A Flawless Victory for Dexcom?

Dexcom might be the only medtech company in recent history to have a nearly flawless quarter. While it might be a stretch to say that 2Q23 was perfect, it wouldn’t be to say the quarter is about as close to perfection as a company can obtain.

Dexcom brought in about $871.3 million in Q2 revenue (+25% y/y rep., +26% y/y org.), $30 million above the consensus estimate of $841.2 million. Q2 adj. EPS was $0.34, 11 cents above consensus of $0.23. 

“There were big expectations for Dexcom heading into this Q2 print and the company delivered, topping consensus sales estimates by $30 million and raising the full-year outlook well above the beat,” BTIG analyst Marie Thibault wrote in research notes. “This was a fairly flawless quarter and we think shares of Dexcom can move higher on Friday despite being priced for near-perfection.

This quarter brought several records — record new WW patient adds, record new Medicare patient adds, and the highest y/y dollar growth. 2023 guidance was raised by more than the beat, with a midpoint $67.5M higher than the prior range. 

A big boost to the Dexcom’s success came from the Centers for Medicare & Medicaid Service expanding coverage to a broader group of beneficiaries with diabetes after removing the prior requirement of multiple daily insulin injections to be eligible for reimbursement.

Additionally, coverage now extends to certain non-insulin-using individuals who have a history of problematic hypoglycemic events — when one’s blood glucose is lower than normal, potentially leading to dizziness or becoming unconscious.

During the company’s earnings call, Kevin Sayer, Dexcom’s CEO spoke about the impact of the expansion.

“We have already established greater than 60% commercial coverage for the basal population, which we view as a validation of Dexcom's value proposition by payers,” said Kevin Sayer, Dexcom CEO, according to a transcript from Seeking Alpha.

Sayer added, “we are thrilled to have this level of coverage established as quickly as it provides us much greater commercial flexibility to promote this opportunity. While still early, the initial response from the clinical community has been very encouraging. Physicians have wasted no time in prescribing Dexcom to their basal patients as they recognize a clear potential for better outcomes among this population.”

But one of the biggest boons for the company came from the launch of Dexcom’s G7 CGM in the U.S. The company won a nod from FDA in late 2022.

“There are now 8,000 physicians writing scripts for G7 in the U.S that were previously not prescribing Dexcom,” Sayer said according to a Seeking Alpha transcript of the call. “We designed G7 to hold broad market appeal, and these early prescribing trends are validating those efforts.”