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DexCom (DXCM) Q2 Loss Narrower Than Expected, Revenues Beat

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DexCom Inc. (DXCM - Free Report) reported a loss of 16 cents per share in the second quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 23 cents. Also, the figure improved from the loss of 24 cents reported in the year-ago quarter.

Total revenue grew to $170.6 million, reflecting an increase of 24% from $137.3 million in the year-ago quarter. Also, the figure came ahead of the Zacks Consensus Estimate of $166.0 million.

Operational Details

DexCom generated gross margin (as a percentage of revenues) of 69%, compared with 62% for the same quarter in the prior year. Notably, gross margin rebounded year-over-year due to an improvement in warranty rate, primarily within receiver lines.

International business displayed continued year-over-year growth in the quarter, generating $30 million in revenues, up 69% on a year-over-year basis. Notably, international business represented 17% of total revenue in the second quarter. Germany contributed almost 25% of international business in the quarter.

Research and development (R&D) expenses totaled $45 million in the quarter compared with $36 million a year ago. The company’s R&D investments include the G6 pivotal study and related submissions with the FDA.

Selling, general and administrative expenses totaled $86 million in the reported quarter compared with $69 million in the prior-year quarter. The rise was primarily due to year-over-year increases in head count in field sales cum customer support organizations, and higher patient-focused marketing expenses.

 

DexCom, Inc. Price, Consensus and EPS Surprise

 

DexCom, Inc. Price, Consensus and EPS Surprise | DexCom, Inc. Quote

Financial Update

 

As of Jun 30, DexCom had $497 million in cash, cash equivalents and short-term marketable securities versus $124 million at the end of 2016. During the quarter, the company raised $400 million in gross proceeds from its convertible notes offering and paid $75 million outstanding on its $200 million credit facility.

Guidance

This Zacks Rank #3 (Hold) company projects global revenues in the band of $710 million to $740 million, reflecting growth of approximately 25% to 30%. For the full year, DexCom anticipates gross margin at the low end of the 67% to 70% guidance.

Key Picks

Some better-ranked stocks in the broader medical sector are Edwards Lifesciences Corporation (EW - Free Report) , Abiomed Inc. (ABMD - Free Report) and Fresenius Medical Care Corporation (FMS - Free Report) .

Notably, Fresenius Medical Care and Edwards Lifesciences sport a Zacks Rank #1 (Strong Buy), while Abiomed has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock has a one-year return of 1.5%.

Abiomed delivered a strong return of 23.4% over the last one year. The stock has a long-term expected earnings growth rate of 30.5%.

Fresenius Medical Care represents an impressive return of 2.5% over the last one year. The company delivered a solid earnings surprise of 20.5% in the last reported quarter.

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