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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

DexCom Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	352,450)	233,041)	294,086)	150,334)	(115,440)
Cost of capital²	14.78%	14.88%	15.09%	14.96%	14.83%
Invested capital³	1,649,000)	1,899,300)	1,367,200)	836,300)	1,449,197)

Economic profit⁴	108,774)	(49,590)	87,748)	25,239)	(330,307)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 352,450 – 14.78% × 1,649,000 = 108,774

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	DexCom Inc. economic profit decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

DexCom Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income (loss)	341,200)	154,700)	493,600)	101,100)	(127,100)
Deferred income tax expense (benefit)¹	(21,600)	(4,900)	(277,300)	200)	(2,200)
Increase (decrease) in allowance for doubtful accounts²	1,900)	(1,800)	1,400)	(1,400)	(4,300)
Increase (decrease) in deferred revenue³	10,900)	(100)	500)	(1,200)	(300)
Increase (decrease) in accrued warranty⁴	(100)	1,200)	4,300)	600)	(2,000)
Increase (decrease) in equity equivalents⁵	(8,900)	(5,600)	(271,100)	(1,800)	(8,800)
Interest expense	18,600)	100,300)	84,700)	60,300)	22,700)
Interest expense, operating lease liability⁶	6,906)	5,955)	5,915)	4,300)	3,198)
Adjusted interest expense	25,506)	106,255)	90,615)	64,600)	25,898)
Tax benefit of interest expense⁷	(5,356)	(22,314)	(19,029)	(13,566)	(5,439)
Adjusted interest expense, after taxes⁸	20,150)	83,941)	71,586)	51,034)	20,460)
Net operating profit after taxes (NOPAT)	352,450)	233,041)	294,086)	150,334)	(115,440)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in accrued warranty.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss).

⁶ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 115,100 × 6.00% = 6,906

⁷ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 25,506 × 21.00% = 5,356

⁸ Addition of after taxes interest expense to net income (loss).

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	DexCom Inc. NOPAT decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

DexCom Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Provision for (benefit from) income taxes	49,600)	19,200)	(268,600)	3,100)	600)
Less: Deferred income tax expense (benefit)	(21,600)	(4,900)	(277,300)	200)	(2,200)
Add: Tax savings from interest expense	5,356)	22,314)	19,029)	13,566)	5,439)
Cash operating taxes	76,556)	46,414)	27,729)	16,466)	8,239)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	DexCom Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

DexCom Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Short-term finance lease liabilities	4,200)	3,300)	8,800)	600)	—)
Current portion of long-term senior convertible notes	772,600)	—)	—)	—)	—)
Long-term senior convertible notes	1,197,700)	1,702,700)	1,667,200)	1,059,700)	1,010,300)
Long-term finance lease liabilities	59,600)	57,000)	54,000)	14,400)	7,300)
Operating lease liability¹	115,100)	119,100)	118,300)	86,000)	58,897)
Total reported debt & leases	2,149,200)	1,882,100)	1,848,300)	1,160,700)	1,076,497)
Stockholders’ equity	2,131,800)	2,251,500)	1,826,500)	882,600)	663,300)
Net deferred tax (assets) liabilities²	(336,300)	(214,900)	(216,400)	100)	(100)
Allowance for doubtful accounts³	7,300)	5,400)	7,200)	5,800)	7,200)
Deferred revenue⁴	29,100)	2,100)	2,200)	1,700)	2,900)
Accrued warranty⁵	12,800)	12,900)	11,700)	7,400)	6,800)
Equity equivalents⁶	(287,100)	(194,500)	(195,300)	15,000)	16,800)
Accumulated other comprehensive (income) loss, net of tax⁷	11,600)	(500)	(3,200)	(2,300)	(1,500)
Adjusted stockholders’ equity	1,856,300)	2,056,500)	1,628,000)	895,300)	678,600)
Construction in progress⁸	(542,600)	(360,700)	(219,000)	(132,600)	(57,300)
Available-for-sale debt securities⁹	(1,813,900)	(1,678,600)	(1,890,100)	(1,087,100)	(248,600)
Invested capital	1,649,000)	1,899,300)	1,367,200)	836,300)	1,449,197)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenue.

⁵ Addition of accrued warranty.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of available-for-sale debt securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	DexCom Inc. invested capital increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

DexCom Inc., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	41,439,004)	41,439,004)	÷	45,069,004)	=	0.92	0.92	×	16.00%	=	14.71%
Debt³	3,514,900)	3,514,900)	÷	45,069,004)	=	0.08	0.08	×	0.87% × (1 – 21.00%)	=	0.05%
Operating lease liability⁴	115,100)	115,100)	÷	45,069,004)	=	0.00	0.00	×	6.00% × (1 – 21.00%)	=	0.01%
Total:	45,069,004)					1.00					14.78%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,505,713)	39,505,713)	÷	43,707,613)	=	0.90	0.90	×	16.00%	=	14.46%
Debt³	4,082,800)	4,082,800)	÷	43,707,613)	=	0.09	0.09	×	5.53% × (1 – 21.00%)	=	0.41%
Operating lease liability⁴	119,100)	119,100)	÷	43,707,613)	=	0.00	0.00	×	5.00% × (1 – 21.00%)	=	0.01%
Total:	43,707,613)					1.00					14.88%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,451,954)	39,451,954)	÷	42,788,654)	=	0.92	0.92	×	16.00%	=	14.75%
Debt³	3,218,400)	3,218,400)	÷	42,788,654)	=	0.08	0.08	×	5.53% × (1 – 21.00%)	=	0.33%
Operating lease liability⁴	118,300)	118,300)	÷	42,788,654)	=	0.00	0.00	×	5.00% × (1 – 21.00%)	=	0.01%
Total:	42,788,654)					1.00					15.09%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	23,100,043)	23,100,043)	÷	25,351,843)	=	0.91	0.91	×	16.00%	=	14.58%
Debt³	2,165,800)	2,165,800)	÷	25,351,843)	=	0.09	0.09	×	5.42% × (1 – 21.00%)	=	0.37%
Operating lease liability⁴	86,000)	86,000)	÷	25,351,843)	=	0.00	0.00	×	5.00% × (1 – 21.00%)	=	0.01%
Total:	25,351,843)					1.00					14.96%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	13,161,858)	13,161,858)	÷	14,627,856)	=	0.90	0.90	×	16.00%	=	14.40%
Debt³	1,407,100)	1,407,100)	÷	14,627,856)	=	0.10	0.10	×	5.43% × (1 – 21.00%)	=	0.41%
Operating lease liability⁴	58,897)	58,897)	÷	14,627,856)	=	0.00	0.00	×	5.43% × (1 – 21.00%)	=	0.02%
Total:	14,627,856)					1.00					14.83%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

DexCom Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	108,774)	(49,590)	87,748)	25,239)	(330,307)
Invested capital²	1,649,000)	1,899,300)	1,367,200)	836,300)	1,449,197)
Performance Ratio
Economic spread ratio³	6.60%	-2.61%	6.42%	3.02%	-22.79%
Benchmarks
Economic Spread Ratio, Competitors⁴
Abbott Laboratories	-0.25%	0.21%	-3.06%	-4.36%	—
Cigna Group	0.51%	-0.44%	2.45%	-0.74%	—
CVS Health Corp.	-4.23%	-0.25%	0.25%	-0.53%	—
Elevance Health Inc.	-0.64%	0.65%	-1.30%	-0.48%	—
Intuitive Surgical Inc.	3.94%	19.56%	7.54%	—	—
Medtronic PLC	-3.31%	-4.92%	-4.02%	-2.94%	—
UnitedHealth Group Inc.	4.38%	4.23%	4.82%	4.85%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 108,774 ÷ 1,649,000 = 6.60%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	DexCom Inc. economic spread ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

DexCom Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	108,774)	(49,590)	87,748)	25,239)	(330,307)

Revenue	2,909,800)	2,448,500)	1,926,700)	1,476,000)	1,031,600)
Add: Increase (decrease) in deferred revenue	10,900)	(100)	500)	(1,200)	(300)
Adjusted revenue	2,920,700)	2,448,400)	1,927,200)	1,474,800)	1,031,300)
Performance Ratio
Economic profit margin²	3.72%	-2.03%	4.55%	1.71%	-32.03%
Benchmarks
Economic Profit Margin, Competitors³
Abbott Laboratories	-0.35%	0.30%	-5.34%	-7.96%	—
Cigna Group	0.24%	-0.23%	1.45%	-0.46%	—
CVS Health Corp.	-1.63%	-0.11%	0.13%	-0.29%	—
Elevance Health Inc.	-0.28%	0.31%	-0.61%	-0.26%	—
Intuitive Surgical Inc.	3.41%	15.39%	7.74%	—	—
Medtronic PLC	-7.26%	-11.79%	-9.88%	-6.98%	—
UnitedHealth Group Inc.	2.24%	2.08%	2.46%	2.37%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 108,774 ÷ 2,920,700 = 3.72%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	DexCom Inc. economic profit margin deteriorated from 2020 to 2021 but then improved from 2021 to 2022 not reaching 2020 level.

DexCom Inc. (NASDAQ:DXCM)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin