Dexcom (Nasdaq:DXCM) shares are up today on second-quarter results that topped the consensus forecast.
Shares of DXCM rose 2.3% at $132.35 apiece after the market closed yesterday. By the next afternoon, DXCM shares were up more than 4% to $134.71 apiece. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was up slightly.
The San Diego-based continuous glucose monitor (CGM) maker posted profits of $115.9 million. That equals 28¢ per share on sales of $871.3 million for the three months ended June 30, 2023.
Dexcom more than doubled its profits on sales growth of 25.2%.
Adjusted to exclude one-time items, earnings per share came in at 34¢, 11¢ ahead of expectations on Wall Street. Sales also topped the analysts’ forecast of $841.6 million.
How Dexcom upped revenues and doubled profits
Dexcom attributed the significant revenue growth to volume growth in conjunction with strong new customer additions. The company said this continues to serve as a primary growth driver as the awareness of real-time CGM increases. Dexcom also launched its next-generation G7 CGM in the U.S. just before the quarter began. Midway through the quarter, a new Medicare guideline increased the addressable market for the company’s CGMs, too.
BTIG analysts Marie Thibault and Sam Eiber say “robust” G7 adoption drove growth in the quarter. The majority of G7 users are new to Dexcom, they said, and there are already 8,000 physicians in the U.S. who are new to Dexcom prescribing G7.
During the quarter, Dexcom also announced a plan to bring new glucose sensor to the market for people who don’t use insulin. Chief Commercial Officer Teri Lawver outlined this plan in a recent interview with Drug Delivery Business News.
“In the second quarter, we advanced several key strategic initiatives and shared our latest vision for the future of Dexcom at our 2023 Investor Day,” said Kevin Sayer, Dexcom chair, president and CEO. “Given our strong start to the year and rapidly growing market opportunity, we are pleased to raise our 2023 revenue and margin guidance.”
Dexcom now expects revenues to land between $3.5 billion and $3.55 billion for 2023. That marks 20%-22% growth and an increase from previous guidance for between $3.4 billion and $3.515 billion. The company projects a non-GAAP gross profit margin of about 63% and an adjusted EBITDA margin of approximately 26.5%.
The analysts’ view
Thibault and Eiber wrote that Dexcom believes it’s winning the market share in nearly all major reimbursed countries. Success with the U.S. basal-only population — helped by the Medicare decision — drove increased guidance, they said.
The analysts reiterated their “Buy” rating.
There were big expectations for Dexcom heading into this Q2 print and the company delivered, topping consensus sales estimates by $30M and raising the full-year outlook well above the beat,” the analysts wrote. “This was a fairly flawless quarter and we think shares of DXCM can move higher on Friday despite being priced for near-perfection.”
William Blair analyst Margaret Kaczor highlighted Dexcom’s significant momentum as proven by the quarterly results. She also believes the non-insulin sensor could prove a “catalyst for adoption” moving forward.
“While the strength internationally stands out as a strong indicator of momentum abroad, the guidance raise was a surprise and makes us more encouraged in the traction the company is seeing in the G7 launch (several positive metrics referenced on the call, particularly around share gains) and basal adoption (the impact to revenues was raised relative to prior guidance though was not quantified this quarter),” Kaczor wrote.
This story originally ran on July 27, 2023. Update July 28 with the next-day stock price.
