DexCom, a key player in diabetes management, witnessed its stock plummet by an astonishing 41% just before the market closed on Friday. This dramatic decline came in response to the company's announcement on Thursday, where it lowered its full-year revenue guidance while simultaneously reporting second-quarter results that Oppenheimer analysts deemed disappointing.
DexCom has revised its 2024 revenue projections to a range of $4 billion to $4.05 billion, a notable decrease from the previous forecast of $4.2 billion to $4.35 billion. Furthermore, the company's anticipated organic growth has shifted downwards to 11% to 13%, contrasting sharply with the earlier expectations of 17%-to-21%. During a recent earnings call, Chief Financial Officer Jereme Sylvain highlighted several issues impacting the company.
He pointed out that sluggish new customer growth within the U.S. durable medical equipment (DME) sector and its international operations, coupled with heightened pharmacy eligibility, necessitated a recalibration of the company's guidance. "The compounding effect of our slower-than-expected new customer growth in the US (durable medical equipment) channel and international business, as well as increased pharmacy eligibility resulted in the need to recalibrate the guide," Sylvain emphasized. In the second quarter, DexCom reported a loss of market share within the DME channel, which Oppenheimer attributes to internal execution challenges.
Additionally, the company observed that the rebate eligibility for its new G7 continuous glucose monitor accelerated more rapidly than anticipated. Oppenheimer analysts conveyed expectations that this rebate eligibility impact would peak in the third quarter, as noted by Chief Executive Kevin Sayer during discussions with analysts. Revenues for DexCom during the three months concluded on June 30 rose to $1 billion, marking a 15% annual increase, yet this figure fell short of the $1.04 billion consensus established by Capital IQ.
Adjusted earnings per share also saw an uptrend, climbing from $0.34 a year earlier to $0.43, surpassing Wall Street’s forecast of $0.39. Looking ahead to the third quarter, DexCom anticipates revenues in the range of $975 million to $1 billion, reflective of an organic growth forecast between 1% and 3%. Analysts Steven Lichtman and Ron Feiner from Oppenheimer have revised their price target for DexCom, reducing it to $115 from a previous target of $150 while maintaining an outperform rating.
They have also adjusted their 2024 sales estimates downward to $4.03 billion from $4.33 billion and their earnings per share outlook from $1.85 to $1.75. Despite the uncertainty, they remain optimistic, noting that with an underpenetrated patient population and a robust product pipeline, strong sales growth is expected in the coming years.
They also expressed awareness of the competitive landscape, particularly the challenges posed by Abbott Laboratories' Libre glucose monitoring system, but they feel confident about emerging market opportunities that could drive growth..