DexCom (DXCM) saw its shares drop by more than 5% intra-day today. This decline comes amidst reports by analysts at JPMorgan and Piper Sandler regarding the potential effects of Medicare's exploration of cost-saving measures for continuous glucose monitors (CGMs), like those offered by Dexcom (NASDAQ:DXCM) and Abbott (ABT).
The Centers for Medicare and Medicaid Services (CMS) are considering adjustments to payment rates for the fiscal year 2025, noting that in 2022, Part B allowed payments exceeding $1.1 billion for CGMs and sensors, as stated in an Inspector General notice.
Piper Sandler views any potential impact on Dexcom as quite manageable. “We do not want to be dismissive of CMS potentially cutting price on CGMs but having seen the delays and push back that accompanied the situation in the obstructive sleep apnea space,” said the analysts, “we do not think it will be something to hurt DXCM in the near to intermediate term.”
Analysts at JPMorgan adopted an even more optimistic stance, suggesting that the CMS evaluation might turn out to be insignificant. In a note to clients, they theorized that if Medicare does lower reimbursement rates, the bulk of the price cut would likely be absorbed by durable medical equipment (DME) suppliers rather than by Dexcom or Abbott.
Both Piper Sandler and JPMorgan currently recommend Dexcom stock as a buy-equivalent overweight.