A pattern emerging

A pattern emerging

Ok now that we’ve had a few earnings calls a pattern has emerged. First comes the obvious concern over COVID with the compensatory stories about employees going above and beyond their duties. Next comes the we did ok in the first quarter but really have no idea how we’re going to do moving forward therefore we are cancelling any previous guidance we have given and don’t plan on giving any either. Finally especially in the MedTech area there is the hidden positive of this crisis.

Well the Dexcom call yesterday afternoon followed this pattern as first quarter results came in pretty much as we expected. The company due to COVID is canceling previous guidance while the move into the hospital is the hidden opportunity the company did not expect and one which we see as nice boost to sales in the future.

We were also delighted to hear that things are progressing nicely with the G7 which as we keep noting has the potential to give Libre and if it ever gets here Libre2 a serious run for its money. Yet unlike the analysts on the call we don’t believe the company should rush the G7. In fact we would advise the exact opposite approach for several reasons;

1. As we just mentioned Libre2 isn’t here yet and likely will not be here before the year is over. We have this funny feeling that next year at JPM Abbott will be answering questions about the Libre2.

2. This is not the time to be launching anything new. Better to wait until patients can see their physician again and more importantly are back at work.

3. We see the COVID crisis as a net positive for the company creating even higher awareness and greater demand. Simply put why rush the G7 when there is no need to better to move methodically.

4. Abbott and the Libre or Libre2 isn’t really the worry here as the CGM market continues to grow. The concern will be meeting demand when the G7 does get here.

Given these reasons there is no need to rush G7.

The story for Dexcom even with the uncertainty over how sales will be impacted in the coming quarters remains pretty much the same as it was before the crisis. CGM remains one of the few bright spots in MedTech as the market continues to expand. As we noted earlier the coronavirus and its favorable impact on the use of telemedicine will be a net positive. The move into hospitals will also be a net positive for as we said before once in the hospital CGM isn’t leaving.

While competition from Abbott will not go away the delay in the Libre2 and the continued progress of the G7 will also favor Dexcom. So all in all the more things change the more they stay the same and when it comes to Dexcom this is a not a bad thing.