Leading manufacturer of continuous glucose monitoring systems, Dexcom (DXCM: $88), released its third quarter results last week, reporting $975 million in revenues, up 27% YoY, compared to $770 million a year ago. The company posted a profit of $200 million, or $0.50 per share, against $110 million, or $0.28, with the spectacular beat on consensus estimates for the coming quarter leading the stock to pop 10% to $89 following the results.
In addition, the company raised its guidance for the full year, now expecting revenues between $3.57 and $3.60 billion, with a YoY growth rate of 24%. These figures can largely be attributed to the rollout of its G7 device, which saw quick traction owing to the company’s solid base of over 18,000 physicians already writing scripts for its products, along with the brand it has painstakingly built over the years.
Another key catalyst for the company was realized in recent months with Medicare coverage for its continuous glucose monitoring devices going live for people with Type 2 diabetes using basal insulin only. It also includes certain non-insulin individuals with hypoglycemia, bringing its total potential customer base within the US alone to about 7 million people, with the figure only set to rise from here.
Dexcom saw similar dynamics play out across various international markets, particularly in France, where Dexcom One has secured reimbursement for all patients on intensive insulin therapy. In addition, the company witnessed a sizable uptick in sales from Japan, which was the first to establish broad reimbursement for diabetics late last year, representing over 1 million patients.
Dexcom is a medical technology company that develops and manufactures continuous glucose monitoring (CGM) systems. CGM systems provide people with diabetes with real-time information about their blood glucose levels, which can help them to better manage their diabetes. Dexcom's CGM systems are used by over a million people worldwide.
Dexcom is well-positioned for growth in 2024 and beyond. The company has a number of new products and ideas in the pipeline that could propel the stock higher. Here are a few examples:
- G7 CGM system: The G7 CGM system is Dexcom's next-generation CGM system. It is smaller, more accurate, and easier to use than Dexcom's previous CGM systems. The G7 CGM system is expected to be launched in the United States in early 2024.
- Dexcom ONE CGM system: The Dexcom ONE CGM system is a lower-cost CGM system that is designed to make CGM more accessible to people with diabetes. The Dexcom ONE CGM system is expected to be launched in the United States in mid-2024.
- Implantable CGM sensor: Dexcom is developing an implantable CGM sensor that would eliminate the need for people with diabetes to wear a patch on their skin. The implantable CGM sensor is expected to be launched in the United States in 2025.
- CGM integration with other devices: Dexcom is working to integrate its CGM systems with other devices, such as insulin pumps and smartwatches. This integration would allow people with diabetes to manage their diabetes more easily and effectively.
In addition to these new products and ideas, Dexcom is also benefiting from a number of other factors, including:
- Growing demand for CGM systems:Â The demand for CGM systems is growing rapidly as more and more people with diabetes recognize the benefits of CGM.
- Expanding reimbursement coverage: More and more insurance companies are reimbursing for CGM systems, which is making CGM more affordable for people with diabetes.
- International expansion: Dexcom is expanding its international presence, which is opening up new markets for the company's CGM systems.
The stock is down 21% YTD but has been on an ascendant streak over the past three weeks after hitting the 52-week low of $75 on October 12th. Another great piece of news for investors is the announcement of a $500 repurchase program, creating additional support for the stock while rewarding shareholders generously, made possible by over $3.2 billion in cash reserves. The company has $2.7 billion in debt and $750 million in cash flow. Our Target remains $120 with a Sell Price of $81. This is no small company, clocking in with a market cap of $34 billion.