The stock of glucose monitoring specialist DexCom reacted with a significant increase in value. Investors celebrated the regulatory approval for the sale of an over-the-counter blood glucose measuring device.

This seems to continue the US company’s success story. The business figures presented in February already showed impressively that DexCom can maintain its high growth rate.

Constantly monitoring blood sugar levels Before we delve into the current news in detail, let me first introduce the company DexCom. Because here in Germany, the company is likely unknown to most investors. DexCom specializes in the development and marketing of CGM systems (Continuous Glucose Monitoring), which continuously monitor blood sugar levels in patients with diabetes.

The sensor is implanted under the skin of a patient, often on the back of the arm. A transmitter connects to the sensor and sends real-time data on insulin levels to a receiver or smartphone. This information can also be shared with other people, such as doctors or parents of children using the device.

Enormous benefits for the patient Unlike most glucose measuring systems, DexCom’s device does not require finger pricks and offers the patient tremendous added value. By continuously automatically monitoring blood sugar levels, patients no longer have to think about it themselves.

In addition, DexCom received FDA approval some time ago to link its diabetes data with third-party fitness trackers, including devices and apps from Garmin, Livongo, and other manufacturers. This allows blood sugar data captured by DexCom’s real-time sensors to be displayed on smartwatches for runners and bike computers attached to the handlebars of a bicycle, for example.

DexCom on the fast track A look at the past years shows how successful the company has been at expanding with its products: Since 2006, revenues have exploded from $2 million to $3.62 billion in 2023. Since 2019, DexCom has been profitable and generated a net profit of $542 million in the last fiscal year.

Fourth quarter above expectations Business has been booming lately: The company generated sales of $1.03 billion in the final quarter. That was 27% higher than the previous year’s level and exceeded analysts‘ estimates by $10 million. Adjusted net earnings of 50 cents per share remained at the bottom line. This exceeded consensus forecasts by 7 cents.

Approval brings joy to investors In addition to good numbers, the recent regulatory approval for the sale of an over-the-counter blood glucose measuring device caused a jump in the stock price. The device, called Stelo, is designed for people with type 2 diabetes who do not take insulin. According to the company, about 25 million people in the US fall into this category and could benefit from continuous glucose monitoring (CGM) technology.

The company added that since Stelo is available over-the-counter, it could make it easier for those affected to access CGM products and be an option for those who do not have CGM insurance to afford them. Stelo is worn on the back of the upper arm and sends glucose measurement values directly to the user’s smartphone. According to the company, the device will be available from this summer.

Conclusion: DexCom has established itself in a promising market with high structural growth. However, at the current market value of $51 billion, the healthcare company is valued at 60 times the expected earnings for 2025 and 10 times the expected sales. This means that high structural growth potential is countered by an ambitious valuation.