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DexCom (DXCM) Q1 Earnings and Revenues Surpass Estimates

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DexCom, Inc. (DXCM - Free Report) reported first-quarter 2021 adjusted earnings per share (EPS) of 33 cents, which beat the Zacks Consensus Estimate of 31 cents by 6.5%. However, the bottom line declined 25% on a year-over-year basis.

Revenue Details

Total revenues grew 24.7% to $505 million on a year-over-year basis and surpassed the Zacks Consensus Estimate by 4.6%. Rising volumes across all channels, strong new patient additions and increasing global awareness of the benefits of real-time Continuous Glucose Monitoring (CGM) contributed to the upside.

Segmental Details

Revenues at the Sensor and other revenue segment (84% of total revenues) climbed 30.6% on a year-over-year basis to $424.3 million. Hardware revenues (16%) inched up 0.7% year over year to $80.7 million.

Geographical Details

U.S. revenues (75% of total revenues) increased 30.4% on a year-over-year basis to $381.2 million. International revenues (25%) climbed 9.8% year over year to $123.8 million.

Margin Analysis

Gross profit in the quarter under review totaled $343.9 million, up 34.1% year over year. DexCom generated gross margin (as a percentage of revenues) of 68.1%, which expanded 480 basis points (bps) year over year.

DexCom, Inc. Price, Consensus and EPS Surprise

DexCom, Inc. Price, Consensus and EPS Surprise

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

Research and development expenses amounted to $109.4 million in the quarter, up 49.7% year over year. Selling, general and administrative expenses totaled $188.6 million in the reported quarter, up 25.9% year over year.

The company reported total operating expenses of $298 million, up 33.7% year over year.
The company reported operating income of $45.9 million, up 36.6% from the prior-year quarter. Operating margin (as a percentage of revenues) of 9.1% contracted 80 bps year over year.

Financial Position

The company exited the first quarter with $2.63 billion in cash, cash equivalents and marketable securities, compared to $2.71 billion in the preceding quarter.

2021 Guidance

On the basis of robust first-quarter performance DexCom has decided to raise its 2021 revenue guidance, while reiterating the previous guidance for adjusted gross margin and adjusted operating margin.

The company expects revenues to be $2.26-$2.36 billion, reflecting growth of 17-22% from the previous year. The Zacks Consensus Estimate for the same is pegged at $2.31 billion.

While adjusted gross margin is anticipated to be about 65%, adjusted operating margin is estimated to be around 13%.

Wrapping Up

DexCom exited the first quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Impressive contribution from the Sensor and other revenue segment, and domestic and international revenue growth were key catalysts. Expansion in gross margin is a positive.

Additionally, the glucose monitoring market presents significant commercial opportunity for this company. DexCom’s prospects 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.

Apart from making significant advancements with respect to strategic objectives, DexCom ended the quarter with new patient additions as well.

Meanwhile, cut-throat competition in the market for blood & glucose monitoring devices remains a concern.

Zacks Rank

Currently, DexCom carries a Zacks Rank #5 (Strong Sell).

Key Picks

Some better-ranked stocks, which are expected to report earnings soon, are DENTSPLY SIRONA Inc. (XRAY - Free Report) , The Cooper Companies, Inc. (COO - Free Report) and Owens & Minor, Inc. (OMI - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

DENTSPLY SIRONA is set to release results on May 6. The Zacks Consensus Estimate for DENTSPLY SIRONA’s first-quarter 2021 adjusted EPS is pegged at 55 cents, suggesting growth of 27.9% from the year-ago quarter. The consensus mark for first-quarter revenues stands at $929.3 million, indicating year-over-year increase of 6.3%.

The Zacks Consensus Estimate for Cooper Companies’ fiscal second-quarter 2021 revenues is pegged at $685.2 million, suggesting year-over-year improvement of 30.5%. The same for EPS stands at $3.04, indicating growth of 101.3% from the year-ago reported figure.

The Zacks Consensus Estimate for Owens & Minor’s first-quarter 2021 EPS is currently pegged at 97 cents, indicating significant growth from the year-ago reported figure. The same for revenues stands at $2.29 billion, indicating an improvement of 7.9% from the year-ago reported figure.

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