Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DexCom Inc (DXCM, Financial) reported a 15% growth in worldwide revenue for Q2 2024, reaching $1.004 billion compared to $871.3 million in Q2 2023.
- The company expanded its direct-to-Apple Watch connectivity with G7, launching in the U.S. and several international markets.
- DexCom Inc (DXCM) introduced a stronger adhesive for its products and expanded G7 Bluetooth connectivity range by more than 65%.
- The company received coverage in France for people with type two diabetes on basal insulin and began serving these customers in June.
- DexCom Inc (DXCM) announced a share repurchase program of up to $750 million, reflecting confidence in its financial position.
Negative Points
- DexCom Inc (DXCM) lowered its full-year revenue guidance to 11% to 13% organic growth due to several near-term trends.
- The company experienced lower than expected new customer starts in the U.S. due to sales force realignment and expansion.
- U.S. revenue per customer decreased faster than expected due to rebate eligibility and channel mix dynamics.
- International performance was lighter than expectations, with category growth softening in certain geographies.
- The company saw a significant impact from increased pharmacy eligibility changes, which lowered revenue per customer.
Q & A Highlights
Q: Guidance has moved down significantly. Can you provide more color on the reasons behind this? Are there other factors at play beyond the U.S. sales force expansion?
A: Kevin Sayer (CEO): The primary factors include a significant shortfall in new patient starts, disruptions from the U.S. sales force expansion, and faster-than-expected rebate eligibility for G7. Additionally, we lost market share in the DME channel, which impacted our revenue per customer. These factors combined led to the downward revision in guidance.
Q: What steps are being taken to address the issues with the U.S. sales force and DME channel?
A: Kevin Sayer (CEO): We are refocusing on our relationships with DME distributors and improving our execution in that channel. We are also reallocating investment dollars to areas that drive the most impact. The sales force disruption is being addressed, and we expect stabilization by Q3 and full productivity by early 2025.
Q: Can you explain the rebate eligibility issue and why it is temporary?
A: Jereme Sylvain (CFO): Rebate eligibility increased faster than expected due to quicker adoption of G7. This is a timing issue, as more patients became eligible for rebates sooner than planned. We expect this impact to peak in Q3 and normalize by Q4.
Q: Are there any changes in patient attrition rates?
A: Kevin Sayer (CEO): Our retention rates remain consistent with our expectations. We continue to see high retention among Type 1 patients using automated insulin delivery systems, with lower retention rates as we move down the acuity curve.
Q: How do you view the long-term growth potential given the current challenges?
A: Kevin Sayer (CEO): We remain bullish on the long-term growth potential. We are addressing the current challenges and expect to see improvements by the end of the year. Our expanded sales force and new product launches, such as Stella, position us well for future growth.
Q: What is the expected contribution from the Stella launch in Q3?
A: Kevin Sayer (CEO): The contribution from Stella in Q3 will be minimal, with most of the revenue expected in Q4. We anticipate Stella to contribute approximately 1% of our total revenue for 2024.
Q: How do you plan to improve execution in the international markets?
A: Kevin Sayer (CEO): We are focusing on expanding coverage and market access, particularly for Type 2 diabetes patients. We recently received coverage in France for basal insulin users and are working on similar expansions in other countries. We also aim to take market share with our superior product offerings.
Q: Are there any competitive pressures affecting your performance?
A: Jereme Sylvain (CFO): Competition is always a factor, but it is not a new dynamic. Our primary focus is on improving our execution and ensuring we get our fair share in the market. We believe our product quality and expanded sales force will help us achieve this.
Q: How do you view the potential for market saturation in the U.S.?
A: Kevin Sayer (CEO): We do not believe we are near market saturation. There is still significant runway for growth, particularly in the Type 2 diabetes segment. Our focus is on improving access and creating a compelling experience for all patients.
Q: What is the status of the extended-wear product?
A: Kevin Sayer (CEO): We are committed to launching a 15-day product in 2025, and progress is on track. The Stella product will also feature a 15-day wear period, and we will learn from its launch to further refine our offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
