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DexCom (DXCM) to Report Q2 Earnings: What's in the Cards?

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DexCom, Inc. (DXCM - Free Report) is scheduled to release second-quarter 2023 results on Jul 27, after the closing bell. In the last reported quarter, the company’s earnings beat estimates by 13.33%.

The figure also outpaced the consensus mark in three of the trailing four quarters and met the same once, delivering an average surprise of 15.19%.

Q2 Estimates

Currently, the Zacks Consensus Estimate for DexCom’s second-quarter revenues is pegged at $837 million, indicating growth of 20.2% from the year-ago quarter’s reported figure. The consensus mark for earnings is pinned at 22 cents per share, implying a 29.4% improvement year over year.

Factors to Note

DexCom’s second-quarter revenues are likely to have been aided by continued increase in volume. This surge can be attributed to new patients across all channels and rising global awareness about the benefits of its real-time Continuous Glucose Monitoring (CGM) system.

Potential robust contributions from the Sensor segment, and domestic and international revenue growth are likely to have been the key catalysts behind the company’s second-quarter results.

In April, DexCom announced that coverage for its CGM systems was expanded through Non-Insured Health Benefits program. The expanded coverage will provide access to CGM systems for all patients managing diabetes with insulin.

The Medicare coverage for the company’s latest CGM technology, G7 sensor, also got expanded in the same month to include people with diabetes using all types of insulin, as well as certain non-insulin-using individuals who have a history of problematic hypoglycemic events.

In March, DexCom’s G6 CGM System was made eligible for treatment of type II diabetes in Manitoba, Canada. It was available earlier for type I diabetes management alone. Moreover, the system will be available for patients of all ages.

These developments might have boosted the demand for DXCM’s CGM systems. This, in turn, is likely to have driven revenue growth in the to-be-reported quarter.

The company has been benefiting from demographic trends and lifestyles in countries outside Europe and the United States. Per management, international growth remains strong and presents lucrative opportunities, courtesy of improving global access and awareness.

In the first quarter, International revenues (29% of total revenues) surged 21% year over year to $215.5 million. Organically, the segment’s revenues were up 27% in the last reported quarter. U.S. revenues (71% of total revenues) increased 17% in the same period. The trend is likely to have continued in the second quarter, owing to broad-based growth.

The Zacks Consensus Estimate for U.S. and International revenues is pegged at $515 million and $205 million, respectively, for the second quarter.

The approval for G7 CGM system in Canada in July buoys optimism. On its second-quarter earnings call, the company may provide an update on the launch plan of the new system in the country.

However, an increase in operating expenses and intense competition might have weighed on DXCM’s performance in the quarter to be reported.

What Our Quantitative Model Suggests

Our proven model does not conclusively predict an earnings beat for DexCom this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that's not the case here.

Earnings ESP: DexCom’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: DexCom carries a Zacks Rank #2 at present.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this reporting cycle.

McKesson (MCK - Free Report) has an Earnings ESP of +1.93% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The stock has gained 9.5% year to date. MCK’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter earnings surprise of 4.48%, on average.

Avanos Medical (AVNS - Free Report) has an Earnings ESP of +0.74% and a Zacks Rank of 3 at present.

The stock has lost 3.5% year to date. AVNS’ earnings missed estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 8.03%.

Pacific Biosciences of California (PACB - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank of 3 at present.

The stock has gained 67.3% year to date. PACB’s earnings beat estimates in the last reported quarter. It has a negative four-quarter average earnings surprise of 3.66%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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