Group 1: Market Overview - Equity markets started 2025 positively, but the Nasdaq Composite index has declined by 8% since the beginning of the year [1] - Uncertainty remains regarding future market movements, with potential for quick recovery or a bear market due to global macroeconomic tensions [1] Group 2: DexCom - DexCom's stock dropped by 37% in 2024 and is down by 8% in 2025, but the company's long-term prospects remain attractive [3][10] - DexCom is a leader in the continuous glucose monitoring (CGM) market, with devices like the G7 that help diabetes patients manage blood glucose levels [4] - The percentage of CGM users in the U.S. is still lower than the covered population, indicating significant growth potential for DexCom [5] - Only 1% of diabetes patients worldwide use CGM devices, suggesting ample opportunity for market expansion [6] - The recent launch of the over-the-counter CGM option, Stelo, adds 25 million type 2 diabetes patients not on insulin to DexCom's market [8] - Increased adoption of CGM devices is expected to drive compatibility with other diabetes management tools, enhancing DexCom's competitive advantage [8][9] Group 3: Vertex Pharmaceuticals - Vertex Pharmaceuticals has seen a 27% increase in share price since the beginning of 2025, defying market trends [11] - The company has received approval for two new medicines, Alyftrek for cystic fibrosis and Journavx, a non-opioid oral pain inhibitor [11][12] - Journavx targets a market of approximately 80 million patients in acute pain, with potential for blockbuster status [13][14] - Vertex's pipeline includes Casgevy, a gene-editing treatment for rare blood diseases, and ongoing development for a potential functional cure for type 1 diabetes [15][16] - The company's innovative capabilities and strong pipeline are expected to drive growth well into the 2030s [17]

Core Viewpoint - DexCom received a warning letter from the FDA due to deficiencies in manufacturing processes and quality management systems, but it does not restrict the company's operations or require product recalls [1][2] Regulatory Actions - DexCom is committed to corrective measures and continuous updates to the FDA, asserting no material impact from the warning letter and that production and distribution remain unaffected [2] - Further regulatory actions could exacerbate existing supply-chain issues, as DexCom has faced challenges related to inventory management and manufacturing disruptions [3] Competition Landscape - DexCom's market share in the durable medical equipment (DME) channel is expected to remain stable, but rising competition from larger rivals like Abbott and Roche poses a concern [4] - Abbott's FreeStyle Libre CGM system has seen significant growth, with sales exceeding $1.8 billion in Q4 2024, a 22.7% increase year-over-year, and projected annual sales of $10 billion by 2028 [5] - Roche's Accu-Chek SmartGuide, recently receiving CE Mark approval, offers advanced features and is set to launch in select European countries [6] Analyst Perspectives - Analysts expect minimal long-term impact from the FDA warning, referencing iRhythm Technologies as a precedent for minimal disruption after similar warnings [7] - DexCom's revenue guidance for 2025 is projected at $4.6 billion, an increase from $4 billion in 2024, with additional remediation costs anticipated but not expected to significantly impact margins [7] Market Position - DexCom holds approximately 74% of the U.S. CGM market share and has strengthened its position through strategic initiatives, including FDA approval of the first over-the-counter CGM in March 2024 [8] - The company has invested $75 million in smart-ring technology to integrate CGM with wearable health technology, reinforcing its long-term growth strategy [8]

Raymond James Institutional Investors Conference 2 Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "anticipates," "believes," "could," "seeks," "estimates," "targets," "guidance," "expects," "intends," "may," "plans," "potential," "predicts," "prospects," "projects," "should," "will," "would" or similar expressions and the negatives of those terms, although not all forward-looking statements contain these identifying words. Forward-looki ...

Company Overview - DexCom, Inc. is focused on continuous glucose monitoring for diabetes management, emphasizing its personal mission to address the health crisis associated with diabetes [3][4]. Industry Context - Diabetes is recognized as an escalating health and economic crisis, impacting many individuals and families, highlighting the importance of effective therapies and monitoring solutions [5].

Financial Performance - Total revenue for fiscal 2024 reached $4.03 billion, an increase of 11% from 2023[439] - Gross profit for fiscal 2024 was $2.44 billion, up 7% from the previous year[439] - Operating income for fiscal 2024 was $600 million, reflecting a slight increase of 0.4% from 2023[439] - Net income for fiscal 2024 was $576.2 million, representing a 6% increase compared to 2023[439] - Operating cash flow for fiscal 2024 was $989.5 million, up 32% from the previous year[439] - Revenue from the United States accounted for 72% of total revenue in fiscal 2024, amounting to $2.89 billion, a 10% increase from 2023[449] - International revenue reached $1.14 billion in fiscal 2024, up 15% from the previous year[449] - For the twelve months ended December 31, 2024, the company reported a net income of $576.2 million, an increase from $203.8 million in the previous year, representing a growth of approximately 183%[477] Expenses - Research and development expenses for fiscal 2024 were $552.4 million, a 9% increase from 2023[441] - Selling, general and administrative expenses totaled $1.29 billion, reflecting an 8% increase from the previous year[441] - Research and development expenses increased by $37.6 million, driven by higher headcount, clinical trials, and software costs, reflecting the company's commitment to future growth and product development[453] - Selling, general and administrative expenses rose by $92.3 million, mainly due to increased advertising, compensation, software, and travel expenses[453] Cash Flow and Capital Management - Cash, cash equivalents, and short-term marketable securities totaled $2.58 billion as of December 31, 2024, a decrease of $144.7 million from $2.72 billion as of December 31, 2023[475] - Positive cash flows from operating activities amounted to $989.5 million for the twelve months ended December 31, 2024, with expectations for continued positive cash generation[459] - The company had a working capital ratio of 1.47 and a quick ratio of 1.22 as of December 31, 2024, indicating sufficient current assets to cover short-term liabilities[463] - As of December 31, 2024, the company had a debt-to-assets ratio of 0.38, suggesting total assets are adequate to cover both short-term and long-term debts[466] - The company received net proceeds of $1.19 billion from the 2025 Notes offering and $1.23 billion from the 2028 Notes offering, with plans to use the proceeds for general corporate purposes and potential acquisitions[460] - The company anticipates significant capital expenditures in the next year to invest in equipment and manufacturing facilities to support growth[463] - Capital expenditures for the year were $358.8 million, up from $236.6 million in the previous year, indicating a growth of approximately 51.6%[477] - The company generated $248.1 million in net proceeds from marketable securities, contrasting with $253.0 million in net purchases of marketable securities in the prior year[477] - The company issued $1.23 billion in senior convertible notes, net of issuance costs, compared to $26.6 million in proceeds from the issuance of common stock under employee stock plans in the previous year[477] - The company purchased $750.0 million in treasury stock, while the previous year saw $688.7 million in similar purchases, reflecting a significant commitment to returning capital to shareholders[477] Product Development and Market Expansion - The company launched the Dexcom G7 in 2023 and Stelo, the first over-the-counter glucose biosensor in the U.S., in August 2024[422] - Revenue for the twelve months ended December 31, 2024, increased primarily due to a sales volume increase from approximately 500,000 - 600,000 net new users added to the worldwide customer base, with disposable sensor revenue comprising approximately 95% of total revenue[451] Risk Management - The company is exposed to foreign currency exchange risk due to international operations, which could adversely affect financial results, including income and losses[483] - The company utilizes foreign currency forward contracts to hedge monetary assets and liabilities, with these contracts generally maturing in one month[485] - The company maintains a portfolio of cash equivalents and short-term investments to preserve capital while maximizing income from investments, with no material exposure to interest rate risk[479] - The company translates financial statements of international subsidiaries into U.S. dollars, affecting net income only upon sale or liquidation of the underlying investment[484] Profitability Metrics - Gross profit margin percentage decreased in 2024 compared to 2023, primarily due to product and channel mix changes, higher freight costs, and non-cash charges totaling $43.3 million related to inventory[451] - The company experienced a net increase of $108.8 million in changes of working capital balances compared to a net increase of $3.2 million in the prior year[477]

Group 1: Company Performance - Dexcom, Inc. reported a fourth-quarter revenue increase of 8% year-over-year to $1.114 billion, surpassing the analyst consensus estimate of $1.104 billion [1] - U.S. revenue grew by 4%, while international revenue increased by 17% on a reported basis and 19% on an organic basis [1] - Dexcom reaffirmed its FY25 guidance for revenue of $4.60 billion, with an adjusted gross profit margin of around 64%–65% and an adjusted operating margin of 21% [1] Group 2: Legal Developments - Abbott Inc. reached an agreement with Dexcom to settle all outstanding patent disputes related to continuous glucose monitoring products, dismissing all pending cases worldwide [2] - The settlement includes a provision that prohibits both parties from litigating patent, trade dress, and design rights disputes for the next 10 years, with no financial payments involved [2] Group 3: Analyst Insights - Analysts note that Dexcom's market share remained steady in Q4, with productivity improvements expected following a 40% expansion of the commercial team last year [3] - Multiple growth drivers are anticipated to boost Dexcom's performance in 2025, sustaining revenue and earnings growth in the long term [4] - Dexcom's long-term growth is supported by an expanding product lineup, including G7, Dexcom One, and Stelo, with opportunities to reach new patient groups [5] Group 4: Competitive Landscape - Competition from major players like Medtronic and Abbott could impact Dexcom's expansion by capturing shares of new or existing patients in the continuous glucose monitoring market [6] - Analysts maintain varying ratings on Dexcom, with Morgan Stanley raising the price target from $75 to $82 and Canaccord Genuity raising it from $99 to $103 [6] Group 5: Stock Performance - Dexcom's stock price increased by 6.22% to $89.32 as of the last check on Friday [7]

Core Insights - DexCom, Inc. reported weaker-than-expected earnings for Q4, with earnings of $0.45 per share, missing the analyst consensus estimate of $0.50 per share, while quarterly sales of $1.140 billion exceeded the consensus estimate of $1.104 billion [1] - The company plans to expand its US commercial sales force and has launched two major products, Dexcom One+ and Stelo, while also submitting the G7 15-day product to the FDA [2] - DexCom reaffirmed its FY25 guidance, projecting revenue of $4.60 billion, an adjusted gross profit margin of around 64%-65%, and an adjusted operating margin of 21% [2] Stock Performance - DexCom shares increased by 0.3%, closing at $84.09 following the earnings announcement [3] - Analysts have adjusted their price targets for DexCom, with Morgan Stanley maintaining an Equal-Weight rating and raising the target from $75 to $82, while Canaccord Genuity maintained a Buy rating and increased the target from $99 to $103 [4]

Core Insights - DexCom, Inc. reported fourth-quarter 2024 adjusted earnings per share (EPS) of 45 cents, missing the Zacks Consensus Estimate of 50 cents by 10% and down from 50 cents in the prior-year quarter [1] - Total revenues grew 7.6% year over year to $1.11 billion, driven by strong new patient performance and expanded availability of its G7 and DexCom ONE+ product platforms [2] - The company expects 2025 revenues to be $4.6 billion, implying 14% year-over-year growth, in line with the Zacks Consensus Estimate [10] Revenue Performance - Total revenues increased by 7.6% (8% on an organic basis) to $1.11 billion year over year [2] - Sensor and other revenues, which account for 96% of total revenues, rose 13% year over year to $1.07 billion, while hardware revenues decreased by 49% year over year to $45 million [5] - U.S. revenues (72% of total revenues) increased 4.4% year over year to $802.8 million, and international revenues (28%) improved 17.1% (19% on an organic basis) year over year to $310.7 million [6] Margin Analysis - Adjusted gross profit totaled $661.2 million, down 0.4% from the prior-year quarter, with an adjusted gross margin of 59.4%, down 480 basis points year over year [7] - Adjusted operating margin was 18.8%, down 460 basis points year over year, with total adjusted operating expenses of $209.5 million, down 13.7% from the prior-year period [8] Financial Position - The company exited the fourth quarter with $2.58 billion in cash, cash equivalents, and marketable securities, compared to $2.49 billion in the third quarter [9] - Total assets amounted to $6.48 billion, up sequentially from $6.35 billion [9] Strategic Initiatives - DexCom's active customer base reached over 2.8 million users worldwide, up 25% from the 2023 level, driven by strategic initiatives including an expanded sales force and new product launches [12] - The company added more than 50,000 new U.S. prescribers, enhancing access to its CGM technology and driving record new patient starts in the fourth quarter [13] - Stelo has contributed significantly to growth, with over 140,000 users, particularly among type 2 diabetes and prediabetes populations [14] Market Expansion - International revenues are driven by expansion in markets such as France and New Zealand, with broader reimbursement coverage achieved [15] - DexCom is focusing on increasing basal insulin coverage across other markets, with early wins in Germany, Canada, Australia, and a growing presence in Japan [15] Future Outlook - The company expects adjusted gross margin to be 64-65% and adjusted operating margin to be approximately 21% for 2025 [11] - Key plans include the rollout of a 15-day wear G7 system, improved manufacturing efficiencies, and further penetration into the non-insulin diabetes market [16] - Reimbursement expansion is crucial, with coverage extending beyond insulin users, potentially granting access to over 5 million people with type 2 diabetes not on insulin [17]

Financial Data and Key Metrics Changes - The company reported fourth quarter organic revenue growth of 8% compared to Q4 2023, bringing full-year organic revenue growth to 12% [10][29] - Worldwide revenue for Q4 2024 was $1.11 billion, up from $1.03 billion in Q4 2023, representing an 8% increase [29] - US revenue totaled $803 million for Q4 2024, compared to $769 million in Q4 2023, reflecting a 4% increase [30] - International revenue grew 17% to $311 million in Q4, with international organic revenue growth at 19% [32] - Gross profit for Q4 was $661.2 million, or 59.4% of revenue, down from 64.2% in Q4 2023, impacted by a $21 million non-cash charge [34] - Operating income was $209.5 million, or 18.8% of revenue, compared to $242.7 million, or 23.5% of revenue in Q4 2023 [36] - Net income for Q4 was $177.8 million, or $0.45 per share, with cash and cash equivalents at approximately $2.6 billion [37] Business Line Data and Key Metrics Changes - The company ended 2024 with over 2.8 million customers globally on its G series and D series products, a 25% increase from 2023 [12] - The US prescriber base grew by more than 50,000 over the past year, contributing to record new customer starts [13][15] - The DME channel share remained stable during Q4, with expectations for improvement in 2025 [31] Market Data and Key Metrics Changes - The company achieved significant reimbursement wins, with two of the three largest PBMs covering CGM for anyone with diabetes as of January 2025 [19] - By the end of 2025, the company expects coverage for over five million people with type 2 diabetes who are not on insulin in the US [19] - Internationally, the company secured basal coverage for its One Plus system in France and expanded coverage in New Zealand [25][33] Company Strategy and Development Direction - The company is focused on broadening its commercial reach, launching new products, and advancing CGM reimbursement globally [11] - The launch of the over-the-counter product, Stella, aims to empower more individuals to take control of their health, with over 140,000 users in the first four months [21][23] - The company is leveraging generative AI technology to enhance the Stella platform and improve customer engagement [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2025 with a stronger position to capitalize on growth opportunities [11] - The company anticipates total revenue of $4.6 billion in 2025, representing a 14% growth, with expectations for improved gross margins [38][39] - Management highlighted the importance of navigating the evolving coverage landscape and the growing economic argument for incorporating CGM earlier into care plans [16][18] Other Important Information - The company is actively pursuing coverage for the remaining 20 million type 2 non-insulin users in the US [20] - The FDA review for the fifteen-day G7 system is nearing completion, with expectations for a second-half launch [80] - The company is developing the G8 platform, which will be smaller and more capable, with multi-analyte capabilities [88][90] Q&A Session Summary Question: Status of Salesforce and DME issues - Management reported significant progress in addressing Salesforce productivity and DME channel issues, with improved metrics and record new starts [47][49] Question: Volume versus revenue gap in the US - Management indicated that the gap between volume and revenue is expected to converge throughout 2025, with improvements anticipated as rebate dynamics stabilize [55][56] Question: Cadence of growth through the year - Management expects a stable cadence of improvement throughout 2025, with a typical seasonal decline in Q1 but overall growth in the second half of the year [62][66] Question: Type 2 coverage impact on revenue - Management confirmed that the unit economics remain similar across disease states, with expectations for strong utilization and retention rates among newly covered type 2 patients [72][76] Question: G7 fifteen-day sensor approval process - Management expressed confidence in receiving FDA approval soon, with plans for a second-half launch and integration with pump partners [80][81] Question: Expectations for record new patient numbers in 2025 - Management anticipates a record year for new patients, driven by continued penetration in insulin-intensive segments and new type 2 coverage [104][110] Question: Assumptions behind 2025 growth guidance - Management provided insights into the conservative assumptions behind the 14% growth guidance, emphasizing the importance of stable DME share and the potential impact of new product launches [121][126]

Core Insights - DexCom reported mixed earnings for Q4 2024, with revenue growth of 8% to $1.114 billion, slightly exceeding analyst expectations, while Non-GAAP EPS fell to $0.45, below the forecast of $0.50 [2][3][6] Financial Performance - Revenue for Q4 2024 reached $1.114 billion, an 8% increase from $1.035 billion in Q4 2023, surpassing the estimate of $1.112 billion [3][6] - Non-GAAP EPS was $0.45, a 10% decline year-over-year from $0.50 in Q4 2023, falling short of the expected $0.50 [3][6] - Non-GAAP operating income decreased by 13.7% to $209.5 million compared to $242.7 million in Q4 2023 [3][6] - Gross profit margin fell to 59.4%, down 4.8 percentage points from 64.2% in Q4 2023 [3][9] Business Overview - DexCom specializes in continuous glucose monitoring systems, focusing on diabetes management with products like the G6 and G7 systems [4] - The company is investing in product development, including AI advancements, to enhance its offerings and market reach [4][7] Strategic Developments - The introduction of the G7 system and the Dexcom Stelo aims to target non-insulin-using diabetes patients, expanding the product line [5][7] - Significant international revenue growth of 17% was noted, with a 19% organic growth increase, indicating successful market expansion [6][8] - A strategic partnership with ŌURA was announced to integrate glucose data into a broader health management ecosystem [8] Future Outlook - Management anticipates a revenue growth of 14% for fiscal year 2025, with a Non-GAAP operating margin target of around 21% [10] - The approval and expected release of the G7 15-day system in the U.S. is seen as a key milestone for future performance [10]