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shares Dexcon The diabetes management company fell nearly 40% in after-hours trading Thursday after the diabetes management company reported disappointing earnings. second season and provided weak guidance.
Here’s what the company does:
- Earnings per share: Adjusted for 43 cents, vs. LSEG forecast of 39 cents
- income: US$1 billion, compared with LSEG’s forecast of US$1.04 billion
Dexcom’s revenue increased 15% from $871.3 million a year earlier, according to a press release. The company reported net income of $143.5 million, up from $115.9 million a year earlier.
Dexcom expects third-quarter revenue of $975 million to $1 billion, which includes “certain unique items impacting seasonality in 2024,” the release said. Dexcom updated its full fiscal year guidance, now expecting revenue of $4.0 billion to $4.05 billion, down from its forecast of $4.2 billion to $4.35 billion last season.
Dexcom offers a suite of tools, such as continuous glucose monitors (CGM), for patients diagnosed with diabetes.
During the earnings call, Dexcom CEO Kevin Sayer attributed the challenges to a reorganization of the company’s sales team, fewer new customers than expected and lower revenue per user. Part of the shortage is related to customers taking advantage of discounts on a new CGM called the G7. Additionally, the company said it was underperforming in its durable medical equipment (DME) pipeline.
“DME dealers remain important partners in our business and we underperformed in those partnerships this quarter,” Sayer said on the call. “We need to refocus on those relationships.”
In March, Dexcom announced new products Over-the-counter CGM is called Star Approved for use by the U.S. Food and Drug Administration. Stelo is designed for people with type 2 diabetes who do not take insulin. Dexcom said Thursday it will officially launch in August.
Dexcom shares were down 13% for the year as of Thursday’s close, while the S&P 500 was up 13% over the same period.
At the start of the Q&A portion of the earnings call, J.P. Morgan analyst Robbie Marcus asked for more details about the sharp drop in guidance and expressed “shock” at the extent of the damage that changes to the sales force structure could cause.
“I feel like more has to be done,” Marcus said, asking whether the growing popularity of GLP-1 weight-loss treatments has had an impact.
Thayer responded that the company “currently lacks the critical mass of new patients to meet our expectations.” He said the reorganization of the sales team resulted in a change in geographic coverage that was much larger than expected because doctors now deal with different sales representatives.
Regarding DME’s woes, Sayer said the company lost its “highest revenue-generating customer every year.” He added that the G7 qualified for discounts three times faster than its predecessor, the G6.
Dexcom Finance Chief Jereme Sylvain said all these factors combined have resulted in a $300 million shortfall in the company’s top guidance for the year.
“It’s certainly not something we’re happy about,” Sylvain said. He said that in the interest of “full transparency” the company needed to clarify “the impact on the remainder of the year.”
watch: Dexcom CEO Kevin Thayer
