Managing for the long term

Managing for the long term

It’s always refreshing to listen to an earnings call for a company that not only gets it but understands where the market is going. This was the case today listening to the Dexcom (NASDAQ:DXCM) call this afternoon. Dexcom is perhaps one of the few diabetes device companies that understand their business is not about selling hardware but patient solutions. Solutions that will drive better patient outcomes. Just as important Dexcom is also an example of company that not only has a strategy but is actually executing that strategy.

When continuous glucose monitoring first became available many assumed this was a story about superior data collection. That patients insulin using in particular, would embrace these systems as they would finally be able to see glucose trend data. However, as valuable as this information is many failed to remember that CGM would not become commercially viable until payors also embraced the technology. That sensor not only had to be accurate but also be built to last, have the ability to withstand the rigors of everyday life. The company also knew that patients would not tolerate excessive sensor failures. As Terry Gregg, the company’s CEO noted on many occasions for Dexcom to be successful they had to master the basics the blocking and tackling of running a diabetes device company.

As today’s results demonstrate the company has mastered the basics well enough so they can now move forward into providing not a piece of hardware but a tool that helps patients better manage their diabetes. The Dexcom system is getting more accurate, becoming easier to use and sharing this actionable data in the cloud.

Another reason Dexcom is the model for how to run a diabetes device company is they understood that they must effectively deal with FDA. Unlike everyone else who complained long and loud about the agency, Dexcom actually learned to work with the agency.

The question now is what next?

Although the company is not publicly for sale there is no question they are quickly becoming the most attractive takeover target in diabetes devices. Yet the gifted management team isn’t just sitting around waiting for an offer. This experienced team is managing the company for the long term, investing in the future ultimately making the company even more valuable. We further believe while they would listen to an offer, they are in no hurry to sell. Most importantly of all they are not becoming distracted and remain laser focused on doing what’s best for patients, which creates even more value.

This earnings season has seen more than its fair share of examples of how not to run a diabetes company. It was a true pleasure to listen to a call from a company that’s getting it right. Thanks Dexcom.