Q1 2021 Dexcom Inc Earnings Call
Off off off.
Welcome to the Dexcom first quarter 2021 earnings release conference, call. My name is Adrian, and I'll be your 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 Answer session. If you have a question please, press * then 1 on your touchtone, phone, please note. This covered is being recorded a monitor. The name is Sean Christensen Sean, you may begin.
Thank you, operator and good afternoon everyone. Welcome to dexcoms first quarter 2021 earnings. Call our agenda begins with Kevin Sayer, Dexcom chairman president and CEO will provide a summary of our progress, followed by a financial review. And outlet from jereme sylvain, our Chief Financial Officer and then an update from Quentin Blackford. Our chief operating officer on the company's strategic initiatives and scaling progress. Following our prepared. Remarks will open up the call for your questions. At that time, we have two 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. With that, let's review our Safe Harbor statement.
Some of the statements.
Bacon 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 a 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 index page, 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 subject or 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 dead.
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 a violation or is the 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 wage reconciliation of these measures to their most directly comparable, gaap Financial measure. Now, I will turn it over to Kevin. Thank you Shawn. And thank you everyone for joining us today. We reported strong first-quarter results with total revenue growth of 25% over the first quarter of 2020. As I often tell our employees, our ability to thrive as a company. Ultimately comes down to solving significant problems with a great product. And that is what we continue to see with G6. We hear incredible stories of improved glucose, control reduce disease burden and people
Empowered and those responses of only increases we've enhanced tools to better drive, our customer experiences, these stories are coming from multiple sources as well whether it is coming home users or their family members who are getting better control of their glucose levels to real-time data or clinicians, who are empowered by the ability to gather unique insights into the diabetes treatment of their type. Often or type, two patients and optimize therapy accordingly. And even new settings, like nurses, and doctors and the inpatient setting who are deploying CGM and learning about its potential to optimize workflows wage and benefit from our remote monitoring technology. New customer additions are off to a great start in 2021 especially in the us as we continue to see growth across all channels office building from The increased access that we gained over the past several years.
This includes continued attraction for people with type 1 diabetes and type 2 intensively managed diabetes both of which have continued, the strong growth momentum that we've seen over the past couple of years. I am also seeing a growing number of type 2 non-intensive customers on G6, not only through our Partnerships. Like UnitedHealthcare is level to program but also including the other Innovative programs and providers are establishing Early Access to Dexcom CGM. We're also progressing our strategic commercial efforts with remainder of our commercial sales, force expansion, completed in the first quarter, and our direct cash or marketing efforts generating new levels of brand awareness. The Super Bowl commercial featuring Nick Jonas was a highlight for the company in the first quarter, we were able to generate significant excitement for our employees and customers. Many of whom have sent us pictures and stories of their pride and feeling represented. During one of the biggest annual events in the world. We also contribute to a broader conversation in the diabetes wage.
Any that we hope will help fulfill.
Update brought her access to CGM in the future. The a drove a record number of visitors to our website, our record for single day, new customer leads and significantly more immediate impression, then we generated in all of 2020 and we are confident that there will be ongoing benefits that will come from the ad. In fact, according to the independent Harris, poll, Dexcom all Super Bowl, appetizers in brand Equity growth, overall, it was a great investment for the company and I'm really proud of our team for pulling it together. Our commercial efforts also include a strong push from a teams to expand access the Dexcom, TTM, technology, internationally both deeper and existing markets as well into new geographies with Dexcom in the strongest, a majority position in the company history. As a result of our scaling initiatives, we are aggressively advocating for broader access to RG6 systems for people that type one diabetes and intensively managed type two diabetes. Dead
Similar to what we have done here in the United States. Since we last reported in February, we have received confirmation from three additional Canadian provinces that they will begin covering dexcoms. This is a great step forward and expanding access for people with diabetes, there's significant demand from customers and clinicians and we are optimistic that we will continue this positive. Momentum in Canada with both the public and private payers over the coming months. In certain reimburse markets, we are proactively lowering price to significantly, expand access to incremental populations this Physicians, as well to continue to grow sensor volume significantly now and into the future. And we believe the incremental volumes will more than offset the impact of pricing a term.
In conjunction with our commercial initiatives and the growing CGM category awareness, we're advancing the clinical and Regulatory path for our next Generation G7 CGM system. As a reminder, we need to improve all aspects of the current customer experience, offered would be six in a disposable wearable that has less than half the size. We are working to repair the submission for seem in accordance, with the new medical device. Reporting standard in the EU. At this point. We remain on track for our Target launch of G7 and the second half of 2021. We also plan a preliminary data on G7 performance at the upcoming. Attd conference in early, June are trial that will support r u, s. I c, g. M. Filing is also well underway and not received outstanding feedback from the investigators and patients involved. We expect complete that trial in the current quarter and we'll keep you updated as we progress towards regulatory approvals and launch off.
Even as we advance our strategic plans and have seen continued customer growth over the past year, the evidence of the global pandemic remains with us, we continue to navigate certain closure of territories that have seen cases spike in our team remains focused on the three priorities that we have emphasized. Throughout the past year, the health and safety of our employees continued supply of our customer and service to our communities toward this. And we were pleased to recently work with the state of Arizona, the open the first indoor Mass vaccination, facility in Arizona to help the community as opposed to the heat of the summer months. This facility rest within our Mesa Distribution facility and has the capacity to support several thousand appointments per day. I am proud to lead company, whose employees are so dedicated to the service of our customers and willing to think creatively about what it means to be a leader in the communities that we serve.
As we come back to first quarter results, I want to welcome a new voice to our earnings call Voice.
Earlier, too many of you already last month, we announced the promotion of jereme sylvain to the role of Chief Financial Officer. And I am pleased to have Jeremy, join Quinn. And I first, first Dexcom earnings call this afternoon with Jeremy. Thank you Kevin. I'm excited to be with you today and in the new role as we advance our work together for people with diabetes, as a reminder, unless otherwise noted the financial metrics presented today, will be discussing non-gaap basis. Reconciliations to Gap, can be found on today's earnings release as well. As on our our website for the first quarter of 2021, we reported worldwide revenue of $505 million dollars compared to 405 million for the first quarter of 2020. Representing growth of 25%, on a reported basis and 23%, on a constant currency basis. This is our seventh consecutive quarter of Revenue off of a hundred million dollars or more impressively. Our Revenue performance came against our toughest quarterly comparison in 2024 both our us and international businesses as the first quarter of 2020, was largely birth.
Affected by the COVID-19. Pandemic. We also saw a nearly 40% Global unit volume growth. In the quarter, demonstrating, the continued, customer growth in the business us Revenue totaled. 381 million fourth quarter, compared to 282 million for the first quarter in 2020. Representing growth of 30%. R u s business, was the primary driver of growth in the first quarter with our commercial efforts and Rising CGM. Awareness package driving. Solid volumes in an acceleration from our fourth. Quarter growth percentage, we believe that we are well-positioned to continue this momentum are DTC efforts are driving awareness of Dexcom CGM. We have new connecting systems coming to Market and build from years of collaborative, work with our partners, and we have an expanded field. Salesforce equipped with a product that our customers love our international business. Reached another quarterly high-water Mark with a revenue 624 million, or 10% growth on a reported basis. Compared to the first quarter of 2020. As we saw in the final three quarters of twenty-twenty, the impact of COVID-19 lockdowns has had a greater impact.
New customer growth in certain International markets, which has a compounding effect on a reoccurring Revenue model. Nevertheless, we deliver growth against our toughest quarterly comp of twenty-twenty or International Revenue. Grew 61% off before the pandemic. We continue to see strong growth across the number of our markets, particularly in countries where the administrative requirements to access CGM or minimized VR eCommerce, Channel or via broad reimbursement wage,
As many of you have seen we've successfully reduced our manufacturing costs and intentionally increase sensor production capacity through these manufacturing efficiencies and increased capacity. We are no longer restricted to focusing on his knee, high reimbursement. Populations with this increase commercial flexibility, we are executing on our strategy to broaden access to our CGM. Technology by pushing deeper into existing markets. We previously could not address walk through the incremental volumes generated by these efforts. We believe We believe the offset any near-term price impact while better positioning the company for long-term growth. Our first quarter, gross profit was 343.9 million or 68.1% of Revenue compared to 63.9% of Revenue. In the first quarter of 2020. The fact that we are driving margin expansion, despite absorbing the channel mix impact associated with the acceleration of our us business to the pharmacy, channel is a testament to the work of our teams to drive down material and production costs operating expenses, where two hundred ninety-seven point five million for the first quarter.
For a 2021 compared to 250.
18.4 million for the first quarter of 2020. The increase in operating expenses as a percentage of sales in the first quarter of 2021, is a result of several of the key initiatives that we outlined. In our original 2012, guidance in February, this includes our expanded commercial efforts with a doubling of our sales, force and increase Global DTC marketing efforts, both reflected in the quarterly results. In addition, the fourth quarter research and development expense, includes costs associated with our large CGM, trial for G7, which will continue into the second quarter as we generate. The data necessary to support our regulatory filing, offsetting the Strategic Investments. We continue to gain leverage in our general, administrative expenses in the quarter demonstrating the benefits of our scaling initiatives, to that end. As we've previously indicated, we have launched a global business services facility and Lithuania, which is now officially live in servicing. Our customers, operating income was 46.4 million or 9.2% of Revenue in the first quarter of 2021 compared to Jersey.
Three, three point, three million or 10.7% of Revenue. In the same quarter of 2020 with a hundred and fifty basis point decrease, resulting from our strategic Investments offset, by our gross margin Improvement. Adjusted ebitda was 94.4 million or 18.7% of revenue for the fourth quarter compared to seventy seven point, eight million, or 19.2% of revenue. For the first quarter of 2020, net income for the first quarter of 32.8 million or 33 cents per share. We were made in the great financial position closing the first quarter with more than 2.6 billion in cash or cash equivalents in. Well positioned to continue, our G7 scale up an opportunistic, as we look to expand our growth opportunities.
Turning to guidance, we expect some impact to new customer starts to continue during the ongoing Global vaccine rollout. Particularly in certain International markets as well as continued higher than usual volumes in a Medicaid Channel as the economy recovers with the strong first-quarter performance, as well as the currency benefit that we saw in the first quarter and continue to anticipate, we are pleased to be in a position to raise our full-year 2001 Revenue guidance. We now expect 2021 Revenue to be between, 2.26 to 2.36 billion representing growth of 17 to 22% over 2020. This growth continues to factor in strong unit growth volumes which are offsetting the impact of lower Revenue per customer channels and our recent efforts to broaden access to G6 and international markets as well as the impact of currency hack into margins. We are affirming the full year 2021 targets previously established on our fourth quarter, call this includes non-gaap results to be approximately at the following levels, gross profit margins of approximately 6.
5% operating margins of approximately 13%, we continue to expect that adjusted ebitda margins to be approximately 23%. And finally, as you may have noticed from a tax perspective, we have transmission to profitability and we'll have a tax rate applicable to earnings going forward. Our expectations
And the call over to Clinton for a scale and strategy update. Thank you, Jeremy. It's been a pleasure to work alongside jereme for the last seven years of our careers. And I am thrilled for him as he now steps into the CFO role. I look forward watching him. Take this next step in his career and look forward to the many contributions that he'll make in his new role. While also excited by the opportunity to turn my attention, much more broadly to our strategic and scaling efforts across the organization with our teams remain. Incredibly focused on our strategic initiatives, and they're making great progress on several friends. As Kevin mentioned, we are advancing our Regulatory and clinical efforts for G7 and what presents the 1st of June at the upcoming attd conference in early June, as we press forward toward our G7 goals. We are making steady progress in our effort to scale G7 manufacturing to support our launches and the continued growth of our Global for base in the near-term. This includes the line that we are building in our San Diego in Mesa, Arizona facilities. We've also Broken Ground on our manufacturing sites in Malaysia, which we expect to enable us to significant wage.
Scalar G7 production capacity to serve meaningfully, more customers as we continue to grow our business in the years to come, even with G7 on the horizon. We remain committed to building on the leading, customer experience that wage established for users of RG6 system. Following the December regulatory approval in the US. We rolled out an update to the G6 algorithm in the first quarter, we believe this update will drive further reduction times in which data is temporarily unavailable. And I've seen excellent results from the initial launch of this updated algorithm in Canada in 2020. These are the kinds of incremental improvements that we are always looking to provide them and they're contributing to our strong. Customer retention in satisfaction levels. Reflected in our industry-leading, net promoter scores.
On the insulin delivery funds, we were encouraged to see the gray results from the omnipod V typical trial presented at Endo 2021 and look forward to the upcoming launch of that system. For Dexcom customers, using the oil pump.
With this launch and omnipod is differentiated patch pump form factor as well as tandems. Continued Market traction with their Dexcom connected control. Like you we believe that we are very well positioned to continue to benefit from the same appreciation for these automated insulin Delivery Systems
Similarly, we continue to advance our development with Eli Lilly, Novo Nordisk and more recently Gibson leaving us in a strong position in future years, as people with diabetes stand to benefit from greater Variety in their choices for Bluetooth connected insulin, delivery options that integrate, Dexcom CGM.
We discussed the excellent first quarter performance, in our us. IIT Market, as well as some of the key strategic initiatives that we are undertaking to expand access in our International markets. We are also making excellent progress in our efforts Drive, the third pillar of near-term growth that we highlighted at our 2020, investor day, the non-intensive type to Market as we've mentioned before we are taking multi-channel approach to enabling access to a g. M c, g m in the absence of widespread reimbursement this involves direct work with payers digital help programs Health Care Providers and integrated networks as well as the patients themselves with the rollout of level two is progressing. Well as we continue to see that program expand in our teams are working. Well with the United Healthcare team to optimize the experience for members using RG6 system. As part of that program, we also work with several Partners to expand their use of G6 and the respective type two populations. In the first quarter. This includes the initiation of commercial pilots with teladoc helps livongo for diabetes platform as well as with well dog.
Riverside Health, also announced that it will
For G6 to its members with type two diabetes, and it's healthstat, business unit and we are proceeding there. Now in a pilot phase, this relationship builds from our initial work with health status, over the previous two years, including the issue of Dexcom CGM, in a pilot for health screenings at on-site clinics. Each of these relationships is expanding the pool of customers who can access our technology while generating evidence of the utility of Dexcom CGI. Bought a broader type to Market that we believe will drive access and awareness in the future. Beyond these cord growth initiatives. Our teams continue to advance Innovative research and product development that we feel will contribute to long-term growth Dexcom. This includes the hospital Market where we are generating data VR patient registry in receiving great feedback as many hospitals Across America continue to take advantage of the fda's temporary allowance to use in the inpatient setting during the pandemic. This also includes several clinical studies, assessing the use of Dexcom CGM, for better management of gestational diabetes, a solution that we believe can enhance the outlaw.
For both the mother and the child. And finally, we continue to access next-generation technologies that we believe can build from the sensor platform that we've established with G6 and G7 we look forward to be updating you as we progress with that, I will pass it back to Kevin. Thanks Clinton. As you can see, we're off to a great start to the year and working hard to execute on the Strategic pass that we've laid out for twenty Twenty-One, I would now like to open up the call for Q&A Shawn. Thank you Kevin. As a reminder, we asked our audience to limit themselves. To only one question this time and then re-issue the queue. If necessary operator, please provide the instructions. Thank you will. Now begin the question-and-answer session. If you have a question, please press star key on your touch-tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you using a speakerphone, you may need to pick up the handset first or pressing them.
First. Once again, if you have an audio question please press the star then one on your touchtone phone and we're standing by for questions.
And a first question comes from Jeff, Johnson from Baird, your line is open.
Thank you, good afternoon, guys. Let me, I'll put it into a multi-part question, I guess. But Kevin, I think it's officially one question. But on the channel mix headwinds, that we've been talking about here, the last six to eight quarters or so is it is not fair to be thinking around two hundred million dollars plus or minus this year and given the exit rate from 4:20 still fair to think a little bit of that as front-end loaded. And then when I look at your 30-day us growth, you know, it would seem like if I X Out the the the channel headwinds, the pricing headwinds, their volumes must have grown well north of 40%. So if you would just kind of confirm that from a price increase volume Nixon won to u.s. number. That would be helpful as well. Thanks guys. Jeremy will take that one Jeff. Yeah, Jeff. So it's your question on on what the channel mix head winds are you know, we'll just tell you what the numbers were wage order. It was about fifty million dollars for the quarter. And if you, if you recall, when you talked about it being a little bit more straight line over the course of twenty Twenty-One do to comps the one thing we have a dog,
talked about Kevin referred to it on the
Call as did. I is that we are going to be a little more aggressive International markets. And so because of that, we're raising what we call Channel, mix slash, pricing headwinds to about 250 million on the year and that obviously takes into account. The aggressive steps were taken outside the US, in terms of your question, in terms of growth and unit volume, we talked about unit volume approaching 40% on a global basis. When you take the, the channel makes Hedwig talked about you are correct, the US unit volume growth was well in excess of that, obviously being the stronger point of the corner, from growth perspective. So you are seeing that performance on the corner supporter home. Internet question, Joanne, wuensch from Citibank your line is open. Thank you very much. Can you go back to what you just said? Please could clear the 50 million recorder. How much of that was US versus o u s.
Yeah, so do I? We we generally don't break down the to what we did talk about was fifty million is the global. Now majority of that has traditionally been the channel, mix from pharmacy, from DME into Pharmacy, but when we give that number we give a global number. So that was fifty million globally on the quarter again heavily weighted us.
Okay, I'm going to make one more run because that's was a clarification. Is there any reason that it's not possible for G7 to be in the US by the end of this year?
You know, we're not giving any G7 timelines. Other than we will launch it. By the end of the year. As I said, in earlier portion of our, our remarks are us, pivotal study wage will conclude this quarter. And then we'll file, we're working on our filing in Europe under MD are rules for CE Mark, and we'll go from there, time will tell. But the, you know, everything is going well, we're happy with the progress of the product. We're extremely happy with the feedback, we've gotten from clinicians and patience. In fact, one condition called me this morning in between with our our prep, for this call to tell me how great the product was. So we're, we're very happy with it, but we're not going to give any other time lines in what we have so far.
Andrew next question comes Robbie Marcus from JPMorgan oh great congrats on nice quarter and thanks for taking the question. You know I wanted to talk to talk about the guidance. Raise it was more than the U had in the first quarter so maybe walk us through your new patient assumptions and what's driving that truck. And if you could comment at all on on how the early trends of the Superbowl and increased DTC spend and Salesforce doubling has benefited, the companies so far in what aspect in 2021. Thanks sure. Yeah, so we can walk you through it, you know, the guidance raised was, you know, approximately twenty-five million of it was currency. So, we referenced some of the foreign currency to be associated with the other half was related to volume growth. Expected, both in the first quarter and on the balance of the year. And in terms of what we saw in terms of new patient ads in the first place,
Yue patient ads were slightly ahead of expectations. And so that's really, as we look to the balance of the year,
Certainly those repeat customers obviously play through in the balance of revenue for the year. And so we've, we've added that to the guidance, we still are bullish on the year. We still expect to have a very strong year, I think there was any question there. And I think if you see the performance in the US result, I think you're obviously seeing a lot of to your second question. A lot of the DTC, a lot of the Superbowl ads as well as the new the new sales force. I'm starting to really play through, not to mention, you know, the fact that we have a sampling program, that's out there. That is starting to allow folks to trial the product, which we think is garnering interest as well. So that's all been contemplated in the guides As We Lay it out. And I, I think what you'd say is is for the balance of the year, I do you think you are seeing the momentum continued to to support raising what we raised it by and Robbie? I would just the way to add to that is as Jeremy laid out in the prepared remarks. Our decision on the international markets with respect opening up access, I do expect you're going to see that new patient number continue to to perform very dead.
In the back half of the year as we're accessing markets that are five to six times larger than what we had coming into the year in some of these markets. So, very excited about where that new patient number potentially goes to bed. And the next question comes from Matthew O'Brien from Piper Sandler, and your line is open.
Afternoon, thanks for taking the question just to follow up on the pricing, Terry, you know, the 200 to 250, you know, is obviously a pretty meaningful increase, you know, we've got Libre 3/9, Germany, now you're talking about being more aggressive in terms of lowering pricing o u s I think for more access. I mean, does that is it is it a function of Libre three you're trying to be aggressive in front of, you know, a more broad launch there with with G6 over there is that a reason why you're increasing the pricing concessions right now. And then what does that say about when 3 comes to money and and you know, how can do you 7 kind of offset that
We've not made our decisions based on Libre stream at, you know, we've looked at what we accomplished in the US here. What we've done is we've increased access by going to the pharmacy Channel wage looking at Medicare approval. For example, which came in at a lower price than what our price was before. As we've set up, Medicaid pricing structures, in the US that are yet once again a pricing structure lower wage when we had before but to increase access to a number of patients. We then have looked at r o u s business and several of our key geographies and said you know what are access is not broad enough. Our access is very much focus on very intensively, managed type ones, often times just children or adults with pumps or adults with incredibly bad hypoglycemia unawareness or something along those lines, and it's more important to us to reach more patients. So we've taken the strategy we've used in the us and we're deploying it in other places as well to increase our access. We won't let Libre 3dr artist dead,
Will drive our own. I think one one important thing to note there is the pricing point. You know, it's always been part of our Global pricing strategy and the level that we're going to is still very much in line with
That's where we're at in the pharmacy channel, to be honest with you. So we're just stepping down as we've had inventory. You know, availability, now, we're in the best position we've ever been in, from that perspective. We know, we got to reduce the burdens to get on the bus products. We're in a position now, to continue to execute against that, Global pricing strategy. So, this is very much part of where we were heading. Um, it's, you know, it doesn't create risk, elsewhere globally, it like I mentioned right in line with our us, pharmacy pricing, if you get into the the, so excited about what this has the potential to create for us,
And the next question comes from Bob, Hopkins, from Bank of America.
Oh great, thank you and good afternoon. I just wanted to ask a question on on G7. I was wondering if you could comment on on two things. First thing I just wanted to clarify. When do you expect to file a mark in, you know, in in Europe. I I, I thought that was something that was going to happen or might have happened already and then secondly, I was wondering if you just could comment on the upcoming data that we're going to see on G7 just maybe help give us a sense of money you know just what we're going to see and and how meaningful it might be and and just a little more detail. There would be great. Thank you.
Well, G7 we have not filed yet. We will file it in the not-too-distant future. We want to, we need all our ducks in a row, you know? For example we want to fight with the Android in the IOS app, at the same time, not file one and into another filing. So making sure our software is validated and verify it is, is really one of the bigger tasks. The clinical data is, is an issue with that part of the filing and we've had Direct discussions with our authorities over there and and we feel we're in good shape. But we'll file when we're ready, we don't want to do it twice and spend a lot of time answering questions wrong, with respect to the data that will present here in the summer, it will be on some of the smaller studies that we've done. It will not be on any of the pivotal date obviously but you'll see how the product performs and and how consistent and and how happy we are with it. Obviously I'm happy with the data and as is our team, you know, I've made the comment on several times when all said and done dead.
Everything you love about G6 you're going to love more about G7 and when that product comes to Market that's exactly what how we're going to feel about it. Not only from the smaller wearable and the easier insertion and all the other. Wonderful patient. You know, ease-of-use features were putting in there. But the software the app and the performance of the system we believe is going to be spectacular. And and again set off a real standard for people to go over.
And our next question comes from Kyle Rose to canaccord. Your line is open.
Great, thank you very much. Wanted to talk about a few of the, the commercial initiatives in the, I mean, obviously, you know, still early in the sampling program. You know, you've just completed the doubling of the sales force and, you know, kind of Shifting some of the focus to more on the primary care. So maybe just help us understand, you know how some of those initiatives have played out in the early days with respect to the the queue wage in the queue to and just are there any metrics or is there any sort of, you know, goalposts? You can help me frame the, the early execution on those initiatives for us and how do we think about that as we move through 21?
Sure, I'll take a quick shot at the the sampling and then hand it over to.
Been here. Um there aren't any metrics that we're good at disclose particular to sampling in and of itself. Although I will tell you the early, you know, response to this program has been beyond our expectations, both from a physician's perspective of just how easy we've enabled these pcps to get products into the hands of our patients. And then also from a patient perspective, when they realize just how easy it is to use the Dexcom product. So the sampling program has been beyond what we imagined coming out of the gate, it will continue to be a big part of what we do into the into the future. But in terms of giving specific month around it, that's not something we will do. I will tell you, it's one of the better Investments that that we look to make at this point. Yeah, I'd agree with that. With respect to the sales force, we've added everybody. We were going to add everybody, took place and everybody's getting up to speed and some of the people came from a diabetes background. So they get up to speed easier because they have relationships already established in these offices. Possibly from another wage.
Company others. It's going to take a little while longer and we plan for that as we do this expansion. But as far as coming on more voices, we are learning that that in all fairness, we've been under surveillance respect to our ability to call on people. There's a great story. We heard from down in Texas, one of our reps called on a on a physician or and and talk to him about our product and the doctor said I know nothing about your product. I put people on your competitor's product cuz they come and ask me for it. So again, using the sample program that the faith described with, hello Dexcom. We put this patient on the system introduced the, The Physician to it and now he's prescribing Dexcom all the time because of the experience that patient have needed a deeper. Reach will get that deeper reach with what we've done and will continue to evaluate overtime and and we've got a tremendous metrics on our sales. People, we have an incredible commercial authors.
Reservation that monitors that but we also very much understand. It takes a while to get to get up to speed. You know, the other great thing I can tell you about this expansion, we literally have thousands of people apply for these jobs and not a lot of very very qualified people that we did not hire. This is a place that people want to work kind of product that they really want to represent and we want to continue that culture and maintain that.
Andrew. Next question comes from Mathew. Blackman, from stifel. Your line is open.
Hi, good afternoon, everybody. Thanks for taking my question. I wanted to follow up on the pricing strategy and sort of a multi-part question here but the incremental fifty million dollar head. When you call, I slated to 20 21 or with these price, headwinds continue beyond 20 21 outside the US. And then if I if I think about the full year, guidance range raise of about fifty million, I think about half of that you said is underlying a performance. But that's also in the face of another fifty million headwind, uh, on price. So, is it fair to say that the guidance range? Is that raises actually closer to call $75,000 XFX on an underlying basis. Thanks.
Yes.
Good question. So you know, let's go step by step. So in terms of your question on the international pricing, a majority of the Rays is our strategy outside the US. And so what you are seeing is we are taking incremental fifty million dollars of call it mix headwinds as a result of going into there. And and we still, yes, you're right. We did raise guidance in the face of that by fifty million of which twenty-five was currency, so long, you know absent, that incremental, yes, you would have seen a seventy-five million. Now we are we are going to be taking those pricing headwinds and and we're going to be taking those pricing headwinds and making up for it and incremental volume. So, you know, Thursday, net neutral to the full-year guide, but you are correct absent, taking on that strategy or because of that strategy, we expect to add new patients, to the point where it increases, our full-year Outlook off
And our next question comes from a Taylor from UBS. You line is open.
Hi, thanks for your question. Okay. So I'd like to ask one just about the US momentum Improvement that was impressive and you called out the factors, is it possible for you to Thursday? Which is the, you know, DTC sampling and Salesforce, do you think contributed more to that which of those is still, you know, more to come? Or is it just all equal?
I think they're all more to come and I think they're relatively equal. You know, as I call that on the call the effect of the Super Bowl ad was more than just short-term sales growth in our minds, be honest, we generated the test text messages. I was getting during the Superbowl from industry and Technology, Executives that I've met over the years, made it all worth it. You know, I'm just sitting on the couch saying, hey, this is really cool. It really created a lot of awareness for our company awareness. We hadn't had before and that was really the goal. As we talked about, we developed more brand Equity from our ad, then anybody else. So that that was important to us that remains important. As you watch our ads, you'll see certainly more with Nick and certainly other campaigns as well. And top of that having more feet on the streets, good, but we needed it, but it will take time to develop those relationships. I think if the three I I couldn't quantify one of them but I am.
I I I think ultimately, the sales force expansion will be extremely helpful in this. We probably got less paying out of that just cuz we were ramping it up then the first quarter but the DTC work and the Superbowl ad, that is probably the biggest and then, hello Dexcom. And the Reps will come more throughout the rest of the year.
And our next question comes from Jayson Bedford for Raymond James. Hi, good afternoon somewhat similar to the last month the first quarter strength in the much better than historical seasonality. And I'm just wondering, is this more a function of just Channel shifts that gone on in the business office or a function of of the new momentum that you've seen kind of perhaps from some of these new initiatives. I know it's a tough question but if if there's any way to parts that out, that'll be helpful. Sure yeah. So I'm good question and, you know, some of that is a bit of a change in shift in Dynamics and you're absolutely right as more. And more goes to the pharmacy, I think you are seeing you know that that wage that neutralization if you will of the Q4 or q1 dynamic. One thing we did see this quarter and we thought it was, uh, certainly a testament to the work that our customer experience team is doing yep.
Saw slight Decline. And attrition slight decline, a nutrition. And a slight increase in utilization.
And so, as you think about the customer experience that we're trying to create here, we've been talking about increases, net promoter scores, you know, that starting to play through and, and, and customer utilization habits. So that certainly something we saw a little bit of. And then, and then, I think what we also saw is just a little bit of incremental performance. We saw some of the performance outpaced expectations. I think, what we talked about is an expectation, a patient grow slightly, outpacing it as a result of increased awareness, as a result of DTC. So I think it's all three of those coming together.
And our next question, comes, and Chris Pasquale for Guggenheim. Your line is open. Thanks two quick questions for Jeremy on the margin. Front first, you just given house. Gross margin was in 1 Q was hoping to talk about why, you know, 65% is the right number for the full year and then your audio cut out a little bit. When you were talking about the tax. Raise, if you could just talk to, you know, go back to that and what you're expecting for an overall tax rate this year. That'd be great. Thanks sure. I'll start with the form the ladder first. We expect the tax rate for the year to be between a non-gaap wage rate between $23 and 25%. Back to your question on margins. You know, we did have a great quarter in q1. Certainly, we're very proud of the 68%. The one thing we we do want to do is first off, it's the first quarter. So we think about it from a first-quarter and really thinking about before taking a look at changing anything being mindful that we won't see things plowed over time. But there's really two components you have to be aware of em.
We do expect to take on incremental Channel mix headwinds and our International markets for the back half of the year. So we have to contemplate that in light of some of the efficiencies you're starting to see and then getting back to the office previous discussions about the driver's when we set guidances in the back half of the year, it's when we're going to launch G7 and when we launched G7 the yield that you get on some of these lines generally is a little lower you've sought so happened with our launch of G6. There was a little bit of step back as you start to work out the Kinks of these lines and the yield start to play out. So as those play out in the back, half of the year, that's why we don't we feel comfortable very come off our guidance, but we didn't feel any need to raise it at this point and what the year play out.
And the next question constant Cecilia, furlong morganstanley.
Great, thanks for taking our questions. I I guess I just wanted to go back to the pricing headwinds, but just in light of increasing extra headlines. Should we expect your 2qx? You rest results. It's more like they did in 2019, just in terms of relatively flat, sequential performance. Or can you really still grow? XTS revenues quarter-over-quarter before G7 Edge? Yeah, I don't think we're going to get into details of providing, you know, specific guidance around us versus US particularly at a quarterly level. I think we're incredibly bullish on where the international business can go. There's so much runway that, it's just said in front of us. A big part of that is continuing to step into this Global pricing strategy that we've laid out over a multi-year basis. And really what, you're seeing with the pricing decisions. Today is that we're in a position. Now we can pull some of those decisions forward where we could know if historically. And a lot of that comes down to having inventory available to us, being highly confident in the ability to continue to grow and scale the levels of production wage,
Go into the future. So
I'm confident you got to see terrific results coming out of that international business you know over time and with some of these decisions that we've made, you know we're now opening up access to the patient volumes that are five or six times larger but we were really addressing historically. So I think all of that sets up very well for a very strong international business here into the future.
And the next question comes to Danielle antalffy from your line is open. Hey, good afternoon, everyone. Thanks so much for taking the question. And I was just wondering if you could talk a little bit about about the potential impact from doubling the sales force, and specifically as it relates to the primary care physician, I'm curious. If you guys have this Faith Hill as to what percentage of your prescribing Physicians are coming from primary care today. So we can sort of have a sense of what the sales force doubling and better call calling on the primary care. How may Physicians, you could potentially capture, thanks so much. Well, this Kevin I'll take that very little comes from that Channel right now. That's why we added them, and that's why we, we've expect, you know, if you take a look at the type to intensive insulin users, most of them are found in those offices and that's why we needed to get get out there over time. This will certainly
Increase. We expect it to and those are the expectations of the team. We brought on board. We're hearing good anecdotal stories and things are starting to heat up and it'll reality and deal with large book and business. We already have in the recurring orders from our, our current patients. It's, we got a ways to go. We think they'll we think they'll do great and we'll monitor it. If we see great returns, I just keep you having them tools to get great return to the best way to describe it. And I think hello Dexcom is going to be the best one that we have for that group.
Cantor, next question comes from the reality of berenberg capital and your line is open. Hi, thanks for taking the questions leaving. Congrats jereme and click on the moves. A lot of mayonnaise changes over a text, or rotations I guess in the last year or so the the question I had I guess I wanted to go after the the gross margin and pricing commentary from maybe a different angle. You know, when you have the similar type of pricing impact in the US, when you started going into farming Channel, we really saw a pretty strong level of uptake through that through that Arena off the pricing headwind continues. I guess what I'm trying to ask is do, you does guidance factor in that type of, kind of immediate impact from the price? The price cut I guess in in Europe. And uh, do you think that fifty million is the kind of extent of it as we kind of go forward here? Thanks.
Yeah, sure I can take that so you know, our gross margin, certainly contemplates. The impact of pricing impacts in their International markets and so long I wouldn't expect any changes there in terms of the extent of it. You know as we go after these incremental markets and open up access, you know we almost look at that as new patients and so when we go after a new patients and new markets, certainly pricing is going to change over time so there could be impacts that dragged out over time in the future years as a result of just going after incremental pocket patience and a sort of knock along impact. Certainly not anything that we would expect to be significant but you know without will always be contemplated in our guidance and we'll all be something that we certainly took two on these calls. I wouldn't expect anything that we provide hasn't been thought through and contemplated in any of the targets that we provide to. If you guys
And our next question comes from Marie, Thibault from btig line is open.
Hi, good evening, thanks for taking the questions and congrats to you as well. Jeremy wanted to ask a question on. I understand that the impact of COVID-19 last year, obviously, have a great impact on revenues this year. But curious, if you're still seeing a COVID-19 impact and this Q1/4 as well as the existing quarter here in terms of that still affecting new page as we certainly heard from other companies that Europe is, you know, lagging on the vaccine rollout. So would love to hear if that's been contemplated in guidance and if so how how you expect that to change over the year? Thanks.
Yeah, I think from our perspective, you know, all that we know right now is kind of the the environment we operate within with respect to COVID-19.
Onto the product. And so in these markets where we've done that, uh the hurdle to get onto the product has been removed. And so we absolutely would expect to see uh patient new patient, acquisition become much easier for us. You see that start to take off in a very positive way. So I do think you're going to see that uptick over the course of the Year even in the COVID-19 environment. With, of course, the caveat being that it kind of stays stable to where it's at today. If I were to get worse in some case, then then we might have to think about that differently, but we're trying to, to look at the future based upon what we see today and how it's impacted the markets here in the moment.
Andrew. Next question comes to Larry biegelsen for Wells Fargo. Your line is open. Hey guys, thanks for taking the question. So on pricing, you know, once Thursday, it's 3 or competing with each other, you know how much of a price premium? Do you think is sustainable and how close do you think you are to that premium today in the US and and outside the US, and Thursday, the opportunity, to place a value brand. Thanks for taking the question.
Larry, thanks for your question. We have numerous opportunities here but I'm not going to give our pricing strategy on underneath call. We we're very thoughtful about this. We run several models Thursday. We know what our technology is worth, and and we know what great benefit, we provide will price it accordingly. But we're also going to price our products and manner to wear by our patients have access to it off. Well, and I think our commercial team combined with our finance team and everybody has done a wonderful job balancing that will continue to balance, but we continue to grow as well. I mean, look at the, the volume growth versus our, our dollar growth this quarter. And we already said, our us volumes were in excess of the overall volume growth. We've managed to extremely well. We'll continue to do so.
Andrew next question, custom? Anthony Petrone from Jefferies.
Thanks a couple of questions, one on G7 and one of them as well. Sunday, 7, trying to get a sense. When you look at us timing to enter in and and CGM, do you think the market actually behaves differently? In other words, new patient starts potentially slow a bit as as the new form factor is is coming down market and then and then I'll margins taking the other side, the cogs specifically breaking down and uh breaking ground in Malaysia. Maybe just an update on timing as to when FDA inspections will take place for that facility and just to recap of what that can do on the side or sensors on a per-unit basis. Thanks a lot.
I'll take the the latter part of that with respect to Malaysia. You know, we're we're clearly well into that project making great progress or have a building in place as we exit the year off with plans, in place to have a clean room up and ready for validation, right at the turn of the year into the first quarter. Sorry, first quarter of next year. So the expectation is, will be producing product out of that page, you know, in the first half of next year, they're in Malaysia. So very excited about what we're seeing there. Yeah. And I'll take the G 67 and, and the cutover question again, with respect to Thursday, we we've not disclosed anything. One of our great learnings on G6 was have enough product ready to go. When you go and really be fully ready for lunch and we met a commitment to our customers that we will be ready when we when we do. Lots of product that we will be able to literally flip the switch and go over. As far as patients slowing their purchases of June
In particular in the Primacy Channel, you're buying one month of product at a time. So it's not like you're going in there and, and loading up with three to six months as we did in the past and the DME Channel. And even in the DM, each home today, there's less of that loading up by patience with G6. Then there was in g v, a n g for prior to that. We don't view that that that people will quit purchasing. Their G6 is when when G7 is announced cuz at all, all fairness our customers can't live without it, and when we have the opportunity to take care of them all will walk, you know, do as as organized, but his rapid migration as we possibly can. And as far as G6 future plans, we do see a lot of opportunity here but we really haven't disposed anything.
Endo next question, cuz even Lichtman from Oppenheimer. Your line is open.
Great. Thanks for taking our questions. Just had a question on your, your International expansion efforts. What are some of the key countries in focus for you? Here over the near-term? And are you interested in any contribution from these new regions in this year's guidance? Or is that more really more of a driver for a 20, 22 think? Yeah, I think that'll be more of a driver for future years. We've talked about are launching in Japan with the room. Oh, and that's scheduled to happen in the second half of the year. We got reimbursement in France, as many of you know. So we do expect France to be a bigger part of our business office that that it has in the past but the law of large numbers in our business, is things have gotten so big. They can't give us a whole lot. That moves the needle when we start. Hence, the discussion we've had about about increasing access in, are more mature markets. And looking at how we follow similar paths in these other geographies with the operating capability, we have now they're dead.
Senza and going through and and and sell.
And just, you know, the top end of this Market, we we want to get more aggressive and be more broad. So I think you'll see as we go into these geographies, overtime will start as we start in the past, but we are going to get off, get more reimbursement to try to get more patients, more rapidly.
Andrew Dice question, cuz the Brandon Vazquez William Blair? And your light is open. All right, thanks for taking my question. I just wanted to go back to one of the comments made during the prepared, remarks name, sounded like there was maybe a little hinting at new connected systems coming this year. It's curious, if you could talk about those, um, and specifically, what those, what those kind of products, I'm thinking, Thursday, or something outside of the regular Hardware upgrades that we see maybe somewhere on the software side, that could be a catalyst. Maybe for growth within maybe some of the, The Tam expansion opportunities, to talk to non incentives, or gestational diabetes or anything like that. So is there anything we're kind of not thinking out of the box here from the normal Hardware that will be important in the coming twelve months or so off. I don't think that there's anything that you guys are missing in terms of the prepared remarks and speaking to some of those systems. The one thing that we certainly are excited about has to be the the omnipod V, you know product.
In the back half of the year and will let you know insulet speak to the exact timing of when we're ready to put that product into the marketplace. But having connectivity into a product, like, that is something that, you know, we're very excited about and believe that they'll have success with and we'll have success with as well. I think with respect to the whole type to, you know, population and the opportunity there we couldn't be more bullish on the opportunity that sits in front of us and I think by today we learned more and more that increases that bullishness for us in the confidence that there's going to be some real opportunity there to create value coming from it and you're going to see a study a little bit later. This year, mid gear box of the the mid-year Society meetings, that's going to start to really lay out the benefit of using CGM relative to be GM in this type 2 population, particularly the non-intensive population. That that just demonstrates, the sort of impact we can have on patients, say they're on basil. Only and that's, you know, that's a four million patient population in the u.s. So I think that sort of data starts to really accumulate in favor of opening up a club
Their Market segment that doubles the existing you know, core u s intensive market today that that we're very excited about so you'll see that data here in mid gear but I think all of it starts to point to the fact that this type of space is going to open up in a significant way and and we're well positioned to take advantage of it and it includes a question answer session. I'll turn the call back over to Kevin Sayer for final remarks off.
Thank you, and thanks everybody for participating. As we wrap up our call today. I want to take a minute to acknowledge some very important recognition. The Dexcom received this week Forbes recently published their own company list of America's best employers for diversity. Dexcom was honored to be number 66 on that list. While we consider this a Perpetual Journey, we're very happy to have been recognized for some of the fact that we've done so far. As far as our outlook on the business, going forward are great quarter fuels. Our continued belief, The Best Is Yet To Come. I recently caught up with a friend who's a longtime healthcare industry executive and the gist of his message to me was very simple. Everything important in Diabetes Care is going to revolve around CGM.
For example, there are numerous systems.
So every device is an algorithm is available for automated insulin delivery, but there's only one CGM commercially capable of delivering the patient experience and outcomes that we've all envisioned for a very long time. That's only the beginning. Their incredible new compounds treatments and programs stepping forward for the treatment of type two diabetes. And we are very confident that the right CGM experience will become an integral part of all these Solutions. And we haven't even started talking about the difference. We can make, as part of prediabetes program, we've never been more excited and engaged an opportunity than we are today. Thank you again one and and have a great day.
Thank you, ladies and gentlemen, this concludes today's conference. Thank you for participating in may now. Disconnect
Joseph.