DexCom (DXCM) reported third-quarter 2010 loss per share of 23 cents, matching the Zacks Consensus Estimate and improving from the year-ago loss of 29 cents.
Total revenue (consisted of “Product revenue” and “Development grant and other revenue”) rose 61% year over year to $11.7 million in the reported quarter, missing the Zacks Consensus Estimate of $14 million. Product sales soared 133% year over year to $10.8 million while development grant and other revenue plummeted 66% to $0.9 million.
Gross margin improved sharply to 29.8% from 11.9% in the year-ago quarter. Operating margin remained in the red at -112%, an improvement nonetheless from -159.5% in the prior-year quarter.
Balance Sheet
As of September 30, 2010, the company had $29.9 million in cash and short-term marketable securities, available for sale, down 20.7% year over year. The company de-leveraged its balance sheet as long-term debt (inclusive of current portion) declined sharply to $0.75 million from $45.6 million a year-ago.
Outlook
DexCom has not provided any financial guidance in its third quarter press release. We believe the company is well positioned to gain a significant share of the glucose monitoring market. Moreover, it remains active on the collaboration front and continues to upgrade and enhance the functions of existing products.
However, we note that competition in the market is fierce with big players like Johnson & Johnson (JNJ), Medtronic (MDT) and Abbott (ABT) accounting for a major part of self-monitored glucose testing systems revenues. Our Neutral recommendation on DexCom is supported by a Zacks #3 Rank (Hold).
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