DexCom, Inc.

Welcome to the Dexcom second quarter 2020 earnings release conference call. My name is Adrienne, and I'll be your operator for this call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. If you have a question, please press star then 1 on your touch-tone phone. Please note this conference call 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 second 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 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 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, 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 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 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 today. We entered the second quarter with several areas of uncertainty as COVID-19 quickly spread. And I'm incredibly proud of how the Dexcom teams have responded. We established three pillars for our organization. To ensure the safety of our employees, to maintain service continuity for our customers who rely on their G6 CGM systems, and third, to do our part to assist our communities as we address this novel virus. We are executing well on all three of these measures. and the results are indicated in our second quarter financial and operational performance. Total revenue grew 35% on a constant currency basis in the second quarter, driven by our significant growth in new patient additions over the past year. This represents more than $115 million of absolute dollar growth over the same period in 2019. This growth includes steady traction in the Type II market, where we continue to see strong new patient additions as coverage expands. As of the close of the second quarter, the type 2 patient population exceeds 20% of our total U.S. patient base, reflecting our growing traction as market access expands. Even with rising CGM awareness, there remain many people who continue to rely on finger sticks to manage diabetes, and we believe that there remains a significant opportunity for growth ahead in our core type 1 and type 2 intensive markets. As we discussed in April, new patients were slowed at the start of the quarter as clinicians transitioned to support their patients via telemedicine. We did see a nice recovery in new patient additions in late April and over the remainder of the quarter, especially in the U.S. with our sales and patient care teams doing a great job to ensure that both customers and clinicians were aware of the full set of Dexcom tools to enable virtual care. The strength of our core business also reflects our focus on the service experience that we provide. Whether through our pharmacy channel initiative, the scaling of our customer support organization, or the user interface and tools we built through our software solution, we are prioritizing the needs of our customers. We are now two years into the launch of our G6 system, and the feedback that we continue to receive from our patients is incredible. In fact, net promoter scores for G6 have now reached all-time highs according to both third-party industry analysis as well as our own internal measurements. This includes the most recent DQ&A industry survey of type 1 and type 2 intensive patients in which G6 received a net promoter score of 83, well ahead of our competitors and in line with the initial results that we saw immediately after the launch of G6 in 2018. Our scores have been especially high among new Medicare customers, where the transition to our no-finger-stick G6 system has been very well received by both Type 1 and Type 2 intensive users. Our customers are achieving these results while paying an out-of-pocket cost that is comparable or often less than the out-of-pocket cost of our largest competitor. As we've mentioned before, G6 has the lowest out-of-pocket cost for Medicare patients and will be at parity with any other CGM classified as a Class II ICGM by the FDA. The pharmacy channel has also proven to be a wonderful option for many of our customers and remains our preferred long-term channel. For customers using pharmacy benefits now, nearly 70% have an out-of-pocket cost less than $60 per month. and 30% pay no out-of-pocket cost. Notably, this data is based upon the first five months of 2020 when patients are more likely to have deductibles still outstanding. As you can see, our products continue to demonstrate their ability to perform in real-world settings and drive patient outcomes at affordable levels. This includes the use of Dexcom CGM in additional populations beyond those with insulin-intensive diabetes. As we mentioned on the first quarter call, on April 1st, we received an allowance from the FDA to provide Dexcom CGM to hospitals during the COVID crisis, allowing for remote monitoring on any of their hospitalized patients. Our primary goal in this initiative was and continues to be the assistance of frontline workers during the pandemic, and the team has been working continually with sites to get CGM implemented. We've made great progress to date in training hospitals, and the feedback we have received from the care teams has been great An example near to us in San Diego, Scripps Health, published a case study on their use of Dexcom G6 since the start of the COVID pandemic and highlighted several encouraging points. The use of G6 was eagerly embraced by the hospital and nursing teams, with high rates of satisfaction among patients as well. Early data indicates a trend toward reduced incidence of low and high glucose values across all patients who use CGM. And specific to COVID-19 patients, visits into the patient's rooms have been decreased by 30% to 50% during the length of stay, saving valuable equipment and also reducing viral exposure for the hospital staff. As we stated previously, our hospital efforts were not a material driver of revenue in the second quarter, and we do not expect it to be for the current year. But the data that we are generating is invaluable as we assess the regulatory pathway forward for this important market. Whether it is the shift to telemedicine, the hospital initiative, or our efforts to expand access for the type 2 population with our various partnerships, our team continues to press forward in the midst of the challenges brought on by COVID. We've successfully doubled G6 capacity in the first half of the year, putting us in a great position operationally to address the significant market opportunities ahead of us. G6 is a platform technology. During the past 12 months, we have seen the launch of a very successful automated insulin delivery system at Tandem, significant progress at Insulet and other automated insulin delivery partners, introduction of the first BLE-enabled MDI systems, utilization of an app developed specifically for the type 2 diabetes program at UnitedHealthcare, and the recent launch of G6 Pro to meet a very important market need. We plan for numerous customer experience and product enhancement, as well as new market opportunities for this platform over the next two years. And many of these initiatives will be incorporated into the G7 platform going forward. And finally, on to G7, where we are pressing forward on several fronts. As we said on the last call, COVID-19 has affected our timelines on this project. Specifically, pivotal studies would be delayed for at least six months due to uncertainty at the clinics. And we are going to be fully ready for a G6 conversion when we launch. Some G7 manufacturing scale activities have been delayed as some of our vendors shut down for meaningful periods of time. And let me remind you, we are going to be fully ready for a G7 conversion when we launch. And a very small amount of G6 equipment can be used for G7. I am not going to provide you a specific clinical trial filing and launch dates today. In this competitive world, we have no interest in sharing our playbook with the entire industry. There will not be a limited launch of G7 in 2020. Such a launch would not provide a meaningful financial impact, and rushing to accommodate such a launch would ultimately delay our long-term plans. Design of the hardware, sensor, and electronics is locked, and the G7 algorithm is complete. We have used our extra time to add some great enhancements to this system. We are back in the clinics. We are in the process of finalizing clinical sites and timing for the U.S. and OUS pivotal studies. Our first fully automated G7 line is up in San Diego. Additional G7 automation equipment is arriving regularly in San Diego, Mesa, and at third-party contract manufacturers. I will now turn the call over to Quinton for a review of our financials.