The Dexcom logo is visible on the smartphone screen and in the background.
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Shares of Dexcom plunged nearly 40% in extended trading Thursday after the diabetes management company reported disappointing second-quarter sales and issued weak guidance.
This is how the company performed:
- Earnings per share: 43 cents adjusted against 39 cents expected by LSEG
- Revenue: USD 1 billion compared to USD 1.04 billion expected by LSEG
Dexcom's revenue increased 15% from $871.3 million a year ago, according to a press release. The company reported net income of $143.5 million, compared to $115.9 million in the same period last year.
For the third quarter, Dexcom expects revenue of $975 billion to $1 billion to “account for certain one-time items impacting seasonality in 2024,” the press release said. Dexcom updated its full-year guidance and now expects revenue of $4 billion to $4.05 billion, up from the $4.20 billion to $4.35 billion it forecast last quarter.
Dexcom offers a range of tools such as continuous glucose monitors (CGMs) for patients diagnosed with diabetes.
In the earnings call, Dexcom CEO Kevin Sayer attributed the challenges to a restructuring of the company's sales team, fewer new customers than expected and lower revenue per user. Part of the shortfall was due to customers taking advantage of discounts on the new CGM called the G7. In addition, the company said it underperformed in the durable medical equipment (DME) space.
“DME distributors remain important partners in our business, and we did not see good results from those partnerships this quarter,” Sayer said on the conference call. “We need to refocus on those relationships.”
In March, Dexcom announced its new The over-the-counter CGM called Stelo has been cleared for use by the U.S. Food and Drug Administration. Stelo is designed for patients with type 2 diabetes who do not use insulin. Dexcom announced Thursday that it will officially launch in August.
Before the market closed Thursday, Dexcom shares were down 13% for the year, while the S&P 500 was up 13% for the period.
At the start of the question-and-answer portion of the quarterly earnings call, JPMorgan analyst Robbie Marcus asked for more details on the significant guidance cut and expressed “shock” at how much disruption a change in the sales team structure could cause.
“I feel like there's more that needs to happen,” Marcus said, asking if the rising popularity of GLP-1 weight-loss treatments had an impact.
Sayer responded that the company is “missing a larger number of new patients than we would have expected at this time.” He said the restructuring of the sales team, which resulted in changes in geographic coverage, was more dramatic than expected because doctors are now dealing with different representatives.
Regarding DME's difficulties, Sayer said the company has lost customers “who generate the highest annual revenue per year,” adding that eligibility for G7 rebates is three times faster than with the previous product, G6.
Jereme Sylvain, Dexcom's chief financial officer, said all of this adds up to a $300 million shortfall compared to the company's annual forecast.
“It's certainly not something we're happy about,” Sylvain said. He said that in the interest of “complete transparency,” the company needed to provide clarity on “what impact this will have for the rest of the year.”
REGARD: Dexcom CEO Kevin Sayer
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