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DexCom (DXCM) Q2 Earnings and Revenues Surpass Estimates

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DexCom, Inc. (DXCM - Free Report) reported second-quarter 2021 adjusted earnings per share (EPS) of 76 cents, which surpassed the Zacks Consensus Estimate of 43 cents by 76.7%. However, the bottom line declined 3.8% on a year-over-year basis.

GAAP EPS in the quarter was 63 cents, up 31.3% from the prior-year quarter.

Revenue Details

Total revenues grew 31.7% to $595.1 million on a year-over-year basis and outpaced the Zacks Consensus Estimate by 8.6%. Rising volumes across all channels coupled with strong new customer additions owing to 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 (83% of total revenues) climbed 36% on a year-over-year basis to $494.5 million. Hardware revenues (17%) rose 15% year over year to $100.6 million.

Geographical Details

U.S. revenues (78% of total revenues) increased 26% on a year-over-year basis to $461.5 million. International revenues (22%) surged 58% year over year to $133.6 million.

Margin Analysis

Gross profit in the quarter under review totaled $417.1 million, up 46.8% year over year. DexCom generated gross margin (as a percentage of revenues) of 70.1%, which expanded 720 basis points (bps) year over year.

Research and development expenses amounted to $129.1 million in the quarter, up 61.6% year over year. Selling, general and administrative expenses totaled $187 million in the reported quarter, up 37.1% 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

The company reported total operating expenses of $316.1 million, up 46.1% year over year.

The company reported operating income of $101 million, up 48.9% from the prior-year quarter. Operating margin (as a percentage of revenues) of 16.9% expanded 190 bps year over year.

Financial Position

The company exited the second quarter with $2.58 billion in cash, cash equivalents and marketable securities, compared with $2.63 billion in the preceding quarter.

Cumulative net cash provided by operating activities in the second quarter amounted to $89.4 million, compared with $156 million in the prior-year period.

2021 Guidance

On the basis of robust second-quarter performance DexCom has decided to raise 2021 revenue guidance along with that of adjusted gross margin and adjusted operating margin.

The company expects revenues to be $2.35-$2.40 billion (up from the prior guided range of $2.26-$2.36 billion) reflecting growth of 22-25% from the previous year. The Zacks Consensus Estimate for the same is pegged at $2.34 billion.

While adjusted gross margin is anticipated to be about 67% (up from the previous projection of about 65%), adjusted operating margin is estimated to be around 14% (up from the prior guidance of around 13%).

Wrapping Up

DexCom exited the second 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 both gross and operating margins is a positive.

Additionally, the glucose monitoring market presents significant commercial opportunity for the 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 continued advancements with respect to key strategic objectives, DexCom ended the quarter with new patient additions as well.

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

Zacks Rank

Currently, DexCom has a Zacks Rank #4 (Sell).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Boston Scientific Corporation (BSX - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Boston Scientific reported second-quarter 2021 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 8.1%. Second-quarter revenues of $3.08 billion outpaced the consensus mark by 4.4%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million beat the Zacks Consensus Estimate by 8.7%.

LabCorp reported second-quarter 2021 adjusted EPS of $6.13, surpassing the Zacks Consensus Estimate by 8.7%. Revenues of $3.84 billion exceeded the Zacks Consensus Estimate by 6.9%.