Recently, several well-known pharmaceutical and medical device companies listed in the US stock market, including Sanofi (SNY.US), Roche (RHHBY.US), AstraZeneca (AZN.US), and Dexcom (DXCM.US), have released their latest performance reports.

Among them, after Dexcom disclosed its latest performance, its stock price suffered a sharp decline after the market closed on July 25th (local time), with a drop as high as 37.36%, which attracted the attention of many investors.

It is understood that Dexcom is a medical device company mainly focused on the design, development, and commercialization of Continuous Glucose Monitoring (CGM) systems for global patients, caregivers, and clinical physicians to manage diabetes, and it is a leader in the global CGM industry.

In 2006, Dexcom obtained approval from the US Food and Drug Administration (FDA) to commercialize its first product.

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In 2018, Dexcom launched a new generation of systems, namely the Dexcom G6® Integrated Continuous Glucose Monitoring System (referred to as G6), and in 2023, it launched the Dexcom G7® (referred to as G7).

In March 2024, Dexcom obtained FDA market approval for Stelo.

Stelo is its new 15-day sensor specifically designed for type 2 diabetic patients who do not use insulin and is the first glucose biosensor that does not require a prescription.

In the first half of 2024, Dexcom's revenue increased by 19% year-on-year to $1.925 billion, and net profit attributable to the parent company increased by 76% year-on-year to $290 million, which seems to be a good performance.

However, the announcement shows that in the second quarter of 2024, Dexcom achieved a revenue of $1.004 billion, a year-on-year increase of 15%, which is lower than expected; during the period, it achieved a net profit attributable to the parent company of $144 million, a year-on-year increase of 24%; the diluted earnings per share for the second quarter was $0.35, compared with $0.28 in the same period last year.

Looking at the regional breakdown, in the second quarter, the revenue in the US market was $732 million, a year-on-year increase of 19%, accounting for 73% of total revenue; while the revenue in the international market was $272 million, a year-on-year increase of 7%.

Dexcom also stated in the announcement that there were some highlights in the company's strategy in the second quarter.

For example, the launch of the "Direct Look" feature in the US and several international markets provides G7 customers with the option of using the Apple (AAPL.US) watch as the main display for glucose readings.

The launch of this feature makes G7 the first and only CGM system that can connect to multiple devices at the same time and directly connect to the Apple Watch function.

In addition, Dexcom ONE has obtained insurance coverage for type 2 diabetic patients using basal insulin in France, further expanding the reimbursement coverage of real-time CGM in this market.

However, the chairman, president, and CEO of Dexcom also frankly stated that although the company has advanced some key strategic initiatives in the second quarter, the company's execution level has not met high standards.

Looking forward, Dexcom said that in order to cope with some unique projects affecting the seasonal changes in 2024, the company expects revenue of about $97.5 million to $100 million in the third quarter, with an organic growth rate of 1%-3%.

Dexcom also expects full-year revenue of $4 billion to $4.05 billion, with an organic growth rate of 11%-13%, lower than the company's original forecast of $4.2 billion to $4.35 billion.

In addition, under non-GAAP, the full-year gross margin is expected to be 63%, slightly lower than analysts' expectations, and also at the lower end of the company's original forecast range (63%-64%).

Overall, the sharp decline in Dexcom's stock price after the market is not only due to the second quarter's revenue not meeting expectations, but more importantly, perhaps the annual performance guidance has been downgraded.

It is worth noting that at the same time as announcing the second quarter performance, Dexcom also launched a share buyback plan, which may also have some meaning in hedging negative news.

The announcement shows that on July 25th, the Dexcom board of directors authorized and approved a share buyback plan of up to $750 million, with a buyback period ending no later than June 30, 2025.

According to the latest announcement, as of June 30, 2024, Dexcom held $3.12 billion in cash, cash equivalents, and marketable securities, with relatively abundant liquidity.

However, the role of the buyback plan is obviously not that big.

Not only did the company's stock price suffer a sharp decline after the market, but some institutions also lowered their target price for Dexcom.

Among them, Canaccord Genuity lowered its target price for Dexcom from $145 to $89; JP Morgan downgraded Dexcom from overweight to neutral, and at the same time lowered its target price from $145 to $75.