Continuous Glucose Monitor Maker Dexcom's Q4 Profit Triples On Volume Growth And New Customer Additions

Thursday, after-hours Dexcom Inc DXCM reported fourth-quarter 2023 earnings with sales of $1.03 billion, up 27% Y/Y (+26% on an organic basis), almost in line with the consensus estimate of $1.02 billion.

Volume growth, in conjunction with strong new customer additions, continues to be the primary driver of revenue growth as awareness of real-time continuous glucose monitoring increases.

The continuous glucose monitor maker posted profits of $256.3 million, almost triple the $91.8 million a year ago.

Adjusted EPS reached $0.50, beating the consensus of $0.43 and up from $0.34 a year ago.

Adjusted gross profit totaled $663.8 million or a margin of 64.2% compared to $543.7 million or 66.7% a year ago.

Adjusted operating income reached $242.7 million, compared to non-GAAP operating income of $172.1 million for the fourth quarter of 2022.

“2023 was an incredible year for Dexcom with significantly expanded access, another year of record new customer starts, and growing momentum behind our global rollout of Dexcom G7,” said Kevin Sayer, Dexcom’s chairman, president, and CEO.

Guidance: Dexcom projects fiscal year 2024 revenues of $4.15 billion-$4.35 billion, marking organic growth of 16%-21% versus consensus of $4.33 billion.

The company sees adjusted gross margin of approximately 63%-64%, adjusted operating margin of around 20%, and adjusted EBITDA margin of approximately 29%.

William Blair’s analysis suggests that DexCom’s primary growth in 2024 is expected to be driven by its core insulin-intensive patients (type 1 and type 2). 

However, the company is also experiencing accelerated growth and is strategically investing to meet the rising demand from basal and non-insulin users. 

Management’s insights indicate that these opportunities will likely result in positive outcomes for the company’s estimates in 2024 and 2025.

DexCom’s outlook for durable long-term growth remains favorable, supported by the introduction of new products such as G7, DexCom One, and Stelo, along with expanding the total addressable market into type 2 basal and beyond. 

Additionally, anticipated catalysts in the next 6-12 months could further boost growth. The company is expected to experience meaningful margin expansion, contributing to industry-leading earnings growth over the next three to five years.

William Blair reiterates the Outperform rating.

Price Action: DXCM shares are down 2.40% at $124.00 premarket on the last check Friday.

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