DexCom Inc. Reports Third Quarter 2010 Financial Results

DexCom, Inc. (Nasdaq: DXCM) today reported its unaudited financial results for the quarter ended September 30, 2010.

Product revenue grew to approximately $10.8 million for the third quarter of 2010, an increase of approximately 133% from the $4.6 million in product revenue reported for the third quarter of 2009, and an increase of approximately 19% from the $9.0 million in product revenue reported for the second quarter of 2010. Total third quarter 2010 revenue, which includes development grant and other revenue, was $11.7 million, an increase of approximately 61% from the same quarter in 2009, and a decrease of approximately 1% from the second quarter of 2010. The Company reported a net loss of $13.4 million, down from $13.5 million for the third quarter of 2009. The net loss included $3.5 million in non-cash expenses during the third quarter of 2010, attributed primarily to share-based compensation. Net loss was $0.23 per share for the third quarter of 2010, down from a net loss of $0.29 per share for the third quarter of 2009. During the quarter, the Company converted the remaining $4 million of outstanding convertible debt into approximately 512,814 shares of common stock, with no notes outstanding as of September 30, 2010.

Product cost of sales increased $2.4 million to $7.0 million for the third quarter of 2010 compared to $4.6 million for the same quarter in 2009, primarily due to increased volume of product sales. Total cost of sales was $8.2 million for the third quarter of 2010, compared to $6.4 million for the third quarter of 2009. The increase was due to additional product sales. Research and development expense increased by approximately $2.7 million to $6.2 million for the third quarter of 2010, compared to $3.5 million for the third quarter of 2009. The increase in research and development expense was due primarily to increased development efforts for our ambulatory products and decreased activity under our development and collaboration agreements. Selling, general and administrative expense increased by approximately $1.4 million to $10.4 million for the third quarter of 2010, compared to $9.0 million for the third quarter of 2009, with the change primarily due to additional customer service, sales and information technology costs. As of September 30, 2010, the Company had $31.8 million in cash, marketable securities, and restricted cash.

Conference Call

Management will hold a conference call today starting at 4:30 pm (Eastern Time). The conference call will be concurrently webcast. The link to the webcast will be available on the DexCom, Inc. website at www.dexcom.com under the investor webcast section and will be archived for future reference. To listen to the conference call, please dial (800) 447-0521 (US/Canada) or 1 (847) 413-3238 (International) and use the confirmation number “27938027” approximately five minutes prior to the start time.

About DexCom, Inc.

DexCom, Inc., headquartered in San Diego, California, is developing and marketing continuous glucose monitoring systems for ambulatory use by patients with diabetes and by healthcare providers in the hospital.

Cautionary Statement Regarding Forward Looking Statements

DexCom is a medical device company with a limited operating history. Successful commercialization and sale of the company’s products is subject to numerous risks and uncertainties, including product performance, a lack of acceptance in the marketplace by physicians and patients, the company’s inability to manufacture products in commercial quantities at an acceptable cost and quality level, possible delays in the company’s development programs, the inability of patients to receive reimbursements from third-party payors and inadequate financial and other resources. Certain of these risks and uncertainties, in addition to other risks, are more fully described in the company’s quarterly report on Form 10-Q for the period ending September 30, 2010, as filed with the Securities and Exchange Commission on November 4, 2010.

DexCom, Inc.
Consolidated Balance Sheets
(In thousands – except par value data)
(Unaudited)
September 30,

2010

December 31,
2009
Assets
Current assets:
Cash and cash equivalents $ 5,529 $ 3,577
Short-term marketable securities, available-for-sale 24,380 24,439
Accounts receivable, net 5,102 3,490
Inventory 6,353 2,641
Restricted cash 1,664 ---
Prepaid and other current assets 1,460 2,773
Total current assets 44,488 36,920
Property and equipment, net 9,240 6,422
Restricted cash 275 2,414
Other assets 102 1,192
Total assets $ 54,105 $ 46,948
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued liabilities $ 7,075 $ 5,745
Accrued payroll and related expenses 5,623 4,406
Current portion of long-term debt 750 900
Current portion of deferred revenue 3,560 7,745
Total current liabilities 17,008 18,796
Long-term portion of deferred revenue 881 ---

Other liabilities

972 840
Long-term debt, net of current portion --- 45,757
Total liabilities 18,861 65,393
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively
Common stock, $0.001 par value, 100,000 authorized; 59,000 and 58,718 shares issued and outstanding, respectively, at September 30, 2010; and 46,324 and 46,045 shares issued and outstanding, respectively, at December 31, 2009 60 46
Additional paid-in capital 371,789 272,730
Accumulated other comprehensive loss (39 ) (13 )
Accumulated deficit (336,566 ) (291,208 )
Total stockholders’ equity (deficit) 35,244 (18,445 )
Total liabilities and stockholders’ equity (deficit) $ 54,105 $ 46,948
DexCom, Inc.
Consolidated Statements of Operations
(In thousands – except per share data)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2010200920102009
Product revenue

$

10,776

$

4,620

$

26,583 $ 11,404
Development grant and other revenue 888 2,639 6,412 7,818
Total revenue 11,664 7,259 32,995 19,222
Product cost of sales 6,982 4,589 18,440 12,738
Development and other cost of sales 1,206 1,805 3,101 6,930
Total cost of sales 8,188 6,394 21,541 19,668
Gross margin (deficit) 3,476 865 11,454 (446 )
Operating expenses
Research and development 6,161 3,496 16,325 10,122
Selling, general and administrative 10,377 8,948 30,533 25,803
Total operating expenses 16,538 12,444 46,858 35,925
Operating loss (13,062 ) (11,579 ) (35,404 ) (36,371 )
Interest income 20 93 73 323
Interest expense (44 ) (2,037 ) (1,540 ) (5,947 )
Loss on debt extinguishment upon conversion of convertible debt (312 ) (8,487 )
Net loss $ (13,398 ) $ (13,523 ) $ (45,358 ) $ (41,995 )
Basic and diluted net loss per share $ (0.23 ) $ (0.29 ) $ (0.81 ) $ (0.96 )
Shares used to compute basic and diluted net loss per share 58,200 45,919 55,707 43,797

Contacts:

DexCom, Inc.
Steven R. Pacelli
Chief Operating Officer
(858) 200-0200
www.dexcom.com
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