What Led to DexCom, Inc. (NASDAQ: DXCM) Stock Decline?

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DexCom, Inc. (NASDAQ: DXCM) stock lost over 4% in the pre-market session of Feb 12th, 2021 (Source: Google finance) after the company posted mixed results for the fourth quarter of FY 20. DXCM in the fourth quarter of FY 20 has reported the adjusted earnings per share of 91 cents, missing the analysts’ estimates for the adjusted earnings per share of 92 cents. The company had reported the adjusted revenue growth of 23 percent to $568.9 million in the fourth quarter of FY 20.

U.S. revenue rose 20% over the fourth quarter of 2019 totaling $451 million. While there is channel mix causing lower revenue per patient in the pharmacy channel, the underlying strength of the business saw fourth quarter unit volumes grow significantly more than the revenue growth rate in the U.S. The international business reached a new high watermark of $117 million in the fourth quarter of 2020 growing 35% over the fourth quarter of 2019. This growth is driven by strong performance in both the direct and distributor markets. The company has reported net income for the fourth quarter of $90.4 million. The company has significantly increased operating cash flow in 2020 and remains in a strong cash position, with greater than $2.7 billion of cash and cash equivalents on the balance sheet as the company ended the year.

The team did a great job maintaining momentum with new patient additions in the fourth quarter and accelerating the shift of the business into the pharmacy channel. The fourth quarter gross profit was $399.1 million or 70.2% of revenue compared to 66.8% of revenue in the fourth quarter of 2019. Operating income has risen to $104.4 million or 18.4% of revenue in the fourth quarter of 2020 compared to $103.6 million or 22.4% of revenue in the same quarter of 2019. Adjusted EBITDA has increased to $159.2 million or 28% of revenue for the fourth quarter, compared to $141.7 million or 30.6% of revenue for the fourth quarter of 2019.

For fiscal year 2021, the company expects the revenue to be in the range of approximately $2.21-2.31 billion (15-20% growth), Non-GAAP Gross profit margin to be of approximately 65%, Non-GAAP Operating margin to be of approximately 13% and Adjusted EBITDA margin to be of approximately 23%. The company is continuing to invest in the growth of the business via DTC, sampling, new markets and the launch of new products, including G7.

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