), a player in the glucose monitoring market, reported third
quarter 2012 loss per share of 25 cents, higher than the Zacks
Consensus Estimate of a loss of 22 cents per share and the
year-ago loss of 20 cents a share. Net loss for the quarter
soared 30% year over year to $17.3 million.
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Revenues surged 26.5% year over year to $23.1 million in the
third quarter, marginally beating the Zacks Consensus Estimate of
Product sales increased almost 27% to $21.1 million while
development grant and other revenues improved 25.6% to $2 million
in the reported quarter.
Margins and Expenses
Gross margin dipped to 36.4% in the third quarter from 44.7% a
year ago. Operating expenses increased 19.8% year over year to
$25.7 million due to higher R&D spending and selling, general
and administrative expenses, which grew 28.6% and 14.4%,
respectively, in the reported quarter. Research and development
expenditure shot up on account of incremental clinical trials
costs while selling, general and administrative expenses
increased due to additional marketing initiatives.
DexCom exited the third quarter with cash and short-term
marketable securities of $53.4 million, down 45.1% on a
DexCom is well placed in the industry that it serves. Given the
burgeoning diabetes population in the U.S., its G4 Platinum
presents considerable market opportunity. Successful
commercialization of G4 in the U.S. could just be the catalyst
that the company needs to gain share in the market it serves.
Increased awareness and acceptance of the need for continuous
glucose monitoring and international expansion should help drive
sales of DexCom's products. The company expects to introduce its
products in India by year end. It also plans to expand its
footprint in China and Japan next year.
In addition to upgrading and enhancing the functions of existing
products, DexCom has also been active on the collaboration front,
through which it is looking to leverage its technology with its
collaborator's product offerings.
Competition in the glucose monitoring market is fierce. DexCom
competes with Roche Diabetes Care, a division of
) and LifeScan under
Johnson & Johnson
) for its Seven Plus offering. Additionally,
) have gained FDA approval for continuous glucose monitoring
We believe that the company's move to buy healthcare IT company
SweetSpot Diabetes Care, may allow it to compete more effectively
through better data management systems.
Despite increasing revenues, DexCom remains a loss making entity
and its efforts are made more difficult by a stringent regulatory
environment. We currently have a long-term 'Neutral'
recommendation on the stock, supported by a short-term Zacks #3