DXCM tumbles 35% as guidance disappoints
1min read DexCom (DXCM) reported its Q2 earnings, showing mixed results that failed to meet revenue expectations, leading to a significant drop in its stock price. The company posted adjusted EPS of $0.43, beating the estimate of $0.39, but revenues came in at $1.004 billion, falling short of the $1.036 billion consensus. Despite a 15% year-over-year increase in revenue, sensor and other revenue grew by 22% to $947.0 million, missing the $962.7 million estimate, while hardware revenue significantly declined by 39% to $57.3 million, below the $73.8 million forecast.
DexCom's revised guidance has also contributed to the stock's poor performance. The company lowered its full-year revenue guidance to $4.00-$4.05 billion, down from the previous estimate of $4.332 billion. Analysts and investors were particularly disappointed by the updated forecast, which reflects ongoing challenges and adjustments in the company's operations. Notably, the U.S. Salesforce realignment, accelerated G7 rebate timing, and disruptions in the Durable Medical Equipment (DME) channel have impacted sales and growth projections.
Shares of DXM fell 35% in reaction to the news. The stock is trading near the 2020 Covid-lows of $62. This sets up as a potential bounce area as analysts do see the issues being transitory. However, we have not seen a tremendous appetite from investors to buy post-earnings sell off.
The primary reasons for the Q2 performance issues are largely self-inflicted, according to analysts. DexCom's realignment of its U.S. Salesforce led to lower-than-expected revenue, and the timing of G7 rebates accelerated, impacting the average selling price (ASP) in the pharmacy channel. Additionally, the company lost patients in the DME channel due to relationship issues. These factors are expected to peak in Q3, potentially stabilizing ASPs, but they have caused a temporary setback in growth and financial performance.
Despite the challenges, some analysts remain optimistic about DexCom's long-term potential. They believe the current issues are transitory and that the company's strong market position and upcoming catalysts could drive future growth. However, the immediate impact of these setbacks is clear, with shares down 35% as the market reacts to the lowered guidance and Q2 performance. Investors will be closely watching how DexCom addresses these issues and whether it can regain momentum in the coming quarters.