DexCom Stock Slumps 10% After Hunterbrook Media Investigation Raises Concerns About Its G7 Device

Shares of DexCom (DXCM) declined 10% on Friday after investment firm Hunterbrook Capital disclosed a short position in the stock.

Hunterbrook said on Thursday that it has a short position on DXCM based on Hunterbrook Media’s reporting, which stated that after inaccurate readings from Dexcom’s flagship G7 continuous glucose monitor (CGM) device, “some diabetics are ending up in the ICU — or dead.” Hunterbrook Media is an investigative news outlet.

The report stated that DexCom made an unauthorized design change to a key component of the G7 that internal studies showed was inferior by “every accuracy metric,” and the company sold the device anyway. This change was revealed during a surprise inspection by the U.S. Food and Drug Administration (FDA), the report stated.

Several company executives left the company amid the FDA’s scrutiny and soaring complaints, the report said, while adding that patients are now returning to the G6 or switching to products from competitors, such as Abbott (ABT).

Hunterbrook also stated that it has shared its probe with a senior official from the Health and Human Services (HHS) and requested that the FDA intervene. The firm also said that DexCom didn't respond to their requests for comments. The report named people who died or had to be hospitalized following wrong readings by the G7 device, including Billy Sosbe, who died in June, and Diana Bates Knight, who rushed her 6-year-old to the emergency, after the device misread her blood sugar by hundreds of points.

“In Dexcom’s crisis, Abbott may see its chance. Our analysis of FDA data shows Dexcom receives more accuracy complaints than its market share predicts; Abbott receives significantly fewer,” Hunterbrook said.

On Stocktwits, retail sentiment around DXCM rose from ‘bearish’ to ‘bullish’ territory over the past 24 hours, while message volume rose from ‘normal’ to ‘high’ levels.

A Stocktwits user opined that DexCom has proven technology and is leading in CGM.

Another user, however, opined that the FDA might pull the G7 device from the market.

DXCM stock is down by 13% this year and by 5% over the past 12 months. 

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