Q4 2021 Dexcom Inc Earnings Call

Welcome to the <unk> Com fourth quarter 2021 earnings release Conference call. My name is Adrian and I'll be your operator for today's call.

Speaker 1: Welcome to the Dexcom fourth quarter 2021 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 listen only mode. Later, we'll conduct a question and answer session.

Speaker 1: All participants are on a list in only mode. Later we'll conduct a question and answer session.

During the question answer session. If you have a question. Please press Star then one on your Touchtone phone. Please note. This conference call is being recorded I'll now turn the call over to Sean Christensen, Sean you may begin.

Speaker 1: During the question and answer session, if you have a question, please press star and one on your touchtone 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 desktops fourth quarter and full year 2021 earnings call. Our agenda begins with Kevin Sayer, <unk>, Chairman, President and CEO , who will provide a summary of our fourth quarter and full year highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy <unk>, Our Chief Financial Officer following.

Speaker 2: Thank you, operator, and welcome to Dexcom's fourth quarter and full year 2021 earnings call. Our agenda begins with Kevin Sayre, Dexcom's chairman, president, and CEO , who will provide a summary of our fourth quarter and full year 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. We ask analysts to limit themselves to one question so we can provide an opportunity for everyone participating today.

In our prepared remarks, we will open the call up for your questions. We ask analysts to limit themselves to one question. So we can provide an opportunity for everyone participating today.

Speaker 2: Please note that there are also slides available related to our fourth quarter performance on the Dexcom Investor Relations website on the Events and Presentations page. With that, let's review our Safe Harbor Statement.

Please note that there are also slides available related to our fourth quarter performance on the <unk> Com 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 expectations and assumptions 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.

Speaker 2: Some of the statements we will make in today's call may constitute forward-looking statements. These statements reflect management's intentions, beliefs, expectations, and assumptions about future events, strategies, competition, products, operating plans, and performance.

Speaker 2: All forward-looking statements included in this presentation are made as of the day thereof based on information currently available to Dexcom. Our subject of various risks and uncertainties and actual results could differ materially from those anticipated in the forward-looking statement.

Based on information currently available to <unk> com 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 <unk> annual report on form 10.

Speaker 2: 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 10K, most recent quarterly report on Form 10Q, 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.

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.

Speaker 2: 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 page.

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 fourth quarter and full year earnings presentation for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Speaker 2: 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.

Speaker 2: Please refer to the tables in our earnings release and the slides accompanying our fourth quarter and full year 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.

Now I will turn it over to Kevin.

Thank you Sean and thank you everyone for joining us.

I want to take time at the start to highlight some of <unk> key accomplishments in 2021 that reflect our progress relative to the priorities that we established at the start of the year and our long term goals.

Speaker 3: I want to take time at the start to highlight some of Dexcom's key accomplishments in 2021 that reflect our progress relative to the priorities that we establish at the start of the year and our long-term goals.

Total revenue grew 26% on an organic basis over the prior year with rising CGM awareness and decks com brand loyalty, leading to another year of record new patient additions. This translates to nearly $500 million of organic growth for the year, leading us to exceed the midpoint of our original guidance for the year.

Speaker 3: Total revenue grew 26% on an organic basis over the prior year, with rising CGM awareness and Dexcom brand loyalty leading to another year of record new patient additions. This translates to nearly $500 million of organic growth for the year, leading us to exceed the midpoint of our original guidance for the year by more than $160 million.

By more than $160 million.

We laid the foundation for significant expansion of our addressable markets in the future with differentiated product solutions and clinical evidence and.

Speaker 3: We laid the foundation for significant expansion of our addressable markets in the future, with differentiated product solutions and clinical evidence.

Speaker 3: In June , we presented results from the mobile randomized control trial for people with type 2 diabetes being managed with basal insulin. The results were clear. Dexcom CGM can do significantly more to help these people manage diabetes.

In June we presented results from the mobile randomized controlled trial for people with type two diabetes is being managed with basal insulin. The results were clear <unk> CGM can do significantly more to help these people manage diabetes.

Speaker 3: And with this conclusion being validated in the Journal of the American Medical Association, as well as in the recently updated ADA standards of care, we're hopeful that we can bring access to our technology for the estimated 3 million people on basal insulin therapy in the U.S. and many more outside the U.S.

And with this conclusion being validated in the journal of the American Medical Association as well as in the recently updated Ada standards of care. We are hopeful that we can bring access to our technology for the estimated 3 million people on basal insulin therapy in the U S and many more outside the U S.

Speaker 3: Alongside the mobile clinical evidence, we drove several updates to our product portfolio to broaden the ways that customers can engage with our technology.

Alongside the mobile clinical evidence, we drove several updates to our product portfolio to broaden the ways that customers can engage with our technology.

We've consistently spoken about our investments in software and data infrastructure as a significant competitive advantage in the third quarter. We received two key FDA clearances for decks com software tools that reflect this commitment and strength.

Speaker 3: We've consistently spoken about our investments in software and data infrastructure as a significant competitive advantage. In the third quarter, we received two key FDA clearances for Dexcom software tools that reflect this commitment and strength.

Our real time API allows us to directly integrate decks com CGM data in real time to the displays of approved third party apps in our App in App solution creates an FDA cleared <unk> com app experience that can be integrated directly with the app of the decks com partner.

Speaker 3: Our real-time API allows us to directly integrate Dexcom CGM data in real-time to the displays of approved third-party apps.

Speaker 3: and our app-in-app solution creates an FDA-cleared Dexcom app experience that can be integrated directly with the app of a Dexcom partner.

Speaker 3: Both of these creative solutions have already been rolled out with Dexcom Partners.

Both of these creative solutions have already been rolled out with ex Comm partners and we believe they position us well to provide extensive options for our customers partners and potential partners a CGM use continues to expand into new populations.

Speaker 3: and we believe they position this well to provide extensive options for our customers, partners and potential partners as CGM use continues to expand into new populations.

Speaker 3: We again strengthen our product portfolio through differentiated software with the CD mark and launch of our Dexcom One product in the fourth quarter of 2021.

We again strengthened our product portfolio through differentiated software with the CE, Mark and launch of our decks com one product in the fourth quarter of 2021.

Speaker 3: In a relatively short period since launch, we've already seen strong adoption in both Type 1 and Type 2 customers, and the health systems in two of our four launch countries established reimbursement.

In a relatively short period since launch we've already seen strong adoption in both type one and type two customers and the health systems in two of our four launch countries establish reimbursement.

Speaker 3: With a focus on ease of use and affordable price point, we believe that Dexcom One will be a significant part of our story as we look to extend CGM access globally.

With a focus on ease of use and affordable price point, we believe that <unk> will be a significant part of our story as we look to extend CGM access globally.

Speaker 3: Perhaps most importantly, in 2021, we completed the pivotal trials in support of our next generation G7 system and submitted the results for both CE mark and FDA clearance.

Perhaps most importantly in 2021, we completed the pivotal trials in support of our next generation <unk> system and submitted the results for both CE, Mark and FDA clearance as many of you recently saw in our January presentation, and we will soon see in a publication the performance of the <unk> system is outstanding achieving unsurpassed for.

Speaker 3: As many of you recently saw in our January presentation and will soon see in a publication, the performance of the G7 system is outstanding, achieving unsurpassed performance levels relative to the FDA's ICTM special controls.

<unk> levels relative to the Fda's IC JM special controls.

Speaker 3: Even with customers on our G6 system expressing record net promoter scores at the end of 2021, we are incredibly excited for them to experience G7.

Even with customers on our <unk> system expressing record net promoter scores at the end of 2021, we are incredibly excited for them to experience <unk> seven.

Speaker 3: We believe that we are very close to receiving C-Mark and are navigating the final stages of that review. In the meantime, our teams continue to work to prepare the manufacturing scale-up and commercial efforts in anticipation of G7 launches throughout the year, as well as launches with some of our partners on their upcoming connected insulin delivery devices.

We believe that we are very close to receiving CE Mark and are navigating the final stages of that review in the meantime, our teams continue to work to prepare the manufacturing scale up and commercial efforts in anticipation of <unk> seven launches throughout the year as well as launches with some of our partners on their upcoming connected insulin delivery devices on that front we were excited.

Speaker 3: On that front, we were excited to see the news of the FDA's recent clearance of Insulid's OmniPod 5, the first tubeless automated insulin delivery.

To see the news of the Fda's recent clearance of Insulet Omnipod five the first two bliss automated insulin delivery pump with this clearance for Insulet and the ongoing success of control IQ for tandem diabetes. We believe that we are enabling automated insulin delivery for the best <unk> pump on the market and the best tethered pump.

Speaker 3: With this clearance for insulin and the ongoing success of Control IQ for tandem diabetes, we believe that we are enabling automated insulin delivery for the best tubeless pump on the market and the best tethered pump.

Speaker 3: The outcomes that customers are seeing with these Dexcom integrated systems are outstanding, and we are proud that our commitment to connectivity is helping advance the market and enhance the quality of life for our customers. These accomplishments align with the strategic priorities that we established at the start of last year, showing the resilience and execution of the Dexcom teams in a challenging environment. These accomplishments are not merely 2021 events, but they are the foundation that we will continue to build on as we press forward in 2022 and beyond.

The outcomes that customers are seeing with these decks com integrated systems are outstanding and we are proud that our commitment to connectivity is helping advance the market and enhance the quality of life for our customers. These accomplishments aligned with the strategic priorities that we established at the start of last year, showing the resilience and execution of the decks com teams in a challenging environment.

These accomplishments are not merely 2021 events, but they are the foundation that we will continue to build on as we press forward in 2022 and beyond.

Many of you likely saw the recent update to the IVF estimates for global diabetes prevalence and cost there are now greater than 500 million adults with diabetes globally and cost to treat the disease alone are estimated to be approximately $1 trillion per year in.

Speaker 3: Many of you likely saw the recent update to the IDF estimates for global diabetes prevalence and cost. There are now greater than 500 million adults with diabetes globally. The costs to treat the disease alone are estimated to be approximately $1 trillion per year.

Speaker 3: In addition, the CDC now estimates that 38% of adults in America, or 96 million people, have pre-diabetes.

In addition, the CDC now estimated to 38% of adults in America or 96 million people have pre diabetes.

There is a real opportunity here for <unk> com to do something great to address this epidemic empower diabetes management and down the road, even work towards diabetes prevention and better health outcomes broadly the future for <unk> is bright with that I will turn it over to Jeremy for a review of the fourth quarter financials and discussion of the 2022 outlook Jeremy.

Speaker 3: There's a real opportunity here for Dexcom to do something great to address this epidemic, empower diabetes management, and down the road even work towards diabetes prevention and better health outcomes broadly. The future for Dexcom is bright. With that, I will turn it over to Jeremy for review of the fourth quarter financials and discussion of the 2022 outlook. Jeremy.

Speaker 2: Thank you, Kevin. As a reminder, unless otherwise noted, the financial metrics presented today will be discussed on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release as well as on our IR website.

Thank you Kevin as a reminder, unless otherwise noted the financial metrics presented today will be discussed on a non-GAAP basis reconciliations to GAAP can be found in today's earnings release as well as on our IR website in.

In line with our January pre announcement, we reported worldwide revenue of $698 million for the fourth quarter compared to $569 million for the fourth quarter of 2020, representing growth of 23% on both a reported and constant currency basis, and 20% on an organic basis. The organic revenue excludes non CGM revenue that we.

Speaker 2: In line with our January pre-announcement, we reported worldwide revenue of $698 million for the fourth quarter, compared to $569 million for the fourth quarter of 2020, representing growth of 23% on both a reported and constant currency basis and 20% on an organic basis.

Speaker 2: The organic revenue excludes non-CGM revenue that we generated in the fourth quarter following our acquisition of our distributor in Australia and New Zealand.

Generally in the fourth quarter following our acquisition of our distributor in Australia, and New Zealand.

U S revenue totaled $517 million in the fourth quarter compared to $451 million in the fourth quarter of 2020 representing growth of 15%.

Speaker 2: US revenue totaled $517 million in the fourth quarter, compared to $451 million in the fourth quarter of 2020, representing growth of 15%

Speaker 2: unit volume growth, which is a general representation for the growth of our user base, remained in the high 30% range compared to the fourth quarter of 2020, and we continue to see the strength in our strategic shift to the pharmacy channel.

Volume growth, which is a general representation for the growth of our user base remained in the high 30% range compared to the fourth quarter of 2020, and we continue to see the strength in our strategic shift to the pharmacy channel.

Speaker 2: Our teams continue to work very hard to broaden our prescriber base and take advantage of the significant reimbursement access that we have driven in the past two years in both the US and international markets.

Our teams continue to work very hard to broaden our prescriber base and take advantage of the significant reimbursement access that we've driven in the past two years in both the U S and international markets.

The uptick in Covid cases has created some challenges for us in the fourth quarter and into the early first quarter, but it is a credit to the resilience of our field team and the strength of the category that global new customers remained near record levels in the fourth quarter.

Speaker 2: The uptick in COVID cases has created some challenges for us in the fourth quarter and into the early first quarter, but it is a credit to the resilience of our field team and the strength of the category that global new customers remain near record levels in the fourth quarter.

Speaker 2: Our international business executed very well in the fourth quarter, with revenue growing 54%, totaling $181 million. Excluding non-CGM revenue that resulted from our 2021 distributor acquisition, international growth was 41% in the fourth quarter.

Our international business execute very well in the fourth quarter with revenue growing 54% totaling $181 million <unk>.

Excluding non CGM revenue that resulted from our 2021 distributor acquisition international growth was 41% in the fourth quarter.

Speaker 2: The international result reflected broad-based strength, including record results in all of our direct markets. This growth continues to validate the strategic moves that we made over the course of 2021, most notably the progress that we made to broaden access to our technology through advocacy, flexibility gained from operating efficiencies, and a differentiated product portfolio. We look forward to extending this momentum now as we progress into 2022.

The international results reflected broad based strength, including record results in all of our direct markets. This growth continues to validate the strategic moves that we made over the course of 2021, most notably the progress that we've made to broaden access to our technology advocacy flexibility gained from operating efficiencies and a differentiated product.

We look forward to extending this momentum now as we progress into 2022.

Speaker 2: Our fourth quarter gross profit was $472.6 million or 67.7% of revenue compared to 70.2% of revenue in the fourth quarter of 2020. The fourth quarter gross margin was slightly above our expectations as certain costs related to the G7 scale-up and commercial preparation remain in our R&D costs until we receive CE adapted

Our fourth quarter gross profit was $472 6 million or <unk> 67, 7% of revenue compared to 72% of revenue in the fourth quarter of 2020.

Fourth quarter gross margin was slightly above our expectations as certain costs related to the G. Seven scale up and commercial preparation remained in our R&D costs until we receive CE Mark.

Speaker 2: we made excellent progress to drive efficiencies across our product design, procurement, manufacturing, and logistics functions, leading to a full year 2021 gross margin that finished 360 basis points above our original 2021 guys.

We made excellent progress to drive efficiencies across our product design procurement manufacturing and logistics function, leading to a full year of 2021 gross margin that finished 360 basis points above our original 2021 times.

Operating expenses were $373 6 million for Q4, 2021 compared to $294 7 million in Q4 2020 the.

Speaker 2: Operating expenses were $373.6 million for Q4 2021 compared to $294.7 million in Q4 2020. The increase in operating expenses as a percentage revenue relative to the fourth quarter of 2020 was primarily a result of development and operational costs incurred in preparation for the launch of Q7, as well as investments to support our global commercialization.

The increase in operating expenses as a percentage of revenue relative to the fourth quarter of 2020 was primarily result of development and operational costs incurred in preparation for the launch of <unk> seven as well as investments to support our global commercialization efforts.

Operating income was $99 million in the fourth quarter of 2021 compared to $104 4 million in the same quarter of 2020.

Speaker 2: Operating income was $99 million in the fourth quarter of 2021, compared to $104.4 million in the same quarter of 2020. As a reminder, when we provided the outlook for 2021, we determined it was in the best interest to make investments in the business continue to fuel CGM growth and awareness. As we wrap the year, we are proud to report that we outpaced our initial 2021 operating margin guidance by more than 200 basis points.

As a reminder, when we provided the outlook for 2021, we determined it was in the best interest to make investments in the business continued to fuel CGM growth and awareness as we wrap the year. We are proud to report that we outpaced our initial 2021 operating margin guidance by more than 200 basis points.

Speaker 2: all of which came despite significant investments to solidify our software advantages, advance the G7 clinical, regulatory and manufacturing programs, significantly expand our global sales force presence and significant efforts to build brand awareness. And we are committed to driving further leverage in the years to come as we strike the right balance between investing to maximize our growth opportunity and turning that opportunity into cash flow generation for the business and our stakeholders.

All of which came despite significant investments to solidify our software advantages advanced the G seven clinical regulatory and manufacturing programs significantly expand our global sales force presence and significant efforts to build brand awareness and we are committed to driving further leverage in the years to come as we strike the right balance between.

Investing to maximize our growth opportunity and turning that opportunity into cash flow generation for the business and our stakeholders.

Speaker 2: Adjusted EBITDA was $154.5 million or 22.1% of revenue for the fourth quarter compared to $159.2 million or 28% of revenue for the fourth quarter of 2020. Net income for the fourth quarter was $69 million or $0.68 per share.

Adjusted EBITDA was $154 5 million or 22, 1% of revenue for the fourth quarter compared to $159 2 million or 28% of revenue for the fourth quarter of 2020.

Net income for the fourth quarter was $69 million or <unk> 68 per share.

Speaker 2: As many of you also saw in our press release and our GAAP reconciliations, we also recognized an $87 million expense associated with contingent milestones under the 2018 Collaboration and License Agreement with Verily Life Sciences. Terms of our amended contract with Verily are available in the SEC filings that were originally published in November 2018 and updated in November 2021.

As many of you also saw on our press release and our GAAP Reconciliations. We also recognize that $87 million expense associated with contingent milestone under the 2018 collaboration and license agreement with Verily life Sciences terms of our amended contract with barely are available in the SEC filings that were originally published in November 2018 and upped.

Data in November of 2021.

Speaker 2: We closed the quarter with greater than $2.7 billion in cash and cash equivalents. We have demonstrated the ability to generate positive cash flow, and going forward we remain in a very flexible position to continue to advance strategic initiatives and opportunities. Most notably, we will continue our development of our manufacturing facility in Malaysia, as we expect to have that facility validated for production by the end of 2022.

We closed the quarter with greater than $2 7 billion in cash and cash equivalents, we have demonstrated the ability to generate positive cash flow and going forward. We remain in a very flexible position to continue to advance strategic initiatives and opportunities most notably we will continue our development of our manufacturing facility in Malaysia, as we expect to have that facility validated.

For production by the end of 2022.

Speaker 2: Turning to 2022 guidance, as we stated last month, we anticipate full year total revenues of $2.82 to $2.94 billion, representing growth of 15 to 20 percent.

Turning to 2022 guidance as we stated last month, we anticipate full year total revenues of $2 82 to $2 94 billion representing growth of 15% to 20%.

Speaker 2: Given the success of our strategic transition to the pharmacy channel over the past three years, we anticipate that 2022 will be the final year where we see a significant shift of our existing base from the durable medical equipment channel to pharmacy. With this ongoing shift as well as the majority of our new customers now coming through the pharmacy channel in the US.

Given the success of our strategic transition to the pharmacy channel over the past three years, we anticipate that 2022 will be the final year, where we see significant shift of our existing base from the durable medical equipment channel to pharmacy with this ongoing shift as well as the majority of our new customers now coming through the pharmacy channel in the U S. Our.

Speaker 2: Our expectations for customer growth in 2022 are again higher than our revenue growth rate.

Patients for customer growth in 2022 are again higher than our revenue growth rate continuing to reflect the large end markets, we serve and the growing demand for <unk> CGM worldwide.

Speaker 2: continuing to reflect the large end markets we serve and the growing demand for Dexcom CGM worldwide.

Speaker 2: We have several scenarios built in conjunction with our planned G7 launches, and factoring in the respective regulatory approvals and competitive environments, we will provide updates as the year progresses.

We have several scenarios built in conjunction with our planned <unk> seven launches and factoring in the respective regulatory approvals and competitive environment. We will provide updates as the year progresses, turning to margins. We are establishing the following guidance for 2022.

Speaker 2: Turning to margins, we are establishing the following guidance for 2022.

Speaker 2: We expect gross profit margins of approximately 65% for the year, in line with the expectation that we establish for our 2025 long-range plan. The flight step back relative to our 2021 result is primarily related to the launch of our G7 system during the year.

We expect gross profit margins of approximately 65% for the year in line with the expectation that we established for our 2025 long range plan.

The slight step back relative to our 2021 result is primarily related to the launch of our <unk> system. During the year as we begin production of lower volumes and gradually scale in conjunction with our launches.

Speaker 2: as we begin production at lower volumes and gradually scale in conjunction with our launch.

Speaker 2: Despite that step back in gross margin, we expect to offset that impact completely with approximately 400 basis points of operating expense leverage. We anticipate our operating margins for 2022 of approximately 16%.

Despite that step back in gross margin, we expect to offset that impact completely with approximately 400 basis points of operating expense leverage we anticipate our operating margins for 2022 of approximately 16%.

Speaker 2: This factors in the ongoing investments that are driving significant returns for Dexcom and setting us up for sustainable growth, including our DTC marketing efforts and investments in our product portfolio pipeline.

This factors in the ongoing investments that are driving significant returns for <unk> com and setting us up for sustainable growth, including our DTC marketing efforts and investments in our product portfolio pipeline.

But we are making these investments with the discipline throughout the organization driving towards the margin expansion that we've established in our long range plan.

Speaker 2: But we are making these investments with the discipline throughout the organization, driving towards the margin expansion that we've established in our long-range plan.

Speaker 3: Finally, we expected just an EBITDA margin of approximately 25% in 2022. With that, I will turn the call back to Kevin. Thanks Jeremy. To summarize, we set out in 2021 with a few key goals in mind.

Finally, we expect adjusted EBITDA margins of approximately 25% in 2022.

With that I will turn the call back to Kevin Thanks, Jeremy to summarize we set out in 2021 with a few key goals in mind.

Speaker 3: to complete the clinical and regulatory process for G7 and prepare for significant launches.

To complete the clinical and regulatory process for <unk> and prepare for significant launches to validate health and economic outcomes for <unk> CGM beyond the intensive insulin using population to broaden access to <unk> CGM globally through evidence advocacy and leveraging our growing scale and efficiency.

Speaker 3: to validate health and economic outcomes for Dexcom FUGM beyond the intent of insulin-using populations.

Speaker 3: to broaden access to Dexcom CGM globally through evidence, advocacy, and leveraging our growing scale and efficiency.

And to strengthen our product portfolio for future growth through differentiated software capabilities. Our progress on all of these initiatives contributed to a great 2021 and have us looking forward to a big year ahead in 2022, I would now like to open up the call for Q&A, Sean. Thank you Kevin as a reminder, we ask our audience to limit themselves to only one.

Speaker 3: and to strengthen our product portfolio for future growth through differentiated software capabilities.

Speaker 3: Our progress on all these initiatives contributed to a great 2021 and have us looking forward to a big year ahead in 2022.

Speaker 2: I would now like to open up the call for Q&A. Sean? Thank you, Kevin. As a reminder, we ask our audience to limit themselves to only one question at this time and then re-enter the queue if necessary. Operator, please provide the Q&A instructions. Thank you.

Question at this time, and then reenter the queue if necessary operator, please provide the Q&A instructions.

Thank you we will now begin the question and answer session.

If you have a question. Please press Star then one on your Touchtone phone.

Speaker 1: If you have a question, please press star, press star, press star, press star,

If you wish to be removed from the queue. Please press the pound sign or they ask Keith.

Speaker 1: If you wish to be removed from the queue, please press the pound sign or the half.

Speaker 1: be using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then 1 on your touch tone phone. And our first question comes from Matthew O'Brien from Pat Piper Sandler. Your line is up.

Using speaker phone you may need to pick up the handset first before pressing the numbers.

Once again, if you have a question. Please press star one on your Touchtone phone.

And our first question comes from Matthew O'brien from Piper Sandler Your line is open.

Afternoon. Thanks for taking the question I do have a <unk> seven.

Speaker 4: Thanks for taking the question. I do have, it's a G7 question, it has two parts, but they're kind of interwoven. So for starters, Kevin, just talk about the data and the importance of the data when you commercialize G7 versus just like, hey, how much is the price of it? And then the second part of it is on the gross margin side, it's a big step back that we're seeing. It looks like it's entirely because of G7. So what are you anticipating as far as the impact?

Kevin question has two parts, but they're kind of interwoven.

So for starters, Kevin just talk about the data EMEA importance of the data when you commercialize <unk> seven versus just like.

How much of the price of oil and then the second part of it is I meant gross margin side with the big steps back, but we're seeing it looks like it's entirely because of G. Seven so what are you anticipating as far as the impact.

Speaker 4: from the G7 rollout, what does that say for the timing in Europe , specifically is it like a month or two and then the timing of approval here in the state.

From from the <unk> rollout.

Timing in Europe , specifically is it like a month or two and then the timing of approval here in the state.

Yes.

There's many parts to your two part question and I'll deal with some of them and then I'll give them to Jeremy Matt. Thanks, Let me talk about the data first <unk>.

Speaker 3: There's many parts to your two-part question. I'll deal with some of them, and then I'll give them to Jeremy, Matt, but thanks. Let me talk about the data first.

Speaker 3: Dexcom has long built its legacy on having the best product in the market with respect to performance and a product that everybody can rely on.

<unk> Com has long built its legacy on having the best product in the market with respect to performance and a product that everybody can rely on and time and time again, we've launched products, where we published great clinical performance in real life experience always ends up better than what we publish I've been looking at glucose sensor since the mid nineties. This data is better than.

Speaker 3: And time and time again, we've launched products where we publish great clinical performance and real life experience always ends up better than what we publish. I've been looking at glucose sensors since the mid-90s. This data is better than anything I've ever...

Anything I've ever seen and I think from a marketing perspective and from a customer experience perspective, it's absolutely critical that we remain top of the industry and this date it puts us in there and it demonstrates.

Speaker 3: And I think from a marketing perspective and from a customer experience perspective, it's absolutely critical that we remain top of the industry. And this data puts us in there and it demonstrates really the thought and effort that's gone into this product. Let's not forget, we've changed pretty much everything. There's a new algorithm, new hardware, new electronics.

Really the thought and effort that's gone into this product, let's not forget we've changed pretty much everything there is a new algorithm new hardware new electronics.

Our new App you name it new receiver everything in here is different than what we've had before so this has been a monumental.

Speaker 3: you name it, new receiver. Everything in here is different than what we've had before. So this has been a monumental effort that's taken a lot of time and to be able to produce this type of clinical results, we think just show the diligence of the effort. And with respect to approvals, we think it's also very important that we not leave room for error or room for doubt with the data that we submitted, which is exactly what we've done when you look at the size of that study. And you know, 39,000 some match pairs.

Your mental effort, that's taken a lot of time and to be able to produce this type of clinical results. We think just show the diligence of the effort and with respect to approvals. We think it's also very important that we not leave room for error room for doubt with the data that we submitted which is exactly what we've done when you look at the size of that study.

39000, some matched pairs theres really no room for doubt that this product is ready for prime time from a performance perspective on the approval timelines as I said in the prepared remarks, we're down to the last steps for <unk>.

Speaker 3: There's really no room for doubt that this product is ready for prime time from a performance perspective.

Speaker 3: On the approval timelines, as I said in the prepared remarks, we're down to the last steps for CE mark.

Mark.

Literally procedural type discussions with documentation that will take place in the near term, we're very confident that we'll get CE Mark very soon and then we will start our limited launch in Europe , and then rollout to the fall launch after that we have.

Speaker 3: literally procedural type discussions with documentation that will take place in the near term. We're very confident that we'll get C-Mark very soon, and then we will start our limited launch in Europe and then roll out to the full launch after that. We've had initial dialogue with the FDA on our submission and so far those discussions go well. We currently are not anticipating a delay, but...

Had initial dialogue with the FDA on our submission and so far those discussions go well.

Currently we're not anticipating a delay, but we don't control that any more than we controlled the CE mark delays either.

Speaker 3: We don't control that any more than we control the CE mark delays either that we've just experienced.

We've just experienced.

By providing great clinical data, though that certainly takes a large element out of the process couldnt be more excited about G. Seven nomad ill kick it over to Jeremy for the financial Ramification sure. Yes. It's a good question on the margins.

Speaker 3: By providing great clinical data though, that certainly takes a large element out of the

Speaker 3: Couldn't be more excited about G7 though, Matt. I'll kick it over to Jeremy for the financial....

Speaker 4: Yeah, so it's a good question on the margins. You know, we exited 2021 north of 68% with our G6, right? So you're certainly seeing G6 firing on all cylinders from efficiency perspective.

We exited 2021 north of 68% with our <unk> six right. So youre certainly seeing G. Six firing on all cylinders from efficiency perspective, and so your question is well how does the sequencing and timing of <unk> seven work, how does that impact the margin in relation to the timing throughout the course of the year and it is a little bit of an installation.

Speaker 5: And so your question is, well, how does the sequencing and timing of G7 work? How does that impact the margin in relation to the timing throughout the course of the year?

Speaker 5: and it's a little bit of an insulation. So if it rolls out a little bit slower, certainly the cost to produce G7 are higher, but that means we're ultimately selling more G6.

So if it rolls out a little bit slower certainly the cost to produce G. Seven are higher but that means we are ultimately selling more <unk> and so you have this little bit of this transition, whereas you think about it from a multitude of different scenarios. It really zones back in on the 65% margin and Thats. The reason why we feel comfortable with the guidance there.

Speaker 5: And so you have this little bit of a transition, whereas you think about it from a multitude of different scenarios.

Speaker 5: it really zones back in on the 65% margin. And that's the reason why we feel comfortable with the guidance there.

Speaker 5: I'll give you the opposite scenario. If G7 is able to come out a little bit faster, the regulatory approval happens quicker. Certainly we'll be selling more of it and we'll be able to leverage the fixed cost infrastructure and certainly improve yields. And so you ultimately get to that end goal a little bit quicker.

I'll give you the opposite scenario of <unk> seven is able to come out a little bit faster the regulatory approval happens quicker certainly we will be selling more of it and we'll be able to leverage the fixed cost infrastructure and certainly improve yields and so you ultimately get to that end goal a little bit quicker. So I think under both scenarios, where the regulatory approval and launch is sooner or later I think that 65%.

Speaker 5: So I think under both scenarios, whether regulatory approval and launches sooner or later, I think that 65% gross margin really speaks to the entirety.

Gross margin really speaks to the entirety of the year.

And our next question comes from Danielle <unk>.

Speaker 1: And our next question comes to Danielle Antosy from SVB Lee Rink. Your line is up.

Yes.

Seb Leerink your line is open.

Hi, good afternoon, everyone. Thanks, so much for taking the question.

Speaker 6: Hey, good afternoon everyone. Thanks so much for taking the question. Kevin and Jeremy, my question is around how to think about Q1 and potential COVID impact that you're seeing thus far. And also kind of, you know, if you could opine on what what you have factored in.

Kevin and Jeremy My question is around how to think about Q1.

Potential COVID-19 impact that youre seeing thus far and also kind of.

If you could opine on what what you have factored in.

Yes, Jeremy go ahead sure I'll take that one.

Yes, sorry about that we've got a little bit in and out there, but I think I got the question, which is how do we thought about it and I think for the full year guidance.

Speaker 5: Yeah, sorry about that. We've got a little bit in and out there, but I think I got the question, which is, you know, how we thought about it. And I think for the full year guidance.

Speaker 5: We have factored in the impact of COVID and how that would impact us. Now, we did talk a little bit about it on the call, and I think you saw this really across, especially in the United States, really where Omicron was pretty strong throughout the course of January , and we see it starting to dissipate here in February . So we will see that as it impacts our ability to get in front of primary care physicians and access new patients, but it's not a

We have factored in the impact of Covid and how that would impact US now we did talk a little bit about it on the call and I think I think you saw this really across especially the United States really we're all mccraw and was pretty strong throughout the course of January and we see it starting to dissipate here in February . So we will we will see that as it impacts our ability to get in front of primary care.

<unk> and access new patients, but it's not a.

Speaker 5: It's not a question of if, it's more a question of when. And so that was all contemplated in the guidance. And as we think about the full year, there's a lot of other things that we think are certainly interesting benefits as we think about. Certainly Dexcom One and the launch, as Kevin referred to, of G7 with the incredible data.

A question of if it's more question of when and so that was all contemplated in the guidance and as we think about the full year. There is a lot of other things that we think are certainly interesting benefits as we think about certainly decks com won in the launches Kevin referred to <unk> seven with the incredible data. So we really contemplated all of those in the guidance but.

Speaker 5: So we really contemplated all of those in the guidance, but certainly we know that as we exited January , certainly there were some primary care physicians that were closed to outside participants, but we are starting to see some of that thaw as we move into February .

Certainly we know that as we exited January certainly there were some primary care physicians that were closed outside participants, but we are starting to see some of that thought as we move into February .

Speaker 3: Yeah, I'd even add to that. I actually got out in the field here earlier this week and I heard from the reps and the teams out there.

Even add to that I actually got out in the field here earlier this week and I heard from from the reps and the teams out there that they have not had the access they wanted here in the first quarter, but it is starting to open up a little bit.

Speaker 3: They've not had the access they wanted here in the first quarter, but it is starting to open up a little bit.

Time will tell.

And your next question comes from Jeff Johnson from Baird. Your line is open.

Speaker 1: And our next question comes to Jeff Johnson from Baird. Your line is open.

Thank you. Good afternoon, guys that have now that you've got the mobile data published in the 88 standard of cares.

Speaker 7: Thank you. Good afternoon guys. Kevin, now that you've got the mobile data published and the ADA standard of care has been published and updated, how should we think about maybe the pathway to US coverage for non-intensive or for basal only, just at the CMS level and maybe expanding commercial coverage? And could you just remind us ballpark how many commercial payers right now or some form or another reimbursing for basal only or non-intensive T tubes that could be used?

It's been published an updated how should we think about maybe the pathway to U S coverage for non intensive days alone.

<unk> level and maybe expanding commercial.

It covers and could you just remind us all park, how many commercial payers right now or some form or another reimbursing for basal only or not intentional teachers. Thanks.

Yeah.

There is some limited reimbursement for basal only in some some non intensive type twos, but it is not a very big number.

Speaker 3: There is some limited reimbursement for basal only in some non-intensive type IIs, but it's not a very big number.

Speaker 3: Jeff, it's kind of on a haphazard basis, and it's not something that...

Jeff it's kind of on a.

Haphazard basis, and it's not something that actually we sell to your market too because they're just not that that much of it out there the pathway for approval will be similar to what we've done in the past given this mobile data. We're certainly presenting this on the commercial side and working to get coverage at various payers and hopefully some of those will drop over the course of the year on the.

Speaker 3: actually we sell to or market to because there's just not that much of it out there. The pathway for approval will be similar to what we've done in the past, given this mobile data. We're certainly presenting this on the commercial side and working to get coverage at various payers and hopefully some of those will drop over the course of the year on the CMS side now that we have really good data. We have a good CMS plan to work with and go with them, make them more aware.

CMS side now that we have really good data we have a good Tms plan.

To work with and go with them make them more aware lest we forget we did lead the charge for Medicare approval for CGM in general as a company here. So we have experience on this front.

Speaker 3: You know, lest we forget, we did leave the charge for Medicare approval for CGM in general as a company here, so we have experience on this.

Speaker 3: and we'll continue to push it, but it takes time and there's always variables. And in all fairness, I was completely wrong on Medicare approval before. It was approved 18 months earlier than I said it was going to come, so when I made a commitment there. So I'm rather hesitant to make any commitments on that front. We're just going to keep pushing. The most important thing though is the outcomes are there.

We will continue to push it but it takes time and there is always variables in all fairness I was completely wrong on Medicare approval before it was approved 18 months earlier than I said it was going to come so.

When I made a commitment there so I'm rather hesitant to make any commitments on that front, we're just going to keep pushing the most important thing though is the outcomes are there.

Speaker 3: I got a note from a patient not long ago who is a type 2 patient in this category and

I got a note from a patient not long ago, who is a type two patient in this category and while the patient got put on a new drug she attribute herb four month, UNC drop in six months to being out of decks com to the new.

Speaker 3: While the patient got put on a new drug, she attributed her four month A1C drop in six months to being out of Dexcom, not today.

Speaker 3: drug. It's because she knew what her glucose values were. And we've seen this time and time again. And we're very confident this is how this plays out over time.

Doug its cushy new way her glucose values were and we've seen this time and time again.

And we are very confident this is how this plays out over time.

And your next question comes from Robbie Marcus from Jpmorgan. Your line is open.

Speaker 8: Oh, great. Thanks for taking the question. I wanted to see if you could speak to the commercial launch strategy here. It sounds like you're spending a lot in fourth quarter and 2022 ahead of G7. You have Omnipod 5 launching. You also have Medtronic in a tight spot with the warning letter with a lot of patients.

Thanks for taking the question.

I wanted to see if you could speak to that.

The commercial launch strategy here it sounds like Youre spending a lot in fourth quarter.

And 2022 ahead of Chi said, then you have omnipod five launching you also have.

Medtronic.

In a tight spot with the warning letter with a lot of patients potentially moving over to partner therapies here. So.

Speaker 8: potentially moving over to partner therapies here. So, you know, maybe just talk to us about the strategy, how you're going to be spending your DTC dollars, how we should think about those ramping up, and what the competitive message from your reps will be this year.

Maybe just talk to us about the strategy. How you are going to be spending your DTC dollars. How we should think about those ramping up in and what the competitive message from your apps will be this year. Thanks.

While our competitive message for our reps is going to be the same it's always been more of the best.

Speaker 3: Well, our competitive message for our reps is going to be the same. It's always been, we're the best. And you're right, Robbie. We have a tremendous opportunity on the integrated system front with our partners to go grab as many of these users as we possibly can. And we're in talks with both Tandem and Insulate to let's go make it while the sun shines and get as many as we possibly can as those individuals rotate off warranty and have an opportunity to get into a new system.

And you're right Ravi we have a tremendous opportunity on the integrated system front with our partners to go grab as many as many of these users as we possibly can and we are in talks with both tandem and Insulet to let's go make hay, while the Sunshine and get as many as we possibly can.

Those individuals' rotate off warranty and have an opportunity to get into a new system.

I think it speaks to our connectivity strategy and partnering with others now we have two options and we know a big driving factor for both of those partners are the fact that they've paired with the best product on the marketplace. So we will aggressively work with our partners on that front and make sure we have a joint message together.

Speaker 3: I think it speaks to our connectivity strategy and partnering with others. Now we have two options and we know a big driving factor for both those partners is the fact that they pair with the best product on the marketplace. So we will aggressively work with our partners on that front and make sure we have a joint message together. With respect to our own DC.

With respect to our own DC.

Speaker 3: and our own direct to consumer marketing. We have specific messages literally down to the geography standpoint, where in some states we target Medicare patients more than others. In other states we target pediatrics and others. And then we analyze the effectiveness of those ads, the return on those investments, and then adjust from there. I think 2022, we're in an interesting year because we're going through a product loss.

Our undrawn direct to consumer marketing.

We have specific messages literally down to the geography standpoint, we're in some states, we target Medicare patients more than than others in other states, we target pediatrics and others and then we analyze the effect of those adds to the return on those investments and then adjust from there I think 2022.

We're in an interesting year, because we're going through a product launch.

That really is in effect our behavior, we have to.

Speaker 3: That really isn't going to affect our behavior. We have to get more users on the G6 system as we go. And then some of those ads will ultimately shift over to G7, but we're not going to slow down and we're not going to create anticipation. We'll market what we have, sell what we have, and then as time comes, we'll pull the switch and go over. And our next question.

Have to get more users on the <unk> system as we go and then some of those adds will ultimately shift over to G. Seven, but we're not going to slow down and we're not going to create anticipation will market. What we have said what we have and then as time comes we'll pull the switch and go over.

And our next question comes from Matt Taylor from UBS.

Hi, Thank you for taking my question.

Speaker 4: I wanted to ask you more about the dynamics of Dexcom One and we are hearing about Libre3 being rolled out more broadly. Are you seeing anything different on the competitive front? Maybe talk about how you are going more head to head with Dexcom One. I would love for you to just flesh out those dynamics and the opportunities it is creating for you now that you didn't have before.

So just I wanted to ask you more about the dynamics of <unk>, one and we are hearing about libre three being rolled out more broadly are you seeing anything different on the <unk>.

Additive front, and maybe talk about how youre going more head to head with that come on I'd Love you to just flush out those dynamics and the opportunities. It is creating for you now that you didn't have before.

Speaker 3: Well again, let's remind everybody our original Dexcom 1 launch is in four relatively small countries. The results have been very good. We've launched it as only an e-commerce platform and two of the four countries have now put...

Well again, let's remind everybody our original decks com one launch.

For for a relatively small countries the results have been very good.

We launched it is only an e-commerce platform in two of the four countries have now but.

The standards in place to reimburse for it because of these of use and the.

Speaker 3: the standards in place to reimburse for it because of the ease of use and the acceptance of that product.

The acceptance of that product and the price point, So <unk> does give us an opportunity first of all to expand in new geographies, where there may not be reimbursement, where the path to reimbursement would be difficult.

Speaker 3: and the price point. So DEXCOM 1 does give us an opportunity, first of all, to expand in new geographies where there may not be reimbursement, where the path to reimbursement would be difficult, and there's not a lot of integrated systems. We look forward to that as a geographical expander where we don't have infrastructure. The other opportunity you have with DEXCOM 1, in all honesty, is looking at a possible two-product strategy in some geographies.

Theres not a lot of integrated systems, we look forward to that geographical expander, where we don't have infrastructure. The other opportunity we have with decks com won in all honesty is looking at a possible two product strategy in some geographies, where we believe we can support our G series for those intense intensive insulin users, particularly those.

Speaker 3: where we believe we can support our G Series for those intents.

Speaker 3: intensive insulin users, particularly those who are on partner systems and integrated systems and those who need all the share and follow function, pediatrics in particular. There's another population that may not need all those features and in those geographies we believe Dexcom One is an excellent product offering that could round out our portfolio very nicely. As far as Libre III rolling out, we haven't seen that much of it so far. I know there's been a lot of...

Huron partner systems, and integrated systems, and thus the need all the share and follow a function pediatrics in particular theres. Another population that may not need all of those features and in those geographies. We believe <unk> is an excellent product offering that could round out our portfolio very nicely.

As far as labor III rolling out.

We haven't seen that much of it so far I know theres been a lot of announcements soon.

Speaker 3: was approved several years ago. So we'll see how that roll out.

Approved several years ago, So we'll see how that rollout goes.

And our next question comes from Larry <unk> from Wells Fargo.

Speaker 1: And our next question comes from Larry Beigleston from Wells Fargo.

Good afternoon, and thanks for taking the question.

Just one for me on <unk> in the U S launch that Kevin I heard you say initially it will be a limited launch.

What does that look like how many market how long is the limited launch and how should we think about the ramp of <unk>. Once it is approved.

<unk>.

Our limited launch will be a relatively short period of time and really focus on one geography, primarily.

Speaker 3: Our limited launch will be a relatively short period of time and really focus on wind geography primarily. And after that we'll then roll it out to

And after that we'll then roll it out to.

Speaker 3: really the larger markets, the larger more reimbursed markets and the larger markets where we can get reimbursement very quickly and then go down to the smaller ones. So we again have the geographies divided up in tiers. Tier one countries first, then tier two and tier three along those lines and that will roll out over the course of 2022 certainly to the larger markets. Then the other geographies will come after that.

Really the larger markets larger more reimburse markets in our larger markets, where we can get reimbursement very quickly and then go down to the smaller ones. So we again have the geographies divided up in tiers tier one countries first in tier two and tier three along those lines and that will rollout over the course of 2020 to certainly to the larger markets than the other.

<unk> fees will come after that.

And your next question comes from Joanne Wuensch from Citibank.

Speaker 9: Thank you very much. I just want to double check two things. I want to make sure I saw either at the earlier presentation in January today Your patient volumes in the United States are up 30%. Is there a similar number you can share outside the United States?

Thank you very much.

I will check two things.

I want to make sure I.

I'll either at the earlier presentation in January today.

Patient volumes.

We're up 30% is there a number you can share outside the United States.

Speaker 5: Yeah, so what we had mentioned is in the US they were in the high 30s and globally they were also in the high 30s. And so that's the two numbers. So we gave you the global one certainly in early January and then today we mentioned the US was also in the high 30s.

Yes, so what we had mentioned is in the U S. They were in the high <unk> and globally. They were also in the high <unk> and so that's the two numbers. So we gave you the global one certainly.

In early January and then today, we mentioned in the U S was also in the high <unk> as well.

Okay.

Speaker 9: Okay, and could you remind us what your view is on pricing headwinds for this year and if and or they roll into next year?

Can you remind us what your view is on pricing headwinds for this year and it's Andrew I think well into next year.

Sure, Yes. So this year, our pricing headwinds, we had talked about and it will be called channel mix was really around $250 million $200 million in the U S and about 50 million outside the U S.

Speaker 5: Sure, yeah, so this year our pricing headwinds, we had talked about, what we call channel mix, was really around 250 million, 200 million in the US and about 50 million outside the US. We came in a little bit light of that this year, but generally in line with that, and we expect similar type mixed headwinds into 2022 and then dissipating significantly as we move into 2020.

We came in a little bit light of that this year, but generally in line with that and we expect similar type.

Similar type mixed headwinds into 2022, and then dissipating significantly as we move into 2023.

And your next question comes from Jayson Bedford from Raymond James.

Speaker 1: The next question comes from Jason Bedford from Raymond's.

Good afternoon, I wanted to ask about the U S business in the fourth quarter.

Speaker 4: Good afternoon. I wanted to ask about the US business in fourth quarter. It's been about a month since you last updated investors. You mentioned COVID a couple times on the call, but is there anything else you could share with us with respect to US growth?

It's been about a month since you last updated investors you mentioned Covid a couple of times on the call, but is there anything else you could share with us with respect to kind of U S growth, which was obviously a bit.

Speaker 10: was obviously a bit slower than the prior three quarters.

Lower than the prior three quarters.

Sure.

Yes, Thanks, Jason appreciate the call. So what we saw from a growth perspective is about 15%. It was a little bit slower from a growth revenue dollars perspective, now we did see unit volumes in the high 30% which indicates.

Speaker 5: Yeah, thanks, Jason. Appreciate the call. So you know, what we saw from a growth perspective is about 15%. It was a little bit slower from a growth revenue dollars perspective. Now we did see unit volumes in the high 30%, which

Speaker 5: you know, indicates that the underlying patient base continues to be strong.

Indicates that the underlying patient base continues to be strong I think the one thing that we did see and I think you referenced it earlier in your question. It was we didn't hit our new patient targets. It. We're still we still had near our record new patient add in so it was still a solid addition, and we're still very happy but.

Speaker 5: I think the one thing that we did see, and I think you referenced it earlier in your question, was we didn't hit our new patient targets. We still had near a record new patient add, and so it was still a solid addition, and we're still very happy.

Speaker 5: But we did have some challenges getting into the primary care physician offices. And Kevin alluded to it earlier. He was out in the field. And when Omicron was really running at its height, a lot of those offices were really not seeing outside visitors. And so that creates a little bit of a challenge as you're ultimately getting to know these physicians and getting them to ultimately understand how to use the product.

But we did have some challenges getting into the primary care physician offices and <unk>.

Kevin alluded to it earlier he was out in the field and when I'm a problem was really running at its height.

Those offices were really not seeing outside visitors and so that creates a little bit of a challenge as you are ultimately getting to know these physicians and getting them to ultimately understand how to use the product that was the predominant driver of what you saw in the Q4 and in our early calls will be when we kind of at least early numbers.

Speaker 5: That was the predominant driver of what you saw in the queue for. And in our early calls, when we released early numbers.

Speaker 5: We have mentioned that and we've confirmed that over the past few weeks is that was predominantly the driver. As Omicron dissipates and we're able to get back in front of these primary care physicians, we remain bullish that folks will ultimately adopt the technology similar to what you've seen prior to that. But that was really the predominant driver, nothing really beyond that. And the only thing I'd add to that, Jason, again, these volume numbers still remain very high.

You had mentioned that in we've confirm that over the next over the past few weeks is that was predominantly the driver.

As omicron dissipates, and we're able to get back in front of these primary care physicians, we remain bullish that folks who ultimately adopt the technology.

Similar to what you've seen prior to that.

But that was really the predominant driver nothing really beyond that.

The thing I'd add to that Jason again, these volume numbers still remain very high so again as channel mix shifts the growth rate is lower than the volume numbers add to that the fact that our NPS scores are higher than they've ever been so patients are very happy and satisfied with the <unk> experience, which leads to them staying on the system and also.

Speaker 3: So again, as channel mix shifts, the growth rate is lower than the volume numbers. Add to that the fact that our NPS scores are higher than they've ever been. So patients are very happy and satisfied with the Dexcom experience, which leads to them staying on the system and also being on the system more time. So as you look at revenue factors going forward, two of the biggest ones are patient retention and utilization, and we're doing very well on that front. And so, yeah, that's...

Being on the system more time, so as you look at revenue factors going forward two of the biggest Windsor patient retention and utilization and we're doing very well on that front.

And so that's.

Pretty much sums it up.

And your next question comes from Matthew Blackman from Stifel. Your line is open.

Speaker 1: Your next question comes from Matthew Blackman from Stiefel. Your line is open.

Hi, good afternoon, everybody. Thanks for taking my question I've got one.

Speaker 11: I've got one for Jeremy on the operating leverage or guiding.

Jeremy on the operating leverage Youre guiding to in 'twenty, two how should we think about where that leverage manifest in the P&L is it disproportionate to the SG&A side, because youre scaling into those large sales Force addition, or is it skewed.

Speaker 11: How should we think about where that leverage manifests in the P&L? Is it disproportionate to the SG&A side because you're scaling into those large Salesforce edition?

Speaker 11: to R&D because G7 costs are rolling off. So if you have any questions, please feel free to contact me.

R&D because G seven cost of rolling off just any help on how to think about the moving parts there.

Speaker 5: Sure, yeah, I know it's a fair question, and it's split about 50-50. I think what you're going to see is you're going to see us leveraging mostly the G&A line and the SG&A line. We'll continue to make sure that we're allocating funds to sales and marketing, but you're going to see us leveraging the G&A line and continuing to do so. And then you will see some of the fall off on some of the R&D side as we leverage R&D and as we post G7 launch, we don't have to incur as many costs associated with a launch established.

Sure Yeah, no. It's a fair question and it's split about 50, 50, and I think what youre going to see is youre going to see us leveraging mostly the G&A line and the SG&A line will continue to make sure that we're allocating funds to sales and marketing, but youre going to see us leveraging the G&A line and continuing to do so and then you will see some of the fall off on some of the R&D side as we leverage R&D and as we.

<unk> G. Seven launch we don't have to incur as many costs associated with our launch establishment. So think about a 50 50 across both of those in G&A, not <unk> and R&D.

Speaker 5: So think about it 50-50 across both of those and G&A, not S&M and R&D.

And your next question comes from Marie Thibault from BTG.

Speaker 1: And the next question comes from Marie Seebalt from BT Edge.

Alright. Thank you so much for taking the question.

Speaker 12: Hi, thank you so much for taking the questions. I wanted to ask a question about the Salesforce progress. I think it was about a year ago that you doubled the Salesforce. And obviously, outside of the Omicron challenges here more recently, I would like to hear how their progress has been and what else might be needed.

Wanted to ask a question about.

The sales force progress I think it was about a year ago that you doubled the.

Sales force and obviously outside of the on the Con challenges here more recently I would like to hear how that progress has been.

What else might be needed at this point. Thank you.

We're really happy with the efforts of the sales team.

Speaker 3: We're really happy with the effort to the sales team. And again, I got out in the field for the first time this week and just had a couple of

And again I got out in the field for the first time this week and just had a couple of meetings with some regional teams I'm very impressed with the quality of the people we were able to bring on <unk> com as a name here in the U S is one that attracted great candidates and literally there were thousands of people that applied for these jobs, we very much had our pick of the cream of the crop there are getting.

Speaker 3: meetings with some regional teams. I'm very impressed with the quality of the people we were able to bring on.

Speaker 3: Dexcom is a name here in the US as one that attracted great candidates and literally there were thousands of people that applied for these jobs. We very much had our pick of the cream of the crop. They're all getting very much up to speed. I'm very also impressed with the diversity of the group with respect to experiences.

Very much up to speed.

<unk> also impressed with the diversity of the group with respect to experiences.

Speaker 3: And what we've learned is they brought from their companies, you have some from pharma, some from devices, some from diabetes, some who used to be clinicians. So you have a very different team with very good ideas to go about.

And what we've learned is they brought from their companies you have some from farmers.

Isis on from diabetes.

<unk>, who used to be clinicians. So you have a very different team with very good ideas to go about this we're confident that the team is making very good progress.

Speaker 3: We're confident the team is making very good progress.

We missed the opportunity in all fairness to have them altogether.

Speaker 3: We miss the opportunity in all fairness to have them all together, and I am in particular, to get to know more of.

And I am in particular to get to know more of them.

The growth in new patient starts has not been linear with the expansion of the sales force, but as we get down into these other markets. We cant expect it to be the same because they don't see as many of the people with diabetes is in our traditional endocrinology market, but we're happy with the growth that they've achieved we have very ambitious targets for next year, what might be needed in the future.

Speaker 3: The growth in new patient starts has not been linear with the expansion of the sales force, but as we get down into these other markets, we can't expect it to be the same because they don't see as many of the people with diabetes as in our traditional endocrinology market.

Speaker 3: But we're happy with the growth that they've achieved. We have very ambitious targets for next year. What might be needed in the future is something we debate a great deal internally. We're happy with what we have now, and let's let this play out for a while longer before we make any changes. I don't see anything changing right now. If anything, again, this is all about awareness on our side. And if what we need to generate more awareness has more feet on the street, that's the direction we would go.

<unk> is something we debate a great deal in turn it internally.

We're happy with what we have now and let's let this play out for a while longer before we make any changes I don't I don't see anything changing right now if anything again. This is all about awareness on our side and of what we need to generate more awareness has more feet on the street. That's the direction. We would go for right now we don't feel that way, but we may in the future. So we'll see we're never adverse to.

Speaker 3: For right now we don't feel that way, but we may in the future, so we'll see. We're never adverse to trying pilot programs.

Try and pilot programs.

Speaker 3: In specific geographies to see if another option can work and we will do that all throughout 2022 and if something sticks will move in that direction.

In specific geographies to see if another option can work and we will do that all throughout 2022, and if something sticks will move in that direction.

And our next question comes from Chris Pasquale from Guggenheim. Your line is open.

Speaker 1: And the next question comes from Chris Pasquale from Guggenheim. Your line is up.

Speaker 13: Thanks. I wanted to follow up on the factors impacting 4Q and what lessons we should take from that as we look at 1Q.

Thanks, I wanted to follow up on the factors impacting <unk> and what lessons we should take from that as we look at <unk>. You said Covid was the main headwind, but your channel mix has also changed a lot over the past couple of years do you think thats, resulting in less seasonality than you used to see in the year and when the corollary to that would be should we expect.

Speaker 13: So you said COVID was the main headwind, but your channel mix has also changed a lot over the past couple of years. Do you think that's resulting in less seasonality than you used to see in the year end? The corollary to that would be, you know, should we expect the typical step down in one queue? Could it be more muted because of that reduced seasonality or was COVID really more of a factor in January than it was in December ? Could it just help us sort of balance those different factors?

The typical step down in <unk>.

Could it be.

Muted because of that reduced seasonality.

Or was Covid really more of a factor in January than it was in December just help us sort of balanced those different factors. Thanks.

Sure Yeah, no happy to walk through it. So you are correct as time moves on the move of the commercial business certainly more and more to pharmacy, then DMA should should give us more of a situation, where Q1 and Q4 are less less pronounced and so you are 100% correct, there and over the longer haul that's where we expect it to go.

Speaker 5: Sure, yeah, Noel, happy to walk through it. So you are correct, as time moves on, the move of the commercial business, certainly more and more to pharmacy than DME, should give us more of a situation where Q1 and Q4 are less pronounced. And so you are 100% correct there. And over the longer haul, that's where we expect it to go.

No.

Speaker 5: In terms of seasonality for this quarter, we do expect it to be relatively similar to last year.

In terms of seasonality for this quarter, we do expect it to be relatively similar to last year and again thats just more of us trying to navigate through one that migration, but too.

Speaker 5: And again, that's just more of us trying to navigate through, one, that migration, but two, the Omicron variant this year was certainly more than we saw in January of last year. And so we're really comparing year over year. And so I think it's fair to say that. So we expect that those two things really offset each other. So you see a little bit of a seasonality in this Q1 of 2022 similar to that you've seen in the past.

The omicron variance. This year was certainly more than we saw in January of last year, and so we're really comparing year over year and so I think it's fair to say that so we would expect that those two things really offset each other so you see a little bit of a seasonality in this Q1 of 2022 similar that you've seen in the past.

Speaker 5: Longer term, you are correct, and we will expect absent all macro factors that ultimately impact people's ability for movement and...

Longer term you are correct and we will expect absent all macro factors that ultimately impact people's ability for movement in.

Seeing physicians et cetera, it will migrate to more of that situation, but we'll keep you posted as years get forward about that seasonality for now that's our expectation.

Speaker 5: seeing physicians, et cetera, it will migrate to more of that situation. But we'll keep you posted as years get forward about that seasonality. For now, that's our expectation.

Excuse me.

And our next question comes from Margaret.

Saar from William Blair.

Hi, everyone. This is Brandon on for Margaret.

Speaker 5: Hi everyone, this is Brandon on for Margaret. I just wanted to ask you a question on the type two basal population and maybe some of the non-intensive patients. I can appreciate you guys are still early there, but you're pretty far in with the mobile data. So maybe you've talked to some, gone out in the field and talked to some endos or some other physicians.

Wanted to ask a question on the type two basal population and maybe some of the non intensive patients I can appreciate you guys are still early there, but you are pretty far and with the mobile data. So maybe you've talked to some gone out in the field and talking to some and those are some other positions.

Speaker 5: And maybe you have a few patients already on Dexcom that are using and so I'm curious what early feedback you're getting from those less intensive type 2 patients in terms of either utilization pricing or demand.

And maybe you have a few patients already on <unk> com that are using and so I'm curious what early feedback youre getting from those less intensive type two patients in terms of.

Either utilization pricing or demand anything that.

Speaker 5: Anything that's kind of early there that we can read through that what the commercialization might look like going forward

Kind of early there that we can read through that what the commercialization might look like going forward.

Speaker 3: Well, I'll start with basal insulin because the ADA and their recent guidelines came out and recommended CGM continuous use for people on basal insulin, which is a far departure from where we were in the past. This is very encouraging for us because the...

I'll start with basal insulin because the Ada and their recent guidelines came out and recommended CGM continue issues for people on basal insulin, which is a part of departure from where we were in the past. This is very encouraging for us because the.

The fact that this group is now recommended that is a big step for us going forward.

Speaker 3: The fact that this group has now recommended that is a big step for us going forward. And as far as that population utilization in our mobile study and even in the other things that we've heard, they have no problem wearing CGML.

And as far as that population and utilization in our mobile study and even in the other things that we've heard they have no problem wearing CGM all the time.

Speaker 3: For non-intensive patients, we've had our program with Level 2 at UnitedHealthcare, we've had other programs with Intermountain Health, OnDuo, WellDoc, a number of them, and the results remain the same over and over again.

For non intensive patients we've had our program with level two at Unitedhealthcare. We've had other programs with Intermountain health on duo well Doc a number of them and the results remain the same over and over again patients are on CGM do better than those who are not in the information provided by CGM enables him to make the proper changes to have better.

Speaker 3: Patients on CGM do better than those who are not. And the information provided by CGM enables him to make the proper changes.

Speaker 3: to have better overall health, very much like I said in my prepared remarks earlier, we see A1Cs go down because people know what the consequences of their meds, of their exercise, of their diets, of sleep, of all these factors has on their overall health.

Overall helped very much like I said.

In my prepared.

Paired remarks earlier, we see <unk> go down because people know what the consequences of their meds of their exercise of their diets of sleep of all of these factors has on their overall health with respect to the pricing in the business model. We've often said we are solving a different problem and we're going after type two less intensive die.

Speaker 3: With respect to the pricing in the business model, we've often said we are solving a different problem when we're going after type 2 less intensive diabetes and we therefore think the pricing model will be different.

And therefore, I think the pricing model will be different than the current product that we have and we are working on what that optimal solution is right now and Youll hear more from us on that front over the course of 2022.

Speaker 3: than the current product that we have. And we are working on what that optimal solution is right now. And you'll hear more from us on that front over the course of 2020.

And your next.

Speaker 1: Our next question comes from Cecilia Furlong from Morgan.

Question comes from Julia for lung from Morgan Stanley .

Hey, good afternoon, and thank you for taking my question I wanted to ask on <unk> Com line again.

Speaker 9: Great. Good afternoon and thank you for taking the question. I wanted to ask on Dexcom 1 again, just how you're thinking about further geographic expansion in 2022, as well as expectations for relative contributions to new patient volumes, OUS in 2022, and where you think this can go over the longer term. And thank you.

Just how you're thinking about further geographic expansion in 2022, as well as expectations for relative contribution to move patient volumes.

In 2022, and what do you think this can go over the longer term and thank you.

I'll start and Jeremy can maybe have some more specific numbers. After I'm done if he's got any again as I said earlier there are two great uses for <unk>. One. The first one is those geographies, where we're not and where we don't have infrastructure or a distribution arrangement with a distribution distributor or another distribution.

Speaker 3: I'll start and Jeremy can maybe have some more specific numbers after I'm done if he's got any. Again, as I said earlier, there are two great uses for Dexcom Live.

Speaker 3: The first one is those geographies where we're not and where we don't have infrastructure or a distribution arrangement with a distributor or another distribution partner lined up. We can drop an e-commerce platform in there, have cash pay payments.

Part partner lined up we can drop an e-commerce platform and Theyre half cash pay payments patients and we can get them on the system and we can go our results and our initial.

Speaker 3: patients and we can get them on the system and we can go. Our results in our four initial countries have been outstanding.

Initial countries have been outstanding and so we will have other new geographies up over the course of the year like that they will not have major contributions to our revenue, but they do expand our footprint and do position us ultimately to get reimbursement in those countries again as we've seen in the first four whenever you launch that we now have reimbursement in progress and.

Speaker 3: and so we'll have other new geographies up over the course of the year like that. They will not have major contributions to our revenue, but they do expand our footprint and do position us ultimately to get reimbursement in those countries, again, as we've seen in the first four where we launched it, we now have reimbursement in process for two of those. The other opportunity for Dexcom One is in many of the major established markets, particularly in the US.

<unk> for two of those the other opportunity for <unk> as in many of the major established markets, particularly O U S.

Speaker 3: We have an opportunity with Dexcom One to implement a dual product strategy. Our G Series does a lot more than our Dexcom One product. With connectivity, share and follow, the predictive alerts and all the other things that we have in that system, we believe it merits a different price point. Again, it solves a different problem. It's a different use case. We will very opportunistically pick geographies where we could launch Dexcom One and augment our business in those geographies, again adding more patient volume and...

We have an opportunity with <unk> to implement a dual product strategy. Our G series does a lot more than our <unk> product with connectivity Sharon follow.

Predictive alerts and all the other things that we have in that system. We believe it merits a different price point again, it solves a different problem. It's a different use case, we will very opportunistically pick geographies, where we can launched XCOM line and augment our business in those geographies again, adding more patient volume and.

Excuse me in more revenue to the process as far as giving you numbers or plans I am not going to give you all of that that's on the strategy side and something for us not to unwind to.

Speaker 3: excuse me, and more revenue to the process. As far as giving you numbers or plans, I'm not gonna give you all of that. That's on the strategy side and something for us not to unwind to the world, but suffice it to say those plans are in progress. I don't know, Jeremy, if you have anything to add. I think the safe bet is just to assume multiple country entries with Dexcom One, and we'll get you a little bit more color once we're into those countries. We'll hold those back for.

To the world, but suffice it to say those plans are in progress and on Jeremy do you have anything to add I think the safe bet is just to assume multiple country entries with <unk> and we'll get you a little bit more color. Once we're into those countries will hold those back for strategic purposes.

And your next question comes from Kyle Rose with Canaccord. Your line is open.

Speaker 1: And our next question comes from Kyle Rose from Canaccord.

Great. Thank you for taking the questions. So.

Speaker 14: Great, thank you for taking the questions. A lot has been asked, but I think I'd like to just touch on the longer term product pipeline. Look, I realize you haven't launched G7 yet, so it's...

Lots been asked but.

I'd like to just touch on the longer term product pipeline I mean look I realize you haven't launched <unk> yet so.

Speaker 14: You're probably not going to be thrilled with me asking about what's next, but with G7 launching over the course of the next 12 to 18 months globally, you've got Dexcom One scaling as well. What should investors expect from a product development and a product launch perspective? Is it combination products? Is there different analytes that you're going to be testing for? Just trying to really understand what the medium to longer term hardware type of product pipeline looks like.

You're probably not going to be thrilled with me asking about what's next.

<unk> seven launching over the course of the next 12 to 18 months globally, you've got <unk> scaling as well what should investors expect from a product development and a product launch perspective.

Is it <unk>.

Combination products as they're different analytes that youre going to be testing for just trying to really understand what the what the medium to longer term.

Hardware type of.

Product pipeline looks like here.

I Love the what's next question, but these guys have cut me off after 15 minutes.

Speaker 3: I love the what's next question, but these guys have kept me off after 15 minutes, so I'd have to stop. You know, first of all, let's look at G7 and everything that's changed.

Have to stop.

First of all let's look at <unk>, seven and everything gets changed we have plans in place to modify and make everything with G seven better already.

Speaker 3: We have plans in place to modify and make everything with G7 better already. We have, for example, a major cost initiative to reduce our manufacturing costs even before they are. You can expect us to be very diligent in efforts to get that up to a 15-day life from a product perspective because that certainly has a big impact on our P&L.

We have for example, a major cost initiative to reduce our manufacturing costs, even with where they are you can expect us to be very diligent in efforts to get that up to a 15 day life from a product perspective, because thats certainly has a big impact on our P&L.

Speaker 3: We have, for example, alternative electronic structures, all those types of things going on. Weíve never stopped improving our sensor technology. All of these things we continue to work on in our core business. At some point in time, there may be some diminishing returns, particularly given the accuracy of the data on the current system, so we balance that. A lot of these efforts, again, we focus on our product development, performance, performance, performance, performance, performance. Weíve seen a lot of changes in the data.

We have for example, alternative electronic structures all of those types of things going on.

<unk> never stopped improving our our sensor technology.

All of these things we continue to work on our core business at some point in time, there may be some diminishing returns, particularly given the accuracy of the data on the current system. So we balance that but a lot of these efforts again, we focus all of our product development performance patient experience, our customer satisfaction and cost and.

Speaker 3: patient experience, or customer satisfaction and cost.

Speaker 3: And we look at all those buckets. I can tell you there will be a lot of software initiatives here going forward with the G7 better.

And we look at all of those buckets I can tell you there will be a lot of software initiatives here going forward with the G seven platform.

Speaker 3: We believe with Dexcom One we've merely scratched the surface of our ability to differentiate products through different software experiences, again creating different business models and expanding our reach. With respect to other analytes, we continue to study that. We've studied that for quite some time.

We believe with <unk>, we've barely scratched the surface of our ability to differentiate products through different software experiences again, creating different business models and expanding our reach with respect to their analytes. We continue to study that we've studied that for quite some time, what we have to determine is what our real commercial markets for us.

Speaker 3: What we have to determine is what are real commercial markets for us.

And in all fairness, we haven't found anything that compares to glucose yet and we have a lot of things that we need to conquer on the glucose side, but we do have studies going on for some of the other analytes that you certainly be familiar with it you've heard others talk about it just becomes a question Ive asked for win and do we have the right platform and.

Speaker 3: And in all fairness, we haven't found anything that compares to glucose yet. And we have a lot of things that we need to conquer on the glucose side. But we do have studies going on for some of the other analytes that you certainly be familiar with that you've heard others talk about. It just becomes a question of us for when and do we have the right platform and what changes we need to make to it to get there. So there are numerous things in the pipeline. Don't ever think we've stopped here.

And what changes.

We need to make it to it to get there. So there are numerous things in the pipeline don't ever think we've stopped here.

It's going.

Yeah.

Speaker 1: Our next question comes from Steven Lichman from Oppenheimer.

And our next question comes from Steven Lichtman from Oppenheimer. Your line is open.

Thank you, Kevin maybe building on that.

Speaker 4: Thank you. Kevin, maybe building on that, you talked today about the steps you're taking now on basal only with the mobile data and ADA recommendations in hand. Last ATD, we saw some positive data on non-insulin type 2. What are the next steps here in 2022 in terms of going after that opportunity and even pre-dive?

Today about the steps you're taking now on basal only with mobile data at Ada recommendations in hand.

Lastly, we saw some positive data on non infill in type two.

The next steps here in 2022 in terms of going after that opportunity and even pre diabetes.

Speaker 3: You know, it is part of our strategy and we build our pillar around four, you know, we call it the four piece here. You've got the physicians, you've got programs, you've got all the clinics who do this and you've got the patients themselves.

It is it is part of our strategy and we build our pillar around for we call. It. The four piece here you've got the physicians <unk> got programs, you've got all the clinics.

Do this and you got the patients themselves.

Speaker 3: And we're attacking on all four fronts with the diabetes programs.

And we're attacking on all four fronts.

With the diabetes programs.

We've had positive data from level two we have other companies, we know will be reporting positive data in the near term and using this.

Speaker 3: We've had positive data from level two. We have other companies we know will be reporting positive data in the near term and using this product on type two patients who are not on insulin. And the outcomes remain strong. We're going to tack it on all four fronts. We believe the experience for these customers, again, is going to be a different experience than those who are intensively using insulin.

This product type two patients who are not on insulin the outcomes remains strong we're going to attack it on all four fronts.

We believe the experience for these customers again is going to be a different experience and those who are intensively using insulin and its an opportunity for us to use our software capabilities to design a different experience for them that will keep them engaged and the key to any technology.

Speaker 3: And it's an opportunity for us to use our software capabilities to design a different experience for them that will keep them engaged. You know, the key to any technology as far as providing a good outcome.

As far as providing a good outcome is engagement.

And one of the things we've been very successful at if you look at all of our studies where.

Speaker 3: And one of the things we've been very successful at, if you look at all of our studies.

Where we have these incredible outcomes.

Speaker 3: where we have these incredible outcomes, the users of our systems remain tremendously engaged. And we are trying to build a type two solution around that level of engagement, and that's why we're taking some time as we look at this product opportunity. So you'll see us attack on all fronts. I don't know, Jeremy, if you had anything to add to that, you're welcome to. No, I think one of the things that, if you think about this opportunity that we really prepared ourself for, even beyond our product and our engagement there, is some of the software with connectivity that we've built.

The users of our system to remain tremendously engaged and we are trying to build a type two solution around that level of engagement and that's why we're taking some time.

As we look at this product opportunities so youll see us attack on all fronts I don't know Jeremy if you have anything to add to that you are welcome to no I think one of the things that if you think about this opportunity that we really prepared ourselves for even beyond our product and our engagement. There is that some of the software with connectivity that we've built.

And so the real time API for example is our way of trying to move into this market and think about well if youre building an app in your App is built around whatever that happens to be whether it is to your point.

Speaker 5: And so, you know, the real time API, for example, is our way of trying to move into this market and think about, well, if you're building an app and your app is built around whatever that happens to be, whether it is to your point, productivity, health and wellness.

Health and wellness, we want to be able to be the partner of choice now we have to work on labels and things around those lines, which we'll absolutely do over the long haul, but we've really set ourselves up to be what we believe is the partner of choice and we will continue to do so so that's another way, we're going about it which I think youll continue to see us push down that path as well.

Speaker 5: We want to be able to be the partner of choice. Now we have to work on labels and things around those lines, which we'll absolutely do over the long haul. But we've really set ourselves up to be what we believe is the partner of choice, and we'll continue to do so. So that's another way we're going about it, which I think you'll continue to see us push down that path as well. It's really about anyone who takes your deck and goes, actually you know, they don't have

And our next question comes from Josh Jennings from Cowen.

Hi, good evening, thanks for taking the questions.

Speaker 4: Hi, good evening. Thanks for taking the questions. I question I should say, um, just want to ask about gross margins and just the outperformance in 2021. And if you could just run through maybe Jeremy, just some of the drivers of the outperformance relative to your initial guidance.

Question I should say I just wanted to ask about gross margins and just the outperformance in 2021, and if you could just run through maybe Jeremy just some of the drivers of the outperformance relative to your initial guidance and why we some of those drivers couldnt repeat in 2022 and I'm, assuming that's part of it is the G. Seven launch timing in 2020.

Speaker 4: and why we some of those drivers couldn't repeat in 2022. I'm assuming that part of it is the G7 launch timing in 2022, but also wanted to just was curious about how the acquisition of the international distributors contribute to the margin performance in 2022 and really just taking about a little bit of the upside.

Two but.

Also wanted to just I was curious about how the acquisition of international distributors contributed to the margin performance in 2022 and really just.

<unk>.

Thinking about whether there is upside to this initial guidance range for 2022, thanks, so much.

Speaker 5: Yeah, absolutely. So, you know, let's think about 2021. And just as you think about that overperformance, really, there's there's a couple of real drivers of it. It's one we've built a lot of automated machinery.

Yeah, absolutely. So let's think about 2021 and just as you think about that over performance really theres a couple of real drivers of it. It's one we've built a lot of automated machinery and as a result of that yields have gone up over time.

Speaker 5: And as a result of that, yields have gone up over time.

Speaker 5: And so you've seen that the team has done an incredible job of building those yields, really driving those through. And that, you know, the reduction of waste and the increase of efficiency and the increase of the absorption of those fixed costs really was an incredible step forward.

And so you've seen that the team has done an incredible job building those yields really driving those through and that the reduction of waste and the increase of efficiency and the increase of the absorption.

Are those fixed costs really was an incredible step forward also through the through our experience with <unk> six we've reduced our warranty exposure and as you have warranties you are sending out replacement you are sending those out.

Speaker 5: Also through our experience with G6, we reduced our warranty exposure. And if you have warranties, you're sending out replacements, you're sending those out. We're starting to maximize our logistics departments and reducing those freight costs.

Starting to maximize our logistics departments and reducing those freight costs ultimately and fulfilling it. So all of those things were all hitting on and maximizing those for <unk> six now when you launched <unk> seven you've got brand new machinery, you've got so you've got to go through the yields process again, it's a new product and so you actually you have to work through the warranty and how you ultimately.

Speaker 5: ultimately in fulfilling it. So all of those things we're all hitting on and maximizing those for G6.

Speaker 5: Now when you launch G7, you've got brand new machinery, so you've got to go through the yields process again. It's a new product, and so you actually have to work through the warranty and how you ultimately navigate that.

Vacate that and so when you get to the question well what happened in 2021, that's exactly what happened the team did an incredible job in in 2022, as we launched <unk> seven we're going to go through that journey and as you saw with the step back that you saw when we launched <unk> six there was a step back and then we were able to navigate our way through it we expect to be able to do the same with <unk> seven.

Speaker 5: And so when you get to the question, well, what happened in 2021? That's exactly what happened. The team did an incredible job. And in 2022, as we launched G7, we're going to go through that journey. And as you saw with the step back that you saw when we launched G6, there was a step back, and then we were able to navigate our way through it. We expect to be able to do the same with G7. However, in the year of G7, we were able to do the same with G7.

And the year of launch we know we're going to have to navigate through that and so what could be potential upside to that could be effectively if we're able to navigate through either yields or warranties quicker than expected, which again dovetails into how quick regulatory approvals happen et cetera. So that's the primary driver over the long haul. There is no reason to believe that we can't.

Speaker 5: we know we're going to have to navigate through that. And so what could be potential upside to that could be effectively if we're able to navigate through either yields or warranties quicker than expected, which again dovetails into how quick regulatory approvals happen, etc.

Speaker 5: So that's the primary driver. Over the long haul, there's no reason to believe that we can't continue to be more efficient over time. G7 was designed with efficiency and models.

<unk> to be more efficient overtime <unk> was designed with efficiency in mind.

Speaker 5: And we have tons of different work streams that are going on around how to maximize, Kevin referred to it earlier, on how to maximize the cost potential within that line. And so we'll continue to do that over time. We'll get to 2023 when we get there, but

We have tons of different work streams that are going on around how to maximize Kevin referred to it earlier on how to maximize the cost potential within that line and so we'll continue to do that over time, we'll get to 2023, when we get there but over the course of 2022, we're very excited about launching <unk> seven and then going through the improvements.

Speaker 5: Over the course of 2022, we're very excited about launching G7 and then going through the improvements.

And our next question comes from Frank <unk> from Jefferies. Your line is open.

Speaker 1: And our next question comes to Frank Pinell from Jefferies.

Hi, Thank you for taking the question.

Speaker 13: Hi, thank you for taking the question. I guess just looking at your user base, it looks like you've grown that by three to four times over the last several years. I'm wondering to what degree that's sustainable given G7, Dexcom 1, pre-diabetes, Type 2-9, obviously a lot of things on Slate. And is there a point that you see where OUS revenues eclipse U.S. revenues?

I guess just looking at your user base it looks like you've grown that by three to four times over the last several years.

Wondering to what degree that sustainable given G. Seven <unk> com, one pre pre diabetes type two obviously a lot of things on slate.

And is there a point that you see where <unk> revenues eclipsed U S revenues. Thank you.

And our long term plans, we certainly show O U S revenues, becoming a larger portion of our overall revenue picture than they are today, we don't have them eclipsing U S revenues in our in our current five year plan, because we have so much opportunity in the U S market.

Speaker 3: You know, in our long-term plans we certainly show OUS revenues becoming a larger portion of our overall revenue picture than they are today.

Speaker 3: We don't have them eclipsing U.S. revenues in our current five-year plan because we have so much opportunity in the U.S. market.

Speaker 3: I think the user base is a great question because over time the characteristics of that user base changes as we are into more, for example, Dexcom One Type products where it's an e-commerce platform. We don't know how sticky those patients are going to be right now.

I think the user base is a great question because over time the characteristics of that user base changes as we are into more for example, <unk> one type products, where it's an E. Commerce platform. We don't know how sticky those patients are going to be.

Right now we have developed a great model for stickiness with respect to our current user base and we are designing our products and our software experiences to maintain that type of engagement in a model where people can afford to pay for the product for many years. The number one reason our individual code using decks com was cost and.

Speaker 3: We have developed a great model for stickiness with respect to our current user base, and we are designing our products and our software experiences to maintain that type of engagement.

Speaker 3: in a model where people can afford to pay for the product, you know, for many years.

Speaker 3: the number one reason an individual quit using Dexcom was caught.

Speaker 3: and we are trying to knock that barrier down more and more as we speak. We need to make sure we address those issues going forward. Our customer experience team has been fabulous at identifying things we can do to make our product better.

And we are trying to knock that barrier down more and more as we speak we need to make sure. We address those issues going forward or our customer experience team has been fabulous identifying things, we can do to make our product better and an increase that base and have them stay it's not just getting them getting the users is as one task.

Speaker 3: and increase that base and have them stay. It's not just getting them. Getting the users is one task, but maintaining them is another one. And our record is unlike anybody else's in this industry. We're really good at it.

But maintaining them is another one and our record.

Unlike anybody else's in this industry, we're really good at this.

Yeah, and I think just to your question in terms of how is it.

Speaker 5: Yeah, and I think just to your question in terms of, you know, how is it repeatable over time in terms of the patient base, look, I mean, the majority of Dexcom's existence has been really focused on the intensive insulin.

Repeatable over time in terms of the patient base look I mean, the majority of <unk> existence has been really focused on the intensive insulin user.

Speaker 5: But we know that there's an unmet need as you move into a basal user, and that's with a mobile study, and that's a large increase in addressable population.

But we know that there is an unmet need as you move into a basal user and thats, what the mobile study and Thats a large increase in the addressable population. We also know that the type two space. There is a huge demand for that product there, but it's a question is Kevin referred to ultimately how do we go to market in there and we have some great ideas about how it should look and we're working through those so I think we're in a pretty good spot.

Speaker 5: We also know that the type two space, there's a huge demand for that product there, but it's a question as Kevin referred to, ultimately how do we go to market in there? And we have some great ideas about how it should look and we're working through those. So I think we're in a pretty good spot, but we're navigating through that. And then to your point, the prediabetes population and health and wellness population is huge. And so it's really a matter of us getting the right product into those folks' hands. And I think that's what you see us doing over time. All the investment in software and platforms.

But we're navigating through that and then to your point the pre diabetes population and health and wellness population is huge and so it's really a matter of us getting the right product into those folks' hands and I think that's what you see us doing over time, all the investment in software and platforms.

Speaker 5: you know, is really designed around how do we engage not only our existing population and engage them better, but also engage these new population, which means the TAM for this potential product is incredible.

Really designed around how do we engage not only our existing population and engage them better but also engage these new population, which means the tam for this potential product is incredibly large.

And that concludes our question and answer session I will turn the call back over to Kevin Sayer for final remarks.

Speaker 1: That concludes our question and answer session. I'll turn the call back over to Kevin Sayer for final...

Thanks, a lot operator, we spend today looking back at 2021, I just want to spend a minute and acknowledge our teams today we have.

Speaker 3: Thanks a lot operator. You know, as we spend today looking back at 2021, I just want to spend a minute and acknowledge our teams today. We have a commercial team who generated 26% revenue growth and volumes that far exceeded that in a time when we're putting them through rapid expansion.

Commercial team, who generated 26% revenue growth in volumes at far exceeded that in a time when we're putting into rapid expansion efforts.

Speaker 3: We doubled the US sales force, acquired distributors, and did a number of things to make it more difficult. We have an operations and quality group who during all this time when the world has talked about component shortages and not being able to produce product has delivered every single month.

As we double the U S sales force acquired distributors and did a number of things to make it more difficult we have in operations and quality group, who during all this time when the world has talked about component shortages and not being able to produce product is delivered every single month and in addition to delivering we've opened a large regional distribution center in areas.

Speaker 3: In addition to delivering, we've opened a large regional distribution center in Arizona and we're building our factory in Malaysia and we're hitting our schedules and timeframes there. You look at the innovation at this company from R&D, clinical and quality groups with respect to the work and efforts on G7.

And we're building our factory in Malaysia, and we're hitting our schedules and time frames. There Youll look at the innovation at this company from R&D clinical and quality groups with respect to the work and efforts on June seven.

Speaker 3: as we got those filings in and those filings are pristine with respect to the data that we present.

As we got those filings in and those filings are pristine with respect to the data that we presented.

Speaker 3: and then we're getting up and ready to scale on the ops side and then just from a day to day basis.

And then we're getting up and ready to scale on the op side, and then just from a day to day basis.

Speaker 3: Our HR group has walked us through thousands of hires literally in the past year and the finance guys haven't missed a beat and IT as we've moved to home we've not had any trouble. This has been a great year for Dexcom and a lot of people have contributed. It's never just one group or one thing. So I just wanted to thank everybody, acknowledge everybody's accomplishments and we look forward to a great year next year. Thanks.

Our HR group is <unk> through thousands of hires literally in the past year and in the finance guys haven't missed a beat in it as we move to whom we've not had any trouble.

This has been a great year for <unk> com and a lot of people have contributed it's never just one group or one thing. So I just wanted to thank everybody acknowledge everybody's accomplishments and we look forward to a great year next year.

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Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker 1: Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.

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Welcome to the <unk> fourth quarter 2021 earnings release Conference call. My name is Adrian and I'll be your operator for today's call.

Speaker 1: Welcome to the Dexcom 4th Quarter 2021 Earnings Release Conference call. My name is Adrienne and I'll be your operator for today's call.

Speaker 1: At this time, all participants are on a list in only mode. Later, we'll conduct a question and answer session.

At this time.

<unk> are in a listen only mode.

We will conduct a question and answer session.

Speaker 1: During the question and answer session, if you have a question, please press star and one 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 be getting...

During the question and answer session. If you have a question. Please press Star then one on your Touchtone phone. Please note. This conference call is being recorded I'll now turn the call over to Sean Christensen, Sean you may begin.

Speaker 2: Thank you, operator, and welcome to Dexcom's fourth quarter and full year 2021 earnings call. Our agenda begins with Kevin Sayre, Dexcom's chairman, president and CEO , who will provide a summary of our fourth quarter and full year 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. We ask analysts to limit themselves to one question so we can provide an opportunity for everyone participating today.

Thank you operator, and welcome to desktops fourth quarter and full year 2021 earnings call. Our agenda begins with Kevin Sayer, <unk>, Chairman, President and CEO , who will provide a summary of our fourth quarter and full year highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy <unk>, Our Chief Financial Officer following.

Our prepared remarks, we will open the call up for your questions. We ask analysts to limit themselves to one question. So we can provide an opportunity for everyone participating today.

Speaker 2: Please note that there are also slides available related to our fourth quarter performance on the Dexcom Investor Relations website on the Events and Presentations page. With that, let's review our Safe Harbor Statement.

Please note that there are also slides available related to our fourth quarter performance on the <unk> 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 expectations and assumptions about future events strategies competition products operating plans and performance.

Speaker 2: Some of the statements we will make in today's call may constitute forward-looking statements.

Speaker 2: These statements reflect management's intentions, beliefs, expectations, and assumptions about future events, strategies, competition, products, operating plans, and performance.

Speaker 2: All forward-looking statements included in this presentation are made as of the day thereof based on information currently available to Dexcom. Our subject various risks and uncertainties and actual results could differ materially from those anticipated in the forward-looking statement.

Forward looking statements included in this presentation are made as of the date hereof based on information currently available to <unk> com are subject to various risks and uncertainties and actual results could differ materially from those anticipated in the forward looking statements.

Speaker 2: 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.

Factors that could cause actual results to differ materially from those expressed or implied by any of these forward looking statements are detailed in <unk> annual report on Form 10-K , most recent quarterly report on Form 10-Q , and other filings with the Securities and Exchange Commission.

Sept 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.

Speaker 2: 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.

Speaker 2: 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.

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 fourth quarter and full year earnings presentation for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Speaker 2: Please refer to the tables in our earnings release and the slides accompanying our fourth quarter and full year 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.

Now I will turn it over to Kevin.

Thank you Sean and thank you everyone for joining us.

Speaker 3: I want to take time at the start to highlight some of Dexcom's key accomplishments in 2021 that reflect our progress relative to the priorities that we establish at the start of the year and our long-term goals.

I want to take time at the SAR to highlight some of <unk> key accomplishments in 2021 that reflect our progress relative to the priorities that we established at the start of the year and our long term goals.

Total revenue grew 26% on an organic basis over the prior year with rising CGM awareness and decks com brand loyalty, leading to another year of record new patient additions. This translates to nearly $500 million of organic growth for the year, leading us to exceed the midpoint of our original guidance for the year.

Speaker 3: Total revenue grew 26% on an organic basis over the prior year, with rising CGM awareness and Dexcom brand loyalty leading to another year of record new patient additions. This translates to nearly $500 million of organic growth for the year, leading us to exceed the midpoint of our original guidance for the year by more than $160 million.

Or by more than $160 million.

Speaker 3: We laid the foundation for significant expansion of our addressable markets in the future, with differentiated product solutions and clinical evidence.

We laid the foundation for significant expansion of our addressable markets in the future with differentiated product solutions and clinical evidence.

Speaker 3: In June , we presented results from the mobile randomized control trial for people with type 2 diabetes being managed with basal insulin. The results were clear. Dexcom CGM can do significantly more to help these people manage diabetes.

In June we presented results from the mobile randomized controlled trial for people with type two diabetes being managed with basal insulin. The results were clear Doug Com CGM can do significantly more to help these people manage diabetes and with this conclusion being validated in the journal of the American Medical Association as well as in the recently updated.

Speaker 3: And with this conclusion being validated in the Journal of the American Medical Association, as well as in the recently updated ADA standards of care, we're hopeful that we can bring access to our technology for the estimated 3 million people on basal insulin therapy in the U.S. and many more outside the U.S.

At Ada standards of care, we are hopeful that we can bring access to our technology for the estimated 3 million people on basal insulin therapy in the U S and many more outside the U S.

Speaker 3: Alongside the mobile clinical evidence, we drove several updates to our product portfolio to broaden the ways that customers can engage with our technology.

Long side, the mobile clinical evidence, we drove several updates to our product portfolio to broaden the ways that customers can engage with our technology.

Speaker 3: We've consistently spoken about our investments in software and data infrastructure as a significant competitive advantage. In the third quarter, we received two key FDA clearances for Dexcom software tools that reflect this commitment and strength.

We've consistently spoken about our investments in software and data infrastructure as a significant competitive advantage in the third quarter. We received two key FDA clearances for <unk> software tools that reflect this commitment and strength.

Speaker 3: Our real-time API allows us to directly integrate Dexcom CGM data in real-time to the displays of approved third-party apps.

Our real time API allows us to directly integrate decks com CGM data in real time to the displays of approved third party apps in our App in App solution creates an FDA cleared <unk> com app experience that can be integrated directly with the app of the decks com partner.

Speaker 3: and our app-in-app solution creates an FDA-cleared Dexcom app experience that can be integrated directly with the app of a Dexcom partner.

Both of these creative solutions have already been rolled out with <unk> partners.

Speaker 3: Both of these creative solutions have already been rolled out with Dexcom Partners.

Speaker 3: and we believe they position this well to provide extensive options for our customers, partners, and potential partners as CGM use continues to expand into new populations.

We believe they position us well to provide extensive options for our customers partners and potential partners a CGM use continues to expand into new populations.

We again strengthened our product portfolio through differentiated software with the CE, Mark and launch of our <unk> product in the fourth quarter of 2021.

Speaker 3: We again strengthen our product portfolio through differentiated software with the CD mark and launch of our Dexcom ONE product in the fourth quarter of 2021.

In a relatively short period since launch we've already seen strong adoption in both type one and type two customers and the health systems in two of our four launch countries establish reimbursement.

Speaker 3: In a relatively short period since launch, we've already seen strong adoption in both Type 1 and Type 2 customers. And the health systems in two of our four launch countries established reimbursement.

Speaker 3: With a focus on ease of use and affordable price point, we believe that the XCOM 1 will be a significant part of our story as we look to extend CGM access globally.

With a focus on ease of use and affordable price point, we believe that <unk> will be a significant part of our story as we look to extend CGM access globally.

Perhaps most importantly in 2021, we completed the pivotal trials in support of our next generation <unk> system and submitted the results for both CE, Mark and FDA clearance as many of you recently signed our January presentation, and we will soon see a publication the performance of the <unk> system is outstanding achieving unsurpassed.

Speaker 3: Perhaps most importantly, in 2021, we completed the pivotal trials in support of our next-generation G7 system and submitted the results for both CE mark and FDA clearance. As many of you recently saw in our January presentation and will soon see in a publication, the performance of the G7 system is outstanding, achieving unsurpassed performance levels relative to the FDA's ICTM special controls.

<unk> levels relative to the Fda's ICM special controls.

Even with customers on our <unk> system expressing record net promoter scores at the end of 2021, we are incredibly excited for them to experience <unk> seven.

Speaker 3: Even with customers on our G6 system expressing record net promoter scores at the end of 2021, we are incredibly excited for them to experience G7.

We believe that we are very close to receiving CE, Mark and are navigating the final stages of that review.

Speaker 3: We believe that we are very close to receiving CMR and are navigating the final stages of that review. In the meantime, our teams continue to work to prepare the manufacturing scale-up and commercial efforts in anticipation of G7 launches throughout the year, as well as launches with some of our partners on their upcoming connected insulin delivery devices.

Meantime, our teams continue to work to prepare the manufacturing scale up and commercial efforts in anticipation of G. Seven launches throughout the year as well as launches with some of our partners on their upcoming connected insulin delivery devices on that front. We were excited to see the news of the Fda's recent clearance of Insulet Omnipod five the first two.

Speaker 3: On that front, we were excited to see the news of the FDA's recent clearance of Insulid's OmniPod 5, the first tubeless automated insulin delivery.

<unk> automated insulin delivery pump with this clearance for Insulet and the ongoing success of control IQ for tandem diabetes. We believe that we are enabling automated insulin delivery for the best <unk> pump on the market and the best tethered pump.

Speaker 3: With this clearance for insulin and the ongoing success of Control IQ for tandem diabetes, we believe that we are enabling automated insulin delivery for the best tubeless pump on the market and the best tethered pump.

Speaker 3: The outcomes that customers are seeing with these Dexcom integrated systems are outstanding, and we are proud that our commitment to connectivity is helping advance the market and enhance the quality of life for our customers. These accomplishments align with the strategic priorities that we established at the start of last year, showing the resilience and execution of the Dexcom teams in a challenging environment. These accomplishments are not merely 2021 events, but they are the foundation that we will continue to build on as we press forward in 2022 and beyond.

And the outcomes that customers are seeing with these decks com integrated systems are outstanding and we are proud that our commitment to connectivity is helping advance the market and enhance the quality of life for our customers. These accomplishments aligned with the strategic priorities that we established at the start of last year, showing the resilience and execution of the decks com teams in a challenging environment.

These accomplishments are not merely 2021 events, but they are the foundation that we will continue to build on as we press forward in 2022 and beyond.

Speaker 3: Many of you likely saw the recent update to the IDF estimates for global diabetes prevalence and cost. There are now greater than 500 million adults with diabetes globally. The costs to treat the disease alone are estimated to be approximately $1 trillion per year.

Many of you likely saw the recent update to the IVF estimates for global diabetes prevalence and cost there are now greater than 500 million adults with diabetes globally.

Costs to treat the disease alone are estimated to be approximately $1 trillion per year in.

In addition, the CDC now estimated to 38% of adults in America or 96 million people have pre diabetes.

Speaker 3: In addition, the CDC now estimates that 38% of adults in America, or 96 million people, have pre-diabetes.

Speaker 3: There's a real opportunity here for Dexcom to do something great to address this epidemic, empower diabetes management, and down the road even work towards diabetes prevention and better health outcomes broadly. The future for Dexcom is bright. With that, I will turn it over to Jeremy for review of the fourth quarter financials and discussion of the 2022 outlook. Jeremy.

There is a real opportunity here for <unk> come to do something great to address this epidemic empower diabetes management and down the road, even work towards diabetes prevention and better health outcomes broadly the future for <unk> is bright with that I will turn it over to Jeremy for a review of the fourth quarter financials and discussion of the 2022 outlook Jeremy.

Thank you Kevin as a reminder, unless otherwise noted the financial metrics presented today will be discussed on a non-GAAP basis reconciliations to GAAP can be found in today's earnings release as well as on our IR website in.

Speaker 5: Thank you, Kevin. As a reminder, unless otherwise noted, the financial metrics presented today will be discussed on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release as well as on our IR website.

Speaker 5: In line with our January pre-announcement, we reported worldwide revenue of $698 million for the fourth quarter, compared to $569 million for the fourth quarter of 2020, representing growth of 23% on both a reported and constant currency basis and 20% on an organic basis.

In line with our January pre announcement, we reported worldwide revenue of $698 million for the fourth quarter compared to $569 million for the fourth quarter of 2020, representing growth of 23% on both a reported and constant currency basis, and 20% on an organic basis. The organic revenue excludes non CGM revenue that we.

Speaker 5: The organic revenue excludes non-CGM revenue that we generated in the fourth quarter following our acquisition of our distributor in Australia and New Zealand.

Generated in the fourth quarter following our acquisition of our distributor in Australia, and New Zealand.

Speaker 5: US revenue totaled $517 million in the fourth quarter, compared to $451 million in the fourth quarter of 2020, representing growth of 15%

U S revenue totaled $517 million in the fourth quarter compared to $451 million in the fourth quarter of 2020 representing growth of 15%.

And that volume growth, which is a general representation for the growth of our user base remained in the high 30% range compared to the fourth quarter of 2020, and we continue to see the strength in our strategic shift to the pharmacy channel.

Speaker 5: Unit volume growth, which is a general representation for the growth of our user base, remained in the high 30% range compared to the fourth quarter of 2020, and we continue to see the strength in our strategic shift to the pharmacy channel.

Our teams continue to work very hard to broaden our prescriber base and take advantage of the significant reimbursement access that we've driven in the past two years in both the U S and international markets.

Speaker 5: Our teams continue to work very hard to broaden our prescriber base and take advantage of the significant reimbursement access that we have driven in the past two years in both the US and international markets.

Speaker 5: The uptick in COVID cases has created some challenges for us in the fourth quarter and into the early first quarter, but it is a credit to the resilience of our field team and the strength of the category that global new customers remain near record levels in the fourth quarter.

The uptick in Covid cases has created some challenges for us in the fourth quarter and into the early first quarter, but it is a credit to the resilience of our field team and the strength of the category that global new customers remained near record levels in the fourth quarter.

Our international business execute very well in the fourth quarter with revenue growing 54% totaling 181 million.

Speaker 5: Our international business executed very well in the fourth quarter, with revenue growing 54%, totaling 181 million.

Speaker 5: Excluding non-CGM revenue that resulted from our 2021 distributor acquisition, international growth was 41% in the fourth quarter.

Excluding non CGM revenue that resulted from our 2021 distributor acquisition international growth was 41% in the fourth quarter.

The international results reflected broad based strength, including record results in all of our direct markets. This growth continues to validate the strategic moves that we made over the course of 2021, most notably the progress that we've made to broaden access to our technology advocacy flexibility gained from operating efficiencies and a differentiated product.

Speaker 5: The international result reflected broad-based strength, including record results in all of our direct markets.

Speaker 5: This growth continues to validate the strategic moves that we made over the course of 2021, most notably the progress that we made to broaden access to our technology through advocacy, flexibility gained from operating efficiencies, and a differentiated product portfolio. We look forward to extending this momentum now as we progress into 2022.

We look forward to extending this momentum now as we progress into 2022.

Our fourth quarter gross profit was $472 6 million or <unk> 67, 7% of revenue compared to 72% of revenue in the fourth quarter of 2020, the fourth quarter gross margin was slightly above our expectations as certain costs related to the <unk> scale up and commercial preparation remained in our R&D cost until we receive.

Speaker 5: Our fourth quarter gross profit was $472.6 million or 67.7% of revenue compared to 70.2% of revenue in the fourth quarter of 2020. The fourth quarter gross margin was slightly above our expectations as certain costs related to the G7 scale-up and commercial preparation remain in our R&D costs until we receive CE marks.

CE Mark.

Speaker 5: we made excellent progress to drive efficiencies across our product design, procurement, manufacturing, and logistics functions, leading to a full year 2021 gross margin that finished 360 basis points above our original 2021 guide.

Made excellent progress to drive efficiencies across our product design procurement manufacturing and logistics function, leading to a full year of 2021 gross margin that finished 360 basis points above our original 2021 times.

Speaker 5: Operating expenses were $373.6 million for Q4 2021, compared to $294.7 million in Q4 2020. The increase in operating expenses as a percentage revenue relative to the fourth quarter of 2020 was primarily a result of development and operational costs incurred in preparation for the launch of Q7, as well as investments to support our global commercialization.

Operating expenses were $373 6 million for Q4, 2021 compared to $294 7 million in Q4 2020.

The increase in operating expenses as a percentage of revenue relative to the fourth quarter of 2020 was primarily a result of development and operational costs incurred in preparation for the launch of <unk> seven as well as investments to support our global commercialization efforts.

Speaker 5: Operating income was $99 million in the fourth quarter of 2021, compared to $104.4 million in the same quarter of 2020. As a reminder, when we provided the outlook for 2021, we determined it was in the best interest to make investments in the business continue to fuel CGM growth and awareness.

Operating income was $99 million in the fourth quarter of 2021 compared to $104 4 million in the same quarter of 2020.

As a reminder, when we provided the outlook for 2021, we determined it was in the best interest to make investments in the business continued to fuel CGM growth and awareness as we wrap the year. We are proud to report that we outpaced our initial 2021 operating margin guidance by more than 200 basis points.

Speaker 5: As we wrap the year, we are proud to report that we outpaced our initial 2021 operating margin guidance by more than 200 basis points.

All of which came despite significant investments to solidify our software advantages.

Speaker 5: all of which came despite significant investments to solidify our software advantages, advance the G7 clinical, regulatory and manufacturing programs, significantly expand our global Salesforce presence and significant efforts to build brand awareness. And we are committed to driving further leverage in the years to come as we strike the right balance between investing to maximize our growth opportunity and turning that opportunity into cash flow generation for the business and our stakeholders.

The G seven clinical regulatory and manufacturing program significantly expand our global sales force presence and significant efforts to build brand awareness and we are committed to driving further leverage in the years to come as we strike the right balance between investing to maximize our growth opportunity and turning that opportunity into cash flow.

<unk> for the business and our stakeholders.

Adjusted EBITDA was $154 5 million or 22, 1% of revenue for the fourth quarter compared to $159 2 million or 28% of revenue for the fourth quarter of 2020.

Speaker 5: Adjusted EBITDA was $154.5 million or 22.1% of revenue for the fourth quarter compared to $159.2 million or 28% of revenue for the fourth quarter of 2020. Net income for the fourth quarter was $69 million or $0.68 per share.

Net income for the fourth quarter was 69 million or <unk> 68 per share.

As many of you also saw on our press release and our GAAP Reconciliations. We also recognized an $87 million expense associated with contingent milestone under the 2018 collaboration and license agreement. The early life Sciences terms of our amended contract with thoroughly are available in the SEC filings that were originally published in November 2018 and up.

Speaker 5: As many of you also saw in our press release and our GAAP reconciliations, we also recognized an $87 million expense associated with contingent milestone under the 2018 collaboration and license agreement with Verily Life Sciences. Terms of our amended contract with Verily are available in the SEC filings that were originally published in November 2018 and updated in November 2021.

David in November of 2021.

We closed the quarter with greater than $2 7 billion in cash and cash equivalents, we have demonstrated the ability to generate positive cash flow and going forward. We remain in a very flexible position to continue to advance strategic initiatives and opportunities most notably we will continue our development of our manufacturing facility in Malaysia, as we expect to have that facility validated.

Speaker 5: We closed the quarter with greater than $2.7 billion in cash and cash equivalents. We have demonstrated the ability to generate positive cash flow and going forward we remain in a very flexible position to continue to advance strategic initiatives and opportunities. Most notably we will continue our development of our manufacturing facility in Malaysia as we expect to have that facility validated for production by the end of 2022.

For production by the end of 2020.

Speaker 5: Turning to 2022 guidance, as we stated last month, we anticipate full year total revenues of $2.82 to $2.94 billion, representing growth of 15 to 20 percent.

Turning to 2022 guidance as we stated last month, we anticipate full year total revenues of $2 82 to $2 94 billion representing growth of 15% to 20% given.

Given the success of our strategic transition to the pharmacy channel over the past three years, we anticipate that 2022 will be the final year, where we see significant shift of our existing base from the durable medical equipment channel to pharmacy.

Speaker 5: Given the success of our strategic transition to the pharmacy channel over the past three years, we anticipate that 2022 will be the final year where we see a significant shift of our existing base from the durable medical equipment channel to pharmacy. With this ongoing shift as well as the majority of our new customers now coming through the pharmacy channel in the U.S.

With this ongoing shift as well as the majority of our new customers now coming through the pharmacy channel in the U S. Our expectations for customer growth in 2022 are again higher than our revenue growth rate continuing.

Speaker 5: Our expectations for customer growth in 2022 are again higher than our revenue growth rate.

Continuing to reflect the large end markets, we serve and the growing demand for <unk> CGM worldwide.

Speaker 5: continuing to reflect the large end markets we serve and the growing demand for Dexcom's CGM worldwide.

We have several scenarios built in conjunction with our planned <unk> seven launches and factoring in the respective regulatory approvals and competitive environment. We will provide updates as the year progresses, turning to margins. We are establishing the following guidance for 2022.

Speaker 5: We have several scenarios built in conjunction with our planned G7 launches, and factoring in the respective regulatory approvals and competitive environments, we will provide updates as the year progresses.

Speaker 5: Turning to margins, we are establishing the following guidance for 2022.

We expect gross profit margins of approximately 65% for the year in line with the expectation that we established for our 2025 long range plan the.

Speaker 5: we expect gross profit margins of approximately 65% for the year, in line with the expectation that we establish for our 2025 long-range plan. The slight step back relative to our 2021 result is primarily related to the launch of our G7 system during the year.

The slight step back relative to our 2021 result is primarily related to the launch of our <unk> system. During the year as we begin production of lower volumes and gradually scale in conjunction with our launches.

Speaker 5: Despite that step back in gross margin, we expect to offset that impact completely with approximately 400 basis points of operating expense leverage. We anticipate our operating margins for 2022 of approximately 16%.

Despite that step back in gross margin, we expect to offset that impact completely with approximately 400 basis points of operating expense leverage we anticipate our operating margins for 2022 of approximately 16%.

This factors in the ongoing investments that are driving significant returns for <unk> com and setting us up for sustainable growth, including our DTC marketing efforts and investments in our product portfolio pipeline.

Speaker 5: This factors in the ongoing investments that are driving significant returns for Dexcom and setting us up for sustainable growth, including our DTC marketing efforts and investments in our product portfolio pipeline.

But we're making these investments with the discipline throughout the organization driving towards the margin expansion that we've established in our long range plan.

Speaker 5: But we are making these investments with the discipline throughout the organization, driving towards the margin expansion that we've established in our long-range plan.

Speaker 5: Finally, we expected just an EBITDA margin of approximately 25% in 2022. With that, I will turn the call back to Kevin. Thanks Jeremy. To summarize, we set out in 2021 with a few key goals in mind.

Finally, we expect adjusted EBITDA margins of approximately 25% in 2022.

With that I will turn the call back to Kevin.

Thanks, Jeremy to summarize we set out in 2021 with a few key goals in mind.

To complete the clinical and regulatory process for <unk> and prepare for significant launches to validate health and economic outcomes for <unk> CGM beyond the intensive insulin using population to broaden access to <unk> CGM globally through evidence advocacy and leveraging our growing scale and efficiency and to strengthen our product.

Speaker 3: to complete the clinical and regulatory process for G7 and prepare for significant launches.

Speaker 3: to validate health and economic outcomes for Dexcom's FUGM beyond the intent of insulin using population.

Speaker 3: to broaden access to Dexcom CGM globally through evidence, advocacy, and leveraging our growing scale and efficiency.

Speaker 3: and to strengthen our product portfolio for future growth through differentiated software capabilities.

Portfolio for future growth through differentiated software capabilities, our progress on all of these initiatives contributed to a great 2021 and have us looking forward to a big year ahead in 2022, I would now like to open up the call for Q&A, Sean. Thank you Kevin as a reminder, we ask our audience to limit themselves to only one question at this time.

Speaker 3: Our progress on all these initiatives contributed to a great 2021 and have us looking forward to a big year ahead in 2022.

Speaker 2: I would now like to open up the call for Q&A. Sean? Thank you, Kevin. As a reminder, we ask our audience to limit themselves to only one question at this time and then re-enter the queue if necessary. Operator, please provide the Q&A instructions. Thank you.

And then reenter the queue if necessary operator, please provide the Q&A instructions.

Thank you we will now begin the question and answer session.

Speaker 1: If you have a question, please press star, within one on your touch tone phone.

If you have a question. Please press Star then one on your Touchtone phone.

If you wish to be removed from the queue. Please press the pound sign or they ask Keith.

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Using speaker phone you may need to pick up the handset first before pressing the numbers.

Speaker 1: be using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then 1 on your touch tone phone. And our first question comes from Matthew O'Brien from Piper Sandler, your line is open.

Once again, if you have a question. Please press star one on your Touchtone phone.

And our first question comes from Matthew O'brien from Piper Sandler Your line is open.

Afternoon. Thanks for taking the question I guess <unk> question has two parts, but theyre kind of interwoven.

Speaker 4: Thanks for taking the question. I do have, it's a G7 question, it has two parts, but they're kind of interwoven. So for starters, Kevin, just talk about the data and the importance of the data when you commercialize G7 versus just like, hey, how much is the price of it? And then the second part of it is on the gross margin side, it's a big step back that we're seeing. It looks like it's entirely because of G7. So what are you anticipating as far as the impact?

For starters, Kevin just talk about the data EMEA importance of the data when you commercialize <unk> seven versus just like how.

How much of the price of it and then the second part of it is on the gross margin side with the big steps back, but we're seeing it looks like it's entirely because of <unk>.

What are you anticipating as far as the impact.

Speaker 4: from the G7 rollout, what does that say for the timing in Europe ? Specifically, is it like a month or two? And then the timing of approval here in the States.

From from the <unk> rollout.

Timing in Europe , specifically is it like a month with you and then the timing of approval here in the state.

Yes.

Speaker 3: There's many parts to your two-part question. I'll deal with some of them, and then I'll give them to Jeremy, Matt, but thanks. Let me talk about the data first.

There's many parts to your two part question and I'll deal with some of them and then I'll give them to Jeremy Matt. Thanks, Let me talk about the data first <unk>.

<unk> Com has long built its legacy on having the best product in the market with respect to performance and a product that everybody can rely on and time and time again, we've launched products, where we published great clinical performance in real life experience always ends up better than what we publish I've been looking at glucose sensor since the mid nineties. This data is better than.

Speaker 3: Dexcom has long built its legacy on having the best product in the market with respect to performance and a product that everybody can rely on.

Speaker 3: And time and time again, we've launched products where we publish great clinical performance and real-life experience always ends up better than what we publish. I've been looking at glucose sensors since the mid-90s. This data is better than anything I've ever...

Anything I've ever seen and I think from a marketing perspective and from a customer experience perspective, it's absolutely critical that we remain top of the industry and this date it puts us in there and it demonstrates.

Speaker 3: And I think from a marketing perspective and from a customer experience perspective, it's absolutely critical that we remain top of the industry. And this data puts us in there and it demonstrates really the thought and effort that's gone into this product. Let's not forget, we've changed pretty much everything. There's a new algorithm, new hardware, new electronics.

Really the thought and effort that's gone into this product, let's not forget we've changed pretty much everything there is a new algorithm new hardware new electronics.

The new App you name it new receiver everything in here is different than what we've had before so this has been a monumental.

Speaker 3: you name it, new receiver, everything in here is different than what we've had before. So this has been a monumental effort that's taken a lot of time and to be able to produce this type of clinical results, we think just show the diligence of the effort. And with respect to approvals, we think it's also very important that we not leave room for error or room for doubt with the data that we submitted, which is exactly what we've done when you look at the size of that study and 39,000 some match pairs.

Your mental effort has taken a lot of time and to be able to produce this type of clinical results. We think just show the diligence of the effort and with respect to approvals. We think it's also very important that we not leave room for error room for doubt with the data that we submitted which is exactly what we've done when you look at the size of that study.

39000, some matched pairs theres really no room for doubt that this product is ready for prime time from a performance perspective on the approval timelines as I said in the prepared remarks, we're down to the last steps for CE Mark.

Speaker 3: There's really no room for doubt that this product is ready for prime time from a performance perspective.

Speaker 3: On the approval timelines, as I said in the prepared remarks, we're down to the last steps for CE mark.

Literally procedural type discussions with documentation that will take place in the near term, we're very confident that we'll get CE Mark very soon and then we will start.

Speaker 3: literally procedural type discussions with documentation that will take place in the near term. We're very confident that we'll get C-Mark very soon, and then we will start our limited launch in Europe and then roll out to the full launch after that. We've had initial dialogue with the FDA on our submission and so far those discussions go well. We currently are not anticipating a delay, but...

Our limited launch in Europe , and then rollout to the fall launch after that we've had initial dialogue with the FDA on our submission and so far those discussions go well.

Currently we're not anticipating a delay, but we don't control that any more than we controlled the CE mark delays either.

Speaker 3: We don't control that any more than we control the CE mark delays either that we just experienced.

We've just experienced.

By providing great clinical data, though that certainly takes a large element out of the process couldnt be more excited about G. Seven nomad ill kick it over to Jeremy for the financial Ramification sure. Yes. It's a good question on the margins.

Speaker 3: By providing great clinical data though, that certainly takes a large element out of the

Speaker 3: Couldn't be more excited about G7 though, Matt. I'll kick it over to Jeremy for the financial jumping rope.

Speaker 5: Yeah, so it's a good question on the margins. You know, we exited 2021 north of 68% with our G6, right? So you're certainly seeing G6 firing on all cylinders from efficiency perspective.

Exited 2021, north of 68% with our <unk> six right. So you're certainly seeing G. Six firing on all cylinders from efficiency perspective, and so your question is well how does the sequencing and timing of <unk> seven work, how does that impact the margin in relation to the timing throughout the course of the year and it is a little bit of an installation.

Speaker 5: And so your question is, well, how does the sequencing and timing of G7 work? How does that impact the margin in relation to the timing throughout the course of the year?

Speaker 5: And it's a little bit of an insulation. So if it rolls out a little bit slower, certainly the cost to produce G7 or higher. But that means we're ultimately selling more G6.

So if it rolls out a little bit slower certainly the cost to produce G seven or higher but that means we are ultimately selling more <unk> and so you have this little bit of this transition, whereas you think about it from a multitude of different scenarios. It really zones back in on the 65% margin and Thats. The reason why we feel comfortable with the guidance there.

Speaker 5: And so you have this little bit of a transition, whereas you think about it from a multitude of different scenarios.

Speaker 5: it really zones back in on the 65% margin. And that's the reason why we feel comfortable with the guidance there.

Speaker 5: I'll give you the opposite scenario. If G7 is able to come out a little bit faster, the regulatory approval happens quicker. Certainly we'll be selling more of it and we'll be able to leverage the fixed cost infrastructure and certainly improve yields. And so you ultimately get to that end goal a little bit quicker.

Give you the opposite scenario of <unk> seven is able to come out a little bit faster the regulatory approval happens quicker certainly we will be selling more of it and we'll be able to leverage the fixed cost infrastructure and certainly improve yields and so you ultimately get to that end goal a little bit quicker. So I think under both scenarios, whether regulatory approval and launches sooner or later I think that 65%.

Speaker 5: So I think under both scenarios, whether regulatory approval and launches sooner or later, I think that 65% gross margin really speaks to the entirety.

Gross margin really speaks to the entirety of the year.

And our next question comes from Danielle.

Speaker 1: And our next question comes to Danielle Antosy from SVP Lee Rink. Your line is up.

From SBB Leerink your line is open.

Hi, good afternoon, everyone. Thanks, so much for taking the question.

Speaker 6: Hey, good afternoon everyone. Thanks so much for taking the question. Kevin and Jeremy, my question is around how to think about Q1 and potential COVID impact that you're seeing thus far, and also kind of also, you know, if you could opine on what what you have factored in.

Kevin and Jeremy My question is around how to think about Q1.

Potential COVID-19 impact that youre seeing thus far and also kind of.

If you could opine on what what you have factored in.

Yes, Jeremy go ahead sure I'll take that one.

Yes, sorry about that we've got a little bit in and out there, but I think I got the question, which is how do we thought about it and I'll say it for the full year guidance.

Speaker 5: Yeah, sorry about that. We cut a little bit in and out there, but I think I got the question, which is, you know, how we thought about it. And I think for the full year guidance.

Speaker 5: We have factored in the impact of COVID and how that would impact us. Now, we did talk a little bit about it on the call, and I think you saw this really across, especially in the United States, really where Omicron was pretty strong throughout the course of January , and we see it starting to dissipate here in February . So we will see that as it impacts our ability to get in front of primary care physicians and access new patients, but it's not a

We have factored in the impact of Covid and how that would impact US now we did talk a little bit about it on the call and I think I think you saw this really across especially the United States really where omicron.

It was pretty strong throughout the course of January and we see it starting to dissipate here in February . So we will we will see that as it impacts our ability to get in front of primary care physicians and access new patients, but it's not a.

Speaker 5: Not a question of if, it's more a question of when. And so that was all contemplated in the guidance. And as we think about the full year, there's a lot of other things that we think are certainly interesting benefits as we think about. You know, certainly Dexcom One and the launches Kevin referred to of G7 with the incredible data.

A question of if it's more question of when and so that was all contemplated in the guidance and as we think about the full year. There is a lot of other things that we think are certainly interesting benefits as we think about certainly decks com won in the launches Kevin referred to <unk> seven with the incredible data. So we really contemplated all of those in the guidance but.

Speaker 5: So, you know, we really contemplated all of those in the guidance, but certainly we know that as we exited January , certainly there were some primary care physicians that were closed to outside participants, but we are starting to see some of that thaw as we move into February .

Certainly we know that as we.

We exited January certainly there were some primary care physicians that were closed outside participants, but we are starting to see some of that thought as we move into February yes, I'd, even add to that I actually got out in the field here earlier this week and I heard from from the reps and the teams out there that they have not had the access they wanted here in the first quarter, but it is starting to open up a little bit.

Speaker 3: Yeah, I'd even add to that, I actually got out in the field here earlier this week, and I heard from the reps and the teams out there.

Speaker 3: They've not had the access they wanted here in the first quarter, but it is starting to open up a little bit.

Time will tell.

And your next question comes from Jeff Johnson from Baird. Your line is open.

Speaker 1: And our next question comes to Jeff Johnson from Baird. Your line is open.

Thank you good afternoon, guys that Kevin now that you've got the mobile data published in the 88 standard of cares.

Speaker 7: Thank you. Good afternoon guys. Kevin, now that you've got the mobile data published and the ADA standard of care has been published and updated, how should we think about maybe the pathway to US coverage for non-intensive or for basal only, just at the CMS level and maybe expanding commercial coverage? And can you just remind us ballpark how many commercial payers right now or some form or another reimbursing for basal only or non-intensive T2s back to us?

It has been published and updated how should we think about maybe the pathway to others, but non intensive days alone.

At the CMS level, and maybe expanding commercial.

Coverage and can you just remind us ballpark, how many commercial payers right now or some form or another reimbursing for basal only or not intensity too. Thanks.

There is some limited reimbursement for basal only in some some non intensive type twos, but it is not a very big number.

Speaker 3: There is some limited reimbursement for basal only and some non-intensive type IIs, but it is not a very big number.

Jeff it's kind of on a haphazard basis, and it's not something that actually we sell to our market too because they're just not that that much of it out there the pathway for approval would be similar to what we've done in the past given this mobile data. We're certainly presenting this on the commercial side and working to get coverage at various payers and hopefully some.

Speaker 3: Jeff, it's kind of on a haphazard basis, and it's not something that...

Speaker 3: actually we sell to or market to because there's just not that much of it out there. The pathway for approval will be similar to what we've done in the past, given this mobile data. We're certainly presenting this on the commercial side and working to get coverage at various payers and hopefully some of those will drop over the course of the year on the CMS side now that we have really good data. We have a good CMS plan to work with and go with them, make them more aware.

Those will drop over the course of the year on the CMS side now that we have really good data we have a good Tms plan.

To work with and go with them make them more aware.

Speaker 3: You know, lest we forget, we did leave the charge for Medicare approval for CGM in general as a company here. So we have experience on this.

We forget we did lead the charge for Medicare approval for CGM in general as a company here. So we have experience on this front.

Speaker 3: and we'll continue to push it, but it takes time and there's always variables. And in all fairness, I was completely wrong on Medicare approval before. I was, it was approved 18 months earlier than I said I was gonna come. So when I made a commitment there. So I'm rather hesitant to make any commitments on that front. We're just gonna keep pushing. The most important thing though, is the outcomes are there.

And we'll continue to push it but it takes time and there is always variables in all fairness I was completely wrong on Medicare approval before it was approved 18 months earlier than I said it was going to come so.

When I made a commitment there so I'm rather hesitant to make any commitments on that front, we're just going to keep pushing the most important thing though is the outcomes are there.

I got a note from a patient not long ago, who is a type two patient in this category and.

Speaker 3: I got a note from a patient not long ago who is a type 2 patient in this category and

Speaker 3: While the patient got put on a new drug, she attributed her four month A1C drop in six months to being on a Dexcom, not to the...

While the patient got put on a new drug she attribute her four month UNC drop in six months to being out of decks com to the new drug its cushy knew what her glucose values were and we've seen this time and time again.

Speaker 3: drug. It's because she knew what her glucose values were, and we've seen this time and time again, and we're very confident this is how this plays out over time.

And we are very confident this is how this plays out over time.

And your next question.

Comes from Robbie Marcus from Jpmorgan. Your line is open.

Oh, great. Thanks for taking the question.

Speaker 8: Oh great, thanks for taking the question. I wanted to see if you could speak to the commercial launch strategy here. It sounds like you're spending a lot in fourth quarter and 2022 ahead of G7. You have Omnipod 5 launching. You also have Medtronic in a tight spot with the warning letter with a lot of patients.

I wanted to see if you could speak to that.

The commercial launch strategy here it sounds like Youre spending a lot in fourth quarter.

2022 ahead of Chi said, then you have omnipod five launching.

Also have.

Medtronic in a tight spot with the warning letter with a lot of patients potentially moving over to partner therapies here. So.

Speaker 8: potentially moving over to partner therapies here. So, you know, maybe just talk to us about the strategy, how you're going to be spending your DTC dollars, how we should think about those ramping up, and what the competitive message from your reps will be this year.

Maybe just talk to us about the strategy. How you are going to be spending your DTC dollars. How we should think about those ramping up in and what the competitive message from your apps will be this year. Thanks.

While our competitive message for our reps is going to be the same it's always been more of the best.

Speaker 3: Well, our competitive message for our reps is going to be the same. It's always been, we're the best. And you're right, Robbie. We have a tremendous opportunity on the integrated system front with our partners to go grab as many of these users as we possibly can. And we're in talks with both Tandem and Insulate to let's go make it while the sun shine and get as many as we possibly can as those individuals rotate off warranty and have an opportunity to get into a new system.

And you're right Ravi we have a tremendous opportunity on the integrated system front with our partners to go grab as many as many of these users as we possibly can and we are in talks with both tandem and Insulet to let's go make hay, while the Sunshine and get as many as we possibly can as as those individuals.

To hit off warranty and have an opportunity to get into a new system.

Speaker 3: I think it speaks to our connectivity strategy and partnering with others. Now we have two options and we know a big driving factor for both those partners is the fact that they pair with the best product on the marketplace. So we will aggressively work with our partners on that front and make sure we have a joint message together. With respect to our own DC.

I think it speaks to our connectivity strategy and partnering with others now we have two options and we know a big driving factor for both of those partners are the fact that they paired with the best product on the marketplace. So we will aggressively work with our partners on that front and make sure we have a joint message together.

With respect to our own DC.

Speaker 3: and our own direct to consumer marketing. We have specific messages literally down to the geography standpoint, where in some states we target Medicare patients more than others. In other states, we target pediatrics and others. And then we analyze the effectiveness of those ads, the return on those investments, and then adjust from there. I think 2022, we're in an interesting year because we're going through a product loss.

Our undrawn direct to consumer marketing.

We have specific messages literally down to the geography standpoint, we're in some states, we target Medicare patients more than than others in other states, we target pediatrics and others.

When we analyze the effect of those adds to the return on those investments and then adjust from there I think 2022.

We're in an interesting year, because we're going through a product launch.

Speaker 3: That really isn't going to affect our behavior. We have to get more users on the G6 system as we go. And then some of those ads will ultimately shift over to G7, but we're not going to slow down and we're not going to create anticipation. We'll market what we have, sell what we have, and then as time comes, we'll pull the switch and go over. And our next question.

That really is in effect our behavior, we have to.

Have to get more users on the <unk> system as we go and then some of those adds will ultimately shift over to <unk> seven, but we're not going to slow down and we're not going to create anticipation will market. What we have said what we have and then as time comes we'll pull the switch and go over.

And our next question comes from Matt Taylor from UBS.

Hi, Thank you for taking my question.

So just I wanted to ask you more about the dynamics of <unk>, one and we're hearing about the phase III being rolled out more broadly are you seeing anything different on the <unk>.

Speaker 4: I wanted to ask you more about the dynamics of Dexcom One and we're hearing about lead base three being rolled out more broadly. Are you seeing anything different on the competitive front and maybe talk about how you're going more head to head with Dexcom One? I'd love for you to just flesh out those dynamics and the opportunities it's creating for you now that you didn't have before.

Additive front, and maybe talk about how youre going more head to head with that come on at Love you just flush out those dynamics and the opportunities. It is creating for you now that you didn't have before.

Well again, let's remind everybody our original decks com one launch.

Speaker 3: Well again, let's remind everybody our original Dexcom 1 launch is in four relatively small countries. The results have been very good. We've launched it as only an e-commerce platform and two of the four countries have now put it.

For for a relatively small countries the results have been very good.

We launched it is only an e-commerce platform in two of the four countries have now put.

Speaker 3: the standards in place to reimburse for it because of the ease of use and the, you know, the acceptance of that product.

The standards in place to reimburse for it because of ease of use and the.

The acceptance of that product and the price point, So <unk> does give us an opportunity first of all to expand in new geographies, where there may not be reimbursement, where the path to reimbursement will be difficult.

Speaker 3: and the price point. So DEXCOM 1 does give us an opportunity, first of all, to expand in new geographies where there may not be reimbursement, where the path to reimbursement would be difficult, and there's not a lot of integrated systems. We look forward to that as a geographical expander where we don't have infrastructure. The other opportunity you have with DEXCOM 1, in all honesty, is looking at a possible two-product strategy in some geographies.

Theres not a lot of integrated systems, we look forward to that geographical expander, where we don't have infrastructure. The other opportunity we have with <unk> and in all honesty is looking at a possible two product strategy in some geographies, where we believe we can support our G series for those intense intensive insulin users, particularly those.

Speaker 3: where we believe we can support our G Series for those intents.

Speaker 3: intensive insulin users, particularly those who are on partner systems and integrated systems and those who need all the share and follow function, pediatrics in particular. There's another population that may not need all those features and in those geographies we believe Dexcom One is an excellent product offering that could round out our portfolio very nicely. As far as Libre III rolling out, we haven't seen that much of it so far. I know there's been a lot of announcements.

Who are on partner systems, and integrated systems, and thus the need dollars share and follow a function pediatrics in particular theres. Another population that may not need all those features and in those geographies. We believe <unk> is an excellent product offering that could round out our portfolio very nicely.

As far as labor III rolling out.

We haven't seen that much of it so far I know theres been a lot of announcements soon.

Was approved several years ago, So we'll see how that rollout goes.

Speaker 3: was approved several years ago. So we'll see how that roll out.

And our next question comes from Larry <unk> from Wells Fargo.

Speaker 1: And our next question comes from Larry Beigleson from Wells Fargo.

Good afternoon, and thanks for taking the question.

Speaker 10: Good afternoon, thanks for taking the question. Just one for me on G7 and the OUS launch. Kevin, I heard you say initially it'll be a limited launch. What does that look like? How many markets? How long is a limited launch? And how should we think about the ramp of G7 once it is approved? Thanks.

Just one for me on <unk> in the U S launch that Kevin I heard you say initially it will be a limited launch.

What does that look like how many market how long is the limited launch how should we think about the ramp of <unk>. Once it is approved thank you.

Speaker 3: Our limited launch will be a relatively short period of time and really focus on wind geography primarily. After that we will then roll it out to

Our limited launch will be a relatively short period of time and really focus on one geography, primarily.

And after that we'll then roll it out to.

Speaker 3: really the larger markets, the larger more reimbursed markets and the larger markets where we can get reimbursement very quickly and then go down to the smaller ones. So we again have the geographies divided up in tiers. Tier one countries first, then tier two and tier three along those lines and that will roll out over the course of 2022 certainly to the larger markets. Then the other geographies will come after that.

Really the larger markets the larger more reimburse markets in our larger markets, where we can get reimbursement very quickly and then go down to the smaller ones. So we again have the geographies divided up in tiers tier one countries first in tier two and tier three along those lines and that will rollout over the course of 2020 to certainly to the larger markets than the other.

Geographies will come after that.

And your next question comes from Joanne Wuensch from Citibank.

Thank you very much.

Speaker 9: Thank you very much. I just want to double check two things. I want to make sure I saw either at the earlier presentation in January today Your patient volumes in the United States are up 30%. Is there a similar number you can share outside the United States?

We'll check two things.

I want to make sure I.

I'll either at the earlier presentation in January .

Patient volumes.

We're up 30% is there a number you can share outside the United States.

Speaker 5: Yeah, so what we had mentioned is in the US they were in the high 30s and globally they were also in the high 30s. And so that's the two numbers. So we gave you the global one certainly in early January and then today we mentioned the US was also in the high 30s.

Yes, so what we had mentioned is in the U S. They were in the high <unk> and globally. They were also in the high <unk> and so that's the two numbers. So we gave you the global one certainly.

In early January and then today, we mentioned in the U S was also in the high <unk> as well.

Okay and could you remind us what your view is present headwinds for this year and it's Andrew I think well into next year.

Speaker 9: Okay, and could you remind us what your view is on pricing headwinds for this year and if and or they roll into next year?

Sure, Yes. So this year, our pricing headwinds, we had talked about and it really will be called channel mix was really around $250 million $200 million in the U S and about 50 million outside the U S.

Speaker 5: Sure, yeah, so this year our pricing headwinds, we had talked about what we call channel mix, was really around 250 million, 200 million in the US and about 50 million outside the US. We came in a little bit light of that this year, but generally in line with that, and we expect similar type mixed headwinds into 2022 and then dissipating significantly as we move into 2020.

We came in a little bit light of that this year, but generally in line with that and we expect similar type.

Similar type mixed headwinds into 2022, and then dissipating significantly as we move into 2023.

And your next question comes from Jayson Bedford from Raymond James.

Speaker 1: The next question comes from Jason Bedford from Raymond's.

Speaker 10: Uh, good afternoon. I wanted to ask about the U S business in, in fourth quarter. Uh, it's been about a month since you last updated investors. You mentioned COVID a couple of times on the call, but is there anything else you could share with us with respect to kind of U S growth?

Good afternoon, I wanted to ask about the U S business in the fourth quarter.

It's been about a month since you last updated investors you mentioned Covid a couple of times on the call, but is there anything else you could share with us with respect to kind of use growth, which was obviously a bit slower than the prior three quarters.

Speaker 10: was obviously a bit slower than the prior three quarters.

Sure.

Speaker 5: Yeah, thanks, Jason. Appreciate the call. So you know, what we saw from a growth perspective is about 15%. It was a little bit slower from a growth revenue dollars perspective. Now we did see unit volumes in the high 30%, which

Yes, Thanks, Jason appreciate the call. So what we saw from a growth perspective is about 15%. It was a little bit slower from a growth revenue dollars perspective, now we did see unit volumes in the high 30%, which.

Speaker 5: you know, indicate that the underlying patient base continues to be strong.

Indicates that the underlying patient base continues to be strong I think the one thing that we did see and I think you referenced it earlier in your question. It was we didn't hit our new patient targets. It. We're still we still had near record new patient add in so it was still a solid addition, and we're still very happy but.

Speaker 5: I think the one thing that we did see, and I think you referenced it earlier in your question, was we didn't hit our new patient targets. It was still, we still had near a record new patient add, and so it was still a solid addition and we're still very happy.

Speaker 5: But we did have some challenges getting into the primary care physician offices. And Kevin alluded to it earlier. He was out in the field. And when Omicron was really running at its height, a lot of those offices were really not seeing outside visitors. And so that creates a little bit of a challenge as you're ultimately getting to know these physicians and getting them to ultimately understand how to use the product.

But we did have some challenges getting into the primary care physician offices and <unk>.

Kevin alluded to it earlier he was out in the field and when I'm, a chrome is really running at its height.

Those offices were really not seeing outside visitors and so that creates a little bit of a challenge as you are ultimately getting to know these physicians and getting them to ultimately understand how to use the product that was the predominant driver of what you saw in the Q4 and then our early calls when we kind of released early numbers.

Speaker 5: That was the predominant driver of what you saw in the queue for. In our early calls, when we released early numbers.

Speaker 5: We had mentioned that and we've confirmed that over the past few weeks is that was predominantly the driver. As Omicron dissipates and we're able to get back in front of these primary care physicians, we remain bullish that folks will ultimately adopt the technology similar to what you've seen prior to that. But that was really the predominant driver, nothing really beyond that. And the only thing I'd add to that, Jason, again, these volume numbers still remain very high.

You had mentioned that in we've confirm that over the next over the past few weeks is that was predominantly the driver.

As omicron dissipates, and we're able to get back in front of these primary care physicians, we remain bullish that folks who ultimately adopt the technology.

Similar to what you've seen prior to that.

But that was really the predominant driver nothing really beyond that.

The thing I would add to that Jason again, these volume numbers still remain very high so again as channel mix shifts the growth rate is lower than the volume numbers add to that the fact that our NPS scores are higher than they've ever been so patients are very happy and satisfied with the <unk> experience, which leads to them staying on the system and it also.

Speaker 3: So again, as channel mix shifts, the growth rate is lower than the volume numbers. Add to that the fact that our NPS scores are higher than they've ever been. So patients are very happy and satisfied with the Dexcom experience, which leads to them staying on the system and also being on the system more time. So as you look at revenue factors going forward, two of the biggest ones are patient retention and utilization, and we're doing very well on that front. And so, you know, that's the biggest thing.

Being on the system more time, so as you look at revenue factors going forward two of the biggest Windsor patient retention and utilization and we're doing very well on that front.

And so that's <unk>.

Pretty much sums it up.

And your next question comes from Matthew Blackman from Stifel. Your line is open.

Speaker 1: Your next question comes from Matthew Blackman from Stiefel. Your line is open.

Good afternoon, everybody. Thanks for taking my question I've got one.

Speaker 11: I've got one for Jeremy on the operating leverage regarding

For Jeremy on the operating leverage you're guiding to in 'twenty two.

Speaker 11: How should we think about where that leverage manifests in the P&L? Is it disproportionate to the SG&A side because you're scaling into those large Salesforce edition?

Should we think about where that leverage manifest in the P&L is it disproportionate to the SG&A side, because youre scaling into those large sales Force addition, or is it skewed to <unk>.

Speaker 11: to R&D because G7 costs are rolling off. So if you have any questions, just any help on how to think about this.

R&D because G seven cost of rolling off just any help on how to think about the moving parts there. Thanks.

Sure Yes.

Speaker 5: Sure, yeah, I know it's a fair question, and it's split about 50-50. I think what you're going to see is you're going to see us leveraging mostly the G&A line and the SG&A line. We'll continue to make sure that we're allocating funds to sales and marketing, but you're going to see us leveraging the G&A line and continuing to do so. And then you will see some of the fall off on some of the R&D side as we leverage R&D and as we post G7 launch, we don't have to incur as many costs associated with a launch established.

It's a fair question and it's split about 50, 50, and I think what youre going to see is youre going to see us leveraging mostly the G&A line and the SG&A line will continue to make sure that we are allocating funds to sales and marketing, but youre going to see us leveraging the G&A line and continuing to do so and then you will see some of the fall off on some of the R&D side as we leverage R&D and as we post G seven launch.

Don't have to incur as many costs associated with our launch establishment.

Speaker 5: So think about it 50-50 across both of those and G&A, not S&M and RS.

I think about a 50 50 across both of those in G&A, not <unk> and R&D.

Okay.

And your next question comes from Marie Thibault from BTG.

Speaker 1: And our next question comes from Marie Zibalt from BTI.

Alright. Thank you so much for taking the question I wanted to ask a question about <unk>.

Speaker 12: Hi, thank you so much for taking the questions. I wanted to ask a question about the Salesforce progress. I think it was about a year ago that you doubled the Salesforce and obviously outside of the Omicron challenges here, more recently would like to hear how their progress has been and what else might be needed.

The sales force progress I think it was about.

On a year ago that you doubled the sales force and obviously outside of the on the Con challenges here more recently I would like to hear how that progresses.

Yeah.

Else might be needed.

Thank you.

Speaker 3: We're really happy with the efforts of the sales team. And again, I got out in the field for the first time this week and just had a couple of

We're really happy with the efforts of the sales team.

And again I got out in the field for the first time this week and just had a couple of meetings with some regional teams I'm very impressed with the quality of the people we were able to bring on <unk> com as a name here in the U S is one that attracted great candidates and literally there were thousands of people that applied for these jobs, we very much had our pick of the cream of the crop there are getting very.

Speaker 3: of meetings with some regional teams. I'm very impressed with the quality of the people we were able to bring on.

Speaker 3: Dexcom is a name here in the US as one that attracted great candidates and literally there were thousands of people that applied for these jobs. We very much had our pick of the cream of the crop. They're all getting very much up to speed. I'm very also impressed with the diversity of the group with respect to experiences.

Much up to speed I'm very also impressed with the diversity of the group with respect to experiences and what we've learned is they brought from their companies you have some from farmers from devices from diabetes.

Speaker 3: And what we've learned is they brought from their companies, you have some from pharma, some from devices, some from diabetes, some who used to be clinicians. So you have a very different team with very good ideas to go about.

<unk> used to be clinicians. So you have a very different team with very good ideas to go about this.

Speaker 3: We're confident the team is making very good progress.

We're confident that the team is making very good progress.

We missed the opportunity in all fairness to have them altogether.

Speaker 3: We miss the opportunity in all fairness to have them all together, and I am in particular, to get to know more of.

And I am in particular to get to know more of them.

The growth in new patient starts has not been linear with the expansion of the sales force, but as we get down into these other markets. We cant expect it to be the same because they don't see as many of the people with diabetes is in our traditional endocrinology market, but we're happy with the growth that they've achieved we have very ambitious targets for next year what might be needed in the.

Speaker 3: The growth in new patient starts has not been linear with the expansion of the sales force, but as we get down into these other markets, we can't expect it to be the same because they don't see as many of the people with diabetes as in our traditional endocrinology market.

Speaker 3: But we're happy with the growth that they've achieved. We have very ambitious targets for next year. What might be needed in the future is something we debate a great deal internally. We're happy with what we have now, and let's let this play out for a while longer before we make any changes. I don't see anything changing right now. If anything, again, this is all about awareness on our side. And if what we need to generate more awareness has more feet on the street, that's the direction we would go.

The future is something we debate a great deal alternatives internally.

We're happy with what we have now and let's let this play out for a while longer before we make any changes I don't I don't see anything changing right now if anything again. This is all about awareness on our side and of what we need to generate more awareness has more feet on the street as to the direction. We would go for right now we don't feel that way, but we may in the future. So we'll see we're never adverse.

Speaker 3: For right now, we don't feel that way, but we may in the future. So we'll see. We're never adverse to trying pilot programs.

To try and pilot programs in specific geographies to see if another option can work and we will do that all throughout 2022, and if something sticks will move in that direction.

Speaker 3: In specific geographies to see if another option can work and we will do that all throughout 2022 and if something sticks will move in that direction.

And our next question comes from Chris Pasquale from Guggenheim. Your line is open.

Speaker 1: Your next question comes from Chris Pasquale from Guggenheim. Your line is up.

Thanks, I wanted to follow up on the factors impacting <unk> and what lessons, we should take from that as we look at <unk> <unk>.

Speaker 13: Thanks. I wanted to follow up on the factors impacting 4Q and what lessons we should take from that as we look at 1Q.

Speaker 13: So you said COVID was the main headwind, but your channel mix has also changed a lot over the past couple of years. Do you think that's resulting in less seasonality than you used to see in the year end? And then the corollary to that would be, should we expect the typical step down in one queue? Could it be more muted because of that reduced seasonality or was COVID really more of a factor in January than it was in December ? Could you just help us sort of balance those different factors?

Said Covid was the main headwind, but your channel mix has also changed a lot over the past couple of years.

That's resulting in less seasonality than you used to see in the year and when the corollary to that would be should we expect the typical step down in <unk>.

Would it be more muted because of that reduced seasonality or was COVID-19 really more of a factor in January than it was in December just help us sort of balance those different factors. Thanks.

Speaker 5: Sure, yeah, Noel, happy to walk through it. So you are correct, as time moves on, the move of the commercial business, certainly more and more to pharmacy than DME, should give us more of a situation where Q1 and Q4 are less pronounced. And so you are 100% correct there. And over the longer haul, that's where we expect it to go.

Sure Yeah, no happy to walk through it. So you are correct as time moves on the move of the commercial business certainly more and more to pharmacy, then DMA should should give us more of a situation, where Q1 and Q4 are less less pronounced and so you are 100% correct, there and over the longer haul that's where we expect it to go.

No.

Speaker 5: In terms of seasonality for this quarter, we do expect it to be relatively similar to last year.

In terms of seasonality for this quarter, we do expect it to be relatively similar to last year and again thats just more of us trying to navigate through one that migration, but too.

Speaker 5: And again, that's just more of us trying to navigate through, one, that migration, but two, the Omicron variant this year was certainly more than we saw in January of last year. And so we're really comparing year over year. And so I think it's fair to say that. So we expect that those two things really offset each other. So you see a little bit of a seasonality in this Q1 of 2022 similar to that you've seen in the past.

The omicron variance. This year was certainly more than we saw in January of last year, and so we're really comparing year over year and so I think it's fair to say that so we would expect that those two things really offset each other so you see a little bit of a seasonality in this Q1 of 2022 similar that you've seen in the past.

Speaker 5: Longer term, you are correct, and we will expect absent all macro factors that ultimately impact people's ability for movement and...

Longer term you are correct and we will expect absent all macro factors that ultimately impact people's ability for movement in.

Speaker 5: seeing physicians, et cetera, it will migrate to more of that situation. But we'll keep you posted as years get forward about that seasonality. For now, that's our expectation.

Seeing physicians et cetera, it will migrate to more of that situation, but we'll keep you posted as years get forward about that seasonality for now that's our expectation.

Excuse me.

And our next question comes from Margaret.

Saar from William Blair.

Hi, everyone. This is Brandon on for Margaret.

Speaker 3: Hi everyone, this is Brandon on for Margaret. I just wanted to ask you a question on the type two basal population and maybe some of the non-intensive patients. I can appreciate you guys are still early there, but you're pretty far in with the mobile data. So maybe you've talked to some, gone out in the field and talked to some endos or some other physicians.

Wanted to ask a question on the type two basal population and maybe some of the non intensive patients I can appreciate you guys are still early there, but you are pretty far and with the mobile data. So maybe you've talked to some gone out in the field and talking to some and those are some other positions.

Speaker 3: And maybe you have a few patients already on Dexcom that are using and so I'm curious what early feedback you're getting from those less intensive type 2 patients in terms of either utilization pricing or demand.

And maybe you have a few patients already on <unk> com that are using and so I'm curious what early feedback youre getting from those less intensive type two patients in terms of.

Either utilization pricing or demand anything that.

Speaker 10: anything that's kind of early there that we can read through that what the commercialization might look like going forward.

Kind of early there that we can read through that what the commercialization might look like going forward.

Speaker 3: Well, I'll start with basal insulin because the ADA and their recent guidelines came out and recommended CGM continuous use for people on basal insulin, which is a far departure from where we were in the past. This is very encouraging for us because the...

I'll start with basal insulin because the Ada and their recent guidelines came out and recommended CGM continue issues for people on basal insulin, which is a part of departure from where we were in the past. This is very encouraging for us because the.

Speaker 3: The fact that this group has now recommended that is a big step for us going forward. And as far as that population utilization in our mobile study and even in the other things that we've heard, they have no problem wearing CGML.

The fact that this group is now recommended that is a big step for us going forward.

And as far as that population utilization and our mobile site in even in the other things that we've heard they have no problem wearing CGM all the time.

For non intensive patients we've had our program with level two at Unitedhealthcare. We've had other programs with Intermountain health on duo well Doc a number of them and the results remain the same over and over again patients are on CGM do better than those who are not in the information provided by CGM enables him to make the proper changes to have better.

Speaker 3: For non-intensive patients, we've had our program with Level 2 at UnitedHealthcare, we've had other programs with Intermountain Health, OnDuo, WellDoc, a number of them, and the results remain the same over and over again. Patients on CGM do better than those who are not. The information provided by CGM enables them to make the proper changes.

Speaker 3: to have better overall health, very much like I said in my prepared remarks earlier, we see A1Cs go down because people know what the consequences of their meds, of their exercise, of their diets, of sleep, of all these factors has on their overall health.

Overall helped very much like I said.

In my prepared.

Repaired remarks earlier, we see <unk> go down because people know what the consequences of their meds of their exercise of their diets of sleep of all of these factors has on their overall health with respect to the pricing in the business model. We've often said we are solving a different problem and we're going after type two less intensive die.

Speaker 3: With respect to the pricing in the business model, we've often said we are solving a different problem when we're going after type 2 less intensive diabetes and we therefore think the pricing model will be different.

And therefore, I think the pricing model will be different than the current product that we have and we are working on what that optimal solution is right now and Youll hear more from us on that front over the course of 2022.

Speaker 3: than the current product that we have. And we are working on what that optimal solution is right now. And you'll hear more from us on that front over the course of 2020.

And your next question comes from Julia for lung from Morgan Stanley .

Speaker 1: Your next question comes from Celia Furlong from Morgan.

Hey, good afternoon, and thank you for taking my question I wanted to ask on <unk> Com one again.

Speaker 9: Great. Good afternoon and thank you for taking the question. I wanted to ask on Dexcom 1 again, just how you're thinking about further geographic expansion in 2022, as well as expectations for relative contributions to new patient volumes, OUS in 2022, and where you think this can go over the longer term. And thank you.

Just how you're thinking about further geographic expansion in 2022, as well as expectations for relative contribution to move patient volumes.

In 2022, and what do you think this can go over the longer term and thank you.

I'll start and Jeremy can maybe have some more specific numbers. After I'm done if you're if he's got any again as I said earlier. There are two great uses for <unk>. The first one is those geographies, where we're not and where we don't have infrastructure or a distribution arrangement with the distribution the distributor or another distribution.

Speaker 3: I'll start and Jeremy can maybe have some more specific numbers after I'm done if he's got any. Again, as I said earlier, there are two great uses for Dexcom Live.

Speaker 3: The first one is those geographies where we're not and where we don't have infrastructure or a distribution arrangement with a distributor or another distribution partner lined up. We can drop an e-commerce platform in there, have cash pay payments.

Our partner lined up we can drop an e-commerce platform and Theyre half cash pay payments patients and we can get them on the system and we can go our results and our initial.

Speaker 3: patients and we can get them on the system and we can go. Our results in our four initial countries have been outstanding.

Initial countries have been outstanding and so we will have other new geographies up over the course of the year like that they will not have major contributions to our revenue, but they do expand our footprint and do position us ultimately to get reimbursement in those countries again as we've seen in the first four whenever you launch that we now have reimbursement in progress and.

Speaker 3: and so we'll have other new geographies up over the course of the year like that. They will not have major contributions to our revenue, but they do expand our footprint and do position us ultimately to get reimbursement in those countries, again, as we've seen in the first four where we launched it, we now have reimbursement in process for two of those. The other opportunity for Dexcom One is in many of the major established markets, particularly the US.

Process for two of those the other opportunity for <unk> as in many of the major established markets, particularly our U S.

Speaker 3: We have an opportunity with Dexcom One to implement a dual product strategy. Our G Series does a lot more than our Dexcom One product. With connectivity, share and follow, the predictive alerts and all the other things that we have in that system, we believe it merits a different price point. Again, it solves a different problem. It's a different use case. We will very opportunistically pick geographies where we could launch Dexcom One and augment our business in those geographies, again adding more patient volume and...

We have an opportunity with <unk> to implement a dual product strategy. Our G series does a lot more than our <unk> product with connectivity Sharon follow.

The predictive alerts and all the other things that we have in that system. We believe it merits a different price point again, it solves a different problem. It's a different use case, we will very opportunistically pick geographies, where we get launched XCOM line and augment our business in those geographies again, adding more patient volume and.

Excuse me in more revenue to the process as far as giving you numbers or plans I'm not going to give you all of that that's on the strategy side and something for us not to unwind to.

Speaker 3: excuse me, and more revenue to the process. As far as giving you numbers or plans, I'm not going to give you all of that. That's on the strategy side and something for us not to unwind to the world, but suffice it to say those plans are in progress. I don't know, Jeremy, if you have anything to add. I think the safe bet is just to assume multiple country entries with Dexcom One, and we'll get you a little bit more color once we're into those countries. I will hold those back for...

To the world, but suffice it to say those plans are in progress and on Jeremy do you have anything to add I think the safe bet is just to assume multiple country entries with <unk> and we'll get you a little bit more color. Once we're into those countries will hold those back for strategic purposes.

Speaker 1: And our next question comes from Kyle Rose from Canaccord.

And your next question comes from Kyle Rose with Canaccord. Your line is open.

Great. Thank you for taking the questions. So.

Speaker 14: Great, thank you for taking the questions. A lot has been asked, but I think I'd like to just touch on the longer term product pipeline. Look, I realize you haven't launched G7 yet, so it's...

Lots been asked but.

I'd like to just touch on the longer term product pipeline look.

Look I realize you haven't launched <unk> seven yet so.

Speaker 14: You're probably not going to be thrilled with me asking about what's next, but with G7 launching over the course of the next 12 to 18 months globally, you've got Dexcom One scaling as well. What should investors expect from a product development and a product launch perspective? Is it combination products? Is there different analytes that you're going to be testing for? Just trying to really understand what the medium to longer term hardware type of product pipeline looks like.

You're probably not going to be thrilled with me asking about what's next with <unk> launching over the course of the next 12 to 18 months globally, you've got <unk> scaling as well what should investors expect from a product <unk>.

Development in a product launch perspective is it is it combination products as they're different analytes that youre going to be testing for just trying to really understand what the what the medium to longer term.

Hardware type of.

Our product pipeline looks like here.

Speaker 3: I love the what's next question, but these guys have kept me off after 15 minutes, so I'd have to stop. You know, first of all, let's look at G7 and everything that's changed.

I Love the what's next question, but these guys have cut me off after 15 minutes.

I'd have to stop.

First of all let's look at <unk>, seven and everything Thats changed we have plans in place to modify and make everything with G seven better already.

Speaker 3: We have plans in place to modify and make everything with G7 better already. We have, for example, a major cost initiative to reduce our manufacturing costs even before they are. You can expect us to be very diligent in efforts to get that up to a 15-day life from a product perspective because that certainly has a big impact on our P&L.

We have for example, a major cost initiative to reduce our manufacturing costs, even with where they are you can expect us to be very diligent in efforts to get that up to a 15 day life from a product perspective, because thats certainly has a big impact on our P&L.

Speaker 3: We have, for example, alternative electronic structures, all those types of things going on. Weíve never stopped improving our sensor technology. So all of these things we continue to work on in our core business. At some point in time there may be some diminishing returns, particularly given the accuracy of the data on the current system. So we balance that. But a lot of these efforts, again, we focus on our product development, performance, performance, performance, performance, performance, performance.

We have pretty good.

<unk> alternative electronic structures all of those types of things going on we never stopped improving our our sensor.

<unk>.

So all of these things we continue to work on our core business at some point in time, there may be some diminishing returns, particularly given the accuracy of the data on the current system. So we balance that but a lot of these efforts again, we focus all of our product development performance patient experience our customers have this action and cost.

Speaker 3: patient experience, or customer satisfaction and cost.

Speaker 3: And we look at all those buckets. I can tell you there will be a lot of software initiatives here going forward with the G7 platform.

And we look at all of those buckets I can tell you there will be a lot of software initiatives here going forward with the G. Seven platform, we believe with <unk>, we've barely scratched the surface of our ability to differentiate products through different software experiences again, creating different business models and expanding our reach with respect to their analytes we can.

Speaker 3: We believe with Dexcom One we've merely scratched the surface of our ability to differentiate products through different software experiences, again creating different business models and expanding our reach. With respect to other analytes, we continue to study that. We've studied that for quite some time.

To study that we've studied that for quite some time, what we have to determine is what our real commercial markets for us and in all fairness. We haven't found anything that compares to glucose yet and we have a lot of things that we need to conquer on the glucose side, but we do have studies going on for some of the other analytes that you certainly be familiar with it <unk> heard others.

Speaker 3: What we have to determine is what are real commercial markets for us.

Speaker 3: And in all fairness, we haven't found anything that compares to glucose yet. And we have a lot of things that we need to conquer on the glucose side. But we do have studies going on for some of the other analytes that you certainly be familiar with that you've heard others talk about. It just becomes a question of us for when and do we have the right platform and what changes we need to make to it to get there. So there are numerous things in the pipeline. Don't ever think we've stopped here.

Talk about it just becomes a question of us for win and do we have the right platform.

And what changes we.

We need to make it to it to get there. So there are numerous things in the pipeline don't ever think we've stopped here.

It's going.

And our next question comes from Steven Lichtman from Oppenheimer. Your line is open.

Speaker 1: And our next question comes from Steven Lichman from Oppenheimer.

Thank you Kevin maybe building on that you talked today about the steps youre, taking now on basal only with mobile data at Ada recommendations in hand.

Lastly, we saw some positive data on non infill in type two what are the next steps here in 2022 in terms of going after that opportunity and even pre diabetes.

It is it is part of our strategy and we build our pillar around four.

Speaker 3: You know, it is part of our strategy and we build our pillar around four, you know, we call it the four piece here. You've got the physicians, you've got programs, you've got all the clinics who do this and you've got the patients themselves.

We call it the four piece here you've got.

The physicians you've got programs you've got all the clinics.

Who do this and you got the patients themselves and we're attacking on all four fronts.

Speaker 3: and we're attacking on all four fronts with the diabetes programs.

With the diabetes programs, we've had positive data from level. Two we have other companies, we know will be reporting positive data in the near term and using this.

Speaker 3: We've had positive data from level two. We have other companies we know will be reporting positive data in the near term and using this product on type two patients who are not on insulin. The outcomes remain strong. We're going to tack it on all four fronts. We believe the experience for these customers is going to be a different experience than those who are intensively using insulin.

This product type two patients who are not on insulin the outcomes remains strong we're going to attack it on all four fronts.

We believe the experience for these customers again is going to be a different experience and those who are intensively using insulin and its an opportunity for us to use our software capabilities to design a different experience for them that will keep them engaged the key to any technology as far as providing a good outcome is engagement.

Speaker 3: And it's an opportunity for us to use our software capabilities to design a different experience for them that will keep them engaged. You know, the key to any technology as far as providing a good outcome.

And one of the things we've been very successful at if you look at all of our studies.

Speaker 3: And one of the things we've been very successful at, if you look at all of our studies.

Speaker 3: where we have these incredible outcomes, the users of our systems remain tremendously engaged. And we are trying to build a type two solution around that level of engagement. And that's why we're taking some time as we look at this product opportunity. So you'll see us attack on all fronts.

Where we have these incredible outcomes the users of our system to remain tremendously engaged and we are trying to build a type two solution around that level of engagement and that's why we're taking some time.

As we look at this product opportunity so youll see us attack on all fronts I don't know Jeremy if you have anything to add to that you're welcome to no I think one of the things that if you think about this opportunity that we really prepared ourselves for even beyond our product and our engagement. There is that some of the software with connectivity that we've built.

Speaker 3: I don't know Jeremy if you had anything to add to that, you're welcome to. No, I think one of the things that if you think about this opportunity that we really prepared ourselves for, even beyond our product and our engagement there is some of the software with connectivity that we built.

Speaker 5: And so, you know, the real time API, for example, is our way of trying to move into this market and think about, well, if you're building an app and your app is built around whatever that happens to be, whether it is, to your point, pre-existing health and wellness.

And so the real time API for example is our way of trying to move into this market and think about well if youre building an app in your App is built around whatever that happens to be whether it is to your point.

Health and wellness, we want to be able to be the partner of choice now we have to work on labels and things around those lines, which we'll absolutely do over the long haul, but we've really set ourselves up to be what we believe is the partner of choice and we will continue to do so so that's another way, we're going about it which I think youll continue to see us push down that path as well.

Speaker 5: You know, we want to be able to be the partner of choice. Now we have to work on labels and things around those lines, which we'll absolutely do over the long haul. But we've really set ourselves up to be what we believe is the partner of choice, and we'll continue to do so. So that's another way we're going about it, which I think you'll continue to see us push down that path as well.

And our next question comes from Josh Jennings from Cowen.

Hi, good evening, thanks for taking the questions.

Speaker 4: Hi, good evening. Thanks for taking the questions. I question I should say I'm just going to ask about gross margins and just the outperformance in 2021. And if you could just run through maybe Jeremy just some of the drivers of the outperformance relative to your initial guidance.

Question I should say I.

Just wanted to ask about gross margins and just the outperformance in 2021, and if you could just run through maybe Jeremy just some of the drivers of the outperformance relative to your initial guidance and why we some of those drivers couldnt repeat in 2022 and I'm, assuming that's part of it is the G. Seven launch timing in 2022, but I'll.

Speaker 4: and why some of those drivers couldn't repeat in 2022. I'm assuming that part of it is the G7 launch timing in 2022, but also wanted to just – was curious about how the acquisition of international distributors contributed to the margin performance in 2022 and really just thinking about what it was like to –

Also wanted to just I was curious about how the acquisition of international distributors contributed to the margin performance in 2022 and really just.

Yes.

Thinking about whether there is upside to this initial guidance range for 2022, thanks, so much.

Speaker 5: Yeah, absolutely. So, you know, let's think about 2021. And just as you think about that overperformance, really, there's a couple of real drivers of it. It's one we've built a lot of automated machinery.

Yeah, absolutely. So let's think about 2021 and just as you think about that over performance really there is a couple of real drivers of it. It's one we've built a lot of automated machinery and as a result of that yields have gone up over time.

Speaker 5: And as a result of that, yields have gone up over time.

Speaker 5: And so you've seen that the team has done an incredible job of building those yields, really driving those through. And that, you know, the reduction of waste and the increase of efficiency and the increase of the absorption of those fixed costs really was an incredible step forward.

And so you've seen that the team has done an incredible job of building those yields really driving those through and that the reduction of waste and the increase of efficiency and the increase of the absorption of those fixed costs really was an incredible step forward.

Speaker 5: Also through our experience with G6, we've reduced our warranty exposure. And as you have warranties, you're sending out replacements, you're sending those out. We're starting to maximize our logistics departments and reducing those freight costs.

Also through the through our experience with <unk> six we've reduced our warranty exposure and as you have warranties you are sending out replacement you are sending those out.

We're starting to maximize our logistics departments and reducing those freight costs ultimately and fulfilling it. So all of those things were all hitting on and maximizing those for <unk> six now when you launched <unk> seven you've got brand new machinery, you've got so you've got to go through the yields process again, it's a new product and so you actually you have to work through the warranty and how you all.

Speaker 5: ultimately in fulfilling it. So all of those things we're all hitting on and maximizing those for G6.

Speaker 5: Now when you launch G7, you've got brand new machinery, so you've got to go through the yields process again. It's a new product, and so you actually have to work through the warranty and how you ultimately navigate that.

We navigate that and so when you get to the question well what happened in 2021, that's exactly what happened the team did an incredible job in in 2022, as we launched <unk> seven we're going to go through that journey and as you saw with the step back that you saw when we launched <unk>. There was a step back and then we were able to navigate our way through it we expect to be able to do the same with <unk> seven.

Speaker 5: And so when you get to the question, well, what happened in 2021? That's exactly what happened. The teams did an incredible job. And in 2022, as we launched G7, we're going to go through that journey. And as you saw with the step back that you saw when we launched G6, there was a step back, and then we were able to navigate our way through it. We expect to be able to do the same with G7. However, in the year of G7, we were able to do the same with G7.

However in the year of launch we know we're going to have to navigate through that and so what could be potential upside to that could be effectively if we're able to navigate through either yields or warranties quicker than expected, which again dovetails into how quick regulatory approvals happen et cetera. So that's the primary driver over the long haul. There is no reason to believe that we can.

Speaker 5: we know we're going to have to navigate through that. And so what could be potential upside to that could be effectively if we're able to navigate through either yields or warranties quicker than expected, which again dovetails into how quick regulatory approvals happen, etc.

Speaker 5: So that's the primary driver. Over the long haul, there's no reason to believe that we can't continue to be more efficient over time. The same was designed with efficiency in mind.

Continue to be more efficient overtime <unk> was designed with efficiency in mind and we have tons of different work streams that are going on around how to maximize Kevin referred to it earlier on how to maximize the cost potential within that line and so we'll continue to do that over time, we'll get to 2023, when we get there but.

Speaker 5: And we have tons of different work streams that are going on around how to maximize, Kevin referred to it earlier, on how to maximize the cost potential within that line. And so we'll continue to do that over time. We'll get to 2023 when we get there. But over the course of 2022, we're very excited about launching G7 and then going through the improvements.

Over the course of 2022, we're very excited about launching <unk> seven and then going through the improvements.

And our next question comes from Frank <unk> from Jefferies. Your line is open.

Speaker 1: And our next question comes to Frank Pinell from Jeffries.

Hi, Thank you for taking the question.

Speaker 4: Hi, thank you for taking the question. I guess just looking at your user base, it looks like you've grown that by three to four times over the last several years. I'm wondering to what degree that's sustainable given G7, Dexcom 1, pre-diabetes, type 2, obviously a lot of things on slate. And is there a point that you see where OUS revenues eclipse U.S. revenues?

I guess just looking at your user base it looks like you've grown that by three to four times over the last several years.

I'm wondering to what degree that sustainable given G. Seven <unk> com, one pre pre diabetes type two obviously a lot of things on slate.

And is there a point that you see where <unk> revenues eclipsed U S revenues. Thank you.

Speaker 3: You know, in our long-term plans we certainly show OUS revenues becoming a larger portion of our overall revenue picture than they are today.

And our long term plans, we certainly show O U S revenues, becoming a larger portion of our overall revenue picture than they are today, we don't have them eclipsing U S revenues in our in our current five year plan, because we have so much opportunity in the U S market I think the user base is a great question because over time the character.

Speaker 3: We don't have them eclipsing U.S. revenues in our current five-year plan because we have so much opportunity in the U.S. market.

Speaker 3: I think the user base is a great question because over time the characteristics of that user base changes as we are into more, for example, Dexcom One-Tie products where it's an e-commerce platform. We don't know how sticky those patients are going to be right now.

<unk> of that user base changes as we are into more for example, <unk> one type products, where it's an E. Commerce platform. We don't know how sticky those patients are going to be right. Now we have developed a great model for stickiness with respect to our current user base and we are designing our products and our software experiences to.

Speaker 3: We have developed a great model for stickiness with respect to our current user base, and we are designing our products and our software experiences to maintain that type of engagement.

Pain that type of engagement in a model where people can afford to pay for the product for many years. The number one reason and individuals using decks com was cost.

Speaker 3: in a model where people can afford to pay for the product, you know, for many years.

Speaker 3: The number one reason an individual quit using Dexcom was because of the pandemic.

Speaker 3: and we are trying to knock that barrier down more and more as we speak. We need to make sure we address those issues going forward. Our customer experience team has been fabulous at identifying things we can do to make our product better.

And we are trying to knock that barrier down more and more as we speak we need to make sure. We address those issues going forward or our customer experience team has been fabulous identifying things, we can do to make our product better and an increase that base and have them stay it's not just getting them getting the users is as one task.

Speaker 3: and increase that base and have them stay. It's not just getting them. Getting the users is one task, but maintaining them is another one. And our record is unlike anybody else's in this industry. We're really good at it.

But maintaining them is another one and our record.

Unlike anybody else in this industry, we're really good at this.

Speaker 5: Yeah, and I think just to your question in terms of, you know, how is it repeatable over time in terms of the patient base? Look, I mean the majority of Dexcom's existence has been really focused on the intensive insulin use.

Yeah, and I think just to your question in terms of how is it.

Repeatable over time in terms of the patient base look I mean, the majority of <unk> existence has been really focused on the intensive insulin user.

But we know that there is an unmet need as you move into a basal user and thats, what the mobile study and Thats a large increase in addressable population. We also know that the type two space. There is a huge demand for that product there, but it's a question is Kevin referred to ultimately how do we go to market in there and we have some great ideas about how it should look and we're working through those so I think we're in a pretty good spot.

Speaker 5: But we know that there's an unmet need as you move into a basal user, and that's with a mobile study, and that's a large increase in addressable population.

Speaker 5: We also know that the type two space, there's a huge demand for that product there, but it's a question as Kevin referred to, ultimately how do we go to market in there? And we have some great ideas about how it should look and we're working through those, so I think we're in a pretty good spot, but we're navigating through that. And then to your point, the prediabetes population and health and wellness population is huge. And so it's really a matter of us getting the right product into those folks' hands. And I think that's what you see us doing over time. All the investment in software and platforms.

But we're navigating through that and then to your point the pre diabetes population and health and wellness population is huge and so it's really a matter of us getting the right product into those folks' hands and I think that's what you see us doing over time, all the investment in software and platforms.

Speaker 5: you know, is really designed around how do we engage not only our existing population and engage them better, but also engage these new population, which means the TAM for this potential product is incredible.

Really designed around how do we engage not only our existing population and engage them better but also engage these new population, which means the tam for this potential product is incredibly large.

And that concludes our question and answer session I'll turn the call back over to Kevin Sayer for final remarks.

Speaker 1: That concludes our question and answer session. I will turn the call back over to Kevin Sayer for final...

Speaker 3: Thanks a lot operator. You know, as we spend today looking back at 2021, I just want to spend a minute and acknowledge our teams today. We have

Thanks, a lot operator, we spend today looking back at 2021, I just wanted to spend a minute and acknowledge our teams today we have the.

Speaker 3: A commercial team who generated 26% revenue growth in volumes that far exceeded that in a time when we're putting them through rapid expansion

Commercial team, who generated 26% revenue growth in volumes at far exceeded that in a time, when we're putting them through rapid expansion efforts.

As we double the U S sales force acquired distributors and did a number of things to make it more difficult we have in operations and quality group, who during all this time when the world has talked about component shortages and not being able to produce product is delivered every single month. In addition to delivering we've opened a large regional distribution center in areas.

Speaker 3: We doubled the US sales force, acquired distributors, and did a number of things to make it more difficult. We have an operations and quality group who during all this time when the world has talked about component shortages not being able to produce product has delivered every single month.

Speaker 3: In addition to delivering, we've opened a large regional distribution center in Arizona and we're building our factory in Malaysia and we're hitting our schedules and timeframes there. You look at the innovation at this company from R&D, clinical and quality groups with respect to the work and efforts on G7.

And we're building our factory in Malaysia, and we're hitting our schedules and time frames. There Youll look at the innovation at this company from R&D clinical and quality groups with respect to the work in <unk> seven.

Speaker 3: as we got those filings in and those filings are pristine with respect to the data that we present.

As we got those filings in and those filings are pristine with respect to the data that we presented.

Speaker 3: and we're getting up and ready to scale on the ops side and then just from a day to day basis.

And then we're getting up and ready to scale on the op side, and then just from a day to day basis.

Our HR group is locked us through thousands of hires literally in the past year and in the finance guys haven't missed a beat in it as we move to whom we've not had any trouble.

Speaker 3: Our HR group has walked us through thousands of hires literally in the past year and the finance guys haven't missed a beat and IT as we've moved to home we've not had any trouble. This has been a great year for Dexcom and a lot of people have contributed. It's never just one group or one thing. So I just wanted to thank everybody, acknowledge everybody's accomplishments and we look forward to a great year next year. Thanks.

This has been a great year for <unk> com and a lot of people have contributed it's never just one group or one thing. So I just wanted to thank everybody acknowledge everybody's accomplishments and we look forward to a great year next year.

Sure.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker 1: Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.