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In this article, I will feature one medical device company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

DexCom (DXCM) focuses on the design, development, and commercialization of continuous glucose monitoring systems.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of DexCom's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Nicholas AugustinosDirectorDec 9-1097,541No22,451 shares81.3%
Terrance GreggCEONov 13-Dec 564,000No957,163 shares + 1,621,890 options2.4%
Barbara KahnDirectorNov 221,500No49,263 shares3.0%
Andrew BaloSVPNov 11-Dec 356,490No124,297 shares + 477,000 options8.6%
Steven PacelliEVPNov 14-1935,000No

195,865 shares + 512,000 options

4.7%
John ListerVPNov 1330,000No71,326 shares + 133,700 options12.8%
Jess RoperCFONov 11-1218,000No65,808 shares + 215,500 options6.0%
Jorge ValdesCTONov 1226,600No144,853 shares + 632,000 options3.3%

(Note: This table has been updated on December 12)

There have been 329,131 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of DexCom's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
December 2013140,8090
November 2013197,3220
October 20139,0000
September 20139,0000
August 20139,0000
July 20139,0000
June 201346,3610
May 201360,2720
April 20139,0000
March 201358,07070,000
February 201384,0000
January 20139,0000

There have been 640,834 shares sold and there have been 70,000 shares purchased by insiders this year. The month of November has seen the most insider selling.

Financials

DexCom reported the third-quarter financial results on November 6 with the following highlights:

Revenue$42.9 million
Net loss$6.0 million
Cash$47.6 million
Debt$7.0 million

Outlook

Kevin Sayer, President and Chief Operating Officer of DexCom, commented at the earnings conference call:

While we are not formally adjusting our full-year guidance at this time, we are confident that we'll exceed the top end of our current range of $140 million in product revenue.

Pipeline and upcoming milestones

DexCom is developing and marketing continuous glucose monitoring systems for ambulatory use by people with diabetes and by healthcare providers in the hospital.

DexCom has three pending FDA filings with upcoming approval decisions.

Competition

DexCom's competitors include Medtronic (MDT). Here is a table comparing these two companies.

CompanyDXCMMDT
Market Cap:2.49B58.08B
Employees:56546,659
Qtrly Rev Growth (yoy):0.860.02
Revenue:141.60M16.76B
Gross Margin:0.590.75
EBITDA:-26.60M5.69B
Operating Margin:-0.230.29
Net Income:-35.70M3.81B
EPS:-0.513.74
P/E:N/A15.54
PEG (5 yr expected):-2.252.25
P/S:17.573.46

DexCom is trading at a higher P/S ratio than Medtronic. In Medtronic, there have been 298,847 shares sold and there have been 4,800 shares purchased by insiders this year. Only DexCom has seen intensive insider selling during the last 30 days.

Conclusion

There have been eight different insiders selling DexCom and there have not been any insiders buying DexCom during the last 30 days. Two of these eight insiders decreased their holdings by more than 10%. DexCom has an insider ownership of 2.00%.

Before entering short DexCom, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are negative earnings, relatively high P/S ratio, and the intensive insider-selling activity.

Source: Insiders Are Selling DexCom: 8 Different Insiders Have Sold Shares During The Last 30 Days