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DexCom Inc. Reports Operating Results (10-Q)

November 01, 2012 | About:
10qk

10qk

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DexCom Inc. (DXCM) filed Quarterly Report for the period ended 2012-09-30.

Dexcom, Inc. has a market cap of $922.9 million; its shares were traded at around $13.07 with and P/S ratio of 12.1.
This is the annual revenues and earnings per share of DXCM over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of DXCM.


Highlight of Business Operations:

Product revenues increased $4.4 million to $21.1 million for the three months ended September 30, 2012 compared to $16.7 million for the three months ended September 30, 2011 based primarily on increased sales volume of our durable systems and disposable sensors. Product cost of sales increased $4.2 million to $13.4 million for the three months ended September 30, 2012 compared to $9.2 million for the three months ended September 30, 2011. The product gross profit of $7.7 million for the three months ended September 30, 2012 increased $0.3 million compared to $7.4 million for the same period in 2011, primarily due to increased revenue. We recorded charges of $2.5 million for the three months ended September 30, 2012 related to the excess and obsolescence of hardware due to the approval and launch of our next generation G4 PLATINUM system. We also recorded accelerated depreciation of $0.6 million for manufacturing equipment used in the production of SEVEN PLUS products.

Product revenue increased $16.2 million to $61.2 million for the nine months ended September 30, 2012, compared to $45.0 million for the nine months ended September 30, 2011 based primarily on increased sales volume. Product cost of sales increased $7.9 million to $33.9 million for the nine months ended September 30, 2012, compared to $25.9 million for the nine months ended September 30, 2011. The product gross profit of $27.4 million for the nine months ended September 30, 2012 increased $8.3 million compared to $19.0 million for the same period in 2011, primarily due to increased revenue and increased manufacturing absorption. We recorded charges of $2.5 million for the nine months ended September 30, 2012 related to the excess and obsolescence of hardware due to the approval and launch of our next generation G4 PLATINUM system. We also recorded accelerated depreciation of $0.6 million for manufacturing equipment used in the production of SEVEN PLUS products.

Development grant and other revenues decreased $3.5 million to $5.4 million for the nine months ended September 30, 2012, compared to $8.9 million for the nine months ended September 30, 2011. Development and other cost of sales increased $1.0 million to $3.7 million for the nine months ended September 30, 2012, compared to $2.8 million for the nine months ended September 30, 2011. The decrease in revenues associated with development was primarily due to the $4.0 million milestone payment received from Animas for CE Mark approval in June 2011 and by extended revenue recognition timelines related to longer than expected development and regulatory review timelines under our collaboration arrangements with Edwards. The increase in costs associated with development was primarily due to additional development obligations during the period with respect to our collaboration arrangements.

We shipped product directly to certain distributors’ customers and recognized $4.0 million and $11.6 million in revenue, which represents 17% of our total revenues for each of the three and nine months ended September 30, 2012, respectively, compared to 3.0 million and $10.6 million in revenue, which represents 17% and 20% of our total revenues for same periods in 2011. With respect to other distributors which stock inventory of our product and fulfill orders from their inventory, we shipped product to these distributors and recognized $8.5 million and $23.0 million in revenue from these arrangements, which represents 37% and 35% of our total revenues for the three and nine months ended September 30, 2012, respectively, compared to $5.3 million and $11.7 million in revenue from these arrangements, which represents 29% and 22% of our total revenues for each of the same periods in 2011. We monitor shipments to, and on-hand inventory levels of, these distributors, and at September 30, 2012, these distributors had limited amounts of our product in their inventory.

We measure and recognize compensation expense for all share-based payment awards made to employees, non-employee directors, and consultants including employee stock options, restricted stock, restricted stock units and employee stock purchases related to the Employee Stock Purchase Plan based on estimated fair values. We utilize the Black-Scholes option-pricing model as our method of valuation for share-based awards granted and we use the grant date fair value of our common stock for valuing restricted stock unit awards. Our determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. We recorded $4.9 million and $3.7 million in share-based compensation expense during the three months ended September 30, 2012 and 2011, respectively, and $13.9 million and $9.9 million during the nine months ended September 30, 2012 and 2011, respectively. As of September 30, 2012, there was $31.9 million of unrecognized compensation cost related to unvested options and restricted stock units that is expected to be recognized as a component of our operating expenses through 2016. We issued performance restricted stock units (the “Performance Awards”) in connection with our acquisition of SweetSpot. The performance targets for these Performance Awards are earnings before interest, taxes, depreciation and amortization (“EBITDA”) for fiscal years 2013 and 2014. We recognize expense for the Performance Awards when it is probable that the EBITDA targets will be met. At September 30, 2012, we had $1.3 million of unrecognized share-based compensation related to the Performance Awards. Compensation costs will be adjusted for future changes in estimated forfeitures.

Read the The complete Report

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