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DexCom (DXCM) Q1 Earnings Miss, Revenues Beat Estimates

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DexCom, Inc. (DXCM - Free Report) reported first-quarter 2022 adjusted earnings per share (EPS) of 32 cents, which missed the Zacks Consensus Estimate of 50 cents by 36%. The bottom line declined 3% on a year-over-year basis.

GAAP net income per share in the quarter was 93 cents, compared with the year-ago quarter’s figure of 56 cents per share.

Revenue Details

Total revenues grew 25% (22% on an organic basis) to $628.8 million on a year-over-year basis and outpaced the Zacks Consensus Estimate by 1.5%. 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 (CGM), contributed to the upside.

Segmental Details

Revenues at the Sensor and other revenues segment (86% of total revenues) climbed 28% on a year-over-year basis to $543.2 million. Hardware revenues (14%) rose 6% year over year to $85.6 million.

Geographical Details

U.S. revenues (72% of total revenues) increased 18% on a year-over-year basis to $451.2 million. International revenues (28%) surged 43% year over year to $177.6 million.

Margin Analysis

Gross profit in the quarter under review totaled $398.1 million, up 15.8% year over year. DexCom generated an adjusted gross margin (as a percentage of revenues) of 63.3%, which contracted 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 $135.9 million in the quarter, up 24.2% year over year. Selling, general and administrative expenses totaled $220.9 million in the reported quarter, up 17.1% year over year.

The company reported total operating expenses of $356.8 million, down 10% from the prior-year figure. Operating margin (as a percentage of revenues) of 6.6% contracted 250 bps year over year.

Financial Position

The company exited the first quarter with $2.69 billion in cash, cash equivalents and marketable securities, compared with $2.73 billion in the preceding quarter.

Total assets in the first quarter amounted to $5.06 billion, compared with $4.86 billion on a sequential basis.

2022 Guidance Reaffirmed

DexCom has decided to reiterate 2022 guidance for revenues, adjusted gross margin and adjusted operating margin.

The company expects revenues to be $2.82-$2.94 billion, reflecting growth of 15-20% from the previous year. The Zacks Consensus Estimate for the same stands at $2.91 billion.

While adjusted gross margin is anticipated to be about 65%, adjusted operating margin is estimated to be around 16%.

Wrapping Up

DexCom exited the first-quarter 2022 on a mixed note, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. Impressive contribution from the Sensor segment, and domestic and international revenue growth were key catalysts.

Additionally, the glucose monitoring market presents significant commercial opportunities 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, contraction in both gross and operating margins is a woe. Apart from this, cut-throat competition in the market for blood & glucose monitoring devices remains a concern.

Zacks Rank

Currently, DexCom has a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks in the broader medical space that have announced quarterly results are Qiagen N.V. (QGEN - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Alkermes plc (ALKS - Free Report) .

Qiagen, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 80 cents, which beat the Zacks Consensus Estimate by 12.7%. Revenues of $628.4 million outpaced the consensus mark by 6.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Qiagen has an estimated long-term growth rate of 11.5%. QGEN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.7%.

UnitedHealth, carrying a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. First-quarter revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 23.8%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.


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