Shares of DexCom (DXCM 3.66%) were jumping 4.5% as of 10:49 a.m. ET on Tuesday after rising as much as 12.4% earlier in the day. The gain came after the company issued a public statement about reports that it's in discussions about a potential merger with Insulet (PODD 1.34%).
DexCom stated that its policy is usually "not to comment on rumors or speculation." But in this case, the company confirmed that it "is not in active discussions regarding a merger transaction at this time."
Investors appeared to breathe a sigh of relief that DexCom isn't considering merging with Insulet. The primary concern with a potential transaction would have been the timing.
DexCom's shares were down 46% year to date before today's public statement. The healthcare stock is still more than 50% below its 52-week high. Using stock to fund a merger transaction with Insulet would have been much more problematic than if a deal was made when DexCom's shares were flying high.
However, aside from the poor timing, a merger between DexCom and Insulet does make sense. The two companies have already integrated DexCom's continuous glucose monitor with Insulet's OmniPod insulin delivery system. Their businesses would be complementary to each other.
DexCom's confirmation that it's not in talks with Insulet means that investors can return to focusing on the company's underlying business. Despite the dismal performance of its stock, DexCom continues to execute well operationally. The company expects to grow revenue in 2022 by between 15% and 20%.