Yahoo Finance DexCom (DXCM) Q1 Earnings Beat Estimates, Volumes Remain Strong
DexCom, Inc. DXCM reported first-quarter 2023 adjusted earnings per share (EPS) of 17 cents, which beat the Zacks Consensus Estimate of 15 cents by 13.3%. The same for the prior-year quarter was recorded at 7 cents.
The company reported GAAP net income per share of 12 cents, declining from the year-ago quarter’s figure of 23 cents.
The company’s shares have gained 9.1% so far this year compared with the industry’s growth of 2.7%. The broader S&P 500 Index has moved up 6.1% in the same period.
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Revenue Details
Total revenues grew 18% (19% on an organic basis) to $741.5 million on a year-over-year basis and beat the Zacks Consensus Estimate by 3%. Rising volumes across all channels, along with strong new customer additions, owing to increasing global awareness of the benefits of real-time Continuous Glucose Monitoring, contributed to the upside.
Segmental Details
Sensor and other revenues(88% of total revenues) increased 20% on a year-over-year basis to $651.9 million. Hardware revenues (12%) increased 5% year over year to $89.6 million.
Geographical Details
U.S. revenues (71% of total revenues) increased 17% on a year-over-year basis to $526 million. International revenues (29%) improved 21% year over year to $215.5 million.
Margin Analysis
Gross profit totaled $462.6 million, up 16.2% year over year. DexCom reported a gross margin (as a percentage of revenues) of 62.4%, which contracted 90 basis points year over year.
Research and development expenses amounted to $119 million in the quarter, down 12.4% year over year. Selling, general and administrative expenses totaled $294.6 million, up 34.6% year over year.
The company reported total operating expenses of $415.4 million, up 16.4% from the prior-year figure. Operating margin (as a percentage of revenues) was 6.4%, almost flat year over year.
Financial Position
The company exited the first quarter with $2.57 billion in cash, cash equivalents and marketable securities compared with $2.46 billion in the preceding quarter.
Total assets amounted to $5.52 billion compared with $5.39 billion on a sequential basis.
2023 Guidance
DexCom raised its revenue guidance for 2023 but reiterated the earnings outlook. The company now expects revenues in the range of $3.4-$3.515 billion, implying 17-21% year-over-year growth. The Zacks Consensus Estimate for the same stands at $3.46 billion. Previously, DXCM expected revenues in the range of $3.35-$3.49 billion.
The company continues to expect an adjusted gross margin of 62-63% and an operating margin of approximately 16.5%.
DexCom, Inc. Price, Consensus and EPS Surprise
DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. Quote
Wrapping Up
DexCom exited first-quarter 2023 on a strong note, wherein both earnings and revenues beat estimates. Impressive contributions from the Sensor segment, and domestic and international revenue growth were the key catalysts.
Additionally, the glucose monitoring market presents significant commercial opportunities for the company. DexCom’s prospects in alternative markets such as non-intensive diabetes management, hospital, gestational, pre-diabetes and obesity are likely to provide it with a competitive edge in the MedTech space.
Apart from making continued advancements in terms of its key strategic objectives, the company also recorded new patients in the quarter.
DXCM launched an updated sensor algorithm in multiple countries in the second half of 2022, making the latest G7 sensor technology available to international markets. It received FDA clearance for the same technology in December 2022. These developments are likely to support the company’s future growth.
Nevertheless, the contraction in gross margin is a woe, reflecting the rising cost of sales. Cut-throat competition in the market for blood & glucose monitoring devices remains another concern.
Zacks Rank and Stocks to Consider
Currently, DexCom carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Intuitive Surgical ISRG, Chemed CHE and Edwards Lifesciences EW, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuitive Surgical reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate of $1.19 per share. Revenues of $1.7 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average surprise being 1.86%.
Chemed reported first-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 0.2%. Revenues of $560 million outpaced the consensus mark by 2.6%.
Chemed has a long-term estimated growth rate of 8.8%. CHE’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.12%.
Edwards Lifesciences reported first-quarter 2023 adjusted earnings of 62 cents per share, which beat the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion surpassed the Zacks Consensus Estimate by 4.7%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 1.69%.
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