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DexCom Inc. (DXCM)
Q4 2007 Earnings Call
March 11, 2008 4:30 pm ET
Terry Gregg - President and CEO
Jess Roper - Interim CFO
Steve Pacelli - VP of Corporate Affairs
Tom Gunderson - Piper Jaffray
Sara Michelmore - Cowen & Company
Ben Andrew - William Blair
Bill Plovanic - Canaccord Adams
Mimi Pham - JMP Securities
Good day, everyone, and welcome to today's DexCom fourth quarter and full year 2007 earnings results conference call. (Operator Instructions)
At this time, for opening remarks, I'd like to turn the call over to Mr. Terry Gregg, President and CEO. Please go ahead, sir.
Previous Statements by DXCM
» DexCom, Inc. Q4 2008 Earnings Call Transcript
» DexCom Inc. Q3 2008 Earnings Call Transcript
» DexCom Inc. Q2 2008 Earnings Call Transcript
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 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 publicly or revise these forward-looking statements for any reason. Terry?
Thanks, Steve. I'll give you a brief idea of the agenda today. We are going to go through the financial review, Jess Roper our Interim CFO is going to present the data. Next, commercialization update, followed by our partnership update, the development and regulatory update, remarks on our in-hospital continuous glucose monitoring, give you a brief preview and review of what we are doing in the reimbursement side and summarize and conclude the call. Jess?
Great, thank you, Terry. Dexcom reported revenues of $4.6 million for the year ended 2007, compared to $2.2 million in 2006. Sequentially, revenues increased 25% from the third quarter of 2007, and totaled $1.5 million for Q4. We added approximately 840 new customers during Q4.
As of December 2007, we have upgraded over 1200 first generation three-day customers to our second generation Seven System. Sensor revenues were up 39% sequentially from Q3. A small portion of our Q4 sensor sales include first generation three-day sensors. We anticipate the sales of these first generation sensors to end near the later part of the first quarter of 2008.
Cost of sales for the year ended 2007 totaled $12.7 million, compared to $11million in 2006. The increase was primarily due to greater product sales, and included additional fixed overhead spending. Our gross margin loss for 2007 was $8.1 million, compared to a loss of $8.8 million in 2006.
Research and development expense decreased $3.3 million to $16.1 million for 2007, compared to $19.4 million in 2006. Changes in R&D expense included lower tooling, facilities, and share based compensation costs.
SG&A expenses totaled approximately $22 million in 2007, compared to $21 million in 2006. The increase was primarily attributed to $3.5 million additional selling related costs, as we incurred such cost for full 12 months in 2007, compared to lower levels incurred throughout 2006, when we were building our sale force. The $3.5 million increase in selling related cost was partially offset by $2.4 million in lower marketing cost in 2007
Net interest income totaled approximately $800,000 for 2007 compared to $2.7 million in 2006. The decrease in net interest income was due to additional interest expense related to the $60 million in convertible senior notes that we issued in March of 2007. Our net loss was down slightly from the prior year and totaled $45.9 million in 2007, compared to $46.6 million in 2006. There was approximately $9 million of non-cash expense related to share based compensation, depreciation, and amortization in 2007, which was up from $8.6 million in 2006.
We ended the year with $64 million in cash and marketable securities, and working capital of $59 million. During the year we invested $3.5 million in capital equipment and facilities to support our business. In January of 2008 we amended our equipment line, which allows us to borrow an additional $3 million for the purchase of equipment in other related items.
I would like to now turn it back to our CEO and President, Terry Gregg.
Thanks, Jess. As we near the end of our first quarter of 2008, we continue to be extremely pleased with the performance of the Seven, our second generation continuous glucose monitoring system. We believe that Seven is proving to be the industry leading CGM product with noticeable performance benefits and greater ease-of-use for our patients versus our competition. We believe that Seven continues to create the positive experiences for patients and healthcare professionals, that we need to build this emerging category.
Highlighting some key performance metrics for Q4 and full year 2007, as Jess mentioned, revenue grew 25% sequentially from Q3 to Q4, and was up a 113% from 2006. And adding approximately 840 new customers in the fourth quarter, we continue to see an increase in the number of new patients added in our key accounts.