Shares of DexCom (DXCM 1.80%) were crashing 39.9% lower as of 10:20 a.m. ET on Friday. The huge sell-off came after the continuous glucose monitoring (CGM) systems maker announced its second-quarter results following the market close on Thursday.
DexCom's revenue increased 15% year over year in Q2 to $1 billion. However, that came in a little below the average revenue estimate of $1.04 billion based on LSEG's survey of analysts.
The company posted Q2 earnings of $143.5 million, or $0.35 per share, based on generally accepted accounting principles (GAAP). Its non-GAAP earnings came in at $174.3 million, or $0.43 per share. This reflected solid year-over-year growth and beat the consensus Wall Street adjusted earnings estimate of $0.39 per share.
NASDAQ: DXCM
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What investors disliked the most about DexCom's Q2 update
The worst part of DexCom's Q2 update was that the company lowered its full-year 2024 guidance. DexCom now expects full-year revenue of between $4 billion and $4.05 billion. It previously forecast revenue of $4.2 billion to $4.35 billion.
What's going on? DexCom lost market share in the durable medical equipment (DME) channel. CEO Kevin Sayer also said in the Q2 earnings call, "We're short a large number of new patients as to where we thought we would be at this point in time." His comment raised concerns that DexCom was feeling the impact of GLP-1 drugs that help patients control their diabetes and lose weight.
Is DexCom stock a buy on the sell-off?
With DexCom's massive decline today, you'd think the sky was falling for the company. That doesn't appear to be the case. However, this stock still trades at a sky-high forward earnings multiple. I think investors' best move is to remain on the sidelines until DexCom can prove its growth will continue to justify such a steep valuation.
