DexCom (DXCM) Q3 Loss Narrower Than Expected, Revenues Meet

DexCom, Inc. DXCM reported a loss of 3 cents per share in the third quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 15 cents. Also, the figure improved from a loss of 22 cents reported in the year-ago quarter.

Total revenues grew 24.2% to $184.6 million from $148.6 million in the year-ago quarter. Revenues met the Zacks Consensus Estimate.

Segmental details

Sensor revenues (71% of total revenues) grew 24% on a year-over-year basis to $131.1 million. Transmitter revenues (21%) increased 20% from the prior-year quarter to $38.2 million. Receiver revenues (8%) grew 15% year over year to $14.4 million. Other revenues (including revenues from services, freight, accessories, etc.), accounting for the rest, totaled $0.9 million.

Operational Details

DexCom generated gross margin (as a percentage of revenues) of 68.8%, compared with 68% in the same quarter of the prior year. Notably, gross margin expanded 76 basis points (bps) year over year.

International business displayed continued to grow in the quarter, generating $33.3 million in revenues, up 83% on a year-over-year basis. Notably, international business represented 18% of total revenues in the third quarter.

Research and development (R&D) expenses totaled $43.3 million in the quarter, contracting 1.4% from $43.9 million a year ago.

Selling, general and administrative expenses totaled $84.2 million in the reported quarter, increasing 11.2% from $75.7 million in the prior-year quarter.

Financial Update

As of Sep 30, DexCom had $525.8 million in cash, cash equivalents and short-term marketable securities versus $496.6 million at the end of the second quarter of 2017.

Guidance

The company expects global revenues to come in at the low end of its previously issued guidance of $710 million to $740 million. For the full year, DexCom reaffirmed the low end of the 67% to 70% gross margin guidance.

Zacks Rank & Key Picks

DexCom has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical sector are PetMed Express, Inc. PETS, Luminex Corporation LMNX and Intuitive Surgical, Inc. ISRG. Notably, PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), while Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 bps year over year to 35.2% in the reported quarter.

Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. The company’s revenues in the quarter increased almost 4.1% year over year to $74.1 million.

Intuitive Surgical posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% year over year. Also, revenues increased 18% year over year to $806.1 million.

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