Q4 2012 Results Earnings Call
February 21, 2013 5:00 p.m. ET
Terry Gregg - CEO
Kevin Sayer - President and COO
Steve Pacelli - EVP, Strategic and Corporate Development
Jess Roper - VP and CFO
Ben Andrew - William Blair
Bill Plovanic - Canaccord
Thom Gunderson - Piper Jaffray
Chris Cooley - Stephens
Danielle Antalffy - Leerink Swann
Mimi Pham - ABR Healthco
Stephen Lichtman - Oppenheimer
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Thank you, operator, and thanks for joining us today for our Q4 and full year 2012 conference call. I’m going to ask Steve Pacelli to go through the Safe Harbor statement. Steve?
Sure, thanks Terry. Some of the statements that we will make in today's call may constitute forward-looking statements. These statements reflect management's expectations about future events, operating plans, and performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties.
A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under “risk factors” and elsewhere in our annual repost on Form 10-K, our quarterly reports on our Form 10-Q, and other reports filed at SEC. We undertake no obligation to update publicly or revive these forward-looking statements for any reason.
Additionally, we will discuss certain financial information that has not been prepared in accordance with GAAP with respect to our cash operating loss. This non-GAAP information is provided to enhance your overall understanding of our current financial performance. The presentation of this additional information should not be considered in isolation, or as a substitute for results or superior results prepared in accordance with GAAP.
Thanks, Steve. Joining me today are Kevin Sayer, our president and chief operating officer; Jess Roper, our chief financial officer; and you just heard from Steve Pacelli, our executive vice president of strategy and corporate development.
Our agenda for today’s call is fairly typical. I will provide a brief update on our G4 PLATINUM launch activities, Kevin will review our detailed fourth quarter 2012 financial results and provide our customary operations update, and then I will offer some concluding thoughts.
As we discussed during our third quarter 2012 earnings call, on October 5, 2012 we received approval from the Food and Drug Administration to begin commercially marketing our fourth-generation CGM system, the DexCom G4 PLATINUM continuous glucose monitoring system.
The U.S. launch of G4 PLATINUM has generated a higher level of excitement among patients, partners, and physicians than any of our previous commercial launches. We began taking orders for G4 PLATINUM immediately upon approval, and we completed our initial G4 PLATINUM shipments to patients before the end of October 2012. While our initial focus was on processing orders for new patients, we also successfully upgraded a fair number of existing SEVEN Plus users to the G4 PLATINUM in Q4.
Also during Q4, approximately 60-65% of PLATINUM starter kits shipped went to new patients, while the balance went to existing SEVEN Plus patients, including patients who took advantage of our $399 in warranty upgrade promotion; patients who purchased the SEVEN Plus in September 2012, who were entitled to a free upgrade; and SEVEN Plus patients who were out of warranty and were processed through normal reimbursement channels.
To add some color to the new patients, I note that we had a 50% increase in kits shipped to new patients in Q4 2012, versus Q4 2011. And we sold more kits to new patients in the U.S. alone in Q4 2012 than the total number of kits we sold in Q4 2011.
The commercial introduction of G4 PLATINUM continues to exceed our expectations. Our pipeline of new patient opportunities remains robust. Call volumes into customer service remain strong, and in spite of typical first quarter seasonality, first quarter sales through late February have been solid.
More than ever, we believe G4 PLATINUM sets a new standard for sensor performance. It is the most accurate and reliable continuous glucose sensor ever commercialized, and we believe this system will accelerate category adoption of CGM.
Now, before I’ll turn the call over to Kevin Sayer, I’m pleased to share that we have yet again delivered on a significant operational milestone at DexCom. Just this week, we received approval of an expanded indication for our CE mark to include pediatric patients and expect to update our product labeling and begin marketing to pediatric patients in Europe before the end of Q1.
Additionally, as promised, we have filed a PMA supplement with the Food and Drug Administration seeking a pediatric indication for the G4 PLATINUM here in the U.S.. I would like to acknowledge the hard work of the people at DexCom, particularly our outstanding clinical and regulatory teams who have taken us one step closer to enabling DexCom to care for all people with diabetes.
And with that, I would like to turn the call over to Kevin Sayer.
Thank you, Terry. I’ll start with the financial updates. DexCom generated $31.7 million in product revenue from the first quarter of 2012 compared to $20.9 million for the same quarter in 2011, a $10.8 million, or 52%, increase. We note the product revenue for Q4 includes a $1.2 million reversal of a sales returns reserve we recorded in Q3 relating to our 30-day money-back guarantee on DexCom hardware, or the so-called September patients.