Why DexCom Shares Took Flight

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of DexCom Inc.  (NASDAQ: DXCM  ) , a medical device company focused on creating continuous glucose monitoring systems, skyrocketed as much as 27% after reporting its second-quarter earnings results.

So what: For the quarter, DexCom delivered a huge surge in revenue -- 53% to be exact -- to $35.8 million, although product revenue was the real star, up 65%. The company's quarterly loss narrowed by a third to $0.14 per share from $0.21 per share in the year-ago period, but includes quite a few one-time expenses. With those pulled from the equation, DexCom lost just $0.02 per share on an adjusted basis. Comparatively, the Street had expected revenue of just $31 million and an EPS loss of $0.15.

Now what: I have to eat some crow here and admit that this quarter was a lot better than I anticipated from DexCom. On paper, DexCom's potential market is huge with some 25 million people in the country living with diabetes and close to 80 million others in the pre-diabetic stage. However, my initial contention that DexCom's surge is occurring without any bottom-line profits remains valid. Revenue growth is surging and losses are narrowing, but we've yet to see DexCom report a profit -- and it may still be a while before this happens given the fierce competition within the sector over monitoring devices. As such, and following such a huge run higher, I'd suggest sticking to the sidelines until such time as DexCom can put its business in the black.

Simply put, your financial health is just as important as your personal health. The Motley Fool's special free report "3 Stocks That Will Help You Retire Rich" names specific investment opportunities that could help you build long-term wealth and help you retire well. The Fool also outlines critical wealth-building strategies that every investor should know. Click here to keep reading.

Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 23, 2013, at 4:38 PM, BeastoftheEast2 wrote:

    Sean, Dexcom is a great company and deserves more praise than they receive. So thanks for some good publicity on a company I own some shares in. While the article in general was positive I would like to correct your saying that the competition is fierce for Dexcom. You could not be more wrong in saying that. They only have one competitor. Dexcom makes a CGM, a continuous glucose monitor, that is worn on the body for a week or more and which provides a new sugar reading every 5 minutes. That's 12 per hour and 300 each day. The numbers are plotted on a graph so the trending levels can be seen easily. Other basic blood sugar monitors, the ones you are suggesting Dexcom is competing with, they only provide a single blood sugar reading. Remember, Dexcom provides you 300/day and these numbers are sent via RF signal in real time to a receiver you keep in your pocket. I wear a Dexcom G4 and have been diabetic for 23 years. The "continuous" part of the monitoring is the key here; it has been a life changing piece of equipment for me, and many other diabetics whom I know. Their only competition is with Medtronic, who makes a CGM too. However, I feel similar to most diabetics who have tried both and feel the Medtronic one is not as good. Dexcom possesses game winning technology with their business, and it is unique in it's functioning. I believe Dexcom as a company will continue to grow. And, get used to the surprising quarterly results, as there will be more of them in the future.

  • Report this Comment On September 26, 2013, at 4:23 PM, cssinisi wrote:

    Have to agree with BeastoftheEast2. I have been a type 1 for 32 years. Blood sugar readings done every few hours do not even compare to CGM. You have to know where you are going and where you have been. I also use Dexcom and own DXCM stock. Haven't tried Medtronic, but have no desire to try it. Dexcom works too well. I expect every hospital using CGM in the very near future as well as patients. Can't wait to use the next generation Dexcom which will use a cell phone as a receiver.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2586623, ~/Articles/ArticleHandler.aspx, 9/26/2016 3:41:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
DXCM $93.91 Down -0.11 -0.12%
DexCom CAPS Rating: **