DexCom Stock Rises Despite Q1 Earnings Miss & Lower Margins

DexCom, Inc. DXCM reported first-quarter 2025 adjusted earnings per share (EPS) of 32 cents, which missed the Zacks Consensus Estimate of 33 cents by 3%. The company also reported earnings of 32 cents per share in the prior-year quarter.DXCM registered GAAP net income per share of 27 cents, down from the year-ago quarter’s figure of 36 cents. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)Revenue Details of DexcomTotal revenues grew 12% (14% on an organic basis) to $1.04 billion year over year. Sales beat the Zacks Consensus Estimate by 2%. The year-over-year revenue growth was driven by continued strong category demand, partially offset by short-term supply challenges in the United States.Following the earnings release, shares of DXCM rose almost 4.1% during after-hours trading on May 1. The stock fell 9.7% year to date compared with a 9.1% decline in the industry. The broader S&P 500 Index has moved down 5.8% in the same period.Image Source: Zacks Investment ResearchSegmental Details of DXCMSensor and other revenues (96% of total revenues) increased 17% on a year-over-year basis to $997.2 million. Hardware revenues (4%) decreased 42% year over year to $38.8 million.Dexcom Revenues by GeographyU.S. revenues (72% of total revenues) increased 15% on a year-over-year basis to $750.5 million. International revenues (28%) improved 7% (12% on an organic basis) year over year to $285.5 million.Margin Analysis of DXCMAdjusted gross profit totaled $596.2 million, up 4.8% from the prior-year quarter’s level. DexCom reported an adjusted gross margin (as a percentage of revenues) of 57.5%, down 420 basis points year over year.Research and development expenses totaled $145.2 million, up 2.6% year over year. Selling, general, and administrative expenses totaled $310.1 million, down 2.9%.The company reported total adjusted operating income of $143.1 million, up 2.1% from the prior-year period’s recorded number. Adjusted operating margin (as a percentage of revenues) was 13.8%, down 140 basis points year over year.  Financial Position of DexcomDXCM exited the first quarter with cash, cash equivalents, and marketable securities worth $2.7 billion compared with $2.58 billion in the fourth quarter of 2024.Total assets amounted to $6.75 billion, up sequentially from $6.48 billion.DXCM’s 2025 GuidanceDexCom reiterated its outlook for 2025 revenues. The company expects revenues to be $4.6 billion, implying 14% year-over-year growth. The sales outlook is in line with the Zacks Consensus Estimate.DXCM expects adjusted gross margin to be approximately 62% (previously 64-65%). The contracted outlook primarily reflects incremental costs related to near-term supply dynamics. Adjusted operating margin is projected to be approximately 21%.DexCom, Inc. Price, Consensus and EPS Surprise DexCom, Inc. price-consensus-eps-surprise-chart | DexCom, Inc. QuoteWrapping UpDexCom’sfirst-quarter sales beat estimates but earnings missed the same. However, Dexcom delivered strong operational performance in the first quarter of 2025, driven by robust category demand, significant access wins and focused execution across its teams. The company reported record acceleration in demand from new customers, attributed to its expanded commercial reach following a broad prescriber base expansion in 2024.Key product innovation included the launch of Stelo, the first over-the-counter CGM, which is now available through the Amazon storefront. Dexcom also implemented several software and connectivity updates, including a 180-day data look-back feature, enhancing customer experience and supporting wider user engagement. Stelo adoption is growing steadily, particularly among type 2, prediabetes  and health-conscious consumers.Notably, Dexcom secured coverage with two of the three largest pharmacy benefit managers (PBMs) for all people with diabetes, regardless of insulin use. This contributed to a significant uptick in new starts from the type 2 non-insulin population — the highest in company history. The third major PBM is set to add Dexcom G7 coverage in select formularies by mid-year, marking a transformational shift in CGM access across the United States.Dexcom also received FDA clearance for its 15-Day Dexcom G7 System, which features improved sensor longevity and accuracy. The system is expected to be launched in the second half of 2025, with preparations underway to align payer coverage and device compatibility.Internationally, Dexcom saw pockets of strength in key markets like Japan and France, where recent type 2 coverage expansions have driven growth. Despite facing short-term supply challenges, Dexcom mitigated disruptions through expedited logistics and close distributor collaboration.In March, the FDA issued a warning letter following inspections in 2024. Dexcom responded swiftly, implementing corrective actions while continuing to work constructively with regulators.Looking ahead, management expects continued momentum through expanded access, new product rollouts and growing international demand.Zacks Rank and Stocks to ConsiderDXCM carries a Zacks Rank #3 (Hold) at present. Some better-ranked stocks from the same medical industry are AxoGen AXGN, Masimo MASI and AdaptHealth AHCO.AxoGen, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 76.9% for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.AXGN’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 113.33%. The company is expected to release first-quarter results later this month.AXGN’s shares have gained 0.1% so far this year.Masimo, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 20% for 2025.MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 14.41%. Its shares have risen 58.5% compared with the industry’s 3.9% growth year to date. The company is expected to release first-quarter results in May.MASI’s shares have lost 2.6% so far this year.AdaptHealth, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 16.7% for 2025.  The company’s earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average negative surprise of 4.17%. The company is expected to release first-quarter results next month.AHCO's shares have lost 10.6% so far this year.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Masimo Corporation (MASI): Free Stock Analysis Report DexCom, Inc. (DXCM): Free Stock Analysis Report AxoGen, Inc. (AXGN): Free Stock Analysis Report AdaptHealth Corp. (AHCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks