DEXCOM, INC. 
By 
In Q2 2024, worldwide sales rose by 15% to $1.004 billion on a reported basis, versus $871.3 million in Q2 2023 and $1.037 billion expected by analyst consensus. Sales in the United States rose by 19%, while international sales increased by 7% on a reported basis and 10% organically, all on a full-year basis.
Volume growth, coupled with a strong increase in new customers, continues to be the main driver of sales growth, as awareness of real-time CGM grows. Watch out, however, for the rise of competitors and indirect competition from anti-diabetes solutions from Novo Nordisk and Eli Lilly.
During the post-results conference call, a JP Morgan analyst asked an initial question about competition and GLP-1 treatments: "Perhaps you could elaborate on the following points: are patients on basal therapy using it less? Do you see fears about GLP-1 arising, and type 2 diabetes patients not starting treatment as much? Do you see Abbott and Medtronic taking much more share? I feel like we need more explanation of the reduced guidance for the third and fourth quarters."
Management's response was disappointing and off the mark. They explained that they had lost market share in the DME channel, but nothing about fears over GPL-1 treatment and OEMs like Medtronic and Abbott. Why didn't management answer this first essential question? Analysts, like the market, abhor this kind of problem-avoiding answer. So we're left a little in the dark, even if we suspect that the GPL-1 treatment will reduce the customer base in the medium term, and that well-armed competitors like Medtronic and Abbott are hurting Dexcom.
Continuing on the release, GAAP operating income for Q2 2024 came in at $158 million, compared with GAAP operating income of $128.1 million for Q2 2023. Analysts were expecting operating income of $189 million.
GAAP net income was $143.5 million, or $0.35 per diluted share, for the second quarter 2024, compared with GAAP net income of $115.9 million, or $0.28 per diluted share, for the second quarter 2023. Analysts were expecting net income of $158 million, or $0.38 per diluted share.
"While Dexcom advanced several key strategic initiatives in the second quarter, our execution fell short of our high standards," said Kevin Sayer, Dexcom's president and CEO.
Dexcom is updating its fiscal 2024 guidance for sales and profit margin. The company now expects sales of around $4 to $4.05 billion (organic growth of 11% to 13%), compared with a previous estimate of between $4.2 and $4.35 billion. Non-GAAP gross profit margin is estimated at 63%, versus a previous range of 63 to 64%. Adjusted EBITDA margin forecasts, however, remained unchanged at 29%.
In addition, to account for certain one-off items impacting 2024 seasonality, the company is forecasting third-quarter 2024 sales of aroundquarter 2024 of around $975 million to $1.00 billion (organic growth of 1% to 3%), against analysts' consensus of $1151 million, again a disappointment.
This very disappointing publication, in both form and substance, will be heavily punished. Results were below expectations, forecasts were adjusted downwards, the company lost market share and management remained vague about Dexcom's difficulties. The sentence was immediate for the group, which has become accustomed to results that often exceed expectations, with annualized growth close to or above 30%. The DCF adjustments resulting from this surprise for the analysts who follow the file will greatly penalize the value. Shares were down 36% after the US close on 07/25/2024.
