Dexcom (DXCM), a major diabetes company, saw its stock plummet by over 42% on Friday after reporting lower-than-expected sales for the June quarter and reducing its outlook for the year. Dexcom, based in San Diego, California, enables people to manage diabetes more effectively with its advanced continuous glucose monitoring (CGM) systems. These wearable sensors continuously track glucose levels around the clock, providing real-time data without the need for fingersticks or scanning. While demand for Dexcom's product remains high, it is expected to slow based on the company's recent quarterly results and full-year outlook.
Allison Gatlin, Investors Business Daily author, reported, “Sales climbed 15% year over year to just north of $1 billion. But that missed expectations for $1.04 billion, according to FactSet. Adjusted earnings came in at 43 cents per share, beating projections by four pennies and up 26.5% vs. the same three months last year.” While this revenue miss was surprising, an even bigger shock was highlighted by Margaret Kaczor Andrew, an analyst at William Blair. She said, “However, the bigger surprise was that management decreased guidance by $200 million to $300 million for the full year” This lower guidance has led many investors to question the company's long-term growth prospects.
Additionally, Dexcom reported international sales falling $27 million below expectations, citing lower-than-expected new patient starts of 70,000 globally. The company lost share in the premium durable medical equipment channel and experienced faster-than-anticipated pharmacy rebates for the new G7 CGM as notable headwinds. Consequently, Dexcom lowered its annual sales forecast to $4 billion to $4.05 billion, missing analysts' $4.3 billion projection. The company also provided disappointing third-quarter guidance of $975 million to $1 billion, compared to the expected $1.15 billion, and announced a $750 million share repurchase program. Despite these struggles, Andrew maintained her outperform rating on the company, citing a positive market outlook and “Dexcom’s strong product portfolio and ecosystem.” Investors should monitor the company to determine if these challenges are largely transient or more persistent.
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