Over the past 10 months, several high-profile stock splits have helped energize an already buoyant stock market. One of them was that of the expert in medical devices DexCom (DXCM -0.81%)which completed a 4-for-1 stock split in June.
Of course, stock splits don’t fundamentally change the company’s outlook, and DexCom has done little to shake up its stock performance in 2022. The company’s stock has performed more or less on par with the struggling stock market this year.
Can the healthcare business bounce back in 2023? Let’s take a closer look at what DexCom is uncovering.
Deployment of new devices
DexCom is focused on the development of Continuous Glucose Monitoring (CGM) devices, which allow diabetic patients to continuously monitor their blood sugar levels. The company currently makes most of its money from its G6 CGM device, which comes with a sensor, transmitter and a touchscreen device that displays blood sugar levels.
Patients insert the sensor under the skin and snap the transmitter into the sensor. The sensor lasts 10 days. While the G6 was a big hit for DexCom, one of the company’s highlights this year was the rollout of a few new CGM options. The first is the G7, the successor to its current gem.
The G7 got its clearance in Europe earlier this year. DexCom recently launched the launch of this device in several countries of the Old Continent. DexCom expects to receive the green light for the G7 in the United States by the end of the year. The company is expected to kick off the launch of the device in the country next year.
DexCom’s other new device is the DexCom ONE, which it has also launched in parts of Europe, including the UK. What is the difference between all these options? The G7 is an improved version of the G6. It has a faster warm-up period, which is the time it takes after setup before glucose readings are readable on the accompanying touchscreen device.
The G7 is also 60% smaller, which makes it more discreet, it has an integrated sensor and transmitter, which makes it easier to manage, and above all, it has shown its superiority in helping patients. diabetics to achieve better health outcomes than the G6 in clinical trials. .
The DexCom ONE, on the other hand, does not allow users to automatically share data with certain contacts, including when blood glucose levels fall below a certain threshold. Both the G6 and G7 have this feature. In exchange, the DexCom ONE is cheaper than the company’s other options.
The great CGM opportunity
DexCom’s latest CGM devices are expected to help it advance in the CGM space next year. In the United States, a recent regulatory decision could dramatically increase the number of people eligible for CGM coverage in the country, expanding the market. DexCom’s rollout of the G7 in the US – if it receives clearance as the company expects – should be an important part of the company’s US growth strategy in 2023.
DexCom also aggressively markets its devices and has partnered with high profile celebrities to do so. DexCom’s G7, marketing efforts, and the launch of the DexCom ONE should all help it gain more adoption inside and outside the United States. Last year, CGM’s penetration in the US type 1 diabetes market was around 30%, leaving plenty of room for expansion. .
The global market also shows a lot of white space. And that’s before we take into account that the percentage of people with diabetes is on the rise, a trend that is expected to continue for decades. Naturally, DexCom is not the only company in this market. Its most notable competitor is Abbott Laboratorieswhich FreeStyle Libre has also had success with.
Even so, DexCom has established itself as one of the leaders in CGM, it continues to grow its revenue rapidly, and its innovations should keep it on par with Abbott and some of its other peers in this industry. In the first nine months of the year, DexCom’s revenue jumped 19.7% year-over-year to $2.1 billion.
Earnings per share for the company were $0.60, down from $0.54 a year ago. DexCom’s momentum in the CGM space should help it deliver excellent returns well beyond next year, making it one of the top healthcare stocks to buy as we approach of the new year.
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