DexCom, Inc.

Welcome to the Dexcom second quarter 2019 earnings release conference call. My name is Adrienne, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star and 1 on your touchtone phone. Please note this conference is being recorded. I'll now turn the call over to Shawn Christensen. Shawn Christensen, you may begin.

Thank you, Operator, and welcome to Dexcom's second quarter 2019 earnings call. Our agenda begins with Kevin Sayre, Dexcom's Chairman, President, and CEO, who will provide a summary of the quarter, followed by a financial review and outlook from Quentin Blackford, our Executive Vice President and CFO, and then a strategic update from Steve Pacelli, our Executive Vice President of Strategy and Corporate Development. Following our prepared remarks, we will open the call up for your questions. At that time, we ask analysts to limit themselves to one question and one follow-up so we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our second quarter performance on the Dexcom Investor Relations website on the Events and Presentations page. With that, let's review our safe harbor statement. Some of the statements that we will make in today's call may constitute forward-looking statements. These statements reflect management's intentions, beliefs, and expectations about future events, strategies, competition, products, operating plans, and performance. All forward-looking statements included in this presentation are made as of the date hereof, based on information currently available to Dexcom, and are subject to various risks and uncertainties. An actual result could differ materially from those anticipated in the forward-looking statements. The factors that could cause actual results to differ materially from those expressed or implied by any of these forward-looking statements are detailed in Dexcom's annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Except as required by law, we assume no obligation to update any such forward-looking statements after the date of this presentation or to conform these forward-looking statements to actual results. Additionally, during the call, we will discuss certain financial measures that have not been prepared in accordance with GAAP with respect to our non-GAAP and cash-based results. Unless otherwise noted, all references to financial metrics are presented on a non-GAAP basis. The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our second quarter earnings presentations for a reconciliation of these measures to their most directly comparable GAAP financial measure. Now I will turn it over to Kevin.

Thank you, Sean, and thank you, everyone, for joining us today. We are pleased to report another outstanding quarter for Dexcom, with awareness of Dexcom's TGM continuing to rise within the diabetes community and beyond. Second quarter revenue grew to $336 million, a 40% increase over the second quarter of 2018, on a constant currency basis, continuing the momentum that we have seen for the past five quarters. As we have observed in previous quarters, the primary driver of our growth in all channels, including our U.S. commercial business, Medicare, and OUS businesses, remains volume growth attributable to new patients. In fact, new patient additions once again reached a record level in the second quarter. And as our results indicate, the volume growth that we are experiencing, is more than offsetting the pricing pressure that we anticipated with lower revenue per patient associated with our move to the pharmacy channel, as well as the continued expansion of our Medicare and OUS businesses. While attending the American Diabetes Association conference in San Francisco in early June, two conclusions became increasingly clear to me. First, awareness of real-time CGM is quickly progressing and driving CGM towards standard of care status. We have been on record for years stating that the future is CGM first, and we believe that future is here. At ADA, CGM was no longer a minor presence relative to the various drug therapies. Instead, Dexcom CGM featured prominently in standing room only product presentations, academic papers, and as the driver of automated insulin delivery devices, all of which reflect the growing market awareness that we are seeing. Time and range is quickly becoming the most important metric to assess glucose control, with new time and range guidelines being established this year. Only CGM can provide these types of metrics. It is very clear to us that CGM as a diagnostic tool will become another large market for us in the future. This is well-timed with the recent submission of our G6 Pro product, which we expect to launch in 2020. With significant room for further adoption in both the type 1 and intensive type 2 populations, we are ever more confident in the growth opportunity that lies ahead for these core business segments. Second, we are just scratching the surface of the potential for Dexcom CGM. Discussions around CGM and ADA were not limited to traditional intensive insulin-using populations, but extended to preliminary studies on use in pregnancy and inpatient settings, And as we stated on the last call, we are exploring applications of our technology into these settings as we position Dexcom to maximize its long-term growth opportunity. To support these significant opportunities, our team's operational performance remains critically important. At the start of the year, we established the ambitious goal of doubling our G6 production capacity, and I'm pleased to report that we are on track to achieve that goal. We are excited about the fact that we have initiated production of our low-cost transmitter in our San Diego and Mesa locations. We are now building inventory as we prepare for launch. Based on the hard work of our operations teams in both San Diego and Mesa, we continue to strengthen our G6 capacity. This positions us well to expand the launch of G6 in the second half of this year. We look forward to bringing G6 to Canada later this year, and driving the ongoing transition to G6 and additional OUS markets. We remain committed to a G6 launch for our Medicare patients later this year and believe that this should drive incremental demand and patient satisfaction in an already strong category. Also on the Medicare front, as a number of you have seen, CMS recently differentiated reimbursement between Class II and Class III CGMs. And while the rate for the G6 system will be less than a Class III CGM, please keep in mind that we will ship fewer sensors and no BGM supplies with the future G6 bundle. Based on our better-than-expected second quarter performance, we are pleased again to be able to increase our revenue outlook for 2019, as well as our full-year operating margin and adjusted EBITDA targets. I will now turn the call over to Quinton, who will provide detail on this outlook, as well as a review of our financials.