Dexcom stock closed in on a breakout Monday after Medicare officials announced the biggest-ever expansion for coverage of continuous glucose monitors in the U.S.
The Centers for Medicare and Medicaid Services will now reimburse the cost of continuous glucose monitors, or CGMs, for all Medicare patients who require insulin to manage their diabetes. Patients with a history of problematic glucose incidents will also receive coverage.
The new coverage opens up access to Dexcom's newest CGM, dubbed G7, to 1.5 million more Americans, Dexcom said in a news release.
On today's stock market, Dexcom stock jumped 2.6%, closing at 118.65. Dexcom shares have a strong Composite Rating of 97 out of a best-possible 99. This puts them in the top 3% of all stocks when it comes to fundamental and technical measures, according to IBD Digital.
Abbott Laboratories stock also inched ahead 0.5% to close at 104.52. Shares of Medtronic, another CGM maker, rose 1.8% and closed at 82.12.
Dexcom Stock: A "Landmark' Decision
Teri Lawver, Dexcom's chief commercial officer, called the CMS decision a "landmark" for people with diabetes. CGMs are body-worn medical devices that track a patient's blood sugar in real time. This allows them to appropriately time their treatment with insulin.
"Our Mobile study, which helped lead to this decision, is part of Dexcom's ongoing efforts to help increase access to the most accurate, easy-to-use CGM technology that offers people a better way to manage diabetes and improve their quality of life," she said in written remarks.
In the test, called Mobile, Dexcom found patients with type 2 diabetes using basal insulin had better glycemic outcomes than those pricking their fingers and using another device called a glucometer. Dexcom stock could rise further on greater demand for its devices among type 2 diabetes patients.
Jared Watkin, senior vice president of Abbott's diabetes care business, noted the need to expand access to CGM technology as diabetes prevalence grows in the U.S. Abbott estimates almost 11 million people over the age of 65 are living with diabetes in the country. Abbott makes a body-worn glucose monitor called Freestyle Libre.
"Increasing access is a monumental step by Medicare to allow more people to have access to Freestyle Libre so they can spend less time worry and more time living healthier, better lives," Watkin said in a written statement.
Expanding To More Type 2 Patients
CGMs are typically used by patients with the genetic form of diabetes, known as type 1. In this type of diabetes, patients' bodies don't make insulin. They rely on multiple injections of insulin everyday or body-worn insulin pumps.
Type 2 diabetes is a progressive condition. But patients can progress to the point of needing insulin injections.
"This is a major win for the diabetes community, and another validation of how CGM can benefit all people living with diabetes," said Dr. Thomas Martens in a written statement. Martens is an internal medicine physician and led Dexcom's Mobile study.
The news pushed Dexcom stock closer to a breakout. Shares are consolidating with a buy point at 125.65, according to MarketSmith.com. Medtronic stock retook its 50-day line on Monday, and Abbott shares closed above that key mark for the second trading day running.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
