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DexCom's (DXCM) Q2 Earnings Beat Estimates, Revenues Miss
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DexCom, Inc. (DXCM - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate of 39 cents by 18.5%. The company had reported earnings of 34 cents per share in the prior-year quarter.
DXCM registered GAAP net income per share of 35 cents, up from the year-ago quarter’s figure of 28 cents.
Revenue Details
Total revenues grew 15% (16% on an organic basis) to $1 billion on a year-over-year basis but missed the Zacks Consensus Estimate by 3.8%. The strong revenue growth was driven by rising volumes on increasing global awareness of the benefits of the real-time Continuous Glucose Monitoring System and strong customer additions.
Shares of DexCom lost 3.6% in after-hours trading on Jul 25, following the mixed quarterly results. The stock has declined 16.6% in the past year against no change in the industry. The broader S&P 500 Index has moved up 19.3% in the past year.
Image Source: Zacks Investment Research
Segmental Details
Sensor and other revenues (94% of total revenues) increased 22% on a year-over-year basis to $947 million. Hardware revenues (6%) decreased 39% year over year to $57.3 million.
Geographical Details
U.S. revenues (73% of total revenues) increased 19% on a year-over-year basis to $731.9 million. International revenues (27%) improved 7% (10% on an organic basis) year over year to $272.4 million.
Margin Analysis
Gross profit totaled $626.7 million, up 14.7% from the prior-year quarter’s level. DexCom reported an adjusted gross margin (as a percentage of revenues) of 63.5%, flat year over year.
Research and development expenses were $136 million, up 13.9% year over year. Selling, general and administrative expenses totaled $332.7 million, up 11.2% year over year.
The company reported total operating expenses of $468.7 million, up 12% from the prior-year period’s recorded number. Adjusted operating margin (as a percentage of revenues) was 19.5%, up 70 basis points year over year.
Financial Position
DXCM exited the second quarter with $3.12 billion in cash, cash equivalents, and marketable securities compared with $2.9 billion in the preceding quarter.
Total assets amounted to $6.79 billion, up sequentially from $6.26 billion.
2024 Guidance
DexCom lowered its outlook for 2024 revenues. The company now expects revenues in the range of $4.00-4.05 billion (previously $4.2-$4.35 billion), implying 17-21% year-over-year organic growth. The Zacks Consensus Estimate for the same is pegged at $4.33 billion.
DXCM expects an adjusted gross margin of 63-64%. Adjusted operating margin is projected to be 20%.
Wrapping Up
DexCom concluded the second quarter of 2024 on a mixed note, with earnings surpassing expectations but revenues missing the mark. Key drivers included significant contributions from the Sensor segment and robust domestic and international revenue growth. The expansion of coverage for CGM systems during the quarter further supported growth, a trend expected to continue throughout 2024. The introduction of new sensors like G6 and G7 in international markets also fueled revenue growth.
Dexcom has advanced its CGM leadership with the G7 integrations into Tandem's Mobi system and Insulet's Omnipod 5. While enhancing existing products, Dexcom is gearing up for its largest product launch in August with Stelo. The demand for CGM is growing in non-insulin and consumer markets, and Dexcom aims to drive better metabolic health outcomes with its innovative and engaging system. These factors are likely to support DXCM’s growth prospects.
DexCom has developed a scalable service model for Stelo, focusing on customer satisfaction. The model includes an enhanced e-commerce experience, seamless Amazon fulfillment, insightful product features and digital support options. Stelo will be available for single purchases and discounted subscriptions, with monthly costs below $100. The company anticipates Stelo to contribute approximately 1% of revenues in 2024.
Quest Diagnostics has an estimated long-term growth rate of 5.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.67%.
Quest Diagnostics shares have gained 3.2% so far this year compared with the industry’s 10.9% rise.
Universal Health Services has an estimated long-term growth rate of 15.20%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 8.12%.
Universal Health Services has gained 17.5% compared with the industry's 10.2% rise so far this year.
ABM’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM Industries’ shares have risen 21.2% in the past year compared with the industry’s 23.5% increase.
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DexCom's (DXCM) Q2 Earnings Beat Estimates, Revenues Miss
DexCom, Inc. (DXCM - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate of 39 cents by 18.5%. The company had reported earnings of 34 cents per share in the prior-year quarter.
DXCM registered GAAP net income per share of 35 cents, up from the year-ago quarter’s figure of 28 cents.
Revenue Details
Total revenues grew 15% (16% on an organic basis) to $1 billion on a year-over-year basis but missed the Zacks Consensus Estimate by 3.8%. The strong revenue growth was driven by rising volumes on increasing global awareness of the benefits of the real-time Continuous Glucose Monitoring System and strong customer additions.
Shares of DexCom lost 3.6% in after-hours trading on Jul 25, following the mixed quarterly results. The stock has declined 16.6% in the past year against no change in the industry. The broader S&P 500 Index has moved up 19.3% in the past year.
Image Source: Zacks Investment Research
Segmental Details
Sensor and other revenues (94% of total revenues) increased 22% on a year-over-year basis to $947 million. Hardware revenues (6%) decreased 39% year over year to $57.3 million.
Geographical Details
U.S. revenues (73% of total revenues) increased 19% on a year-over-year basis to $731.9 million. International revenues (27%) improved 7% (10% on an organic basis) year over year to $272.4 million.
Margin Analysis
Gross profit totaled $626.7 million, up 14.7% from the prior-year quarter’s level. DexCom reported an adjusted gross margin (as a percentage of revenues) of 63.5%, flat year over year.
Research and development expenses were $136 million, up 13.9% year over year. Selling, general and administrative expenses totaled $332.7 million, up 11.2% year over year.
The company reported total operating expenses of $468.7 million, up 12% from the prior-year period’s recorded number. Adjusted operating margin (as a percentage of revenues) was 19.5%, up 70 basis points year over year.
Financial Position
DXCM exited the second quarter with $3.12 billion in cash, cash equivalents, and marketable securities compared with $2.9 billion in the preceding quarter.
Total assets amounted to $6.79 billion, up sequentially from $6.26 billion.
2024 Guidance
DexCom lowered its outlook for 2024 revenues. The company now expects revenues in the range of $4.00-4.05 billion (previously $4.2-$4.35 billion), implying 17-21% year-over-year organic growth. The Zacks Consensus Estimate for the same is pegged at $4.33 billion.
DXCM expects an adjusted gross margin of 63-64%. Adjusted operating margin is projected to be 20%.
Wrapping Up
DexCom concluded the second quarter of 2024 on a mixed note, with earnings surpassing expectations but revenues missing the mark. Key drivers included significant contributions from the Sensor segment and robust domestic and international revenue growth. The expansion of coverage for CGM systems during the quarter further supported growth, a trend expected to continue throughout 2024. The introduction of new sensors like G6 and G7 in international markets also fueled revenue growth.
Dexcom has advanced its CGM leadership with the G7 integrations into Tandem's Mobi system and Insulet's Omnipod 5. While enhancing existing products, Dexcom is gearing up for its largest product launch in August with Stelo. The demand for CGM is growing in non-insulin and consumer markets, and Dexcom aims to drive better metabolic health outcomes with its innovative and engaging system. These factors are likely to support DXCM’s growth prospects.
DexCom has developed a scalable service model for Stelo, focusing on customer satisfaction. The model includes an enhanced e-commerce experience, seamless Amazon fulfillment, insightful product features and digital support options. Stelo will be available for single purchases and discounted subscriptions, with monthly costs below $100. The company anticipates Stelo to contribute approximately 1% of revenues in 2024.
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 #4 (Sell).
Some better-ranked stocks in the broader medical space are Quest Diagnostics (DGX - Free Report) , Universal Health Service (UHS - Free Report) and ABM Industries (ABM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an estimated long-term growth rate of 5.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.67%.
Quest Diagnostics shares have gained 3.2% so far this year compared with the industry’s 10.9% rise.
Universal Health Services has an estimated long-term growth rate of 15.20%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 8.12%.
Universal Health Services has gained 17.5% compared with the industry's 10.2% rise so far this year.
ABM’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM Industries’ shares have risen 21.2% in the past year compared with the industry’s 23.5% increase.