Dexcom targets Europe as it buys distributor, opens HQ and aims for reimbursement

Dexcom ($DXCM) is working to up its commercial game in Europe. The latest part of that plan is an acquisition of its distributor in Germany, Switzerland and Austria: Nintamed. It's been Dexcom's exclusive distributor in those countries for the last 6 years. But now that the continuous glucose monitor company expects it's on the verge of securing reimbursement in several European countries, it's devoting more effort there.

The San Diego, CA-based company is slated soon to open a European headquarters in Edinburgh, Scotland, and plans to "expand the European team on all fronts," said Dexcom President and CEO Kevin Sayer on a late April earnings call.

"Over the next several years, we expect the transition to a direct commercial presence in multiple European countries, including the UK. We continue to believe that reimbursement could come in Germany and France and the UK in the near future and we will be ready to capitalize on that opportunity," continued Sayer.

Dexcom is currently operating on a cash-pay basis for its CGMs in Germany, France and the U.K.; it expects two or even three of these countries to enable reimbursement this year or during the first half of next year. The Nintamed acquisition seems timed to take advantage of a potential groundswell of sales with reimbursement. Financial details of the deal were undisclosed.

Nantamed will "operate closely" with the company's new international headquarters in Scotland.

"The acquisition of Nintamed represents another step forward in our mission to improve access to our leading CGM technologies globally. As we expand our international footprint, these countries represent attractive markets for Dexcom and Nintamed's team leaves us well positioned to drive continued strong growth there," said Sayer in a statement. "Since introducing our CGM system to these countries several years ago, Nintamed, has developed deep knowledge and relationships in the diabetes community. Together, I am confident we will increase the awareness of the tremendous benefits Dexcom's technologies can deliver to patients throughout this region."

Dexcom doesn't break out European or even international sales. Its first-quarter revenue was up a whopping 60% to $116.2 million--but routine profitability has eluded the company. It reported a net loss of $19.2 million, or $0.23 per share, last quarter. That's up from a loss of $12.9 million, or $0.17 per share, the same period a year earlier.

Its expenses are being driven in part by an R&D effort with Alphabet ($GOOG) subsidiary Verily to create miniature, and even disposable, CGMs as well as by its need to address a recent Class 1 recall for receiver speakers in several models.

The company's R&D spend was $32 million last quarter, up from $20 million a year earlier. It expects it may have to write off about $5 million in receiver inventory as it rolls out new receiver speakers and has to dispense with existing inventory.

- here is the distributor announcement