Dexcom stock plummeted early Friday after the diabetes devices maker reported lighter-than-expected June-quarter sales and slashed its outlook for the year.
Sales climbed 15% year over year to just north of $1 billion. But that missed expectations for $1.04 billion, according to FactSet. Adjusted earnings came in at 43 cents per share, beating projections by four pennies and up 26.5% vs. the same three months last year.
"However, the bigger surprise was that management decreased guidance by $200 million to $300 million for the full year," William Blair analyst Margaret Kaczor Andrew said in a report. "This change we believe has led investors to question the longer-term growth profile for Dexcom."
Chief Executive Kevin Sayer acknowledged that second-quarter metrics didn't "meet our high standards."
The company is well known for its continuous glucose monitors, or CGMs. These body-worn devices track glucose levels in real-time for patients with diabetes. Dexcom stock has traded sideways this year, despite expectations for the company to launch a new monitor this year.
"We have a unique opportunity to serve millions of more customers around the world with our differentiated product portfolio and we are taking action to improve our execution and best position ourselves for continued long-term growth," he said in a statement.
But on today's stock market, Dexcom stock crashed 40.7% to 64. That put shares at their lowest point since April 2020.
Dexcom Stock Slammed On Guidance Cut
Andrew said international sales came in $27 million below expectations.
The company cited lower-than-expected new patient starts of 70,000 globally — roughly 20% to 25% below Andrew's forecast. Dexcom also noted its lost share in the durable medical equipment channel, which comes at a price premium. Further, previously noted pharmacy rebates for the new G7 CGM are kicking in faster than expected.
As a result, Dexcom lowered its outlook for the year. The company now expects sales to increase 11% to 13% to $4 billion to $4.05 billion. That lagged Dexcom stock analysts' forecast for $4.3 billion.
"Despite the lower revenue, it is notable that the company reiterated its profitability guidance for 2024 and 2025," Andrew said.
Third-quarter guidance also came in well below expectations at $975 million to $1 billion, up just 1% to 3% organically. Analysts projected a stronger $1.15 billion.
The company also announced a $750 million share repurchase program.
Andrew kept her outperform rating on Dexcom stock.
"We remain believers in the story given our view of the market outlook and Dexcom's strong product portfolio and ecosystem," she said. "We believe the reasons for the miss and guide down are (painfully) self-inflicted though ultimately should prove transient and manageable."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
