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Shares of Dexcom Shares of U.S. diabetes management company tumbled about 40% in extended trading Thursday after the diabetes management company reported disappointing second-quarter revenue and gave weak guidance.
This is what the company did:
Earnings per share: 43 cents adjusted vs. 39 cents expected by LSEGR Revenue: $1 billion vs. $1.04 billion expected by LSEG
Dexcom’s revenue rose 15 percent from $871.3 million a year earlier, according to a news release. The company reported net income of $143.5 million, up from $115.9 million in the same period last year.
In the third quarter, Dexcom expects revenue to be between $975 million and $1 billion to cover “some unique elements impacting 2024 seasonality,” the statement said. Dexcom updated its full-year guidance and now expects revenue of $4 billion to $4.05 billion, down from the $4.20 billion to $4.35 billion it forecast last quarter.
Dexcom offers a range of tools such as continuous glucose monitors (CGMs) for patients diagnosed with diabetes.
On the earnings call, Dexcom CEO Kevin Sayer attributed the challenges to the company’s sales force restructuring, fewer new customers than expected and lower revenue per user. Part of the shortfall was related to customers taking advantage of discounts on a new CGM device called the G7. Additionally, the company said it underperformed in the durable medical equipment (DME) channel.
“DME distributors remain important partners in our business, and we did not perform well this quarter with respect to those partnerships,” Sayer said on the call. “We need to refocus on those relationships.”
In March, Dexcom announced that its new non-prescription continuous glucose monitor, Stello, had received FDA approval for use. The Stello is designed for people with type 2 diabetes who do not use insulin. Dexcom announced Thursday that it will officially launch it in August.
Before Thursday's close, Dexcom shares were down 13% for the year, while the S&P 500 was up 13% during that time.
At the start of the Q&A portion of the earnings call, JPMorgan analyst Robby Marcus asked for more details on the large guidance cut, expressing “shock” at how disruptive a change in sales force structure could be.
“I feel like there should be more,” Marcus said, asking whether the growing popularity of weight-loss treatments using GLP-1 was having an effect.
Sayer responded by saying the company was “experiencing a significant shortfall in new patients compared to what we expected at this point in time.” He said the sales force reshuffle, which led to changes in geographic coverage, was more dramatic than expected as doctors were now dealing with different representatives.
Regarding the struggles facing DME products, Sayer said the company has lost customers who “generate the highest annual revenue.” He added that eligibility for the G7 product rebate was three times faster than its predecessor, the G6.
All of this results in a $300 million shortfall in the company's guidance for this year at the high end, said Jeremy Sylvan, Dexcom's chief financial officer.
“This is certainly not something we are happy about,” Sylvain said, adding that in the interest of “full transparency,” the company should provide clarification “on what impact this may have on the rest of the year.”
Watch: Kevin Sayer, CEO of Dexcom
