The operator introduces the Dexcom Third Quarter 2023 Earnings Release Conference Call and turns it over to Sean Christensen, Vice President of Finance and Investor Relations. Kevin Sayer, Dexcom's Chairman, President and CEO, will discuss recent highlights and strategic initiatives, followed by a financial review from Jereme Sylvain, Chief Financial Officer. The call will then be opened for questions, with analysts limited to one question. A Safe Harbor statement is also reviewed, stating that some statements may constitute forward-looking statements and are subject to risks and uncertainties.

Dexcom reported strong third quarter results with 26% organic revenue growth compared to the same period in 2022. The company is experiencing a period of excitement and growth, with increased access and enthusiasm for their products. The rollout of G7 in the US is expanding and attracting new customers and prescribers due to its accuracy, simplicity, and affordability.

In the third paragraph, the company reports that there has been a significant increase in the number of physicians prescribing Dexcom products since the launch of G7. The new software platform has also improved the value proposition for all types of patients, with frequent updates and improved features. The company is constantly working to improve the customer experience and expand coverage for Dexcom CGM, with Medicare coverage now available for a larger population.

The company is seeing strong growth in commercial coverage for their products, particularly for basal-only reimbursement. They have experienced an uptick in new patient starts and record numbers in Medicare new patient starts. The company is confident in their market position, with leading center technology and gaining share across all reimbursement channels and patient segments in the US and internationally. Their product portfolio allows them to tailor offerings to meet the needs of different regions and reimbursement structures.

The paragraph discusses how DexCom has been working to secure reimbursement for their products and expand their market reach. They have recently made the decision to go direct in Japan and have presented new data at EASD to demonstrate the effectiveness of their products in various settings. DexCom's CGM is seen as a valuable tool in diabetes care and has potential for use in other areas such as pregnancy.

The paragraph discusses the importance of drugs and continuous glucose monitoring (CGM) in diabetes care. Data shows that clinicians prefer to use CGM with GLP-1 therapy for better outcomes. The company plans to launch new products and expand its impact. In the third quarter of 2023, the company reported a 27% increase in revenue compared to the same period in 2022.

The company's organic revenue, which excludes currency and non-CGM revenue, grew by 24% in the US and 30% internationally in the third quarter. This growth is attributed to the success of their G7 launch and expansion of coverage for Dexcom. The company also saw strong growth in new customer starts and gained market share in international markets. However, slower growth was seen in non-CGM business and Japan as the company transitions to direct sales. The company has decided to focus solely on CGM and diabetes technologies in Japan to improve execution in the market.

The company expects the deal to close in early 2024 and thanks their employees for their hard work. In the third quarter, their gross profit was $630 million, representing a strong gross margin performance. Operating expenses were $392 million, showing a focus on cost management. Operating income and adjusted EBITDA were also at record levels for the company. Net income for the quarter was $203 million.

The company is in a strong financial position and has announced a share repurchase program. They have also raised their revenue guidance for the year and increased their non-GAAP gross margin, operating margin, and adjusted EBITDA margin. The call is now open for Q&A.

During the earnings call, the first question was asked by Robert Marcus from JP Morgan. He congratulates the company on their fantastic quarter and asks about the contribution of the new basal indication to the US numbers and profitability. Jereme Sylvain responds by stating that the strong quarter was partially due to basal and that they are starting to see similar patterns to type two intensive. He also mentions the potential for growth in Europe as more countries start to cover for basal. Outside the US, access has created significant opportunities for growth and the company has taken actions to capitalize on this.

The company has seen significant growth in international markets due to increased access for their products. They are excited about the potential for even more growth as more coverage is established. They have been in discussions with clinical societies about expanding coverage for non-insulin users and have seen a gradual uptick in guidelines recommending CGM use. They believe that as they gather more data and conduct more studies, they can make an even stronger case for CGM use in this population. Every study they have done has shown that people using CGM have better outcomes.

The speaker discusses the company's upcoming product launch and their excitement for its potential. They also mention their adherence to medication and the positive impact it has on their industry. The speaker then addresses a question about the company's guidance and explains that the slight decrease in growth in the fourth quarter is due to historical trends and seasonality. They clarify that this does not imply any negative changes for the company's future.

The speaker, Jereme Sylvain, discusses the company's base case and guidance for the year. He mentions that the underlying trends in the business remain strong, but there may be a slight decrease in growth in Japan due to seasonality. He also mentions that basal patients are starting to ramp up, similar to how the influenza census did when they got coverage. However, there hasn't been a significant change in numbers yet, but Terry, who is also present, can provide more insight into the day-to-day interactions with patients.

Terry Lauver, along with Jeremy and Danielle, discusses the trends and excitement around basal and the intention to prescribe it from physicians. Dexcom, being the most covered CGM with the lowest out-of-pocket copay, has a benefit of being out in front of payers and healthcare providers. They also see a positive trajectory in line with their expectations. In terms of partnering with pharma companies and running studies to show the benefits of using CGM with GLP-1s, Dexcom has had discussions but the companies are currently busy. They have also discussed the possibility of conducting studies internally.

The company discussed the recent EASD Meeting where the use of new drugs and continuous glucose monitoring (CGM) in combination was a large topic of discussion. They are aware of upcoming studies that will show data on this combination in the first half of 2024. The company is also conducting their own studies and will continue to support this approach. The company is excited about the upcoming integration of G7 with AID systems, which will allow users to access the benefits of the most accurate sensor. There will be no disruption for users, as they will simply switch over to G7 once their G6 supplies are used up and they receive a new prescription.

During a conference call, a question was asked about the potential for non-insulin products in the market. The CEO, Kevin Sayer, responded by saying that they have high expectations for the non-insulin market and believe it will have a faster adoption curve compared to the intensive insulin market. He also mentioned that they are working on creating an enhanced healthcare experience for non-insulin users and are hoping to push for reimbursement and possibly create a new product category. The company is excited about this opportunity and has seen positive results from a recent study.

The management team is committed to keeping investors informed about the market for their products as they launch new ones. The company had a strong quarter with well-contained margins and operating expenses. The gross margin was higher than expected due to successful execution by the operations team. The switch from G6 to G7 products may impact gross margins in the future.

The company is in the process of transitioning to G7 and expects to achieve lower costs over time. They have raised their full year guidance for operating margin to 19%. There may be fluctuations in operating margin due to investment in growth, but the company is focused on efficiency. One analyst asked a question about G7 integration and the response was not heard, but a follow-up question was asked.

The company has made enhancements to the G7 platform, including updates to the Bluetooth capability, and these changes are compatible with the tandem pump and are already shipping globally. There are no concerns for investors as this is a normal process of continuous improvement for the company. The DME channel will only have access to this version until the end of the year.

The company has a new product that will be available in all channels soon. The buyback was done to limit dilution and to give back cash to shareholders. The company is confident in their business in the long term.

In this paragraph, the speaker discusses the company's approach to investing in their business and mentions their recent trend of investing in capabilities and purchasing stock. They also mention the complementary relationship between CGM use and GLP-1s, with the latest generation of compounds leading to even more pronounced results. The speaker credits this to the fact that physicians are prescribing CGM to patients using GLP-1s to track their progress and see the positive effects of the combination.

The speaker discusses the upcoming release of a non-insulin product and provides updates on its features and timeline. They also mention that the product is focused on helping people engage with their health and will have a different software experience from their other products.

The company is launching a product next year that is specifically designed for those who are not on insulin. It will focus on improving metabolic health and is expected to be launched in the summer of next year. The company is also looking for reimbursement options and the pricing has not been determined yet. In France, basal coverage is expected in 2024 and the annual revenue contribution from the business being spun off is estimated to be $30 million.

During a conference call, a question was asked about the company's recent increase in market share across all reimbursement channels and segments, including non-reimbursed channels. The CEO attributed this growth to the company's wide coverage and ease of use, as well as a cash pay program for their new product. Another question was asked about the potential for CGM use in non-insulin hypo at risk patients, to which the COO responded that it is still early but they have seen an increase in this market since the implementation of a CMS decision six months ago.

The company is still working on gaining coverage for their CGM product for patients with hypoglycemia. They see a lot of potential for growth in this niche market and are focusing on educating payers and healthcare professionals about the benefits of CGM use. They are also pursuing reimbursement for non-insulin using patients with type 2 diabetes and have seen positive results in studies and real-world data. The company is confident in the positive impact of their product and has heard positive feedback about its potential to improve medication adherence.

The speaker discusses the benefits of continuous glucose monitoring (CGM) for patients with diabetes and how it can help them see the effects of their medication adherence. They also mention the increasing prevalence of diabetes and the potential for CGM to reduce costs and complications. They believe that data will continue to support the use of CGM and they are confident in their ability to make a case for reimbursement.

Jereme Sylvain, responding to a question from Matt Miksic, explains that the increase in new prescribers for Dexcom's products is intentional and driven by the launch of G7 and the company's focus on simplicity and coverage. The commercial team has identified target areas and physicians to focus on, resulting in a significant number of PCPs switching to Dexcom. This has led to 18,000 incremental prescribers in the past three quarters. Jereme expresses pride in this achievement and notes that the message is getting out and having a meaningful impact.

During a conference call, an operator introduces Mike Kratky from Leerink Partners, who asks about the commercial coverage for Dexcom's basal-only CGM. Terry Lauver responds that Dexcom is the most covered CGM with the lowest out-of-pocket copay, and they are actively working on increasing coverage for the basal population. Jereme Sylvain adds that it takes time to get in front of payers, but a majority of people using basal insulin now have access to CGM technology. The call concludes with Kevin Sayer highlighting the company's record-breaking quarterly growth.

Dexcom has had a second consecutive quarter of record financial performance and market share gains. Their G7 launch is still in its early stages, with plans for upgrades and AID integrations. The company has also been recognized for its growth and sustainability initiatives, as well as being named one of the top five organizations to work for in California. Dexcom is grateful for the support of its team and others.

This summary was generated with AI and may contain some inaccuracies.