DexCom Inc. (DXCM, Financial) said it expects 2021 revenue to increase between 15% and 20% to more than $2.2 billion as it extends its diabetes care business into two new areas of the disease, prediabetes and Type 2 diabetes.
The San Diego-based medical device company should have no problem funding the expansion; at the end of 2021, DexCom's balance sheet showed it had more than $2.7 billion in cash and marketable securities.
The company is coming off a stellar year, with revenue growing more than 30% in 2020 to $1.9 billion and adjusted earnings of $3.10 per share, up over 68% from 2019. Both performances beat Wall Street expectations and, even more impressive, came in the face of the pandemic.
The revenue and earnings gains coupled with optimistic guidance for 2021 have pushed DexCom shares up 40% in the past year to a lofty $406, giving the company a market cap of nearly $40 billion.
Wall Street thinks DexCom still has substantial upside. According to CNN Money, the 18 analysts offering 12-month price forecasts have a median target of $475, with a high estimate of $540 and a low of $350. The stock is rated a buy.
FierceBiotech reported the company is now starting its own venture capital fund, a move DexCom said will benefit shareholders by leveraging access to its industry expertise and technology.
Dexcom Ventures, as it will be known, will look to invest in technologies aimed at helping diabetes patients better manage the disease. It will focus on methods that improve continuous glucose monitoring and related software applications, such as new types of blood sugar sensors, as well as broader methods for tracking a person's metabolism.
The company also plans to expand its systems for CGM to people with Type 2 diabetes, including those who are or are not managing the condition with intensive insulin therapies.
There are seven times more patients in the U.S. with non-intensive Type 2 diabetes than those with the intensive insulin variety, DexCom CEO Kevin Sayer said last month during the annual J.P. Morgan Healthcare Conference. "And if you add to that prediabetes and diabetes prevention, the number of opportunities to serve patients in this market just becomes massive," he added.
To kick off the effort, DexCom has partnered with Teladoc Health Inc. (TDOC, Financial) to operate free pilot demonstrations of Dexcom's wearables and deliver the same information that it provides to people with Type 1 diabetes.
"I'm frequently told by our team that when this market goes, it is going to explode—it's not going to be small, and it's not going to be slow," Sayer said.
Disclosure: The author has no position in any of the companies mentioned in this article.
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