What You'll Want to Know About DexCom's Q2 Earnings Results

The medical device maker delivered strong revenue and adjusted earnings growth in Q2 thanks to continued popularity of its G6 continuous glucose monitoring system.

Keith Speights
Keith Speights
Aug 1, 2019 at 6:00AM
Health Care

DexCom (NASDAQ:DXCM) has taken investors on a roller-coaster ride so far in 2019, with shares rising more than 25% earlier in the year, giving up all of those gains and then some, then bouncing back to move even higher than before. Investors were spooked after a bearish report about the company was released in March, but the worries soon faded away.

There wasn't anything spooky about DexCom's latest quarterly figures. The company announced its second-quarter results after the market closed on Wednesday. Here are the highlights from DexCom's Q2 update.

Glucometer and insulin pen on top of a paper with the words Blood sugar control.

Image Source: Getty Images.

By the numbers

DexCom's Q2 revenue jumped 39% year over year to $336.4 million. Analysts estimated that the company's revenue for the second quarter would come in at a little over $307 million.

The company announced a net loss in the second quarter on a generally accepted accounting principles (GAAP) basis of $10.5 million, or $0.12 per share. This reflected deterioration from the prior-year period when the company announced GAAP net income of $30.2 million, or $0.34 per share.

DexCom reported non-GAAP adjusted net income of $7.8 million, or $0.08 per share. This represented a significant improvement from the prior-year period adjusted net loss of $6.5 million, or $0.07 per share. Wall Street analysts estimated that DexCom would post adjusted earnings per share of $0.01 in the quarter.

Behind the numbers

It's apparent from DexCom's strong revenue growth in Q2 that its G6 continuous glucose monitoring (CGM) systems remain very popular with customers who have diabetes. The company said that increased awareness of real-time CGM is a key factor in driving higher sales volumes.

This revenue growth came from all geographic regions where DexCom sells its products. U.S. sales soared 40% year over year to $266.3 million. International sales jumped 33% higher to $70.1 million.

You might wonder, though, why DexCom's bottom line looked so much worse than the prior-year period. There were two primary culprits. One was that the company's interest expense increased significantly from a year ago. However, the biggest factor was a $42.7 million gain from an equity investment posted in the second quarter of 2018 that resulted in a temporary profit on a GAAP basis.

That one-time equity gain was adjusted out of DexCom's non-GAAP net income figures. As a result, the company's non-GAAP comparisons looked much better.


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Looking ahead

DexCom now anticipates revenue to be between $1.325 billion and $1.375 billion in full-year 2019, up from its previous guidance of $1.25 billion to $1.30 billion. The company projected 2019 non-GAAP operating margin of 7%, compared to 6% provided in its previous outlook.

CEO Kevin Sayer said that the company remains "confident in DexCom's long-term growth opportunity." Investors will want to watch closely, though, to see how the future launch of Abbott Lab's new version of its FreeStyle Libre CGM system impacts sales of DexCom's G6 CGM.