DexCom, Inc.

Welcome to the Dexcom First Quarter 2020 Earnings Release Conference Call. My name is Adrienne, and I'll be your operator for today's call. At this time, all participants are in 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 then 1 on your touch-tone phone. Please note this conference is being recorded. I'll now turn the call over to Shawn Christensen. Shawn, you may begin.

Thank you, Operator, and welcome to Dexcom's first quarter 2020 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 COO 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 so we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our first 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 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, including statements with respect to the impacts of the COVID-19 pandemic on Dexcom and the potential timing of updated 2020 annual guidance. All forward-looking statements included in this presentation are made as of the date hereof based on information currently available to Dexcom, are subject to various risks and uncertainties, and actual results 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 and other filings of 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 first quarter earnings presentation for 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. Let me start by expressing my gratitude for the many healthcare workers and first responders that are supporting all of us at this time. We certainly stand with you in this effort, and our thoughts are with you and those who have been impacted by COVID-19. As a quick summary, the first quarter was another very strong quarter for Dexcom, continuing the growth momentum that we've delivered for much of the past two years. First quarter revenue grew to $405 million. representing 44% growth over the first quarter of 2019 or greater than $120 million of absolute dollar growth. This performance was driven by strength in new patient additions in both the U.S. and international businesses, even as we saw some impact in new patient opportunities related to COVID-19 beginning in mid-March. We will address first quarter performance in a moment. But first and foremost, we wanted to discuss the impact of COVID-19 and Dexcom's response. The past few months have brought and likely will continue to bring unprecedented challenges to global health and economic systems as a result of the virus. While this has been an incredibly difficult humanitarian crisis, we have also seen many encouraging examples of collaboration around the world from public and private entities. We have seen people working to bring care to those in need, protect the health of the vulnerable, and support the well-being of workers and families. From the outset, we recognize that Dexcom has an important role to play. Our customers rely on our CGM technology to safely manage blood glucose and deliver insulin. In many cases, these are people with diabetes who have relied on Dexcom CGM since diagnosis, meaning they haven't known a world without the peace of mind of real-time continuous glucose monitoring. People with diabetes are also at heightened risk for complications with COVID-19, highlighting the importance of good glycemic control during these challenging times. We set out with three core priorities. Keep our employees safe, continue to serve our patients, and work to help our communities. To meet this challenge and support these core priorities, we set in motion several initiatives. We quickly moved the majority of our global employees to home-based work arrangements. This transition enhances safety of all of our employees, including our teams, who remain on-site and benefit from a less dense work environment. Our IT and emergency response teams have done an excellent job to enable this shift and provide necessary resources for our teams to continue to function effectively and care for our patients. I could share numerous examples of Dexcom teams going above and beyond to ensure that our customers receive product and the support that they need, but I'll share one that stands out to me. In order to ensure that our products were supplied in a timely manner, we had members of our IT teams who were willing to sleep onsite to meet the needs of our employees and our patients. As this story demonstrates, our employees care deeply for our patients, and we continue to work on new ways to enhance customer support in these unique times. This includes our announcement yesterday of a program to provide financial assistance to our existing patients who have lost or may lose access to insurance coverage for their Dexcom supplies as a result of COVID-19. This program, which we plan to launch in the next several weeks, will provide up to two 90-day supply shipments for only $45 each and provide relief to our patients in what is clearly a very challenging time. As it pertains to our customers, both the patient and the clinician, We are working on ways to ensure we have the appropriate infrastructure to support their evolving needs. Our extensive virtual resources for patient and clinician training and customer support are proving to be especially important as the world embraces the increasing use of telemedicine platforms. As a reminder, more than 70% of our historical new patient additions have self-trained using the resources that we provide, demonstrating the value of these resources and the ease of use of our CGM systems. Even prior to the global spread of the virus, our procurement and operations teams worked to access and mitigate any potential risk to the supply chain for existing products. Because of their effort, we have seen very little disruption with our manufacturing sites as both San Diego and Mesa remain fully operational. Our manufacturing teams have worked seamlessly to make sure that our customers get the CGM systems they rely on. We've implemented additional safety measures to reduce the number of people on site at any given time. We have implemented shift separations and added additional sanitation and safety measures on top of our existing procedures, including thermal scanning. With the supply chain and manufacturing operations currently in good shape, we continue to be in a strong inventory position to meet the current demand for both existing patients and new patients. We have seen some customer interest in stocking up on the product. but have worked to keep customers supplied in line with the provisions of their insurance providers. This also applies to our DME suppliers and wholesalers. We did not see a material positive impact from customer stocking on our first quarter sales performance. We have also looked at ways that Dexcom could play its part in providing solutions that benefit our communities during the COVID outbreak. When avenues already played out as hospital systems came under increasing pressure and had limited personal protective equipment, we began to field a number of requests for our G6 sensors. In the ICU, hospital personnel often need to monitor patients with finger sticks as much as every half hour. In response to the request, we worked with the FDA to temporarily allow for the use of G6 in the hospital setting, and we quickly set out to supply product to key regions battling the COVID crisis. Because of our real-time connectivity, our CGM systems allow healthcare providers to remotely monitor a patient's glucose levels in real-time, reducing the need for finger sticks. As a result, there are fewer physical interactions between healthcare providers and patients, which limits viral exposure for hospital staff and preserves personal protective equipment. We are already seeing promising evidence of these benefits from the initial sites. Recently, the FDA removed the three-hour delay requirement for CGM data into our clarity software. allowing for faster data integration. As we roll this out in the coming weeks, our remote monitoring solutions will be further enhanced in both the hospital setting and for telehealth consultations for people with diabetes. We expect to continue supporting hospitals in areas of the country most impacted by the COVID-19 emergency, although our top priority remains serving our existing patients without interruption. The drastic but necessary steps to mitigate the spread of the virus have also created some areas of unpredictability for us as we continue in our second quarter and the remainder of 2020. As I briefly noted above, we have seen some impact in new patient opportunities since the broader social distancing measures were put in place in mid-March. We are hopeful that this impact may be mitigated as clinicians enhance their telemedicine capabilities, and our team is certainly working hard to ensure patient access for those in need of Dexcom CGM. Quentin will provide more detail around how we have contemplated this uncertainty relative to our 2020 guidance. Another area of unpredictability right now is around the timing of large clinical trials like we need to run for G7. We remain confident in our ability to deliver G7, but acknowledge that the timing of the pivotal trial will be delayed due to the pausing of new trials at most clinical sites. We currently expect a minimum delay of approximately six months for the pivotal trial. This is obviously a challenging time across the globe, but I am very proud of the way the Dexcom teams have responded. I will now turn the call over to Quentin for a review of our financials.