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Investing.com -- DexCom (NASDAQ:DXCM) stock fell 3% Thursday after Hunterbrook Media published a scathing short report alleging serious safety issues with the company’s G7 continuous glucose monitoring device.
The report claims that inaccurate readings from the G7 device have resulted in hospitalizations and deaths among diabetic patients. According to Hunterbrook, an FDA inspection revealed DexCom made an unauthorized design change to a key component of the G7 that internal studies showed was inferior by "every accuracy metric."
Hunterbrook’s investigation alleges that in December 2023, DexCom switched the coating of G7 sensors from an outsourced material to an in-house formulation without proper regulatory clearance. FDA inspection documents reportedly show the company’s own tests failed to demonstrate equivalence with the original component, yet DexCom sold the product anyway.
The report also highlights patient cases, including that of Billy Sosbe who allegedly lost his life in June after his G7 gave incorrect glucose readings, and a six-year-old girl who was rushed to the ER when her G7 misread her blood sugar levels.
According to Hunterbrook, complaints about the G7 have led to the formation of a Facebook group with over 58,000 members in just over a year. The report claims some doctors have stopped putting patients on the G7 altogether due to "disproportionate sensor inaccuracies, repeated device failures, connectivity issues, and problems with the adhesive."
The short seller also raised concerns about DexCom’s accounting practices, suggesting the company used aggressive tactics to beat second-quarter earnings expectations. Hunterbrook noted that days sales outstanding have ballooned past 100 days, compared to a normal range of 30-90 days.
Adding to DexCom’s challenges, the report points to an executive exodus, including the recent unexpected departure of longtime CEO Kevin Sayer, who was supposed to remain until the end of 2025.
Hunterbrook Capital disclosed it is short DXCM shares and is hedging with derivatives.
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