DexCom, Inc.

Welcome to the Dexcom Third 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 a list-and-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 now turn the call over to Shawn Christensen. Shawn Christensen, you may begin.

Thank you, operator, and welcome to Dexcom's third 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 third quarter performance on the Dexcom Investor Relations website on the events and presentations page. Before we dive in, I am also pleased to announce that Dexcom will be hosting its Biennial Investor Day on Wednesday, December 9th, where we will discuss our business and long-term outlook in more detail. This will be a fully virtual event available by webcast. 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 third quarter earnings presentation 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. Well, we've gone a bit different route over the past 24 hours compared to our usual earnings reports, but I am very glad to be with you today. Most of you probably saw that we pre-announced revenue after market closed yesterday in conjunction with the announcement of the retirement of Rick Doubleday, our Chief Commercial Officer. I'll have more to say about Rick and what he's accomplished later in this call. We chose to provide the revenue pre-announcement in order to remove any market uncertainty about the strength of our business in conjunction with our notification of Rick's retirement. Our strong third quarter results reflect the resilience of our business and the importance of Dexcom CGM to our growing customer base, even as the world continues to navigate the challenges prevented by the COVID pandemic. Based on this performance, we are pleased to be in a position once again to raise our 2020 revenue guidance into year end. Total revenue grew 26% in the third quarter, driven by our strong new patient growth over the past year. This patient growth continued in the third quarter with our pharmacy and Medicare channels exhibiting the strongest growth in the quarter. We continue to see some impact in new patients relative to our expectations as a result of the pandemic. However, as our updated guidance indicates, the impact was not as significant as we expected and communicated on our second quarter call. We also officially introduced our patient assistance program at the start of the third quarter, extending our support to our customers who have lost coverage during this trying time. We saw a small handful of people utilize the program during the quarter, but it did not have a material impact on our performance. We've made excellent progress on the access front, with nearly all people with type 1 diabetes in the U.S. now having access to Dexcom CGM, as well as a quickly increasing amount of people with type 2 diabetes on intensive insulin therapy. We recently entered into a government-wide contract for the sale of Dexcom CGM to eligible government buyers, including the VA. This contract will facilitate easier and more convenient access to Dexcom CGM, as it may allow for pharmacy access to Dexcom CGM for eligible veterans. Another example of how we're making it easier for patients to take control of their diabetes at an affordable price. In addition, our team is doing great work to expand access outside of the U.S. including the recent publication of our UK cost-effectiveness study that showed the clear economic benefits associated with use of Dexcom CGM. Based on studies like these, we are hopeful that we will be able to drive near-term access wins on behalf of people with diabetes with government payers on a global basis. With customer feedback related to G6 continuing to trend at record levels, We have several initiatives underway to extend the Dexcom growth opportunity and bring Dexcom CGM to more people who stand to benefit from enhanced knowledge of their glucose levels. For our intensive business, many of you likely saw our press release with Eli Lilly earlier this month announcing our co-marketing efforts of our G6 CGM with Lilly's new ultra-rapid acting insulin. This collaboration is a great example of our strong partnership with the Lilly team and should provide a nice boost to our efforts to extend awareness of Dexcom CGM among practicing clinicians, including primary care physicians. We are making great progress in our efforts to extend Dexcom CGM to non-intensive type 2 customers as well. Intermountain Healthcare recently published the results of their first pilot using Dexcom CGM. which demonstrated annual cost savings of approximately $5,000 per member for Dexcom users relative to standard of care finger sticks. We are thrilled to say the large expansion of this trial with Intermountain is now well underway. We are excited about our work with UnitedHealth as they extend their rollout of the Level 2 program. Although it is still early in the commercial rollout, our teams are working together very well to ensure the kind of patient experience that we expect for any users of our CGM systems. We continue to support hospitals and help protect patients and frontline workers during the pandemic, with more than 200 hospitals reaching out to us about Dexcom CGM during this crisis. We remain focused on generating evidence to potentially expedite approval for the use of CGM for patient monitoring. Along these lines, early feedback on the performance of our CGM has been positive, including several recently published articles documenting use of the product during the pandemic. In September, we also announced the creation of a hospital registry to allow us to collect data on Dexcom's EGM performance efficiently during this time. As we press forward these initiatives with a great customer satisfaction with G6, our teams internally are intently focused on the next steps with G7. We commenced approval support trials for G7 in mid-October. This timing remains consistent with our previous discussions around the impact of COVID to our clinical trial timelines. Although all of us are eager for you to experience G7, we are committed to doing this in the right way and ensuring that the trials are run efficiently and that we bring to market a product that delivers the best-in-class customer experience for Dexcom users. We expect to launch G7 into several key markets during the second half of 2021. Given the growth of the business and our expanding patient base, the expansion of G7 into all of our core markets will likely extend into 2022 as we continue to scale manufacturing to support these markets in the right way. There is one change to G7 from our previous discussions. After extensive evaluation and several pre-market studies, we have made the decision to launch G7 first as a 10-day product with a clear pathway to extend the wear duration shortly. Our customers' lives are heavily dependent upon Dexcom CGM, and we have high standards to ensure that we meet our commitments to our customers. For example, while our 15-day configuration demonstrates survival rates in the 70% plus range, we don't believe this is good enough for our patients. With that, I will turn it over to Quentin for a financial review.