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DexCom, Inc. (DXCM - Free Report) reported fourth-quarter 2022 adjusted earnings per share (EPS) of 34 cents, beating the Zacks Consensus Estimate of 26 cents by 30.8%. The company had recorded an adjusted loss of 1 cent per share in the prior-year quarter.
GAAP net income per share in the quarter was 22 cents, against the year-ago quarter’s loss of 1 cent per share.
Revenue Details
Total revenues grew 17% (20% on an organic basis) to $815.2 million on a year-over-year basis and beat the Zacks Consensus Estimate by 2.2%. 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 (88% of total revenues) climbed 19% on a year-over-year basis to $714.8 million. Hardware revenues (12%) increased 1% year over year to $100.4 million.
Geographical Details
U.S. revenues (74% of total revenues) increased 17% on a year-over-year basis to $606.4 million. International revenues (26%) improved 15% year over year to $208.8 million.
Gross profit in the quarter under review totaled $541.3 million, up 14.5% year over year. DexCom generated a gross margin (as a percentage of revenues) of 66.4%, which contracted 130 basis points (bps) year over year.
Research and development expenses amounted to $116.3 million in the quarter, down 22.4% year over year. Selling, general and administrative expenses totaled $297.8 million in the reported quarter, up 27.4% year over year.
The company reported total operating expenses of $415.9 million, down 11.9% from the prior-year figure. It reported an operating margin (as a percentage of revenues) of 15.4%, expanding significantly year over year.
Full-Year Results
DexCom reported revenues of $2.91 billion for the full-year 2022, up 19% reportedly and 20% organically from prior-year. The company’s adjusted EPS improved 77.6% year over year to 87 cents.
Revenues in the United States were up 16%. International revenues were up 28% and 31% reportedly and organically, respectively.
Financial Position
The company exited the fourth quarter with $2.46 billion in cash, cash equivalents and marketable securities, compared with $2.37 billion in the preceding quarter.
Total assets in the fourth quarter amounted to $5.39 billion, compared with $4.9 billion on a sequential basis.
2023 Guidance
DexCom issued its revenue and earnings guidance for 2023. The company expects revenues to be in the range of $3.35-$3.49 billion, implying 15-20% year-over-year growth. The Zacks Consensus Estimate for the same stands at $3.44 billion.
The company expects adjusted gross margin to be 62-63% and operating margin to be approximately 16.5%.
Wrapping Up
DexCom exited fourth-quarter 2022 on a strong note, wherein earnings and revenues beat the Zacks Consensus Estimate. 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 with respect to its key strategic objectives, DexCom also ended the quarter with new patient additions. It launched an updated sensor algorithm in multiple countries in the second half of 2022, making the latest G7 sensor technology available to international markets. The company received FDA clearance for G7 sensor 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. Apart from this, cut-throat competition in the market for blood & glucose monitoring devices remains a 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 Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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DexCom (DXCM) Q4 Earnings Beat Estimates, Volumes Remain Strong
DexCom, Inc. (DXCM - Free Report) reported fourth-quarter 2022 adjusted earnings per share (EPS) of 34 cents, beating the Zacks Consensus Estimate of 26 cents by 30.8%. The company had recorded an adjusted loss of 1 cent per share in the prior-year quarter.
GAAP net income per share in the quarter was 22 cents, against the year-ago quarter’s loss of 1 cent per share.
Revenue Details
Total revenues grew 17% (20% on an organic basis) to $815.2 million on a year-over-year basis and beat the Zacks Consensus Estimate by 2.2%. 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 (88% of total revenues) climbed 19% on a year-over-year basis to $714.8 million. Hardware revenues (12%) increased 1% year over year to $100.4 million.
Geographical Details
U.S. revenues (74% of total revenues) increased 17% on a year-over-year basis to $606.4 million. International revenues (26%) improved 15% year over year to $208.8 million.
DexCom, Inc. Price, Consensus and EPS Surprise
DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. Quote
Margin Analysis
Gross profit in the quarter under review totaled $541.3 million, up 14.5% year over year. DexCom generated a gross margin (as a percentage of revenues) of 66.4%, which contracted 130 basis points (bps) year over year.
Research and development expenses amounted to $116.3 million in the quarter, down 22.4% year over year. Selling, general and administrative expenses totaled $297.8 million in the reported quarter, up 27.4% year over year.
The company reported total operating expenses of $415.9 million, down 11.9% from the prior-year figure. It reported an operating margin (as a percentage of revenues) of 15.4%, expanding significantly year over year.
Full-Year Results
DexCom reported revenues of $2.91 billion for the full-year 2022, up 19% reportedly and 20% organically from prior-year. The company’s adjusted EPS improved 77.6% year over year to 87 cents.
Revenues in the United States were up 16%. International revenues were up 28% and 31% reportedly and organically, respectively.
Financial Position
The company exited the fourth quarter with $2.46 billion in cash, cash equivalents and marketable securities, compared with $2.37 billion in the preceding quarter.
Total assets in the fourth quarter amounted to $5.39 billion, compared with $4.9 billion on a sequential basis.
2023 Guidance
DexCom issued its revenue and earnings guidance for 2023. The company expects revenues to be in the range of $3.35-$3.49 billion, implying 15-20% year-over-year growth. The Zacks Consensus Estimate for the same stands at $3.44 billion.
The company expects adjusted gross margin to be 62-63% and operating margin to be approximately 16.5%.
Wrapping Up
DexCom exited fourth-quarter 2022 on a strong note, wherein earnings and revenues beat the Zacks Consensus Estimate. 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 with respect to its key strategic objectives, DexCom also ended the quarter with new patient additions. It launched an updated sensor algorithm in multiple countries in the second half of 2022, making the latest G7 sensor technology available to international markets. The company received FDA clearance for G7 sensor 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. Apart from this, cut-throat competition in the market for blood & glucose monitoring devices remains a 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 Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.