DexCom, Inc.

The Dexcom second quarter 2023 earnings release conference call. My name is Abby and I will be your operator for today's call. At this time all participants are in a listen only mode and later we will conduct a question and answer session. During the question and answer session if you have a question please press star 1 on your touchtone phone. As a reminder the conference is being recorded and I will now turn the call over to Shawn Christianson Vice President of Finance and Investor Relations. Mr. Christensen, you may begin.

Thank you, Abby, and welcome to Dexcom's second quarter 2023 earnings call. Our agenda begins with Kevin Sayre, Dexcom's Chairman, President, and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy Sylvain, our Chief Financial Officer. 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 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, most recent quarterly report 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 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 reported another great quarter for Dexcom with second quarter organic revenue growth of 26% compared to the second quarter of 2022. Demand for Dexcom CGM continues to grow as access to our products is expanding faster than at any time in our company's history. In the first half of 2023 alone, we broadened our product portfolio strategy, extended our geographic reach, and meaningfully expanded reimbursed coverage for Dexcom CGM. As we sit at the midpoint of this pivotal year for our company, we have a lot to be excited about. In the U.S., our launch of G7 continues to gain momentum. Customers and clinicians alike are sharing consistently great feedback around G7's ease of use, discrete form factor, faster warm-up time, and redesigned software platform. With this product, we've extended our leadership position in accuracy and product performance, while taking a significant step forward in terms of simplicity. It has never been easier to user prescribe a Dexcom CGM, and we are attracting new customers and prescribers to our ecosystem as a result. Similar to last quarter, we have seen a continuation of the trend that the majority of our G7 users have been new to Dexcom. Additionally, there are now 8,000 physicians writing scripts for G7 in the US that were previously not prescribing Dexcom. We designed G7 to hold broad market appeal, and these early prescribing trends are validating those efforts. Behind the scenes, we continue to drive reimbursement for G7. As a reminder, we established Medicare and broad commercial DME coverage during the first quarter while rapidly progressing our commercial pharmacy contracts. We further advanced this process in the second quarter as expected, and we are excited to share that all major PBMs now covered XCOM G7. This occurred much faster than we originally anticipated and brings our total number of G7 covered lives nearly in line with our industry-leading G6 levels. This further strengthens our position as the most covered CGM brand as we prioritize keeping out-of-pocket costs low for our customers. As a reminder, the majority of our customers are paying less than $20 a month out-of-pocket in the pharmacy channel, which is significantly less than our nearest competitor, where the majority of customers are paying greater than $70 per month. We're also seeing G7 play a very important role for us as we move more broadly beyond intensive insulin management. We've taken a big step in that direction this year following the recent CMS decision to significantly expand coverage beyond intensive insulin use. As of mid-April, Medicare coverage officially kicked in for people with type 2 diabetes using basal insulin only, as well as certain non-insulin-using individuals that experience hypoglycemia. This resulted in a true step change in coverage for the industry. As we estimate, these two populations represent around 6 to 7 million people in the U.S., with roughly half being of Medicare age. It has also been encouraging to see commercial payers quickly follow suit. We have already established greater than 60% commercial coverage for the basal population, which we view as a validation of Dexcom's value proposition by payers. We're thrilled to have this level of coverage established this quickly, as it provides us much greater commercial flexibility to promote this opportunity. While still early, the initial response from the clinical community has been very encouraging. Physicians have wasted no time in prescribing Dexcom to their basal patients, as they recognize the clear potential for better outcomes among this population. We have also seen excitement coming directly from members of the basal community who are interested in engaging with their glucose data to make more informed lifestyle decisions. As a result, we have seen a notable uptick in demand in our Medicare business. In fact, Q2 was our highest new patient quarter within the Medicare channel in the history of our company. Considering this was only a partial quarter of expanded coverage, we view this as a very positive sign of things to come. In our international business, our share gains accelerated in the second quarter, as our ongoing access initiatives and product portfolio strategy have helped us reach many more people with diabetes across the globe. We expanded our international G7 launch in the second quarter into six new markets. G7 is being met with a lot of enthusiasm in our initial launch countries, and we are excited to bring it to additional geographies in the coming months. This will include our launch of G7 into Canada, where we recently received regulatory clearance. We have plenty of inventory on hand to support this broader rollout, particularly with our Malaysia facility now producing commercial product. Another key international lever for us has been our broader rollout of Dexcom 1. Dexcom 1 has proven to accelerate our entrance into new markets. broaden access within existing geographies, and even serve as a catalyst for reimbursement in certain regions. Perhaps most noteworthy this past quarter is that we officially launched XCOM-1 in Argentina, which marks our initial entrance into Latin America. We expect this to only be a starting point for us in that region as we continue to extend our global reach in coming years. Finally, we came away from the American Diabetes Association's 83rd Scientific Sessions as excited as ever about our future. This year's event added to the growing body of evidence demonstrating Dexcom CGM's ability to drive greater health and economic outcomes across the diabetes care continuum. Particularly, we are seeing more data suggesting a clear use beyond the intensive insulin population and even outside of insulin use altogether. For example, our team presented a real-world study of more than 7,000 adults with type 2 diabetes who were not using insulin. After only three months, this cohort saw a 40% increase in time and range and a clinically meaningful improvement in A1C levels. Perhaps just as important was the high level of engagement demonstrated as study participants wore Dexcom CGM more than 80% of the time. This was consistent with what we have seen in other broader Type 2 studies, including the mobile trial where we saw high levels of utilization and a clear desire to continue to wear Dexcom CGM full-time. During ADA weekend, we hosted an investor day where we shared our latest vision around the future of Dexcom. As part of the day, we increased our LRP, provided new detail on the size of our recent access wins, and shared our plan to launch a product specifically for people not on insulin. With this product, we will leverage our G7 hardware but provide a custom software experience tailored to this broader population. We expect to launch early next year with a 15-day wear time and cash pay option. This will simplify access out of the gate for users as we build the case with payers for broader coverage. Importantly, this new product also provides a glimpse into our future where we expect to utilize software to build tailored experiences and serve much larger populations. As we said at Investor Day, we're just getting started. With that, I will turn it over to Jeremy for a review of the second quarter financials.