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DexCom (DXCM) Beats on Q4 Earnings, Strong CGM Demand Continues
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DexCom, Inc. (DXCM - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 50 cents, which beat the Zacks Consensus Estimate of 43 cents by 16.3%. The company reported earnings of 34 cents per share in the prior-year quarter.
DXCM registered GAAP net income per share of 62 cents, up from the year-ago quarter’s figure of 22 cents.
Revenue Details
Total revenues grew 27% (26% on an organic basis) to $1.03 billion on a year-over-year basis and beat the Zacks Consensus Estimate by 0.4%. Strong revenue growth was driven by rising volumes on the back of increasing global awareness of the benefits of its real-time Continuous Glucose Monitoring system and strong customer additions.
Despite better-than-expected results, shares of DexCom lost 1.9% in after-hours trading on Feb 8. However, the stock has risen18.5% in the past year against the industry’s 6.7% decline. The broader S&P 500 Index has moved up 22.9% in the same period.
Image Source: Zacks Investment Research
Segmental Details
Sensor and other revenues(92% of total revenues) increased 32% on a year-over-year basis to $947 million. Hardware revenues (8%) decreased 13% year over year to $87.5 million.
Geographical Details
U.S. revenues (74% of total revenues) increased 27% on a year-over-year basis to $769.1 million. International revenues (26%) improved 27% (23% on an organic basis) year over year to $265.4 million.
Margin Analysis
Gross profit totaled $656.6 million, up 21.3% from the prior-year quarter’s level. DexCom reported a gross margin (as a percentage of revenues) of 63.5%, which contracted approximately 290 basis points year over year.
Research and development expenses amounted to $136.1 million, up 17% year over year. Selling, general and administrative expenses totaled $303.6 million, up 1.3% year over year.
The company reported total operating expenses of $439.7 million, up 5.7% from the prior-year period’s recorded number. Operating margin (as a percentage of revenues) was 21%, up 560 bps year over year.
Financial Position
DXCM exited the fourth quarter with $2.72 billion in cash, cash equivalents and marketable securities compared with $3.24 billion in the preceding quarter.
Total assets amounted to $6.26 billion, down sequentially from $6.6 billion.
2024 Guidance
DexCom reiterates its guidance for 2024 revenues. The company continues to expect revenues in the range of $4.15-$4.35 billion, implying 16-21% year-over-year growth. The Zacks Consensus Estimate for the same is pegged at $4.29 billion.
DXCM expects an adjusted gross margin of 63-64%. Adjusted operating margin is projected to be approximately 20%.
Wrapping Up
DexCom exited fourth-quarter 2023 on a strong note, wherein both earnings and revenues beat their respective estimates. Impressive contributions from the Sensor segment, and domestic and international revenue growth were the key catalysts. Moreover, the expansion of coverage for CGM systems during the quarter supported growth. This trend is likely to continue in 2024. The availability of new sensors like G6 & G7 in new international markets is also boosting revenue growth. Moreover, a potential approval for its under-review glucose sensor for people with type 2 diabetes, Stello, later this year buoys optimism. This will be the first device from the company’s portfolio for type 2 diabetes patients.
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 continued to have strong new patient additions in the quarter.
The contraction of gross margin raises concern. However, cut-throat competition in the market for blood & glucose monitoring devices remains another concern.
Some better-ranked stocks to consider in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Cardinal Health (CAH - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’ shares have risen 11.9% in the past year compared with the industry’s 17.3% growth.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 44.3% in the past year compared with the industry’s 4.6% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.3%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.64%.
Cardinal Health’s shares have risen 32.2% in the past year compared with the industry’s growth of 9.4%.
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DexCom (DXCM) Beats on Q4 Earnings, Strong CGM Demand Continues
DexCom, Inc. (DXCM - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 50 cents, which beat the Zacks Consensus Estimate of 43 cents by 16.3%. The company reported earnings of 34 cents per share in the prior-year quarter.
DXCM registered GAAP net income per share of 62 cents, up from the year-ago quarter’s figure of 22 cents.
Revenue Details
Total revenues grew 27% (26% on an organic basis) to $1.03 billion on a year-over-year basis and beat the Zacks Consensus Estimate by 0.4%. Strong revenue growth was driven by rising volumes on the back of increasing global awareness of the benefits of its real-time Continuous Glucose Monitoring system and strong customer additions.
Despite better-than-expected results, shares of DexCom lost 1.9% in after-hours trading on Feb 8. However, the stock has risen18.5% in the past year against the industry’s 6.7% decline. The broader S&P 500 Index has moved up 22.9% in the same period.
Image Source: Zacks Investment Research
Segmental Details
Sensor and other revenues(92% of total revenues) increased 32% on a year-over-year basis to $947 million. Hardware revenues (8%) decreased 13% year over year to $87.5 million.
Geographical Details
U.S. revenues (74% of total revenues) increased 27% on a year-over-year basis to $769.1 million. International revenues (26%) improved 27% (23% on an organic basis) year over year to $265.4 million.
Margin Analysis
Gross profit totaled $656.6 million, up 21.3% from the prior-year quarter’s level. DexCom reported a gross margin (as a percentage of revenues) of 63.5%, which contracted approximately 290 basis points year over year.
Research and development expenses amounted to $136.1 million, up 17% year over year. Selling, general and administrative expenses totaled $303.6 million, up 1.3% year over year.
The company reported total operating expenses of $439.7 million, up 5.7% from the prior-year period’s recorded number. Operating margin (as a percentage of revenues) was 21%, up 560 bps year over year.
Financial Position
DXCM exited the fourth quarter with $2.72 billion in cash, cash equivalents and marketable securities compared with $3.24 billion in the preceding quarter.
Total assets amounted to $6.26 billion, down sequentially from $6.6 billion.
2024 Guidance
DexCom reiterates its guidance for 2024 revenues. The company continues to expect revenues in the range of $4.15-$4.35 billion, implying 16-21% year-over-year growth. The Zacks Consensus Estimate for the same is pegged at $4.29 billion.
DXCM expects an adjusted gross margin of 63-64%. Adjusted operating margin is projected to be approximately 20%.
Wrapping Up
DexCom exited fourth-quarter 2023 on a strong note, wherein both earnings and revenues beat their respective estimates. Impressive contributions from the Sensor segment, and domestic and international revenue growth were the key catalysts. Moreover, the expansion of coverage for CGM systems during the quarter supported growth. This trend is likely to continue in 2024. The availability of new sensors like G6 & G7 in new international markets is also boosting revenue growth. Moreover, a potential approval for its under-review glucose sensor for people with type 2 diabetes, Stello, later this year buoys optimism. This will be the first device from the company’s portfolio for type 2 diabetes patients.
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 continued to have strong new patient additions in the quarter.
The contraction of gross margin raises concern. However, cut-throat competition in the market for blood & glucose monitoring devices remains another concern.
DexCom, Inc. Price, Consensus and EPS Surprise
DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. Quote
Zacks Rank and Stocks to Consider
Currently, DexCom carries a Zacks Rank #3 (Hold).
Some better-ranked stocks to consider in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Cardinal Health (CAH - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’ shares have risen 11.9% in the past year compared with the industry’s 17.3% growth.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 44.3% in the past year compared with the industry’s 4.6% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.3%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.64%.
Cardinal Health’s shares have risen 32.2% in the past year compared with the industry’s growth of 9.4%.