Dexcom stock takes a tumble, despite reporting increased Q1 revenue

As of Friday afternoon, Dexcom’s stock has fallen 6.3% from about $422 to $395.
By Mallory Hackett
02:32 pm
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Photo by Kwanchai Lerttanapunyaporn/EyeEm/Getty Images

Despite coming out on top of analysts’ revenue predictions, Dexcom’s stock is tumbling after the company shared its first quarter of 2021 financial results.

As of Friday afternoon, Dexcom’s stock has fallen 6.3% from about $422 to $395.

Still, the company posted year-over-year growth for Q1 and increased its expectations for the remainder of the year.

“Dexcom is off to a great start in 2021, including several key advancements of our strategic priorities in the first quarter,” Kevin Sayer, Dexcom’s chairman, president and CEO, said in a statement. “Based on the strength of our first-quarter results and the significant market opportunity ahead of us, we are pleased to raise our 2021 revenue guidance.”

TOP-LINE DATA

Dexcom reported a 25% increase in worldwide revenue for Q1 2021, totaling $505 million. Compared to the same time last year, Dexcom's revenue was $405.1 million. These figures break down to $381.2 million for U.S. revenue and $123.8 million for international revenue.

This is the seventh quarter in a row that Dexcom has had revenue growth of $100 million or more, CFO Jereme Sylvain said during the earnings call.

GAAP gross profit totaled $343.9 million or 68.1% of revenue for the quarter, compared to $256.5 million or 63.3% of revenue in the first quarter of 2020.

“The fact that we are driving margin expansion, despite absorbing the channel-mix impact associated with the acceleration of our U.S. business to the pharmacy channel, is a testament to the work of our teams to drive down material and production costs,” Sylvain said in the call.

Operating expenses grew in Q1 2021 to $298 million, up from $222.9 million in Q1 2020. Dexcom attributes the increase to expanded commercial efforts and growing direct-to-consumer marketing efforts.

“In addition, the first quarter research and development expenses include costs associated with our large U.S. ICGM trial for G7, which will continue into the second quarter as we generate the data necessary to support our regulatory filing,” Sylvain said.

“Offsetting those strategic investments, we continue to gain leverage in our general and administrative expenses in the quarter, demonstrating the benefits of our scaling initiatives.”

LOOKING AHEAD

Following the success of Q1, Dexcom adjusted its 2021 guidance. It hopes to achieve revenue growth between 17% and 22%, or between $2.26 billion and $2.36 billion.

For its non-GAAP gross profit margin, Dexcom is shooting for 65%. Additionally, it hopes to have an operating margin of approximately 13% and an adjusted EBITDA margin of 23%.

Dexcom is also gearing up for the launch of its G7 continuous glucose monitor later this year.

“At this point, we remain on track for our target launch of G7 in the second half of 2021,” Sayer said during the earnings call. “We also plan to present preliminary data on G7 performance at the upcoming ATTD conference in early June.

"Our trial that will support our US ICGM filing is also well underway. And we have received outstanding feedback from the investigators and patients involved. We expect to complete that trial in the current quarter, and we'll keep you updated as we progress towards regulatory approvals and launch,”

LOOKING BACK

Dexcom has been growing financially for some time. In February, it announced its full-year 2020 earnings, which included a 31% year-over-year revenue increase to $1.93 billion.

Last quarter saw the company launch its venture fund, called Dexcom Ventures. It plans to invest in adjacent businesses focusing on sensing technology, data analytics, remote patient monitoring and population health.

Additionally, Dexcom aired its first Super Bowl commercial featuring Nick Jonas to drive awareness, education and access to diabetes management technology.

“The Super Bowl commercial featuring Nick Jonas was a highlight for the company in the first quarter, Sayer said.

“We were able to generate significant excitement for our employees and customers, many of whom have sent us pictures and stories of their pride and feeling represented during one of the biggest annual events in the world.”

 

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