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DexCom (DXCM) Q4 Earnings Match Estimates, Revenues Beat

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Zacks Equity Research
·4 min read
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DexCom, Inc. DXCM reported fourth-quarter 2020 adjusted earnings per share (EPS) of 91 cents, in line with the Zacks Consensus Estimate. Notably, the bottom line declined 20.9% on a year-over-year basis.

For the full-year 2020, the company reported adjusted EPS of $3.10, up 68.5% from 2019. The figure also outpaced the consensus mark by 1.3%.

Revenue Details

Total revenues grew 22.9% to $568.9 million on a year-over-year basis and beat the Zacks Consensus Estimate by 1.9%. Rising volumes across all channels, strong new patient additions and increasing global awareness of the benefits of real-time Continuous Glucose Monitoring (CGM) contributed to the upside.

DexCom, Inc. Price, Consensus and EPS Surprise

DexCom, Inc. Price, Consensus and EPS Surprise
DexCom, Inc. Price, Consensus and EPS Surprise

DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. Quote

For the full-year 2020, total revenues increased 30.5% to $1.93 billion on a year-over-year basis and beat the consensus mark by 1%.

Segmental Details

Revenues at the Sensor and other revenue segment (82% of total revenues) climbed 29.5% on a year-over-year basis to $465.6 million. Hardware revenues (18%) remained flat year over year to $103.3 million.

Geographical Details

U.S. revenues (79% of total revenues) increased 20.1% on a year-over-year basis to $451.5 million. International revenues (21%) surged 35.1% year over year to $117.4 million.

Margin Analysis

Gross profit in the quarter under review totaled $399.1 million, up 29% year over year. DexCom generated adjusted gross margin (as a percentage of revenues) of 70.2%, which expanded 340 basis points (bps) year over year.

Research and development expenses amounted to $119.2 million in the quarter, up 51.3% year over year. Selling, general and administrative expenses totaled $175.9 million in the reported quarter, up 36.4% year over year.

The company reported total operating expenses of $295.1 million, up 42% year over year.

The company reported operating income of $104 million, up 2.5% from the prior-year quarter. Operating margin (as a percentage of revenues) of 18.3% contracted 360 bps year over year.

Financial Position

The company exited the fourth quarter with $817.6 million in cash and cash equivalents, which improved 54.3% sequentially.

2021 Guidance

DexCom has decided to reiterate full-year 2021 guidance.

The company expects revenues to be $2.21-$2.31 billion, reflecting growth of 15-20% from the previous year. While adjusted gross margin is anticipated to be about 65%, adjusted operating margin is estimated to be around 13%.

Wrapping Up

DexCom exited the fourth quarter on a mixed note, wherein earnings matched the Zacks Consensus Estimate, while revenues beat the same. Impressive contribution from the Sensor and other revenue segment, and domestic and international revenue growth were key catalysts. Expansion in gross margin is a positive.

Additionally, the glucose monitoring market presents significant commercial opportunity for this company. DexCom’s prospects in alternative markets such as the non-intensive diabetes management space, the hospital, gestational, pre-diabetes and obesity are likely to provide it a competitive edge in the MedTech space.

Apart from making outstanding progress with respect to strategic objectives, DexCom ended the quarter with record new patient additions and highest gross margin quarter in the past five years.

Meanwhile, cut-throat competition in the market for blood & glucose monitoring devices remains a concern.

Zacks Rank

Currently, DexCom carries a Zacks Rank of 3 (Hold).

Key Picks

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Hologic, Inc. HOLX, Abbott Laboratories ABT and AngioDynamics, Inc. ANGO. While Hologic sports a Zacks Rank of 1 (Strong Buy), both Abbott and AngioDynamics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

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