DexCom Misses on EPS, Losses Mount - Analyst Blog

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DexCom ( DXCM ), a player in the glucose monitoring market, reported first-quarter 2012 loss per share of 21 cents, higher than the Zacks Consensus Estimate of a loss of 19 cents per share. Net loss for the quarter increased 18.7% year over year to $14.1 million (21 cents per share).

Revenues

Sales increased sharply 41.8% year over year to $20.1 million in the first quarter, narrowly beating the Zacks Consensus Estimate of $20 million.

Product sales jumped 42% to $18.6 million while development grant and other revenues were up 42.7% to $1.5 million in the reported quarter.

Margins and Expenses

Gross margin picked up to 46.7% in the first quarter from 36.1% a year ago. Cost of sales moved up 18.2% year over year to $10.7 million mostly on account of higher cost of product sales. Operating expenses increased 45.9% year over year to $24.8 million on account of higher R&D spending and selling, general and administrative expenses, which grew 55% and 40.6%, respectively, in the reported quarter.

Balance Sheet

DexCom exited the quarter with cash and short-term marketable securities of $70.2 million, down 14.3% on a sequential basis.

Our Take

We believe DexCom is poised to gain a major share of the glucose monitoring market driven by sustained product development initiatives, collaborations, favorable reimbursement coverage and increased need for continuous glucose monitoring.

However, we note that competition in the glucose monitoring market is intense and DexCom faces stiff challenges from much larger players such as Johnson & Johnson ( JNJ ), Medtronic ( MDT ) and Abbott Labs ( ABT ). Moreover, the company has incurred losses since inception and is exposed to a stricter regulatory environment. Our Neutral recommendation is supported by a short-term Zacks #3 Rank (Hold).


 
ABBOTT LABS (ABT): Free Stock Analysis Report
 
DEXCOM INC (DXCM): Free Stock Analysis Report
 
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
 
MEDTRONIC (MDT): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ABT , DXCM , JNJ , MDT

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