Investors are worried about the diabetes care technology leader’s slowing growth.
Shares of DexCom (DXCM -40.66%) were crashing 39.9% lower as of 10:20 a.m. ET on Friday. The huge sell-off came after the continuous glucose monitoring (CGM) systems maker announced its second-quarter results following the market close on Thursday.
DexCom’s revenue increased 15% year over year in Q2 to $1 billion. However, that came in a little below the average revenue estimate of $1.04 billion based on LSEG’s survey of analysts.
The company posted Q2 earnings of $143.5 million, or $0.35 per share, based on generally accepted accounting principles (GAAP). Its non-GAAP earnings came in at $174.3 million, or $0.43 per share. This reflected solid year-over-year growth and beat the consensus Wall Street adjusted earnings estimate of $0.39 per share.
What investors disliked the most about DexCom’s Q2 update
The worst part of DexCom’s Q2 update was that the company lowered its full-year 2024 guidance. DexCom now expects full-year revenue of between $4 billion and $4.05 billion. It previously forecast revenue of $4.2 billion to $4.35 billion.
What’s going on? DexCom lost market share in the durable medical equipment (DME) channel. CEO Kevin Sayer also said in the Q2 earnings call, “We’re short a large number of new patients as to where we thought we would be at this point in time.” His comment raised concerns that DexCom was feeling the impact of GLP-1 drugs that help patients control their diabetes and lose weight.
Is DexCom stock a buy on the sell-off?
With DexCom’s massive decline today, you’d think the sky was falling for the company. That doesn’t appear to be the case. However, this stock still trades at a sky-high forward earnings multiple. I think investors’ best move is to remain on the sidelines until DexCom can prove its growth will continue to justify such a steep valuation.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends DexCom. The Motley Fool has a disclosure policy.
It’s an expensive product for those that don’t absolutely need it.
On that note, I’m quite curious how the professional athletes are using their CGM data. The tour de France riders eat 120 carbs per hour but I’d like to know the various insights they’ve gained from tracking BG levels.
I wonder if the rollout of non diabetic use CGM sales will have much financial impact YOY in the 5 years. Dexcom and Abbott both are releasing/ have released internationally OTC CGMs aimed at the weight loss crowd which should be here in the US soon.
I think Dexcom thought it would get more of the Type 2 market in it’s projections. I’m sure Medicare covering type 2’s was suppose to be a big boost. But you have to be an insulin user to qualify for a cgm under Medicare and probably a lot of private insurers. Libre is cheaper if someone is interested in wearing one and not covered. Libre is cheaper if you are covered by insurance and pay a percentage and while you can calibrate a Dexcom, it’s not that important if you are not taking a fast acting insulin. The Ozempic craze is helping people lose weight and not need to go to insulin and in some cases getting people off of insulin so that adds to a lesser demand.
Dexcom is coming out with a cheaper version, but Abbott has had plenty of warning and coming out with a cheaper version of theirs. So the LIbre will still be cheaper. Libre has been advertising for a while now and already has a big share of the market. I find it hard to believe Dexcom would have honestly thought they could have pulled a non dependent insulin user from a Libre to a Dexcom with Dexcom being a lot more expensive. And Ozempic and it’s counterparts are changing the whole grocery industry. It would make sense it would affect the CGM market too.
And I have a strong feeling if you are doing good and your numbers have fallen as a type 2, do you really want to see your numbers all the time and wear a cgm? My husband as a type 2 in the low 6’s for years now just puts one on off and on to see how his numbers are doing. It helped at the beginning tremendously, but he doesn’t want to wear one all the time.
@elver That could make a difference, a lot of people are just interested in what their numbers are doing. If you don’t need a script I bet more people will grab one off and on to see. But if Libre is cheaper, I still think Libre will win that battle. Plus I think the cheaper version of Dexcom released here won’t be able to be calibrated. The UK cheaper version can’t be.
It’s a cheap product for those that do. The device; the G7 itself (what they are pushing and what caused the price drop) is cheap to manufacture apart from the sterilisation issues, which are the same as every syringe we have ever used.
Who does not need “absolutely” need it? We don’t have beta cells; we clearly do. But T2s don’t have effective insulin responses and knowing what is happening is essential to their long term chance of staying alive.
So give it to the good and the great? There’s a word for that.
Yes! Looking at the G7 that’s where all the cost is. I won’t say it is over-engineered because they are trying to solve a problem (inserting stuff under our skin) which is difficult to solve; the Omnipod has a similar solution but the 'pods have a much high cost build because of the need to have a mechanical(thermo-mechanical) pump too.
I’d like to see what Abbott are doing; they face the same problem. I don’t believe for a minute that the excessive complexity of the G7 (or G6) inserter can’t be solved, it just requires imagination.
Way more over-engineered then either Dexcom or Insulet. Pretty colour plastic? At least Dexcom don’t do that.
It’s reusable but it only inserts the canula; not the whole pump (or the sensor!) The canula alone costs CAD21.30 (I couldn’t find a US price, no surprise there!) So compare to my Omnipod Dash costs (complete pump, canula and inserter all in one): USD I paid $819.39 for a “90 day” supply (30 units) but the quoted (Walmart) cash price was $2175. The insurance negotiated price is likely to include the kickback (the rebate; I pay for the rebate/kickback), so that’s $27 per canula; somewhat less than minimed for just the canula!
The “cash” price is, of course, a joke, although if you don’t have insurance in the US you aren’t laughing. It’s $72.50 per pod (the cash price used to be $30/pod).
Fancy inserters, fancy canulas, loads of fancy overpriced stuff. Think Paco Rabanne, or Nike, then apply the same principles to healthcare. It makes me want to throw up.
Thanks everyone - and thanks @mm2 for the motley fool link.
we’re just back from the Olympics in Paris so I haven’t been able to be on the boards for awhile. LMK if you want me to do an olympic thread - we had a great time…
But w/r/t Dexcom - just to note that the stock is currently trading at 75.50, so it’s recovered about 40% of the value it lost.
My view is that many stocks these days are “priced to perfection” which means that their prices can only be justified if everything goes just right. Dexcom announced a relatively minor downward revenue adjustment which was what drove the dramatic drop. Also the stock has generated strong price growth for a couple of years so there is a lot of unrealized gains that people get nervous about.
For investors (or long term savers) it’s useful to keep this in mind because the market has gotten considerably more volatile overall since the original posting of a couple of weeks ago. The patterns are similar between Dexcom and the overall Nasdaq.
I was reading in Diatribe today about the new Accu-Chek SmartGuide CGM. MARD of 9.2%, uses AI to predict hypoglycemia from 30 minutes to 7 hours in advance of occurrence!. Yowza if it’s true. They have received the CE mark in Europe and will be distributing soon (I tried to get one today from an Austrian Dr friend that I know). Apparently they are applying to the FDA as well.
It will be interesting to see how this affects not Dexcom and Abbott’s stock in the long run with a 5th player in the marketplace, especially one with a product that has such a great MARD. I’m curious to see what pricing will be here in the US.
