Earnings call transcript: DexCom beats Q2 2025 expectations, stock rises

DexCom Inc. (DXCM) reported strong financial performance for the second quarter of 2025, exceeding both earnings and revenue forecasts. The company’s earnings per share (EPS) came in at $0.48, surpassing the expected $0.45, while revenue reached $1.16 billion, above the forecasted $1.12 billion. Following the announcement, DexCom’s stock saw a modest increase of 0.44% in aftermarket trading, reflecting positive investor sentiment. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.17, supported by strong profitability metrics and robust cash flows.

Key Takeaways

• DexCom’s Q2 2025 revenue grew by 15% year-over-year, reaching $1.16 billion.
• EPS exceeded forecasts by 6.67%, reflecting strong operational execution.
• The launch of the 15-day G7 sensor and the expansion of international markets were significant contributors to growth.
• The company raised its full-year revenue guidance to $4.600-$4.625 billion.

Company Performance

DexCom demonstrated robust performance in Q2 2025, driven by strong sales in both U.S. and international markets. U.S. revenue increased by 15% year-over-year to $841 million, while international revenue rose by 16% to $316 million. The company’s strategic focus on expanding its product offerings and enhancing market access contributed to these results.

Financial Highlights

• Revenue: $1.16 billion, up 15% year-over-year.
• Earnings per share: $0.48, surpassing the forecast of $0.45.
• Gross profit: $695.9 million, representing 60.1% of revenue.
• Net income: $192.8 million.

Earnings vs. Forecast

DexCom’s Q2 2025 earnings per share of $0.48 exceeded the forecast of $0.45, resulting in a 6.67% surprise. The revenue of $1.16 billion also surpassed expectations by 3.57%. These results reflect the company’s ability to outperform market predictions consistently.

Market Reaction

Following the earnings announcement, DexCom’s stock rose by 0.44% in aftermarket trading, reaching $89.74. This movement reflects positive investor sentiment and confidence in the company’s growth prospects. Trading near its 52-week high of $93.25, the stock has delivered an impressive 27.78% return over the past year. InvestingPro analysis suggests the stock may still have room to grow, with analysts setting price targets up to $110. For deeper insights into DexCom’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

DexCom has raised its full-year revenue guidance to a range of $4.600-$4.625 billion, anticipating 14-15% growth, building on its impressive five-year revenue CAGR of 22%. The company reaffirmed its margin guidance, expecting a gross profit margin of approximately 62%, an operating margin of 21%, and an adjusted EBITDA margin of 30%. These projections underscore DexCom’s confidence in its strategic initiatives and market expansion efforts. InvestingPro reveals 12 additional key insights about DexCom’s financial health and market position, helping investors make more informed decisions about this rapidly growing healthcare technology company.

Executive Commentary

Jake Leach, President and incoming CEO, expressed enthusiasm for the company’s future, stating, "We have an incredible team and I’m excited to lead the next phases of our journey to both expand access to our technology." Current CEO Kevin Sayer highlighted the company’s execution, noting, "We continue to see strong category growth, focused execution by our team."

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact production and delivery timelines.
• Market Saturation: As the CGM market matures, maintaining growth may become challenging.
• Regulatory Changes: New regulations could affect product approvals and market access.
• Competitive Pressures: Increased competition from other CGM providers may impact market share.
• Economic Conditions: Macroeconomic factors could influence consumer spending and healthcare budgets.

Q&A

During the earnings call, analysts inquired about DexCom’s expansion into the Type 2 non-insulin diabetes market and ongoing clinical trials. The company emphasized its positive outlook on this market segment and preparations for potential Medicare competitive bidding, highlighting its focus on international market access.

Full transcript - DexCom Inc (DXCM) Q2 2025:

Abby, Conference Operator: Ladies and gentlemen, welcome to the DexCom Second Quarter twenty twenty five Earnings Release Conference Call. My name is Abby, and I’ll be your conference operator today. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star one on your touch tone phone.

As a reminder, this conference is being recorded. And I will now turn the call over to Sean Christiansen, vice president of finance and investor relations. Mr. Christensen, you may begin.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: Thank you, operator, and welcome to DexCom’s second quarter twenty twenty five earnings call. Our agenda begins with Kevin Sayer, DexCom’s Chairman and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy Sylvain, our Chief Financial Officer. Following our prepared remarks, we will open the call up for your questions. At that time, we ask analysts to limit themselves to one question each so we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our second quarter twenty twenty five performance on the DexCom Investor Relations website on the Events and Presentations page.

With that, let’s review our Safe Harbor statement. Some of the statements we will make on today’s call may constitute forward looking statements. These statements reflect management’s intentions, beliefs and expectations about future events, strategies, competition, products, operating plans and performance. All forward looking statements included on this call are made as of the date hereof based on information currently available to DexCom, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in the forward looking statements. The factors that could cause actual results to differ materially from those expressed or implied by any of these forward looking statements are detailed in DexCom’s annual report on Form 10 ks, most recent quarterly report on Form 10 Q and other filings with the Securities and Exchange Commission.

Except as required by law, we assume no obligation to update any such forward looking statements after the date of this call or to conform these forward looking statements to actual results. Additionally, during the call, we will discuss certain financial measures that have not been prepared in accordance with GAAP. Unless otherwise noted, all references to financial measures on this call are presented on a non GAAP basis. This non GAAP information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our second quarter earnings call for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Now I will turn it over to Kevin.

Kevin Sayer, Chairman and CEO, DexCom: Thank you, Sean, and thank you everyone for joining us. Today, we reported second quarter organic revenue growth of 15% compared to the 2024. We continue to see strong category growth, focused execution by our team and a growing contribution from our recent access wins. In The U. S, our new customer demand and volume growth remained consistent with the high levels we experienced during the first quarter.

With the year now under our belt since expanding our sales force, our commercial team is operating at a very high level. Our expanded reach has helped us build relationships with a wider base of physicians, grow our market share, and more quickly educate the market on the evolving coverage landscape. This has been particularly important as coverage continues to build. In fact, as of this month, our type two non insulin reimbursement went live with a third major PBM. With this coverage in place, we now have reimbursement established for anyone with diabetes on the national formularies of the three largest commercial PBMs in The US.

As previously stated, this will provide us with coverage for nearly six million type two non insulin lives this year, but we’re not stopping there. This is only a first step as we work to build coverage for this entire 25,000,000 person population in The US. Given our growing body of health outcomes evidence as well as Dexcom CGM’s proven ability to save cost for the health care system, we believe this is only a matter of time. Importantly, clinicians are quickly recognizing the potential to deliver better type two care. Many experienced providers have wanted to integrate DexCom CGM earlier into care plans, and this new coverage has greatly improved their ability to do so.

As a result, during the second quarter, we again saw strong growth from the type two nine insulin population, which helped us take share in this quickly growing part of the market. With more opportunity than we’ve ever had, we’re building on this momentum with new access wins, more personalized software, and by leveraging our differentiated product portfolio to deliver for our communities. Along those lines, interest in Stello, our over the counter glucose biosensor, also continued to grow during the second quarter. In fact, as of this summer, the Stello app has been downloaded more than 400,000 times. This reflects both the improving brand awareness for Stello, particularly as more customers share their early success stories, as well as the broader consumer movement toward health wearables and personalized metabolic health management.

Physicians are also more broadly leveraging Stellows across their practices as they now have a simple and easily accessible Dexcom biosensor available for any patient that doesn’t have coverage. While we are less than a year into Stellows launch, we’ve already greatly enhanced the customer experience with new software features, broader distribution, and digital health partnerships, steadily increasing the value of our features and providing more choice in how and where they engage with their glucose data. These connections will also enable us to expand the range of health and activity data available in the Sello app experience. For example, our integration with Aura is now live, which allows customers to integrate DexCom glucose data with vital signs, sleep, stress, heart health, and activity data provided by the Oura Ring. This broader dataset can help us deliver more personalized and well rounded insights over time, particularly as we continue to expand our generative AI capabilities within the app.

Similarly, we recently introduced a new feature across both Stello and g seven that leverages AI to greatly simplify the process of meal logging for our customers. With the launch of our smart food logging feature, our apps can now generate a detailed meal description based on a photo and then as the post meal glycemic impact for our customers. Additionally, users can now search for previous meals through the history tab, which can help support healthier decisions in the future as well as interaction with their care providers. On the hardware side, we’re very excited for the upcoming launch of our fifteen days g seven system. With FDA clearance now secured, we’re working through the standard reimbursement contracting process in advance of launch.

These discussions are progressing as planned, leaving us right on track to start the launch in the second half of the year. We continue to balance a focus of long term platform innovation like our fifteen day G7 and our G8 development, while simultaneously embracing the mindset of rapid software development like a consumer technology company. Along those lines, we’ve already introduced 17 app updates across our Stello, g series, and Dexcom OnePlus core products in the 2025. These updates address real needs for our users and their caregivers, things that take complex diabetes and metabolic health management and simplify the experience for the good of our customers. We already mentioned the simplicity of AI food logging.

We’ve also enabled our share and follow system to work for our customers using direct to watch connectivity. As a real world example of how this can benefit our customers, I recently met the parents of a competitive swimmer while traveling. They were thrilled with this new functionality as it allowed them to track their son’s glucose during swim competitions even if he does not have a phone nearby. We’ve enhanced the data visualization for our customers while giving them greater ability to customize their experience with adjustable target ranges. We brought to market connected pen technologies for our customers using insulin pens, allowing them to automatically log doses without the hassle of tracking them manually.

We also know how much our customers rely on their DexCom sensors to manage their health and the challenge that any disruptions their supply represents. This is one of the reasons why we have prioritized resources so heavily this year to maintain continuity for our customers. We’ve also recently rolled out a nationwide warranty program for our pharmacy customers, allowing them to access replacement sensors as early as the same day. One of the core values that we embrace is summed up in the simple word, listen. With the type of enhancements like I just reviewed, we are taking the direct feedback from our customers and driving innovative solutions that address their core needs.

Essentially, we continue to bring greater value to our products every month and are thankful for the sincere loyalty that this has driven amongst our customer base. As we’ve mentioned before, our definition of customer goes beyond just the end user. It includes caregivers, channel partners, payers, and certainly the health care practitioners that rely upon Dexcom CGM. Along those lines, we have seen significant momentum and excitement since we became the first CGM company to offer a direct, no cost integration into Epic EHR last year. At this point, we already have more than 100 health systems either integrated or in the process of onboarding to enable DexCom CGM data to flow directly into their customer health records.

As many of you recall, we exited the first quarter with the inventory levels in a tighter position than we typically would like and set a clear focus on continuing to support our overall customer demand while rebuilding our finished goods inventory. I’m proud of the seamless customer support provided by our manufacturing logistics teams during the second quarter. To accomplish this, we delivered multiple months of record production across our facilities and invested strategically in expedited shipping routes. This helped us to successfully restore inventory levels with key channel partners and allowed us to start rebuilding our own stock of finished goods internally. As a result, our supply dynamics today are in a much better position than they were even ninety days ago.

Finally, we were thrilled to showcase our latest collection of clinical evidence at the American Diabetes Association’s eighty fifth Scientific Sessions last month. This year, we presented or supported nearly 40 studies during the event, with the majority of these exploring earlier stages of metabolic health management and areas where market access remains more limited today. This included the readout of two randomized controlled trials, which studied Dexcom CGM usage for gestational diabetes and type two non insulin care. Each of these presented very compelling outcomes, which we expect to further bolster the case for broader access and adoption. The momentum behind CGM for the type two non insulin population was abundantly clear during the weekend.

Building on the update to the ADA standard of care that we saw at the 2024. Across the session, we heard more KOLs advocating for CGM to become the standard of care in this population. To further support this movement, our own type two non insulin RCT remains on track to read out early next year. Our team also presented data looking at the next frontier of glucose biosensing. This included studies outside of diabetes, such as chronic kidney disease, where the data showed a significant reduction in disease progression over a three year period for those using DexCom CGM.

As always, I left this year’s conference as excited as ever about the future of our company and the potential we have to serve a much larger population over time. With that, I’ll turn it over to Jeremy.

Jeremy Sylvain, Chief Financial Officer, DexCom: Thank you, Kevin. As a reminder, unless otherwise noted, the financial measures presented today will be discussed on a non GAAP basis. Reconciliations to GAAP can be found in today’s earnings release as well as the slide deck on our IR website. For the 2025, we reported worldwide revenue of $1,160,000,000 compared to $1,000,000,000 for the 2024, representing growth of 15% on both a reported basis and organic basis. As a reminder, our definition of organic revenue excludes the impact of foreign exchange in addition to non CGM revenue acquired or divested in the trailing twelve months.

U. S. Revenue totaled $841,000,000 for the second quarter compared to $732,000,000 for the 2024, representing an increase of 15%. As Kevin mentioned, we had a strong quarter in The U. S.

As we benefited from our recently expanded Type two access and growing presence within the primary care channel. This helped us deliver new customer starts that were right in line with the record levels that we experienced in Q1. International revenue grew 16% totaling $316,000,000 in the second quarter. International organic revenue growth was 14% for the second quarter. We experienced an acceleration in growth across our international markets in Q2 with particular strength coming from our DexCom OnePlus platform.

Several of our key Type two coverage wins recently have been for DexCom OnePlus and we’ve started to see a growing contribution from this expanded access. We expect this will remain a nice source of continued growth for us as Type two coverage continues to expand globally. Along those lines, we were recently excited to announce coverage for anyone on insulin with the Ontario Drug Benefit Program in Canada. This represents a significant expansion for us in the largest Canadian province as our public coverage was previously very limited in this region. In addition, the coverage expansion includes all insulin, continuing the momentum that we are seeing in international markets for broader Type two coverage.

We view this as another nice example of the growing recognition globally of DexCom’s ability to deliver improved outcomes for anyone with diabetes. Our second quarter gross profit was $695900000.0.60.1 percent of revenue compared to 63.5% of revenue in the 2024. During the second quarter, we again invested in expedited shipping routes to ensure consistent customer supply while we stabilized our supply chain. This helped us keep our key distribution partners with sufficient supply during the quarter and allowed us to start refilling our own finished goods inventory. This includes more educational samples available in the field, which were limited in the second quarter.

These samples often play a critical role to enable clinicians and people with diabetes to have an introductory experience with DexCom CGM. We still have some work to do to be at the preferred inventory levels that give us greater flexibility in our operations, but the rebuild is moving forward as we planned. I’m very proud of our continued progress, which will help us return to more targeted inventory levels and efficient shipping options throughout the year. Operating expenses were $474,100,000 for 2025 compared to $442,700,000 in 2024. Operating income was $221,800,000 or 19.2% of revenue in the 2025 compared to $195,400,000 or 19.5% of revenue in the same quarter of 2024.

Adjusted EBITDA was $327,600,000 or 28.3% of revenue for the second quarter compared to $283,900,000 or 28.3% of revenue for the 2024. Net income for the second quarter was $192,800,000 or $0.48 per share. We remain in a great financial position, closing the quarter with approximately $2,900,000,000 of cash and cash equivalents. This cash flow, along with our growing free cash flow profile, provides us with a lot of financial flexibility in our capital allocation decisions. We’re currently watching the macroeconomic and capital market environments closely as we finalize plans to address our twenty twenty five convertible notes along with any other strategic uses of capital.

Turning to guidance. We are raising our revenue guidance to a range of €4,600,000,000 to €4,625,000,000 representing growth of 14% to 15% for the year. For margins, we are reaffirming our 2025 guidance of non GAAP gross profit margin of approximately 62%, non GAAP operating margin of approximately 21% and adjusted EBITDA margin of approximately 30%. With that, I’m going to pass the call back to Kevin. Kevin?

Kevin Sayer, Chairman and CEO, DexCom: As many of you saw in the press release today, I also wanna take the opportunity to formally announce our succession plan as I will hand over my CEO responsibilities to Jake Leach at the 2026. We’ve taken an initial step in this process with the announcement of Jake’s promotion to president in May, and the board and I are convinced that now is the right time to provide clarity on the next step for Dexcom. I am confident that the company is in a great position with the right leadership team in place to not only continue the significant momentum that we carry right now, but to capitalize on the massive future opportunity ahead for Dexcom by advancing access and executing on our exciting product portfolio. And there is nobody that I trust more than Jake to lead the company into the future. As we transition to Q and A, I’ll hand it over to Jake for a few words.

Jake?

Jake Leach, President (Incoming CEO), DexCom: Thanks, Kevin, and hello, everyone. I’ll keep my comments fairly brief at this point. I’ve been at DexCom since we launched our very first product, and I know the impact that we’ve had on the lives of our customers, and I’m proud of that impact. And yet, when I look to the future potential for DexCom, I can honestly say that I believe this company is just getting started. We have an incredible team and I’m excited to lead the next phases of our journey to both expand access to our technology and to innovate across our portfolio of products to drive better health outcomes for our customers.

I look forward to continuing to work closely with Kevin throughout this transition and also more closely with all of you as we move forward. With that, Sean, let’s open it up for Q and A.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: Thank you, Jake. As a reminder, we ask our audience to limit themselves to only one question at this time and then reenter the queue if necessary. Operator, please provide the q and a instructions.

Abby, Conference Operator: Thank you. If you have a question, please press star one on your touch tone phone. If you wish to be removed from the queue, press star one a second time. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, press star one to join the queue.

And our first question comes from the line of Travis Steed with Bank of America. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: Hi. Thanks for the question.

Speaker 5: I guess, first, Kevin, congrats on a long successful career. And I wanted to ask

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: I’ll ask, and we’ll miss you on these calls.

Speaker 5: And I ask about the the ability to already raise the guidance in the full year, and it was a a very strong quarter. But what you’re kind of seeing on new starts and the non insulin opportunity and kind of the confidence at this stage in the year to be able to raise the full year revenue guidance. I’d just love to get more color on that.

Jeremy Sylvain, Chief Financial Officer, DexCom: Hey, Travis. Thank you. This is Jeremy. Happy to certainly cover that. You know, we saw we we continue to see, especially, you know, kind of harkening back to when we started the year, you know, talking about the three PBMs, the three major PBMs covering non insulin users.

And what we’ve seen is we’ve seen some really solid starts in that space. We’ve always talked about this being an opportunity for us. And when you have both coverage with with what we believe is is the best product on the market combined with the opportunity with Stella, which also covers a lot of folks in that space and as folks are kinda moving through their journey, you know, put that in the hands of of our sales team, and they’ve done really wonderful work with it. So we’ve seen that take place over the course of the first quarter and into the second quarter. We know our third PBM is coming online here, in, you know, the third quarter, and and so that that’s online now.

You know, it gave us the confidence with the performance in the first half of the year to to give a little bit of an increase there for the full year on the guide. Recognizing, of course, you know, we wanna make sure that we provide, you know, that we commit I guess, we we provide, you know, opportunities to meet our commitments that we started off over the course of the year, but knowing full well that the year has gone well thus far. So it gave us that confidence. As we get into the back half of the year, we’re excited and really beyond, we’re excited for all these opportunities and what they present, as Kevin alluded to, and some of the access wins we’re seeing open up for us.

Abby, Conference Operator: And our next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Speaker 6: Good afternoon. Thanks for taking the question. Kevin, congratulations on all your success at DexCom. And Jake, congratulations on the promotion. I guess I feel compelled, Kevin, to ask you about the CMS competitive bidding for CGM and pumps.

So maybe can you frame the exposure to Medicare and the potential risk to DexCom? And you know, if finalized as proposed, how how might that impact, you know, your price in that channel? And lastly, when do you expect it to start? Is is 2027 the earliest? Thank you.

Kevin Sayer, Chairman and CEO, DexCom: You know, Larry, this is all very early. I’m gonna pass it over to Jake. Sure. Let him do that.

Jake Leach, President (Incoming CEO), DexCom: Yeah. Thanks thanks, Larry, for the question. Obviously, we’re staying close to the CMS. Basically, proposal for competitive bidding. We’ve been studying it.

And, you know, at this point in time, as we work through it, it’s it’s just a proposal. And we are looking at basically, it’s about 15% of our business is fee for service Medicare. So if just kinda think of that, that’s the group that we’re talking about. And if you look at, you know, distributor pricing and what’s going on in the channels, I think we feel very comfortable about the value that we bring for the price of our product. You think about the outcomes and the the dollars saved.

So this is gonna be a a process where there’s gonna be a response first. I think there’s some, you know, you know, unique things in this particular version of the competitive bidding that, we need to make sure it’s clear kind of what the impacts are gonna be. Think the number one thing that we’re wanna ensure is that there’s not interruption to Medicare beneficiaries, as we go through this process. That has happened in previous versions of competitive bidding. So I think that’s our number one focus to make sure customers, can get the products they need.

Jeremy Sylvain, Chief Financial Officer, DexCom: Yeah. And then just, you know, Larry, to your question on when it in and and all you know, it’s it’s early on. So I think we’ll get more clarity as to when the competitive bidding process starts. Historically, if it was to start right away, the earliest we’d likely see it is 2027. And so that’s the earliest you’d likely see it.

Of course, that’s based on historical precedence. And, you know, to your question, you know, in terms of pricing, it’s against too early to to go there. The one thing I would say is, you know, if there is some sort of pricing compression, there’s also gonna be supplier compression. So I think the one thing that’s important as we’re thinking through this is, you know, we’ll we’ll see what the appropriate value is and how that plays out. But I know we’re also gonna see a lot more volume concentrated in suppliers, so, if if it plays out as it’s currently written.

So let’s walk through it. We’ll be we’ll be vocal with you throughout the process. We’re obviously staying incredibly close to it. And and as you can see, Kevin, Jake, myself, and really our entire team, we’re all spending a lot of time with this and making sure that it’s if it’s introduced, it’s introduced in a way that’s beneficial for really our patients and those that use our product.

Abby, Conference Operator: And our next question comes from the line of Robbie Marcus with JPMorgan. Your line is open.

Speaker 7: Great. Kevin, I’ll also, I guess, add my congratulations to a long and very successful career. And Jake, look forward to working with you in the new role. Question for me on margin progression through the year. Was just a touch low on gross margin, good on operating margins with good expense control.

Sounds like you still have a little bit of inventory building to go, but I was hoping you could just walk us through sort of the margin progression through the rest of the year and the puts and takes there to get to the guide. Thanks.

Jeremy Sylvain, Chief Financial Officer, DexCom: Sure. Thanks, Robbie. This is Jeremy. I can answer that one. You know, think I think you you hit on it well.

I think you looked at the the progression, I would say, from q one to q two, and you saw, you know, a few 100 basis points of improvement. And one thing just to remind you and kind of put in the back of your mind, Q2 also included, I think many of you have seen it, but we had a receiver recall. Effectively, we’ll be swapping out some receivers. It’s not a large impact, but we took that charge here in the second quarter as well. So that was about a 100 basis point impact on the quarterly results.

So the results were even a little bit better than I think what you’re seeing. The impact on the full year, obviously, pretty immaterial. But on the quarter, obviously, it’s worth discussing that. You know, I’d expect a sequential improvement of a couple 100 basis points more as we move into to q three and then again into q four and as you kinda get back to the full year guide of 62%. That’s the math that makes sense.

And so I think you’ve seen a lot of progress from q one to q two, especially when you, you know, adjust, you know, for the the the accrual we made for the recall. And I would expect to see more progress throughout the course of the year, especially as inventory start to return to our shelf. You know, Kevin alluded to it in in his marks, and I did a little bit as well. We’ve got some finished goods starting to build up on our balance sheet. And as that takes place, we’ll be able to think about more effective and efficient freight routes cost a little bit less.

We’re still doing a lot of the chartered flights that we talked about on the last call to make sure that inventory was in place that our customers weren’t interrupted. So hopefully, helps thinking about the cadence over the course of the year. And again, as we have more and more volume going to our plants and those plants get more and more efficient, I’d to see that play out.

Abby, Conference Operator: And our next question comes from the line of Joanne Wuensch with Citibank. Your line is open.

Speaker 8: Good afternoon, and congrats to both of you. Awesome. I I’m I’m thinking about next steps. I’m thinking about g eight, the timing of it, what it might look like, and there’s a lot of discussion about dual analyte sensors. And I’d love to get your opinion on what do you think about competitive dual analyte sensors and what it may mean for how I started the question on g eight.

Thank you so much.

Jake Leach, President (Incoming CEO), DexCom: Yeah. Thanks, Joanne, for the question. So when we think about g eight, we’re extremely excited about it. It’s our next generation, wearable platform. Some of the key, components of it are it’s 50% smaller in in wearable size on the body.

And so you take that, you know, smaller package and we packed even more functionality into it. So it has a next generation custom chipset that does support multiple analyte sensing. That’s a really designed for that from the start. It’s also we’re looking to push the envelope again on performance and reliability, when it comes to continuous glucose monitoring. One of the things we’ve seen as we’ve continued to expand, the user base and the the broad population that’s using CGM, both those with diabetes and those without, we need to continue to ensure, that we are building sensors that are both reliable, accurate, and continue to push that boundary because it’s so important, for these users.

So when think about timing, we are deep in development of g eight, and we’ll be sharing more around timelines as we progress through the clinical studies required and we get, closer to to a launch timeline. When we think about, you know, the competitive, nature around, multianalyte sensing, what I’d say is there’s certainly a lot of discussion right now around ketones. And I think most of the discussion is really focused on the clinical utility of ketones, you know, continuous ketone measurement at the same time as measuring glucose. You know, when I think about a competitive offering for CGM, it’s about, you know, what you bring to the user. And when you focus on things like safety, know, you the number one, safety component of CGM for somebody with diabetes is reducing hypoglycemia, the severe hypoglycemia that can lead to death.

And so systems like ours that have the, urgent low soon alert that gives people a heads up before, they go low so they can treat it. That’s a significant safety factor. And as we think about high glucose, same thing with our smart high alert, that it only alerts users if they’ve been too high for too long and they need to take a little more insulin. So, you know, it’s really about the package that you bring. Certainly, we have a ketone sensor in development, in our technology development pipeline, and we’ll bring it to the market when we we feel it’s appropriate.

But at this point in time, we’re very focused on features that extend safety, and ease of use for both our patients as well as the prescribing physicians.

Abby, Conference Operator: And our next question comes from the line of Matt Taylor with Jefferies. Your line is open.

Speaker 9: Hi, thanks for taking the question. Congrats on the transitions there and looking forward to work with Jake.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: So I wanted to just ask if you could give us

Speaker 9: an update on how things are going with the FDA and the progress that you’ve been making in the plants that were inspected and and maybe just touch on the outlook for fifteen days. You’re gonna be launching that here in the second half of the year.

Jake Leach, President (Incoming CEO), DexCom: Yeah. Fantastic. Thanks thanks for the question. The yeah. Things have been going really well with the FDA.

We, responded rapidly, to the warning letter and their concerns, and we’ve been, giving them periodic updates. We’ve, made quite a bit of, updates to our processes, and documentation, addressing much of what the FDA’s concerns were. And so we still have work to do there, but we’ve been making fantastic progress there. Along the lines of fifteen day launch, again, another very exciting development for Dexcom, getting our fifteen day product out into the market. So you will be seeing its fifteen day sensor soon in our warrior population.

We’re getting it out there in in this this quarter for sure. And then shortly after that, you’ll see a more broad scale launch. So very excited to bring the longest lasting, most accurate sensor to our users in that g seven fifteen day.

Abby, Conference Operator: And our next question comes from the line of Danielle Antalffy with UBS. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom0: Hey, good afternoon, guys. Thanks so much for taking the question. Kevin, congratulations. I mean, you are DexCom. So it’s going to be an adjustment for sure.

But Jake, I have no doubt you’ll be great, and I’m excited to work with you. So just a question as we think about some of the competitive dynamics here in the moving parts, particularly the primary sensor competitor to you guys integrating with insulin pumps and maybe improving their position in what has been your stalwart patient base and that is the type one patient population. Can you talk about what you guys are doing as they start to get close to launching in that patient population and how you’re going to protect your competitive moat there? Thanks so much.

Kevin Sayer, Chairman and CEO, DexCom: You know, I’ll start with that, and then Jake can add some other technology if you’d like. We’ve got more than 2,000,000 patient years on AAD systems, and these outcomes have been phenomenal. I’ve been out in the field quite a bit the past couple of months, and the stories I hear from people and the things I’m learning, we’re doing a very good job with our partners. We very much, you know, do everything we can to improve anything we can do to make those experiences better. And we do have a nice head start, and we have a number of patients on those systems.

At the end of the day, these algorithms were built based on Dexcom technology and Dexcom CGM. They will perform best using a Dexcom CGM sensor. So we’re very comfortable with our position, but we’ll never sit still. If our patients and and our partners need something to make the systems better, we communicate with them all frequently. We’re we’re very hard to make that happen.

I don’t know if you have anything else to add to that one.

Jeremy Sylvain, Chief Financial Officer, DexCom: You know,

Jake Leach, President (Incoming CEO), DexCom: the only thing I’d add, I think Kevin covered the, you know, the the long history we have with, automated and delivery partners and the integrations and powering all those years of outcomes. The other thing too I’d I’d I’d add is that it also all the the components that come with our system, all the features, all the benefits, we’re gonna continue to advance those. And one of the things in the way that we architect our systems is that whether you’re using the IT system or not, you get all the benefits of Dexcom, all of the alerts, the share follow features, the now photo meal logging, all of those things are really what rounds out an offering. So it’s not just the sensor. It’s about all what else comes with it.

And so I think that positions us really well. And as Kevin mentioned, we’re gonna continue to innovate. We’re not stopping here. And so we’re gonna innovate both, for our users, but also for our partners.

Abby, Conference Operator: And our next question comes from the line of David Roman with Goldman Sachs. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom1: Thank you. Good evening, everyone. Kevin, I’m sorry, won’t have an opportunity to work with you in this role. But Jake, looking forward to getting to know you and working with you as you come into the CEO seat. Maybe I’ll start on utilization.

I mean one of the areas where we continue to get a lot of questions is as you broaden out the population to include the Type two non insulin dependent users, What does that mean to overall utilization rates? And what are some of the opportunities you have to drive higher retention in that population? Does that factor into is that coverage? Is it integration with the Oura Ring and other features? Maybe help us think about how you maximize the value of that population as you think about broadening out down the acuity curve.

Jeremy Sylvain, Chief Financial Officer, DexCom: Hey, David. Yeah. This is Jeremy. I think, you know, in terms of maybe we just start with the the specifics around utilization. And if look you at our presentation on our website, it kinda has kinda utilization trends for covered users.

And I think what’s what’s quite interesting is is the utilization, especially as you’re thinking about that type two population. You know, the utilization in a covered population is still 75 to 80%. So pretty high utilization, and and sometimes that surprises folks. And and the reason, of course, is is people see the value in utilizing the product. The feedback loop that’s provided really helps them modify their lives.

And so you you really you kinda beat me to it in terms of the features that that we’re ultimately offering out there that drive more utilization. Aura, certainly, that integration helps integrate into individuals’ lives. You know, things like share and follow and and working together as a team to help manage diabetes. I think those are things that are out there that clearly are helpful. Jake alluded to it.

Kevin alluded to it, but meal logging. These are the kind of things that there’s value in the app. Meal logging has been out there obviously in various independent apps, but we can overlay things like activity, sleep, meals across your glucose levels. Those provide very valuable feedback features. And, you know, the question of, now I know my numbers, so what do I do with it?

I think we’re answering that. And I think that’s how you increase utilization and you increase outcomes. So we’re gonna continue to work on that. A lot of the features that are coming over the years are a combination of hardware, as Jake alluded to to GA, but also software that should really enhance the value of the product we’re offering every day. And when you choose Dexcom, it all comes with that, whether it’s G Series, D Series, or Stello.

We’ll be continuing to offer those to all the users of Dexcom going forward.

Abby, Conference Operator: And our next question comes from the line of Jason Bedford with Raymond James. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom2: Good afternoon and congrats to both of you. Just maybe on Stellar, the over 400,000 app downloads is certainly higher than we thought. Is the guide still I think last week we checked was two to 3% of sales for the year. Does that still stand? And then if there’s any way to comment maybe on on on the mix between people with diabetes, wellness, or or maybe prediabetes?

Thanks.

Jeremy Sylvain, Chief Financial Officer, DexCom: Sure. Yeah. Let me start with the the guide. Yes. The guide is still two to 3% off to a great start in the first half of the year, Jason.

So I think we’re we’re excited about about that. But, yeah, I think I think we’re we haven’t necessarily changed that that range. In terms of the user base, Kevin, you wanna kinda cover the the user base who’s using it? You know, when

Kevin Sayer, Chairman and CEO, DexCom: we first started, Jason, it was very much geared towards the type two non insulin patients. And quite candidly, that’s how we designed and developed the app. Because last year, at this time, we didn’t have very much, if any, type two coverage for non insulin users. So early days, that was the group who was buying it, you know, very much, and they were the biggest group. As time has gone on, and now g seven has coverage by the three largest p PBMs in the country, we’re seeing a shift from those type two patients to coverage.

Because it has always been within our history. When we have coverage, we grow, and we grow markets very quickly when we have that. So right now, I would tell you our biggest user group would be health and wellness as far as numbers, prediabetes, and and and type two non non intensive insulin after that. And we’ll continue to design and and develop and and work with the app to make sure we hit the features of the user base that’s gonna be most relevant in what we’re doing. Our partners, Aura and our distribution partners, like like, in particular, Amazon, have made a huge difference in our ability to reach that population.

And it’s been a great learning for us, as we look at our strategies going forward.

Abby, Conference Operator: And our next question comes from the line of Matthew O’Brien with Piper Sandler. Your line is

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: Kevin, best of luck in the future. Jake, best of luck in your new role, and congratulations. I would love to just talk about guidance a little bit more in the back half. I don’t

Speaker 6: know if this question is

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom: for Jeremy or not, but you know, it it did come up a little bit, but it is less than the beat that we see in q two. So just a pretty meaningful, you know, two year stack deceleration, you know, at a time where I think you’re getting you should see less of the the negative mix shifts. So I’m just trying to figure out how much of that is new CEO coming in, wanna be conservative versus any kind of competitive concerns or, you know, lack of type two adoption that you’re seeing in the business, maybe, you without it coming in on the on the insulin pump side of things? Anything else like that to call out specifically versus just being really conservative with the guide in the back half? Thank you.

Jeremy Sylvain, Chief Financial Officer, DexCom: Sure. Yeah. I can answer that, and thanks. Thanks for the question. You know, I I I would say this.

We’re bullish on this business, maybe full stop there. And, you know, as we get into the back half of the year, you know, we talked about the downloads in Stello. We’ve talked about type two coverage, you know, coming in for our third PBM. We’ve obviously seen some good work over the first half first half of the year. You know, I I think our our our commitment at the start of the year was was 4,600,000,000.0, and, obviously, we’ve outperformed here a little bit in the first quarter and a little bit here in the second quarter.

So completely understand where the question was is coming from. I I think our answer is, look, we need to make sure we we meet our commitments. We’re gonna make sure we deliver against those commitments. It’s our focus. It’s why it’s how we’re thinking about the guide for the year.

Certainly, if you think at the top end of the guide, the top end of the guide does pass through the entirety of the constant currency beat that you see here in the second quarter. And so and so the the way to think about it is is is we made a commitment. We plan on executing against that commitment. If we can outperform that commitment, we’ll certainly pass it along.

Abby, Conference Operator: And our next question comes from the line of Marie Thibault with BTIG. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom3: Hi, good evening. Thanks for taking the questions and congrats on a nice quarter. Also passing along my congrats to you Kevin and Jake. I wanted to ask here, I think Kevin I heard in your prepared comments that DexCom would love to try to go after the entire Type two non insulin patient population when it comes to securing reimbursement coverage for these patients. Wanted an update here then on the clinical trial work you guys have been doing.

I believe that there was a trial underway. Wondering if we could get an update on how that is, progressing. Any other, clinical trial work you’re hoping to do and any readouts that we might look forward to?

Jake Leach, President (Incoming CEO), DexCom: Yeah. I’m happy to to update you on the, randomized controlled trial that we’re running. So we are, actively, running a trial, in this broad population of the type two non insulin users. So on lots of different therapies including GLP ones, SGLT twos, just basically anybody who’s not on insulin. And so that trial is is actively running.

You know, the outcome that we’re looking for is, that it’s powered for is, improvements in glycemic control time and range, all the typical things as well as a one c. You were also, have a number of registries around the world where we are producing real world evidence from these the same population of users who are already using g seven or Dexcom one plus. And the outcomes that we’re seeing there in terms of their improvement in glycemic control and their ability to hit their goals around a one c and time and range is phenomenal. So we’re really excited, for that study. It’s on definitely on track, and looking to read it out early next year.

Kevin Sayer, Chairman and CEO, DexCom: You know, this is Kevin. I’ll add to that. When you look at dynamic changes in the CGM reimbursement and access world, you go back to 2017 when we drove very hard Medicare coverage for the first time, and then our study drove basal coverage after that. We’ve worked very hard to accumulate evidence to support CGM coverage in the CMS world for people with type two diabetes not on insulin to support the outcomes, you know, just showing them the outcomes. At the same time, you’re hearing in political circles pretty much on a daily basis.

We’re about to go into a wearables revolution. Well, we’ve got a wearable, and it’s pretty revolutionary if somebody uses it. So we will keep pushing. We are working all over the the country with respect to understanding things we can do, to move this forward, and we’ll continue to do so.

Abby, Conference Operator: And our next question comes from the line of Issey Kirby with Redburn Atlantic. Your line is open. Hi, guys. Thanks for taking my question and echoing my congratulations to you both. I wanted to talk about the sales force one year on from the challenges last year and the new prescriber base.

Just what are you currently seeing with respect to rep productivity? Any sort of increase versus where you expected to be when you made these changes? And then just around the prescriber base, can you remind us the extent to which that was increased in The US with, the Salesforce transition? And what are you seeing in terms of the prescription rates from these new docs that you’ve onboarded? Thanks.

Jeremy Sylvain, Chief Financial Officer, DexCom: Yeah. Sure. I can I can start? And and, certainly, if anyone else wants to add in, please feel free to do so. You know, I we we we’ve been we’ve been talking about being about nine we’ll start with we’re in a much we’re in a good position at this point.

I think you can see, you know, based on the patient performance, the new patient performance over the course of this year so far, you know, the the sales team is doing a wonderful job in terms of getting in front of of new physicians and and demonstrating the value of Dexcom CGM. And I think having Stello out there as well, you can see Kevin alluded to it earlier where coverage exists for g series. Great. But Stello has also been a really effective tool in getting folks to adopt CGM. And having our sales teams out there with access to that product, I think, has been great.

So, you know, I would say that the team continues to do better and better every year. They’re getting more and more comfortable in the seats. I would say at this point, after we’re about a year plus out, the team is operating well. And I think we’re getting more and more productive every moment, and we’re learning every time and and tweaking as needed to get better and better. I don’t think you’ll ever find a Salesforce that says, hey.

We’re at max productivity. I think everybody in a Salesforce is certainly hungry to take on more, and we continue to see that with the team. In terms of where we would be from where we expected, we’ve always talked about being maybe ninety days behind where we thought we would be. I I I don’t think anything’s changed from that perspective. And that just really dates back to last year in terms of how we kinda kicked off the ground.

Across the board, lessons learned, learning those, implying them. I think right now, the entire team’s at midyear sales meetings and, again, applying all the lessons learned over the course even of this year. And so I think the team’s doing a really nice job there. In terms of prescribers, you know, it’s it’s hard now to parse out which ones are new as a result of the Salesforce versus just organic growth. But I think it’s safe to say we have well over a 100,000 prescribers at this point writing Dexcom scripts.

And what we’ve seen is is the classic thing we want to see, which is when you look at when you look at expanding the the prescriber base, the average scripts written by physician tends to stay the same. And what that means is is as we’re bringing in new physicians that write onesie, twosies, you’ve got folks that have started writing and they’re writing more and more. And so it allows you to have that weighted average. It means, basically, folks are moving up into the right in terms in terms of the the curve, in terms of the prescription curves, and we should continue to see that. So that’s very encouraging to see and especially encouraging to see as our third PBM coverage kicks in.

As more and more coverage is kicking in for non insulin folks, having those prescribers comfortable and familiar with CGM, I think, provides us a real opportunity for the back half of this year and beyond.

Abby, Conference Operator: And our next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open.

Kevin Sayer, Chairman and CEO, DexCom: Thank you. Congrats on the quarter and congratulations Kevin and Jake. I want to circle back on the international beat in the quarter and outlook. How would you have us think about the underlying international growth outlook here in the near to medium term? And what are the biggest incremental catalysts outside of The US?

Thanks.

Jeremy Sylvain, Chief Financial Officer, DexCom: Sure, Steve. Thanks. This is Jeremy again. I’ll cover it briefly. The international business, obviously, there was some acceleration from q one.

I think the good underneath all of it, and we talked a little bit about it in q one with the business, in some cases, being a little bit choppy, is underlying new patient adds in q one were very solid. That continued here in q two in our international business. So the underlying volumes continue to perform well. And and what we’re seeing is it starts with some of the Dexcom OnePlus coverage, and and that we talked about that a little bit last quarter. That’s continued this quarter, where we’ve seen new coverage opportunities either stemming in the back half of last year or in the early part of this year.

Obviously, France Basil being one of those. And that really has started to play in. We have seen, and I think we talked about it in the script here earlier, in Canada, the Ontario drug benefit. It’s the largest province in Canada for which they have have approved coverage for Dexcom now for for all insulin users, so all the way down through basal. And so you’re seeing both pockets of coverage in large in large areas play in.

But I think what you’re also seeing, and maybe more importantly, is you’re starting to see more and more places across the the the the world cover basal. So when you ask the question, what are the opportunities? In a lot of the established markets, the opportunities are going deeper in the insulin, intensive using population and either gaining or going deeper in basal for which there is very, very low penetration. A country like Japan, for example, as I earlier mentioned, France, basal adoption is still quite low in these countries, and we have coverage for those. So it’s going deeper into those markets.

It’s also looking to turn on additional coverage. We’ve talked about Germany, for example, having some basal coverage out there, but being a real opportunity as well as all of the emerging markets so the established markets. Lastly is the emerging markets for which there’s limited coverage. As we’ve gone into some of these markets, we’ve used the Bell example in the past, you know, Bulgaria, Estonia, Latvia, Lithuania, where there wasn’t coverage for type one. We moved into that category with Dexcom one and Dexcom one plus, and coverage ultimately came.

And so it’s establishing coverage in even the most intensive users and using that as kind of a starting point to demonstrate their capability. So there’s really opportunities all over the world. We’ve covered a few on the call with Ontario drug benefit, obviously, Japan, France, some opportunities across established markets. But I’d expect to see those coverage wins to continue to knock down over the coming months and years, which all provide opportunities in our OUS business.

Abby, Conference Operator: And our next question comes from the line of Shagun Singh with RBC. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom4: Great. Thank you so much, and congratulations, Kevin and Jake. I wanted to go back and touch on the CEO transition and the strategy going forward. Jake, can you share with us what your vision for DexCom is? What you plan to do similarly or differently to define your era at DexCom?

Are there any goalposts or milestones that you would like us to evaluate your progress on? And I guess more specifically, anything you can share on how you plan to further build operational global scale at Dexcom, and further capitalize on the opportunity ahead? Thank you.

Jake Leach, President (Incoming CEO), DexCom: Yeah. Absolutely. Thanks thanks for the question. You know, I think I’m, really excited about the opportunity that we have in front of us. If you think about the runway, that Dexcom has in terms of the number of people around the world that we can impact and change lives, you mentioned it around global scale.

That is certainly something, that we’re seeing good progress in our growth globally, but there’s so much more to do in terms of gaining access for people around the globe that could benefit from our technology. Our technology not only improves health outcomes, but also saves, money to the the health care systems. And so as we continue to make sure that that message is very clear, and we bring those products to the markets around the globe, that’s a key part of our our growth strategy going forward. The other thing I’m incredibly excited about is, continue to drive innovation that provides real value to our customers, and and that includes our end users, which is becoming a much broader group of people. You know, think type one, type two, prediabetes, and and those who are looking to, you know, have a health more healthy metabolic condition.

Those are our customers, those end users. But also, you know, we think about our prescribers and, you know, our EHR integration is a great example of where we focused on how do we make Dexcom the CGM of choice for some of these prescribers so that they have preference for Dexcom because our technology is the best, and we want people to have advantage the advantage it brings. And so I think those are my two key areas of focus right now is access, driving innovation, and then the last one is is really around scale of the business. I think there’s lots of things we do well. There’s lots of things we need to continue to enhance in how we scale our business and how, we we provide efficiencies in the future so we could continue to invest in that innovation.

Abby, Conference Operator: And our next question comes from the line of Richard Newitter with Truist Securities. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom5: Hi. This is Ravi in for Rich. Thank you for taking the questions and congrats on the new announcements. I just kind of want to press on the back half guide or the implied back half guide a little bit. Can you talk maybe about the dynamic between U.

S. And OUS here? I believe earlier in the year, we were talking about kind of US volume and revenue growth converging. How should we kind of still think about that in the back half, kind of given that reiterated Stellar guide and strength in terms of what appears to be pretty robust growth OUS? Thank you.

Jeremy Sylvain, Chief Financial Officer, DexCom: Sure. Yeah. I mean, let’s start. It’s a bit of two questions. Right?

It’s the it’s The US question around, you know, what I would say is is volume and and revenue percentage growth and then just, you know, outside The US performance. I think we we came into the year talking about the OUS business effectively growing faster than The US business. That’s been our historical norm for the past. And we said this year would would feel a little bit similar until we get to a seventy thirty split. You know, look, if the if The US business and Stelo can continue, great.

We’d be happy to to tell you that it’s outperforming there. But I think that’s the general thinking we came into the year and still our general thinking for the rest of the year. As you then turn to The US business, we do expect the price volume, delta, if you will, to come in a little bit over the course of the year. We’re lapping the rebate conversation we had last year. And so every kind of sensor out the door is subject to a rebate.

So as we certainly lap that, you would expect to see that come in over the course of this year. And and and as you saw in the first quarter and here to a to a little bit of an extent here in the second quarter, you’re seeing those take place as well. And so that’s our thinking for at least the back half of the year. Obviously, you know, given the first half of the year’s performance, I think it puts us in a good position. I think we’re excited about where that’s gonna lead us into the back half of the year, but we also wanna be mindful and not get ahead of ourselves when it comes to our guidance.

And that’s the way we’re thinking about the guide for the balance of the year.

Abby, Conference Operator: And our next question comes from the line of Michael Pollard with Wolfe Research. Your line is open.

Jeremy Sylvain, Chief Financial Officer, DexCom: Good afternoon. I want to follow-up, on a prepared remark comment. You announced that you’ve rolled out a nationwide warranty program for your pharmacy customers. The question is, is this financially consequential? If so, how?

You know, why now? And is this something that’s different than your competitor or or now similar? Thank you. Sure. Yeah.

We can answer that. You know, in terms of financially, it’s indifferent at this point. And so, you know, it should effectively be net neutral from a cost perspective. In terms of its technology, it’s leveraging technology and partners that that are in place to help us do that. And so, you know, as as that technology and those partners were able to be put in place and that feature became available, it is something that, one, is differentiated to us.

And, two, I think for those folks that don’t mind waiting at home for us to ship them a sensor, if they have excess sensors from a shipment that took place earlier, great. It’s not too dissimilar from a lot of us ordering things on Amazon. They come to the house in the next couple of days and, you know, you wait for it and it’s just fine. For those that have or they’re on their last sensor or they’re going on a trip and they need a replacement immediately where it’s worth driving to the pharmacy to pick one up, it’s an option. And and when, you know, Jake talks about making things easier for our customers, that’s exactly what the focus was.

And this technology became available and the capability was there. It’s an opportunity for for our customers to choose which way they wanna get it, and I think that choice is value additive. And so we we went forward with it and excited for customers to experience it.

Abby, Conference Operator: And our next question comes from the line of Josh Jennings with TD Cowen. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom6: Hi, good afternoon. Thanks for taking the question. And apologize if you addressed this already, but was hoping to just get the status of the recovery in the DME channel. I know you guys have been working and making strides over the last number of quarters since last year. But where do you stand today?

How much more work is left? Or you feel like that channel has been stabilized and the DME partnerships are are back to to where they where they where you started at at the 2023? Thanks for taking the question.

Kevin Sayer, Chairman and CEO, DexCom: Yeah. This is Kevin. I’ll take that. We spent a lot of time with our DME partners to learn the things that we can do better. I think those relationships, particularly with the large DME partners, are much stronger than they were before.

We’re working hard to give them enough inventory to keep everybody stocked up and to be able to serve patients with what is typically a three month supply. We communicate regularly with them. You know, we have a new commercial team right now, and they are spending a great deal of time on these relationships and understanding what goes on. These partners are gonna be very important to us as we go through this competitive bidding process. This is not something we’re gonna go through alone, So we’ll work with them continually.

We’ll have regular conversations, and we’re comfortable that we can get to the right place.

Abby, Conference Operator: And our next question comes from the line of Brandon Vasquez with William Blair. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom7: Hi, everyone. Thanks for taking the question and congrats to Kevin and Jake on the transition. I just wanted to ask on fifteen day as we’re getting closer to the actual launch here and we are kind of sharpening our models on this. And historically, you all have talked about think about this on an annual revenue per patient. Now you are starting to have discussions with the payers since this is approved.

How are those discussions going? Should we continue to think about this as an annual revenue per patient? And as those discussions are evolving, do you how do you feel like the annual revenue per patient is going to shake out on the ten day versus the fifteen day now that we know that just to hone in on our models? Thanks.

Jeremy Sylvain, Chief Financial Officer, DexCom: Sure. Thanks, Brandon. Yeah. You know, think, you know, the negotiations are really and they have been for some time. It’s really about everything really devolves into how do you provide a month full of support, almost like a service model.

Actually, not too dissimilar from the CMS proposal where things are thought about on a monthly rental basis. And when we we negotiate, that’s exactly how we think about it is. What are the monthly reimbursement? And so by way of multiplying by that 12 and annual reimbursement, we would expect something the exact same approach to apply to the fifteen day sensor. And and that’s how we’re going about it.

You’d expect that across really all business lines as well. So we’ve we’ve been doing that across our commercial business lines. And, of course, CMS has reimbursed that way for some time. So I I wouldn’t expect much of a change from that perspective.

Abby, Conference Operator: And our final question comes from the line of Bill Plavonic with Canaccord Genuity. Your line is open.

Sean Christiansen, Vice President of Finance and Investor Relations, DexCom8: Hey, great. Thanks, and thanks for squeezing me in. Just wanted to switch over to the pregnancy, the Type one pregnancy and the gestational. You did have a lot of data at ADA. This has been an area that’s been an opportunity for a long time.

I was wondering if you could give us some kind of granularity on where are you today in penetration of that market? Does the data that’s been presented provide the information needed to kind of change physician behavior and guidelines? And, you know, kinda how do you see this playing out over the next year or two? And and and remind us again of the the TAM of that market. Thanks.

Jake Leach, President (Incoming CEO), DexCom: So, yeah. Thanks, Bill. The, you know, I think we’re we’re still early in the penetration there. It’s basically, 10, one in ten pregnancies in The United States is impacted by, gestational diabetes. So it’s quite quite a large, population.

And so as we think about the product, we actually made some updates to g seven very recently to better serve this population. We added in a fasting glucose measurement as well as customizable target ranges because for pregnancy, the physicians often often want a little bit tighter control during pregnancy. So we implemented all of that into g seven to help drive, you know, more of the utility of of CGM in this population. So our our teams are starting to call in these offices, and I think there’s multiple things work we still have to do in terms of one awareness of the technology. How do these physicians who are not necessarily accustomed to prescribing CGM, how do they ensure that they get the prescriptions filled in?

And then also really about reimbursement, making sure we can navigate the the payers for this. And so all those things are starting to come together, and it’s a great opportunity to really improve birth outcomes. One of the papers that ADA that was presented was, as you mentioned, was around, the benefits of mothers get from wear wearing CGM and the, you know, CGM group compared to the control group that was doing finger sticks that had gestational diabetes. Significant, decrease in unscheduled c sections and admissions to the NICU in the the population that was using CGM. So the outcomes are very clear, and so now it’s our our job to drive awareness.

Abby, Conference Operator: And ladies and gentlemen, that concludes our question and answer session. I would now like to turn the call back over to mister Kevin Sayer for closing remarks.

Kevin Sayer, Chairman and CEO, DexCom: Thank you, everybody, and thanks for the kind words today. I just wanna remind you all that I’m not riding retirement wave out of here right now. I’ve got about five more months, and we need to drive this company, but I’ve learned a very valuable lesson over the years. My main job is to position these guys for success as much as I possibly can, and that’s what we’ll be doing the five months while I’m still CEO and then when I’m an executive chairman after that. So I totally look forward to being around this company for a while and learning and and being involved.

And I thank you all for your support and all the time that we’ve worked with you. You guys have a great day.

Abby, Conference Operator: And ladies and gentlemen, this concludes today’s call, and we thank you for your participation. You may now disconnect.

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