spend in technologies our enables that one some the diabetes, system, we're time again, Health the are in because by that

payers see it agencies with traditional and working the over various being we So and more time. government

This them. be path. with happy over can traditional I the to continue tools of is that our we But and And generation that, can develop tab. we're we need to first The and them be reimbursement have be top more pass programs partnerships partners the way. a to only will -- going Stelo. support On relationships that think our continue the around first we launch to support, time, be to we'll

numerous better product. will It that really have and We people and iterations engaging lead XX of the course a the makes more inviting months first much experiences. to it over product of

to to that exciting. front the be So we stay very it's XX on next months, tuned for say going what have over

Operator

we our from take Citi with Joanne question And Group. Wuensch will next

Joanne Wuensch

And [indiscernible] I that quarter. think expense? more the A Nice questions. the interest second somewhat for is a interesting number. you give bypassed one operating in is Can this LRP of and think net XX% about tax then how the your to row strikes couple sort margins. is as where of us guidance quarter me for that you've And

had? right still number the XX% be So to why is

Jereme Sylvain

Yes. Sure.

tax. with start we'll So

I think to range. closer this down of to we that year, dropped XX% kind

guide to the low down XXs. years necessarily get tax. don't to over next of X the The we X into course goal the to is While year-by-year

So I in into that we've place. to structure year, it the would as grow expect put down to tax come every continue we

our of interest of time. straightforward those going difficult cost where it's to converts. of given terms is it's interest it's over rate our some cash it's In given but a -- just pretty one net -- interest that of low is that -- pretty a go bit But income, just one,

that look basically change a for think time. about balance over sheet, to interest the you the at rates And as X%. be so you you the that's it you'd updated way we'll on keep year. about Again, But And the multiply other can to have where to about take gets by cash it.

And an XXXX margin gave then operating from perspective, we LRP. XX%. That's a the

Your point valid. is

a you're XX% there at year take our you already our guide XX% if look XX% hold our If gross margin belief, which at to XX%, of and XX% XXXX, we margin to in is at true margin. this of absolutely our gross

drive We've Joanne, understand but come into of It work a update in the necessarily We're this to and we our leverage update means around we're it So it willing just think point at the thing. LRP, done it's I sure we're of absolutely point. ahead and around the we'll future. mathematics. some a forward not lot making lean at business. good I this, ahead. We'll getting But

we And the are great ahead. news is as

And so to One that's caveat other maybe so. note to just be we'll and in, do a to good spot year. continue important think it's I on the

the work little investment a are organization. year that making I step we did around a about on We're work think the you We're and you a We're certainly and launching all we force. about why some Stelo, we We're year. that and investments business. step forward. a that, ago, sales talked this our to being question good in margin. on And year back bit years recall, do lot in if asked a few and still the significant doing the going the took around we of some

the Japan in making our to we're deliver continuing all doing another make to investments expansion clinical That's still to work we're then margins. an around an improve around thing the that And going this of work those going investment We're go direct product. all in. and year. Kevin operating We're referenced that

longer we're business. So show drive building building we're I the can you, to I think on you that the rely it you just But see in to can that and goes to here. us term think continue through that levers

Operator

O'Brien And Sandler. we will take from our next with question Piper Matthew

Matthew O'Brien

What Basal points top domestic of specifically primary half we the helping as adoption It inflecting a of States? the in the right on to back been that that's far contributor the we as Looking of contribution as year? 'XX, if terms like line to in there's XXX, acceleration. just Is X-year maybe at this the with acceleration? think a now XXX should domestic wondering And Basal here basis And are the we much there. CGM basis. that's acceleration about as Basal, goes the I'm in stacked a clear looks it's performance,

Jereme Sylvain

question. It's a good Yes.

thinking as Let color the to some how about just maybe we're guidance. me give

the see you Basal and launching there. the As A with performance do form the coverage of in with has to year, lot the that factor back being accurate having course, the then, half the of sensor, most GX of

sense on think when share. sensor -- when taking are you the And see at share the the can the look taking it, so we about is and there. market you driver script advanced the you most And data, having

So taking share. that's

Now within those spaces, Basal is a contributor, no question.

that As that to numbers. category, category take that expands within we share the overall does contribute and

you contributor, with category taking so us expansion. do it does Basal much are And is but with share right, as has to it as a

those as So think about of contributors. both

about a a basis. about adoption XXXX, X% we've year of on bit you this total, back think about the talked little per in the annum per around assumes guide adopting in year Basal X% there. As rate, half XX% The to

the I think can you case. And so was that assume

like X% per was year. Our plan long-range X% more to

So seeing over what's that in is than haul. share what we a going faster will than Basal that long-range faster expected, was are to help the great And about our category little as the we grows and take plan. continue longer contribute

that don't intensive do the though So Basal well, taking hopefully, continue how seeing really there context I that and as to contributor. because, well. see us absolutely fact to you Insulin Basal share to overstate frankly, we're our a quite businesses want really, you some gives is

Kevin Sayer

Matt. just to I'd Jereme's add comments,

rolled what just an year, our launching a what the There again, field to and of U.S. with And the If consequence out. you second this of doing GX when acceleration important growth. saw, event. the the correlation expansion. our GX we're supports in really sales the other half It that is respect as you a look thing at of was to that's direct

We call We on And call have with to we somebody well. technology where as very as I in our on do said spend with more need physicians do the familiar time as would win. been past. they aren't who earlier, the we

voice, needed that the that feet the happen So on We more saw of we street over year. more acceleration given we the and good saw calls. we the the half second and need things more

So together nicely. it all flows

Operator

next our question from with Margaret take We'll Blair. Andrew William

Margaret Kaczor

pretty to the of When you market the back insulin Non- wanted as we in maybe numbers our million at adoption X last for could I users years. increased, get our Non-insulin. probably market but as year, amount. seems to of this a for run the sizable probably have couple that's not perfect, kind And certainly to U.S. market's well meaningfully again, the spin aren't there maybe and models,

the that? guidance what obviously adds $XX be what of $XXX guess, quickly can in plus regardless XXXX, but meaningful I sales we inputs in million one, chunk pretty going are chain. you to adds, million patient a drove of is So Stelo to And Dexcom back those these XXXX? or some ASPs per gets of pretty to already And patient the which meaningful year, around can throw assumptions

you Why -- be of could right or correct? it that much guess I provided incremental So in wrong? 'XX? how LRP to is And the that could be initial that

Kevin Sayer

business that users It CGM. our Margaret. get experiences had cover We is for part can And plans [indiscernible] seen some wonderful noninsulin probably product, -- detail we've our Jereme we actually into me. today, of there. more than have have a do

a product our to but outside pharmacy We have traditional the some channels very pay an program through aggressive cash and cash distribution DME. noninsulin not program, also access pay have nonetheless, traditional users where outside

a noninsulin not not our There's to those and of well, is driver use CGM tremendous business. But have significant and it some remarkable has support but been programs. we So hasn't a as the individuals our growth. of purchased front grown, continue it it on of been a percentage. It chunk

right positioned XXXX XXXX, to $XXX And certainly, we're We're guidance learning of our a committed really like As we is is number million, and you're for most forward, committed to because about and gave look going we we're what forecast interested what that there. like be that. again, talking certainly product the we've with to for X% and guided.

where respect that have labeled to we going not for And it's we're And products. how population tremendous where have pay cash this we're and program. With a launch to our current pricing is reimbursement. for to as product, the flexibility, reimbursed

to we'll profitably. that. flexibility believe growing we again, have, And So grow

have we going that again, into a So XX-day product market.

have we COGS. lower will So

of lot things that, we're it And that developing a around rolls out. as

different a see, offer meet served you the and versus time. in we've are to experience we'll changing business point this their those of needs, to We're going we serve the model up across individual this to As really board. definitely type

big number on. planning So time, could be we're and we're in on bullish it XXXX. over That's it what very a

Operator

next Bedford James. take question with We'll our from Raymond Jayson

Jayson Bedford

there. Malaysia year in would GX levels gross you then of think but play in I thinking and on what margin, the point on be had what alluded some question, as do part margin Malaysia, gross wasn't, you outside positive came related I starting the we gross weighs to on a It 'XX? just see impact encouraging in mix, on And guessing margin? Just half. and and it, think a a I'm comments have last at But to revenue lower price we margin gross second

Jereme Sylvain

the thanks we for looked a year, transition margin assumption like, was was to little of the GX the But had when range the made question. would assumptions. GX on what perhaps assumption a transition. the Last the take place Jason, bit We the GX GX earlier. assumption

goes over in And the market some of and when with timing coverage, available systems were of that do had how to AID that the time.

a little it majority to users, legacy And took And today. base of bit GX the on system. the our as GX less longer. cost gets sit on so a it GX result, our a And we make margin still and to back outperformed still

half the move of year, of integrated Tandem base and QX. launch the and starts a over out to with launch here quicker. with Omnipod back obviously, GX the sometime And limited later believe Control-IQ we coming do that the in launch obviously, With then in X

that's you is goes. shift that goes a place, And Jason, cost have what the weighing of the takes so margin why And higher-cost year. start lower it a there as the from hence, that where you to in have product

have than updates as base the on point, and give that we'll it then our exiting of accretive. in back half the balance the but the to over the should a should you course should where us within should be year models of it assuming year, puts in progresses, year, favor -- GX. show position lower that year GX, the tilt equilibrium transitions that Now and in base be the should the GX the at that of be, It

course, then, and move be the and And now XXXX 'XX beyond. as that exit to would we leading into then of rate bodes well

transition base it So when that does, that's we driver. the when do and kind big does cost equilibrium. of just -- It's when have that

thought there place. happen a outperformed result, going the XXXX probably first take in we in half We XXXX. It of as didn't to here the to of place again, in going back it half was So XXXX. take

Operator

And with Genuity. we will take our next question Canaccord Plovanic from Will

William Plovanic

quarter. Congratulations on the

a of follow-up. kind Just

order and should but X, move a shifting it's it that we forward? days as Just of really and of then these to where the is granularity the if trying possible more to intensive X, type And business the new so, growth? hypo just in in kind and cadence hypo continue to about at how the kind the the if you patient get Basal color, you think as Question, of that look [indiscernible] intensive is from the growth contribution Basal type

Jereme Sylvain

least XXXX, that patients think at insulin-intensive the to contributor And XXXX, insulin, if X mean so the I in about you where new sit least course business the is core . Basal underlying doing the and is the new going is patients. and actually up, combination over up up, majority still our the intensive type in is of still the revenue Yes. at still or X still patients from type a year. to is of of job of but catching new a makes business. those Basal revenue those X the nice of part catching driving main

Basal, XXXX over We'll larger we closer given and well. have to that. give get do to a beyond of more do very get update to very, we as as expect an into population we you Now time, it's

those and still are online then opportunities there Basal. our in driving least and coming about still XXXX which bullish frankly, lot beyond. point, quite in on But Basal of obviously at is your opportunities contributor long-term the all XXXX, a then hypo, real core incredibly actually growth and is, kind longer-term to well. a opportunity low think So the with of as business of with Stelo with

Operator

take next with will question from Polark our Research. Wolf We Michael

Michael Polark

until approval. a that the seems testing the we've pin kind a we was XXXX. like had not this -- XXXX Kevin, take Or a broader see question could and to to in filed timing. a provide appetizer I path I XX ask days of year and you to is I'm thought was a this there a asking response for to on affected? but lot of rollout -- of a prior want heard timing color follow-up XX-day maybe innovation broader longer? want your down to and There might to won't little don't a all transition and I Stelo it year And be where kind on been XX-day

Kevin Sayer

were that, those Stelo We time as with it days would as we it, current and a would users possible. so our use go configuration. particularly on as to from my frame, be primary is fast sensor it XX like for If they gather data at learn can yesterday.

trial we're that As and learning that technology we're making, a put through we changes features the go, but we'll we're we go day. dial-in going started as product, on each in and those to get the we'll every final pivotal

our completely position same in were GX, system features XX-day not GX new lines, product, are platform, and the suppliers, we're has This new on current like new manufacturing everything. we with built. submitting with where new a entire we new built hardware new We and an

all and as near the security Bluetooth it So as from and and with stuff. already. the was, through to last such going things issues time We product, be filing and as pivotal to finishing difficult not those worked intent is

and see there's those too the us And along headed more starting or should many speed type getting is -- filing extremely I'm So We to as that this you to and date variables. assumption, and is important right end quality reliability of a going certainly we don't refining getting be level to we'll well. an things things and when to I reasonable as really because But but a as I What's from land you milestones XX give give patients expect done. think view now, and just our then it's us. science that things. where that we're updates your the along 'XX days path down way. not an getting

but So, we are. where posted, we'll that's keep you

Operator

our with will from We question Chris take Nephron. next Pasquale

Christopher Pasquale

progress on a questions the about couple of ask to and DexCom Wanted there.

think be I in it you to starts you it for expect where you Curious said what had about that's to if patient expected patient starts you ended new International of account 'XX. and in up of XX% new 'XX? portion

Jereme Sylvain

Yes, it U.S. in starts Sure, patient going Chris. Thanks starts. outside X/X closer be we XXXX of about we for was the new was to about did X/X question. thought patient It of the -- to

there. So a behind little bit

a of little good the bit more us, took Some tenders it the a the on least behind at still -- time little on year year, a expectations. had where bit to get we started and for so was really but

we a year, it be contributor This and to as bigger more a percentage. expect

think coming the was countries the that launched on Very if was last already obviously, So we here here form form out about on you That in certainly excited and year, the factor GX about, GX that case. factor. X the in. in XXXX

it given percentage necessarily haven't U.S. while number, be outside to that we So, new patients XXXX. the expect team is our and expectation bigger bigger it bigger, be a to the a of wants as percentage, in

Operator

our take next will We Jennings Josh Cowen. question with from

Joshua Jennings

patient didn't as about hypo hoping ask type to going deeper forward, penetration of that think opportunity. ? bottleneck Type coverage. a non-insulin bigger follow-up the Basal patient it just opportunity has a X Basal. We hypo talked as -- indication think penetrating But you 'XX that you how would 'XX, indication? in been into And guys the I Anything just a that's was the on in U.S. 'XX, X do terms I fast a move see X than type

Jereme Sylvain

in bit in to front hypo And going gone. qualify. if take we do time a awareness it's a the way, Yes. here's it's to bit area opportunity, all know but you is how this getting physicians It's folks be that Thanks, a an more on Josh. big candor, little hey, challenge. It's a by a document the look, you've that, to of it. And knew and going and of had letting event,

can sure there. It's folks this What they however, in Officer Basal. than is that material out. And can and that making suffering a events, technology Terry, our certainly team Commercial change if do that getting it been they help, the are out contributor help all it very word been that her we are real do know, there XXXX. Chief is with and very, hypo qualify understand in focused So and has not slower and reimbursement

took or And understanding and it. so understand not, that how where believe are out place out on it's is, That a we those identify are events we messaging those place. that on get can -- get there taking we to it working front in that challenge making have it in so is of and working when sure folks, those but

We the for have making so making for then around they sure serving are patients can those are requirements then reimbursement. that good physicians data those that. and aware of what we're that qualify documentation

very but arm to some it there's the faster. team So do on with sales community grow the help And there's sure information and work that we done, be intently needed working force our a it. making then to arm very,

opportunity longer us, for an a think think penetrate. it's big bit to it's a I to take I opportunity that's but little going

be to in little is I is can I in So we think do here over haul, this to bit certainly going it's continue a it's a meaningful. -- XXXX, role. that driver point, to think the slow contributor time longer opportunity a an your over a But think driver XXXX, but

Kevin Sayer

we're get you those their of But it, needed a we to do do sales to that conversations And to and to they to in lot that, back population on taking and who street outcomes the people I'd We this space, seating start investment patients. a there's more the go and and have this feeds add physicians we do once that. place, to just feet have the easier. doctors need positive to more becomes educate it making in states. of force

Operator

question take BiriPartners. with we Mike And next from will Kratky our

Michael Kratky

clarifying One on Basal. one

penetration are And trajectory comparison the would you out insulin-intensive in that How as You've population few basal years? characterize within over saw where patients. based about previously relative type X the next today? the on also to talked looking framing you you you're

Jereme Sylvain

Sure. Yes.

there's about had as talked So But the of we the we start the X in that a in population to work in our internationally, because percentage adoption here LRP. talked of had being X about as a about And points with we our coverage opportunities. U.S. Basal, long-term guide, through there, XXXX there's I'll total coverage effectively U.S.

X a to X% was which that the rate. In our intensive, type should mirroring to point, it was about first your couple say, your to that quarters, of saw question, penetration we XX% it I mirror

Our to it X%. but those guide, we prudent, guidance. between at got comes assumes quarters our under least when to we're also It's for XXXX, belt. middle make a We've positive, couple very very, want X, sure a of

assumed And an the rate so over that's we've X% course XXXX. why penetration of about

a again, of we you. helps penetration. of our back the mirrors there's X% half to of opportunities XXXX, Hopefully, the in if signals, our that outperform. I LRP, And positive Obviously, saw I think, guidance as which tracking But it clearly, that, which has think been we're is ahead percent for both in business total.

Operator

from question We with Steve will Oppenheimer. Lichtman take next our

Steven Lichtman

think feel? an significant this Does go-to-market DexCom in large to investments it mentioned group? like? Stelo. How expand office for and you need look the you models denominator make Kevin, And any more Noninsulin earlier business do to have you different on question, back we as really could direct-to-patient should a go the what after support

Kevin Sayer

It's a of walls very pertinent and and meeting the of company. here question, our great discussion within that topic a is

those group as evaluating time with serve much differently than us a insulin very we group build that are been ways We and may models large a out. such patient on to very efficient over who've those patient interact

are models we different doing appear that are we looking what at So than today. distribution

done little starting some again, product with a the past. to we've So get efficiently And pay, do people. things can to opportunities most we cash different gives that in than us

And have very so that. everything It's every on day. a with very for to tuned you'll here question stay line much that's going and thoughtful in

Operator

We with from Matt will take our final Barclays. Miksic question

Matthew Miksic

one as So on follow-up of and margins drive. kind mix, you

over GX wondering Like of gross profitable more how could term? trail drive should improving we GX So where mentioned volumes we long and you sense before, be over in maturity profitable some share lines? super product up. maybe long other not of ramping is have -- directionally that, and exceeds ONE Stelo And maybe line about volumes profitability GX those rather with that, GX the the words, you DexCom these time. the [indiscernible] think helpful just and think that understand is just just as of more those if now. I kind of Do is margin a intermediate does are GX You headed trail the term would you

Jereme Sylvain

Yes.

we is on about So how of about a maybe can also think cost I calls I'll thinking from from operating make because think I little is important perspective. that from help service which then on model, some think comment kind there, maybe what that the margin I'll product. about the margin. we're And And talk of the we bit the will how

today, So as GX. think more you about the of than product costs the as it itself, GX, just

out, or will And course a this out into kind whether get eventually the of models year to sensor, bent days, of XXXX. so XX we over we kind as or exit XX of $XX expect LRP as your XXXX it's -- you expect laid to get flip. the early kind of that And down of irrespective we

feel of get kind gives each for sensor. So some where we'll you that to of cost the

the whether the the it's It's software, sensor, whether DexCom the support Series. is about G the in ultimately the it the that it's cost, it's ONE it. Stelo, the Now same models, then course, service R&D, each investment change hardware or of then, the whether and support models

software and have most you into then also but in the And of all model reimbursement, have service so work the put Series highest will the think highest investment the will it the as about and otherwise. Series, that G the G we

was able into model. thus, XX-day that the Stelo and a a play bit with DexCom then warranty we And ONE And reduce associated is of little form more factor. then service of cost in the to burden a some that. different are the support

a from helpful time. that's through perspective over so And gross you as margin think that

profile. way I So about the that's cost to the think think

maybe haven't we're obvious at this can't we point. the how about so specific margin of give it. the you at We necessarily pretty Stelo point, launched Otherwise, this price thinking

as time, way as think levers I opportunities there's opportunities help that Stelo. there there with align -- lines some product more think will the out, that to DexCom product, time. its in about and you comes starting over a to real drive where here XX-day G through then real those as Series think profitability. XX-day I it But models. are the And continue But over ONE makes Again, a

of you least So of giving of each it wearing for not context. gives gives differentiate P&L I and some cost levers the course, these. a at of each the but context you and I'm one OpEx hardware across I some service costs I and models on you think realize that them. all one. the days there's at then, hope we

Operator

And turn to call the gentlemen, time, this ladies would I Kevin like remarks. closing Mr. for and back at to Sayer

Kevin Sayer

topics. talk a in and It's But history. remarkable competitors our important up to I during today, guidance truly focus as Thank technologies, to and which whole calls we you really future much. percentages year want very is easy earnings engaging margins about very these the financial host most of wrap XXXX, on

than more XXX,XXX new numbers over of active a Let's in Asia without and, organic GX user in review a course, missing all up world. revenue our $XXX base, launching beat $X again, the billion growth, plant customers in in our these product standing EBITDA, million

best-in-class accomplishment, beyond. foundational to it doesn't these While is technology and exceptional going and types of without fundamental happen people above

are, So we -- DexCom well we're more everybody. our close XX,XXX Thanks, I want out I the now employees thank to incredibly than guess world, done. XXXX. around we

Operator

and this you concludes We participation. call. for today's thank gentlemen, Ladies your

disconnect. now may You

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