Dexcom shares plunge nearly 40% after company misses sales targets and cuts forecasts

Shares of Dexcom fell nearly 40% in prolonged trading on Thursday after the diabetes management company reported disappointing sales for the second quarter and offered weak guidance.

This is how the corporate performed:

• Earnings per share: 43 cents adjusted against 39 cents expected by LSEG
• Revenue: USD 1 billion in comparison with USD 1.04 billion expected by LSEG

Dexcom's revenue increased 15% from $871.3 million a yr ago, in response to a press release. The company reported net income of $143.5 million, in comparison with $115.9 million in the identical period last yr.

For the third quarter, Dexcom expects revenue of $975 billion to $1 billion to “account for certain one-time items impacting seasonality in 2024,” the press release said. Dexcom updated its full-year guidance and now expects revenue of $4 billion to $4.05 billion, in comparison with the forecast range of $4.20 billion to $4.35 billion. last quarter.

Dexcom offers a spread of tools similar to continuous glucose monitors (CGMs) for patients diagnosed with diabetes.

In the earnings call, Dexcom CEO Kevin Sayer attributed the challenges to a restructuring of the corporate's sales team, fewer recent customers than expected and lower revenue per user. Part of the shortfall was as a consequence of customers profiting from discounts on the brand new CGM called the G7. In addition, the corporate said it underperformed within the durable medical equipment (DME) space.

“DME distributors remain important partners in our business, and we did not see good results from those partnerships this quarter,” Sayer said on the conference call. “We need to refocus on those relationships.”

In March, Dexcom announced its recent The over-the-counter CGM called Stelo has been cleared to be used by the U.S. Food and Drug Administration. Stelo is designed for patients with type 2 diabetes who don’t use insulin. Dexcom announced Thursday that it’s going to officially launch in August.

Before the market closed Thursday, Dexcom shares were down 13% for the yr, while the S&P 500 was up 13% for the period.

At the beginning of the question-and-answer portion of the quarterly earnings call, JPMorgan analyst Robbie Marcus asked for more details on the numerous guidance cut and expressed “shock” at how much disruption a change within the sales team structure could cause.

“I feel like there's more that needs to happen,” Marcus said, asking if the rising popularity of GLP-1 weight-loss treatments had an impact.

Sayer responded that the corporate is “missing a larger number of new patients than we would have expected at this time.” He said the restructuring of the sales team, which resulted in changes in geographic coverage, was more dramatic than expected because doctors are actually coping with different representatives.

Regarding DME's difficulties, Sayer said the corporate has lost customers “who generate the highest annual revenue per year,” adding that eligibility for G7 rebates is thrice faster than with the previous product, G6.

Jereme Sylvain, Dexcom's chief financial officer, said all of this adds as much as a $300 million shortfall in comparison with the corporate's annual forecast.

“It's certainly not something we're happy about,” Sylvain said. He said that within the interest of “complete transparency,” the corporate needed to supply clarity on “what impact this will have for the rest of the year.”

REGARD: Dexcom CEO Kevin Sayer