DexCom, Inc. Q3 FY2025 earnings call

• Jake Leach noted third quarter organic revenue growth of 20% y/y, type 2 coverage expansion in the U.S. with coverage for nearly 6 million type 2 non-insulin lives, and ongoing work on type 2 evidence road map including a new RCT. Highlighted DexCom Smart Basal in development, Stelo surpassing $100M in revenue in 12 months, G7 15-day system launch progress with coverage finalized, and rollout of My DexCom Account. Emphasized focus on customer experience and addressing G7 quality issues.
• Jereme Sylvain discussed financials: worldwide revenue growth, gross margin impact from scrap rates, operating expenses at $468.4M, net income of $242.5M or $0.61 per share, strong cash position with over $3.3B in cash and cash equivalents, and plans for share repurchases.

Worldwide revenue for the third quarter of 2025 was $1.21 billion, compared to $994 million in the third quarter of 2024, representing 22% growth on a reported basis and 20% organic growth. U.S. revenue totaled $852 million, an increase of 21% from the third quarter of 2024. International revenue grew 22% to $357.4 million, with international organic revenue growth at 18% for the quarter. Third quarter gross profit was $741.3 million, or 61.3% of revenue. The company made progress in stabilizing global sensor supply but faced higher-than-expected scrap rates at manufacturing facilities.

• Raised revenue guidance to a range of $4.630 billion to $4.650 billion, representing approximately 15% growth for the year.
• Lowered 2025 non-GAAP gross profit margin guidance to approximately 61% due to additional scrap dynamics.
• Guided non-GAAP operating margin and adjusted EBITDA margin to ranges of 20% to 21% and 29% to 30% respectively, expecting to offset gross margin pressure through OpEx leverage.

• Higher-than-expected scrap rates at manufacturing facilities impacting gross margin.
• Potential impact of quality issues on new patient starts in the short term.
• Competitive dynamics and uncertainties related to coverage expansion affecting future performance.

Q: What's the color on 2026 growth framing?

A: While not providing specific 2026 guidance, Jake Leach mentioned the base case includes current coverage landscape and expects top end of range to be slightly below Street estimates with opportunities for outperformance via expanded access and innovation.

Q: Confirm G7 performance and impact on new starts?

A: Jake Leach said sensors produced are of high quality with improved deployment, Jereme Sylvain noted Q3 had slight impact on new starts but Q4 and beyond expected to improve with addressed concerns.

Q: Where is new patient growth most seen?

A: Jereme Sylvain said strong growth in type 2 markets including intensive and non-insulin, teams constantly evaluating go-to-market strategies to drive growth.

Q: Thoughts on expanded coverage in 2026?

A: Base case includes current coverage, with significant potential wins in non-insulin, basal, and emerging markets but base case doesn't include those yet.

Q: G7 15-day launch details?

A: In limited launch with Warriors, rolling out broader in coming weeks, minimal 2025 contribution, expected to be a big contributor in 2026 with margin and revenue opportunities.

Q: Plan to communicate G7 message?

A: Out in the field engaging with prescribers and users, focusing on clear messaging about performance improvements and complaint rate stability.

Q: Scrap rate timing and impact?

A: Jereme Sylvain said scrap rate issue related to deployment is expected to dissipate, with improvement expected in Q4 and into 2026, 50-50 impact from scrap and freight.

Q: Type 2 uptake utilization?

A: AID users have >90% utilization, intensive insulin users >85%, basal type 2 ~80%-85%, non-insulin type 2 ~75%, Stelo has high utilization in non-insulin type 2 users.

Q: Quality issues impact on new starts and return to records?

A: Jereme Sylvain said Q3 had slight impact, expecting Q4 and 2026 to return to record new patient starts with existing coverage.

Q: Price vs volume growth in U.S.?

A: Jereme Sylvain said price year-over-year not a significant impact, mix is the key with pharmacy growth stabilizing and CMS coverage potentially changing mix.

Q: OpEx leverage and 2026 plans?

A: Jereme Sylvain said 2025 OpEx work is about efficiency and leveraging investments, 2026 plans balance investment and growth, aiming for operating margin improvement.

Q: New patient start cadence and attrition?

A: Jereme Sylvain said attrition rates stable, anecdotal positive feedback on Q4 new starts though data not fully in yet.

Q: Competitive dynamics in 2026 base case?

A: Jereme Sylvain said competitive dynamics considered in base case, official guidance needed for specific details.

Q: G8 platform and ketone sensing?

A: Jacob Leach said G8 is important, multi-analyte platform, focus on broad user needs, investor event planned for first half 2026 to discuss G8 and operations.

Q: G6 transition and 15-day impact?

A: Jacob Leach said transitioning customers to G7, small number using G6 again, Jereme Sylvain said transition to 15-day takes time, significant impact on margin and growth potential.

Q: Type 2 penetration projections?

A: Jereme Sylvain said basal penetration expected to reach ~60% over time, non-insulin-intensive hypo risk penetration to increase from under 5%, significant growth opportunity with coverage.