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Dexcom’s shares fell nearly 40% in extended trading on Thursday after the diabetes management company reported weaker-than-expected revenue for the second quarter and revised its guidance downward.
Key Financials:
- Earnings per Share: 43 cents adjusted vs. 39 cents expected by LSEG
- Revenue: $1 billion vs. $1.04 billion expected by LSEG
Despite a 15% increase in revenue from $871.3 million a year earlier, Dexcom fell short of analyst expectations. The company’s net income rose to $143.5 million, up from $115.9 million year-over-year.
For the third quarter, Dexcom expects revenue between $975 million and $1 billion due to “certain unique items impacting 2024 seasonality.” The company also revised its full fiscal year guidance, projecting revenue between $4 billion and $4.05 billion, down from the previous forecast of $4.20 billion to $4.35 billion.
Dexcom provides continuous glucose monitors (CGMs) for diabetes patients. On the earnings call, CEO Kevin Sayer attributed the disappointing results to several factors, including a restructuring of the sales team, fewer new customers, and lower revenue per user. Challenges included customers using rebates for the new CGM, G7, and underperformance in the durable medical equipment (DME) channel.
Sayer emphasized the need to strengthen partnerships with DME distributors, stating, “We need to refocus on those relationships.” Dexcom’s new over-the-counter CGM, Stelo, which was cleared by the FDA in March, is set to launch in August.
Before Thursday’s close, Dexcom shares had already declined 13% for the year, compared to a 13% gain for the S&P 500.
JPMorgan analyst Robbie Marcus expressed surprise at the significant guidance reduction, questioning whether other factors, such as the rise of GLP-1 weight-loss treatments, might be impacting Dexcom. Sayer explained that a reshuffling of the sales force and changes in geographic coverage had more dramatic effects than anticipated, with physicians dealing with new representatives and a faster-than-expected rebate eligibility for the G7.
Finance chief Jereme Sylvain noted a $300 million shortfall in guidance at the top end, emphasizing the need for transparency regarding the company’s financial outlook for the remainder of the year.