DexCom, Inc. (DXCM)
Q1 2013 Earnings Call
May 1, 2013 4:30 PM ET
Terry Gregg – CEO
Steve Pacelli – EVP, Strategy and Corporate Development
Kevin Sayer – President and COO
Tom Gunderson – Piper Jaffray
Ben Andrew – William Blair
Bill Plovanic – Canaccord
Jayson Bedford – Raymond James
Mimi Pham – ABR Healthco
Suraj Kalia – Northland Securities
Danielle Antalffy – Leerink Swann
Robert Marcus – Leerink Swann
Greg Simpson – Wunderlich Securities
Previous Statements by DXCM
» DexCom's CEO Presents at Barclays Global Healthcare Conference (Transcript)
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I would now turn the call over to Mr. Terry Gregg. Mr. Gregg, you may begin.
Thank you, operator, and thanks for joining us for this first quarter 2013 conference call. I’m going to ask Steve Pacelli to go read our Safe Harbor statement. Steve?
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 the section Risk Factors and elsewhere in our Annual Report on Form 10-K, our quarterly reports on Form 10-Q and our other reports filed with the SEC. We undertake no obligation to update publically or revise 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 to results prepared in accordance with GAAP. Terry?
Thank you, Steve and joining me today are Kevin Sayer, our President and Chief Operating Officer; Jess Roper, our Chief Financial Officer; and Steve Pacelli, whom you’ve just heard from, our Executive Vice President of Strategy and Corporate Development.
As we just held our Q4 2012 earnings call in late February, today’s call will be largely a financial update with Kevin reviewing our first quarter 2013 financial results providing a brief operations update. I will then follow with some concluding thoughts. Kevin?
Thank you, Terry. I will start with the financial update. DexCom generated $27.8 million in product revenue for the first quarter of 2013 compared to $18.6 million for the same quarter in 2012, a $9.2 million or 49% increase.
Sequentially, product revenue for Q1 of 2013 decreased 12% from the prior quarter, which is consistent with the 11% decrease we experienced from Q4 2011 to Q1 2012. The seasonality is not unexpected, as annual insurance deductibles reset and flexible spending accounts are largely unfunded in Q1 requiring patient to spend more out of pocket dollars to obtain our products.
Total revenue for the first quarter of 2013 was $29.6 million compared to $20.1 million during the same quarter in 2012. Our product gross profit totaled $15.4 million, generating a product gross margin of 55% for Q1 2013 compared to a product gross profit of $9.0 million and a product gross margin of 49% for the same quarter in the prior year.
As a reminder, product gross margin continues to be affected by a number of factors related our G4 Platinum launch, including the impact of our $399 in-warranty upgrade program which expired at the end of January, continued manufacturing scale-up activities for G4 Platinum, and the continued support of our SEVEN PLUS sensor manufacturing operations.
Some final thoughts on our product revenues and our gross profits during Q1. Our split between consumable and durable revenues was again slightly more heavily weighted to durables in Q1 due to existing patients upgrading to the G4 Platinum.
With approximately 30% of our product revenues generated by sales of G4 Platinum hardware and approximately 70% generated by sales of both SEVEN PLUS and G4 Platinum sensors. ASP for sensors has increased slightly to a range of approximately $65 to $70 per sensor and the ASP for our hardware continued at approximately $800 to $850 for starter kit.
Our international business performance remained consistent in Q1 and continues to represent between 5% and 10% of product revenue, but remained somewhat overshadowed by our strong domestic growth. Research and development expense totaled $9.3 million for Q1 of 2013 which would slight compared to $9.4 million in Q1 of 2012.
Sequentially, R&D expense was up 7% as a result of increased spending on the development of our mobile platforms. We continue to expect R&D expense for the full – we continue to expect that R&D expense for the full year would be relatively flat versus 2012.
However, we will always consider adjusting our R&D spend to take advantage of near term opportunities such as advanced integrated pump CGM systems, mobile and cloud base data platforms, system performance improvements, all of the elements of our GEN5 system and continued research on our G6 sensor platform.
Selling, general and administrative expense totaled $18.1 million in Q1 of 2013 compared to $15.4 million during the same quarter in 2012. The increased primarily related to sales, administrative, and IT cost to support revenue growth.