DexCom shares gain as Medicare to expand CGM coverage in April

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DexCom Inc (NASDAQ:DXCM) shares jumped more than 6% Thursday after it was revealed that Medicare will cover continuous glucose monitors (CGMs) for a wider group of patients starting in April.

Citi analysts explained in a note that the updated policy from the Centers for Medicare and Medicaid Services reveals that effective April 16, to obtain CGM coverage, “Medicare beneficiaries must only be ‘insulin-treated’ versus ‘insulin-treated with at least one daily administration of insulin,’ therefore, expanding coverage to any beneficiary taking any form of insulin.”

The analysts stated that Abbott has sized the Medicare basal population at 1.5 million individuals and 4M in total, including commercial, while DexCom has sized the total basal market at 3M.

“With the finalized LCD, we believe these numbers in the U.S. could be larger, a win for both ABT and DXCM. We reiterate our Buy ratings on ABT and DXCM,” wrote the analysts.

Meanwhile, Stifel analysts said that basal (background insulin) coverage is “an important positive catalyst for DXCM/ABT, and could serve as a market growth accelerant.”