The Dexcom logo is seen on a smartphone screen and in the background.
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Shares of Dexcom fell nearly 40% in extended trading Thursday after the diabetes management company reported disappointing earnings for the second quarter and offered weak guidance.
Here’s how the company did it:
- Earnings per share: 43 cents adjusted vs. 39 cents expected by LSEG
- Income: $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 statement. The company reported net income of $143.5 million, up from $115.9 million in the same period last year.
For the third quarter, Dexcom expects revenue of $975 billion to $1 billion for “certain unique items affecting 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 had forecast last quarter.
Dexcom offers a number 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 restructuring the company’s sales force, fewer new customers than expected and lower revenue per user. Some of the shortfall had to do with customers taking advantage of discounts on the new CGM called the G7. Additionally, the company said it underperformed in the durable medical equipment (DME) channel.
“DME’s distributors remain important partners for us in our business, and we did not do well this quarter against those partnerships,” Sayer said on the call. “We need to refocus on those relationships.”
In March, Dexcom announced its new The over-the-counter CGM called Stelo had been approved for use by the US Food and Drug Administration. Stelo is designed for patients with type 2 diabetes who do not use insulin. Dexcom said Thursday that it will officially launch in August.
Before Thursday’s close, Dexcom shares were down 13% for the year, while the S&P 500 was up 13% over that stretch.
At the start of the Q&A portion of the earnings call, JPMorgan analyst Robbie Marcus asked for more details on the significant drop in guidance, expressing “shock” at how much disruption a change in sales force structure could cause.
“I feel like more needs to be done,” Marcus said, and asked if the growing popularity of GLP-1 weight loss treatments is having an impact.
Sayer responded by saying the company has “a small number of new patients compared to where we thought we would be right now.” He said the reshuffle of the sales force, which led to changes in geographic coverage, was more dramatic than expected, as doctors were now dealing with different agents.
As for DME’s struggles, Sayer said the company lost customers “who have the highest annual revenue year over year.” And he added that G7 rebate eligibility was three times faster than its predecessor, the G6.
Jereme Sylvain, Dexcom’s chief financial officer, said that all adds up to a $300 million shortfall in the company’s guidance for the year at the top.
“It’s definitely not something we’re happy about,” Sylvain said. He said that for the sake of “full transparency”, the company must provide clarity “about the impact for the balance of the year”.
I’M WATCHING: Dexcom CEO Kevin Sayer