Dexcom Stock Tanks Despite Beating Q324 EstimatesDexcom Stock Tanks Despite Beating Q324 Estimates

Despite beating analyst estimates for Q324, Dexcom stock plunged 16% in after-hours trading yesterday after its earnings report conference call, with investors seemingly daunted by the company’s slowing US sales numbers.

The continuous glucose monitoring (CGM) systems maker reported an adjusted earning per share of $0.45 — a 10% year-over-year (YoY) decline — which still beat the analysis consensus of $0.43. Additionally, Q3 revenue came in at $994.2 million, around $4 million above the estimated $990.44 million expected — up 2% YoY.

Dexcom maintained its full-year 2024 revenue guidance of $4 billion to $4.1 billion, which represents 11% to 13% organic growth.

The company also saw new product launches during the quarter. In Q3, the company launched Stelo in the US, an over-the-counter glucose biosensor for adults with prediabetes and type 2 diabetes not on insulin therapy. It launched its advanced D7 products in Australia and the Dexcom One+ in France. Meanwhile, the 15-day Dexcom G7 was submitted to FDA for review.

Dexcom did not reconfirm its expectations of ~$40 million in Stelo sales for the year but reported >70,000 different people using the device in the first two months of launch, with half of customers signing up for subscriptions. “We will learn as we go to more distribution channels, and we get to a more diverse group of people over and over again,” said Kevin Sayer, Dexcom president and CEO, in the earnings call. “We've got a base right now of over 70,000 users on our product we launched a couple of months ago. That's a huge success for us as far as we're concerned. We've given our guidance for the quarter. We've reaffirmed it. Stelo right now for us is a huge success and we are really looking at things we can do to enhance the experience of those users going forward to make it more sticky and to add more. So far, so good with Stelo. We're very pleased.”

It was also reported that Teri Lawver, executive VP and chief commercial officer, will retire at the end of the year. Sayer will lead the commercial organization while looking for Lawvers replacement.

Declined revenue growth

While broadly positive, the Q3 earnings report seemed to do nothing to calm investors to slowing US sales numbers. Showing US revenue totaling $702 million for Q324 compared to $714 million in Q323 — representing a decline of 2% YoY — the market reacted swiftly by plunging the stock 16%. Internationally, revenue grew 12% on a reported basis according to the company.

“This reflected the compounding effect of slower new customer starts from Q2, along with a decline in our revenue per customer due to shifting channel dynamics and higher rebate eligibility compared to a year ago,” said Jereme Sylvain, chief financial officer at Dexcom, during the earnings call.

Sylvain said that with “rebate eligibility now near 100%, we expect this impact peaked in Q3 and we’ll moderate over the next couple of quarters.”

This remains to be seen since the company, in August, was hit with a class action lawsuit by shareholders alleging they were misled regarding revenue expectations for the 2024 fiscal year.

Analyst reactions

Even with lingering questions pertaining to US revenue growth, analysts remained positive on Dexcom’s future.

William Blair analyst Margaret Andrew maintained her outperform rating on the company, writing today that “we continue to believe that DexCom is well positioned for durable long-term growth with an expanding portfolio of products and TAM [total addressable market] expansion opportunities.”

BTIG analysts Maire Thibault and Sam Eiber highlighted that there were plenty of positives underscoring their confidence in a return to high growth for the company in 2025. “Despite the light US result, management commentary was upbeat, highlighting a record level of new patient starts, progress and momentum on commercial execution efforts, stabilizing share in the DME channel in September, and confidence in returning to higher growth.

The BTIG analysts concluded by maintaining their $120 PT, citing profitability compared to competitors, strong market position, and the company’s clear path back to higher growth.

“Even if [Dexcom] shares are a bit weak in Friday trading, we think the positive updates for Q4 and 2025 combined with relatively low investor expectations may allow [Dexcom] shares to move higher into year-end,” according to the analysis. “We think [Dexcom] deserves a premium valuation, since it is more profitable than most of its peers, retains a strong position in a market duopoly, and has a path back to higher growth. We maintain a $120 PT based on 9x EV/Sales on our 12-24 mo. sales estimate.”