DexCom (DXCM) Q2 Earnings and Revenues Surpass Estimates

DexCom, Inc. DXCM reported adjusted earnings of 8 cents per share in the second quarter of 2019, beating the Zacks Consensus Estimate of a break even. Notably, the company reported a loss of 7 cents per share in the year-ago quarter.

Total revenues surged 38.7% to $336.4 million on a year-over-year basis and also surpassed the Zacks Consensus Estimate by 11.4%. Rising volumes across all channels and increasing global awareness of the benefits of real-time CGM contributed to the upside.
 
Segmental Details

Revenues at the Sensor segment (77% of total revenues) surged 45.2% on a year-over-year basis to $260.4 million. Transmitter revenues (17%) increased 31.2% year over year to $57.6 million. Receiver revenues (5%) declined 3.7% year over year to $18.4 million.

DexCom, Inc. Price, Consensus and EPS Surprise

 

DexCom, Inc. Price, Consensus and EPS Surprise

DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. Quote

Geographical Details

U.S. revenues (79% of total revenues) surged 40.5% on a year-over-year basis to $266.3 million. International revenues (21%) improved 32.5% year over year to $70.1 million.

Margin Analysis
 
Gross profit in the quarter under review totaled $206.5 million, up 34.4% year over year. However, DexCom generated gross margin (as a percentage of revenues) of 61.4%, which contracted 190 bps year over year.
 
Research and development (R&D) expenses amounted to $69 million in the quarter, up 46.2% year over year. Selling, general and administrative expenses totaled $138.3 million in the reported quarter, up 24.3% year over year.
 
The company reported total operating expenses of $207.3 million, up 30.8% year over year.

The company reported operating income of $6.2 million, against an operating loss of $2.2 million in the year-ago quarter.
 
Financial Position
 
As of Jun 30, 2019, DexCom had $1.38 billion in cash and marketable securities.
 
Total cash and cash equivalents came in at $709.2 million, down 37.6% from 2018-end level.
 
2019 Guidance Revised
 
DexCom now expects revenues in the range of $1.33-$1.38 billion (up from the previously guided range of $1.25-$1.3 billion). The Zacks Consensus Estimate for revenues is currently pegged at $1.29 billion, which is below the lower end of the guided range.
 
Gross profit margin is projected to be 64% to 65% of net revenues.
 
While adjusted operating margin is expected to be about 7% of net revenues (up from the previous projection of 6%), adjusted EBITDA margin is anticipated to be 18.5% (up from the prior estimate of 18%).
 
Wrapping Up
 
DexCom exited the second quarter on a strong note, wherein both the top and bottom line beat the Zacks Consensus Estimate. Impressive contributions from the Sensor and Transmitter segments were key catalysts. Strong guidance also instills investors’ optimism in the stock.
 
Additionally, the glucose monitoring market presents significant commercial opportunity for this company. DexCom’s opportunities in alternative markets such as the non-intensive diabetes management space, the hospital, gestational, pre-diabetes and obesity are likely to provide it a competitive edge in the MedTech space.
 
Aided by the solid performance, the company has commenced 2019 on a good note and is optimistic about the future results. DexCom’s growth is a testament to the increasing awareness and excitement revolving real-time CGM and DexCom’s new G6 technology.
 
Meanwhile, cutthroat competition in the market for blood & glucose monitoring devices is worrisome. We believe that the company’s margins will continue to remain under pressure in the upcoming quarters owing to high product development costs and rising expenditures on the R&D front.
 
Zacks Rank
 
Currently, DexCom sports a Zacks Rank of 2 (Buy).

Earnings of Other MedTech Majors at a Glance

Other top-ranked stocks which posted solid results this earning season are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered second-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company has a Zacks Rank #2.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

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