Yahoo Finance DexCom (DXCM) Q1 Earnings Beat, Strong CGM Demand Continues
DexCom, Inc. DXCM reported first-quarter 2024 adjusted earnings per share (EPS) of 32 cents, which beat the Zacks Consensus Estimate of 27 cents by 18.5%. The company reported earnings of 17 cents per share in the prior-year quarter.
DXCM registered GAAP net income per share of 36 cents, up from the year-ago quarter’s figure of 12 cents.
Revenue Details
Total revenues grew 24% (25% on an organic basis) to $921 million on a year-over-year basis and beat the Zacks Consensus Estimate by 1.1%. Strong revenue growth was driven by rising volumes on the back of increasing global awareness of the benefits of its real-time Continuous Glucose Monitoring system and strong customer additions.
Despite better-than-expected results, shares of DexCom lost 6.5% in after-hours trading on Apr 25. The stock has risen 0.9% in the past year compared with the industry’s 5.2% growth. The broader S&P 500 Index has moved up 25.8% in the past year.
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Segmental Details
Sensor and other revenues(93% of total revenues) increased 31% on a year-over-year basis to $854.3 million. Hardware revenues (7%) decreased 26% year over year to $66.7 million.
Geographical Details
U.S. revenues (71% of total revenues) increased 24% on a year-over-year basis to $653.2 million. International revenues (29%) improved 24% (26% on an organic basis) year over year to $267.8 million.
Margin Analysis
Gross profit totaled $561.9 million, up 21.5% from the prior-year quarter’s level. DexCom reported an adjusted gross margin (as a percentage of revenues) of 61.8%, which contracted approximately 160 basis points year over year.
Research and development expenses amounted to $141.5 million, up 18.9% year over year. Selling, general and administrative expenses totaled $319.3 million, up 7.7% year over year.
The company reported total operating expenses of $460.8 million, up 10.9% from the prior-year period’s recorded number. Adjusted operating margin (as a percentage of revenues) was 15.2%, up 460 bps year over year.
Financial Position
DXCM exited the first quarter with $2.9 billion in cash, cash equivalents and marketable securities compared with $2.72 billion in the preceding quarter.
Total assets amounted to $6.48 billion, up sequentially from $6.26 billion.
2024 Guidance
DexCom raised the lower-end of its guidance for 2024 revenues. The company continues to expect revenues in the range of $4.2-$4.35 billion (previously $4.15-$4.35 billion), implying 17-21% year-over-year growth. The Zacks Consensus Estimate for the same is pegged at $4.32 billion.
DXCM expects an adjusted gross margin of 63-64%. Adjusted operating margin is projected to be 20%.
Wrapping Up
DexCom exited first-quarter 2024 on a strong note, wherein both earnings and revenues beat their respective estimates. Impressive contributions from the Sensor segment, and domestic and international revenue growth were the key catalysts. Moreover, the expansion of coverage for CGM systems during the quarter supported growth. This trend is likely to continue through 2024. The availability of new sensors like G6 & G7 in new international markets is also boosting revenue growth. Moreover, the approval for its glucose sensor for people with type 2 diabetes, Stello, in March buoys optimism. This will be the first device from the company’s portfolio for type 2 diabetes patients.
Additionally, the glucose monitoring market presents significant commercial opportunities for the company. DexCom’s prospects in alternative markets such as non-intensive diabetes management, hospital, gestational, pre-diabetes and obesity are likely to provide it with a competitive edge in the MedTech space.
Apart from making continued advancements in terms of its key strategic objectives, the company continued to have strong new patient additions in the quarter.
The contraction of gross margin raises concern. However, cut-throat competition in the market for blood & glucose monitoring devices remains another headwind.
DexCom, Inc. Price, Consensus and EPS Surprise
DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. Quote
Zacks Rank and Stocks to Consider
Currently, DexCom carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space areIDEXX Laboratories, Inc. IDXX, Becton, Dickinson and Company BDX, popularly known as BD, and Ecolab Inc. ECL.
IDEXX, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 11.6%. IDXX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDEXX’s shares have risen 1.6% compared with the industry’s 5.2% growth in the past year.
BD, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.4%. BDX’s earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 4.6%.
The stock fell 10.8% against the industry’s 5.5% growth in the previous year.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.
Ecolab’s shares have rallied 35.2% against the industry’s 8.6% decline in the past year.
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