Dexcom (Nasdaq:DXCM) shares got a massive boost on third-quarter results that came in well ahead of the consensus forecast.
The San Diego-based continuous glucose monitor (CGM) maker also announced a $500 million share repurchase program in conjunction with its third-quarter results. The repurchase program follows a $1 billion senior convertible note offering this year, plus a 4-for-1 reverse stock split executed last year.
Shares of DXCM skyrocketed nearly 10% at $88.80 apiece after the market closed today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — closed the day down nearly 2%.
Dexcom posted profits of $120.7 million, or 29¢ per share, on sales of $975 million for the three months ended Sept. 30, 2023. The company recorded a 19.3% bottom-line gain on sales growth of 26.7%.
Adjusted to exclude one-time items, earnings per share totaled 50¢. That landed 16¢ ahead of expectations on Wall Street. Dexcom also beat the sales forecast as analysts projected $939.2 million in revenue.
“Our teams executed incredibly well in the third quarter, delivering solid financial results while further advancing global access to Dexcom CGM,” said Kevin Sayer, Dexcom chair, president and CEO. “Our continued momentum has left us in a great position to again raise our full-year revenue and margin guidance and finish a strong 2023.”
Dexcom increased its sales guidance to a range between $3.575 billion and $3.6 billion (23%-24% growth) for 2023. That ticks up from the previous range of $3.5 billion to $3.55 billion. The company also projects an adjusted gross profit margin of approximately 64%.
The analysts’ view on Dexcom
BTIG analysts Marie Thibault and Sam Eiber say the repurchase program can help offset dilution from the maturing 2023 notes that remain. They maintained a “Buy” rating for the company with optimism in its CGMs, despite the growing popularity of GLP-1s.
“Management emphasized they are extremely bullish on their long-term business as well; we like this opportunity to buy back shares at what we view as a major discount,” they wrote. “Yet again we are moving our DXCM forecasts higher. We remain confident in the long-term broad appeal of CGMs even in this evolving therapy landscape.”
They said the company’s earnings call had “refreshingly little focus on the GLP-1 debate.” GLP-1 receptor agonists, like Ozempic and Wegovy, provide therapy for diabetes and weight loss. This therapeutic class, a glucagon-like peptide 1, has proven to lead to improved blood sugar control and weight loss.
After hosting a call with a diabetes expert, BTIG analysts even went as far as to say GLP-1s shouldn’t have a massive impact on insulin pumps. What’s more, the drug class could even provide a continuous glucose monitor (CGM) boom.
Abbott also recently shared data to back up this notion, too. The company sees GLP-1s as a potential modest accelerator for its FreeStyle Libre CGM product family.
Dexcom updated its analysis of third-party payor data through August 2023, noting that the growing use of CGMs within Type 2 patients starting GLP-1 therapy is even more pronounced with the latest generation of drugs.
“This may be because of the high potency of these newest drugs, interest in assessing the effect of the drugs, and using CGM as a tool to encourage behavior change to support long-term improvement,” the analysts said.