Dexcom Follows Abbott’s Footsteps With Exceptionally Strong 3Q23 in CGM; Medicare Expansion in Type 2 Diabetes and G7 Seem Like Early Innings of Substantial Product Cycle

DexCom has announced its third quarter of 2023 earnings with total revenue reaching $975.0 million representing 27% growth compared to the same quarter the previous year. The company saw a 24% increase in U.S. revenue and 33% growth in international revenue. Analysts were forecasting total revenue of $939.2 million. Dexcom’s results follow Abbott’s strong results in continuous glucose monitoring where there diabetes care segment grew 26% and help alleviate concerns over share loss to FreeStyle Libre. The company noted the impact of Medicare coverage for type 2 diabetics only using basal insulin starting in April this year as a major growth driver representing 7 million individuals in the U.S. with 3.5 million on Medicare. Management noted commercial coverage is also expanding for this population. Management also noted that since the G7 launch they have gained share across the U.S. with 17,000 new physicians prescribing Dexcom products.

From a strategic perspective, Dexcom secured reimbursement for Dexcom ONE in France this quarter, allowing all individuals on intensive insulin therapy to have increased access to Dexcom CGM in the French market. The company received regulatory clearance for Dexcom G7 in Canada and subsequently launched the product in the Canadian market after the quarter ended. The Dexcom G7 has been previously launched in U.S. and select international markets. Additionally, in early October, Dexcom presented a wealth of clinical evidence at the EASD 59th Annual Meeting. The data included new findings from the 7-year COMISAIR study, which is considered the longest prospective real-world CGM study. This study demonstrated high adherence to Dexcom CGM, sustained reduction in A1c levels, and a significantly lower risk of retinopathy, underscoring the positive impact of CGM technology.

From a profitability perspective, the company reported non-GAAP operating income of $238.9 million, which accounted for 24.5% of reported revenue, reflecting a substantial increase of 360 basis points compared to the same period the previous year demonstrating strong cost control. Adjusted EPS came in at $0.50 healthily beating analyst forecasts of $0.34.

Dexcom has increased its fiscal year 2023 guidance, which now calls for revenue of approximately $3.575 – 3.600 billion, reflecting a growth rate of 23-24%. Notably the company is also calling for a non-GAAP Operating Margin of approximately 19% as it transitions to profitability. Dexcom has quite the war chest with $3.24 billion in cash, cash equivalents, and marketable securities. The company noted it may explore new market opportunities.

Kevin Sayer, Chairman, President, and CEO of Dexcom, expressed his satisfaction with the company’s performance, stating, “Our teams executed incredibly well in the third quarter, delivering solid financial results while further advancing global access to Dexcom CGM. Our continued momentum has left us in a great position to again raise our full-year revenue and margin guidance and finish a strong 2023.”