DexCom Inc. (NASDAQ:DXCM)

The analysis of the financial data reveals several notable trends in the key performance metrics over the five-year period from 2018 to 2022.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrated a significant improvement from a negative figure of -115,440 thousand US$ in 2018 to a positive 150,334 thousand US$ in 2019. This upward trend continued in 2020, reaching 294,086 thousand US$, indicating strong operational performance. However, in 2021, NOPAT decreased to 233,041 thousand US$, reflecting a contraction compared to the previous year. In 2022, it again increased substantially to 352,450 thousand US$, achieving the highest value in the observed period.

Cost of Capital

The cost of capital remained relatively stable over the period, fluctuating marginally around 15%. It slightly increased from 15.27% in 2018 to 15.55% in 2020, then decreased gradually to 15.23% by 2022. The consistency in the cost of capital suggests stable financing conditions during the period.

Invested Capital

The invested capital exhibited considerable variability throughout the years. Initially, there was a sharp decline from 1,449,197 thousand US$ in 2018 to 836,300 thousand US$ in 2019, representing a substantial reduction. Following this dip, invested capital increased significantly to 1,367,200 thousand US$ in 2020 and continued to rise to a peak of 1,899,300 thousand US$ in 2021. In 2022, invested capital declined to 1,649,000 thousand US$, still maintaining a level higher than the early years.

Economic Profit

Economic profit showed considerable fluctuations over the period. In 2018, the value was strongly negative at -336,771 thousand US$, indicating value destruction. This turned positive in 2019, as economic profit rose to 21,461 thousand US$, and further improved to 81,499 thousand US$ in 2020, reflecting enhanced value creation. However, economic profit dropped back to a negative figure of -58,101 thousand US$ in 2021, suggesting a period of value loss. The figure recovered to 101,257 thousand US$ in 2022, indicating renewed value generation.

Overall, the company experienced substantial improvements in operational profitability with fluctuations in both invested capital and economic profit across the years. The consistent cost of capital suggests financing conditions were stable, while the variability in economic profit implies that value creation was not consistent, with one year showing clear losses before recovery in the final year.

The financial data over the five-year period reveals several notable trends in profitability metrics.

Net Income (Loss)

The net income (loss) shows a significant transition from a negative figure in 2018 to positive values in subsequent years. In 2018, the company reported a net loss of approximately US$127.1 million. In 2019, net income turned positive, reaching US$101.1 million, indicating a substantial improvement.

The growth trend continued strongly with net income rising to US$493.6 million in 2020, representing the highest value within the observed period. However, in 2021, net income decreased to US$154.7 million, indicating a contraction compared to the previous year. In 2022, net income rebounded materially to US$341.2 million, suggesting recovery and sustained profitability despite some volatility.

Net Operating Profit After Taxes (NOPAT)

The NOPAT data parallels the net income trend but displays some differences in magnitude and yearly variation. In 2018, NOPAT was negative at approximately US$115.4 million, consistent with the net loss reported that year.

From 2019 onward, NOPAT remained positive, increasing from US$150.3 million in 2019 to US$294.1 million in 2020. Unlike net income, NOPAT decreased less sharply in 2021, recording US$233 million, reflecting a smaller decline compared to net income's sharper fall in the same period.

In 2022, NOPAT increased further to US$352.5 million, reaching its highest value during the period and indicating enhanced operational efficiency and profitability after taxes.

Overall, the data suggests the company experienced a turnaround starting in 2019, moving from losses to profits. The peak in profitability occurred in 2020, followed by a decline in 2021, then a recovery in 2022. The NOPAT figures indicate that operational profitability after taxes has generally improved, and although fluctuations exist, the trend is positive, with 2022 reflecting stronger operational results than previous years. These patterns may indicate strategic or operational improvements that influenced earnings performance and operational efficiency over the period.

Provision for (benefit from) income taxes

The provision for income taxes demonstrates considerable volatility over the five-year period. Initially, it was a modest positive figure of 600 thousand US dollars at the end of 2018, increasing significantly to 3,100 thousand US dollars by the end of 2019. In 2020, the provision shifted dramatically to a large tax benefit of -268,600 thousand US dollars, marking a substantial reversal. Following this, the provision reverted to positive values, reporting 19,200 thousand US dollars in 2021 and further rising to 49,600 thousand US dollars in 2022. The notable negative provision in 2020 suggests an exceptional tax event or adjustment during that year.

Cash operating taxes

Cash operating taxes have exhibited a consistent upward trajectory throughout the five years. Starting at 8,239 thousand US dollars in 2018, the cash outflow more than doubled by 2019 to 16,466 thousand US dollars. This trend of increasing cash tax payments continued steadily, reaching 27,729 thousand US dollars in 2020, 46,414 thousand US dollars in 2021, and finally 76,556 thousand US dollars in 2022. The persistent growth in cash operating taxes indicates increasing taxable income or changes in tax policy resulting in higher cash tax obligations.

The financial data over the five-year period reveals several notable trends in the company’s debt, equity, and invested capital.

Total Reported Debt & Leases

This metric shows a consistent upward trend, increasing from approximately $1.08 billion in 2018 to about $2.15 billion in 2022. The most significant jump occurs between 2019 and 2020, where the debt rose by roughly 59%, then continued growing at a steadier pace through 2022. This indicates increasing leverage and possibly expanding financing commitments or capital expenditures funded by debt.

Stockholders’ Equity

Stockholders’ equity also experienced growth from 2018 through 2021, rising sharply from approximately $663 million to $2.25 billion. However, in 2022, equity declined by around 5% to approximately $2.13 billion. The substantial increase up to 2021 suggests successful retention of earnings or capital infusion, while the slight downturn in 2022 might point to losses, dividend payments, or other equity-reducing transactions during that year.

Invested Capital

Invested capital demonstrates a more volatile pattern over the period. After starting at about $1.45 billion in 2018, it dropped substantially by 2019 to $836 million, a decrease of over 40%. This was followed by a recovery and growth to approximately $1.9 billion in 2021, before declining again to $1.65 billion in 2022. These fluctuations could reflect changes in the mix of debt and equity financing, asset acquisitions or disposals, or shifts in working capital components.

Overall, the data indicates increasing reliance on debt with growing total reported debt and leases, balanced by a rise in equity up to 2021. The fluctuations in invested capital suggest dynamic capital management strategies, potentially responding to operational needs or market conditions. The slight decline in equity and invested capital in 2022 may warrant further analysis to determine underlying causes and implications for financial stability and investment capacity.

The economic profit for the company has shown considerable volatility over the analyzed periods. Starting with a significant loss of approximately -$336.8 million in 2018, the company moved into positive territory in 2019 and further increased the economic profit to around $81.5 million in 2020. However, this positive performance was not sustained, as the economic profit declined sharply to a loss of about -$58.1 million in 2021 before recovering again to a profit of approximately $101.3 million in 2022.

Invested capital exhibits a fluctuating trend as well. After decreasing from nearly $1.45 billion in 2018 to about $836.3 million in 2019, it rose significantly to approximately $1.37 billion in 2020, followed by a further increase to nearly $1.90 billion in 2021. The invested capital then decreased to around $1.65 billion in 2022.

The economic spread ratio, which represents the company's returns over its capital costs, mirrors the pattern seen in economic profit. It began with a substantial negative value of -23.24% in 2018, improved to positive ratios of 2.57% in 2019 and 5.96% in 2020, declined back to a negative -3.06% in 2021, and climbed again to 6.14% in 2022. This fluctuation indicates variation in the company's efficiency in generating value over its invested capital.

Overall Trend

The company experiences significant fluctuations in economic profitability, with recoveries after periods of losses, reflecting changes in operational efficiency and returns relative to invested capital.

Invested Capital

The invested capital does not display a consistent upward or downward trend but fluctuates considerably, peaking in 2021 before declining moderately in 2022.

Economic Spread Ratio

The economic spread ratio aligns closely with economic profit, showing alternating performance with recovery in 2022, suggesting efforts to improve capital returns after prior setbacks.

An analysis of the annual financial data reveals several notable trends in key performance metrics over the five-year period.

Adjusted Revenue

There is a consistent and strong upward trend in adjusted revenue from 2018 through 2022. The revenue increased from approximately 1.03 billion US dollars in 2018 to around 2.92 billion US dollars in 2022. This represents nearly a threefold increase over the five years, indicating significant growth in the company's sales or service income during this period.

Economic Profit

The economic profit experienced considerable volatility across the years. In 2018, the company recorded a substantial economic loss of approximately 337 million US dollars. This shifted positively in 2019 and 2020, with economic profits of about 21 million and 81 million US dollars respectively, indicating a period of improved profitability. However, in 2021, economic profit turned negative again, posting a loss of around 58 million US dollars. By 2022, the company returned to economic profitability, with an economic profit of approximately 101 million US dollars.

Economic Profit Margin

The economic profit margin, which measures economic profit as a percentage of revenue, shows a pattern consistent with the absolute economic profit figures. The margin was significantly negative at -32.66% in 2018, reflecting the deep loss sustained that year. It improved to a positive margin of 1.46% in 2019 and further increased to 4.23% in 2020, reflecting enhanced profitability relative to revenue. The margin dipped into negative territory again at -2.37% in 2021, aligning with the negative economic profit. In 2022, the margin recovered to 3.47%, suggesting a return to more favorable economic profit relative to revenue.

Overall, the data depicts a company experiencing rapid revenue growth accompanied by fluctuating economic profitability. The periods of economic losses in 2018 and 2021 are interspersed with years of modest positive economic profit, indicating challenges in consistently converting growth into economic profit. The rebound in 2022 suggests improved operational efficiency or strategic adjustments leading to better economic profit outcomes despite continued revenue expansion.