DexCom's Q3 2025: Contradictions Emerge on New Start Retrieval, Pricing Trends, and Sensor Launch Delays

Date of Call: October 30, 2025

Financials Results

• Revenue: $1.21B worldwide in Q3 2025 vs $994M in Q3 2024; reported growth 22% and organic growth 20% (U.S. $852M vs $702M, +21%)
• EPS: $0.61 per share (Q3 net income $242.5M) — highest quarterly EPS in company history
• Gross Margin: 61.3% of revenue in Q3 2025, compared to 63.0% in Q3 2024 (impacted by higher scrap rates and freight)
• Operating Margin: 22.6% of revenue in Q3 2025, compared to 21.3% in Q3 2024 (operating income $272.9M)

Guidance:

• Revenue guidance raised to $4.630B–$4.650B for 2025 (~15% growth)
• Non‑GAAP gross profit margin guidance lowered to ~61% (reflecting scrap dynamics)
• Non‑GAAP operating margin guided to 20%–21%; adjusted EBITDA margin guided to 29%–30%
• Management expects freight and scrap headwinds to abate into 2026 as ocean freight resumes
• Base case for 2026 guidance will assume current coverage (new coverage wins would be upside)

Business Commentary:

* Revenue and Growth: - DexCom reported organic revenue growth of 20% for Q3 compared to the third quarter of 2024. - Growth was driven by the increasing coverage for type 2 diabetes, recent CGM access expansion, and solid share performance in both U.S. and international markets.

• CGM Utilization and New Patients:
• The company observed strong performance across type 2 diabetes, with more new customers coming from the broader type 2 population.

• This was due to the recent coverage expansion that now includes nearly 6 million type 2 non-insulin lives, representing half of the type 2 market.

• Product Innovation and Market Expansion:

• DexCom is planning a broader launch of its G7 15-day system, with finalized contracts with major commercial payers and DME partners.

• The launch of this product aims to expand market reach, particularly with a focus on improving customer experience and service requests through updates like My DexCom Account.

• Quality and Customer Experience:

• The company resolved issues related to out-of-box deployment failures and saw complaint rates stabilize, aligning with historical levels.
• Efforts are being made to enhance the customer experience by addressing issues, improving product quality, and streamlining service requests through digital platforms.

Sentiment Analysis:

Overall Tone: Positive

• Management reported 20% organic revenue growth, raised full‑year revenue guidance to $4.63–$4.65B, delivered record quarterly EPS ($0.61) and ended Q3 with >$3.3B cash, while acknowledging near‑term margin headwinds from scrap/freight that they expect to abate into 2026.

Q&A:

• Question from Travis Steed (BofA Securities): Any color on 2026 growth expectations and how you are framing guidance?
  Response: No specific 2026 guidance; base case assumes current coverage and expects double‑digit growth with top end slightly below Street, with upside if access or share gains occur.

• Question from Gursimran Kaur (Wells Fargo): Have the G7 engineering/manufacturing issues been resolved and did noise disrupt new starts in Q3 or will it in Q4/2026?
  Response: Deployment issues have been addressed and product quality is improved; there was likely a modest Q3 impact on new starts but management expects recovery in Q4 and beyond.

• Question from Robert Marcus (JPMorgan): Where are you seeing most new‑patient growth (type 1 vs type 2 intensive/basal/non‑intensive) and any go‑to‑market changes required?
  Response: Growth is broad across type‑2 segments (intensive, basal, non‑insulin) with continued type‑1 demand; go‑to‑market is being adjusted to pursue remaining opportunities.

• Question from Danielle Antalffy (UBS): Does your base‑case for next year assume no expanded coverage?
  Response: Confirmed: the base‑case for next year reflects only coverage currently established today.

• Question from Matthew Taylor (Jefferies): Potential to secure broader NIT2 coverage earlier in 2026 and mechanism?
  Response: Management believes broader NIT2 coverage is a 'when not if' driven by outcomes evidence, but timing is uncertain; DexCom will be ready to support adoption.

• Question from Joanne Wuensch (Citigroup): What does broader rollout of the 15‑day sensor require and its near‑term revenue/margin impact?
  Response: 15‑day is in limited Warrior launch; expected to be nominal for 2025 revenue/margins but a meaningful growth and margin opportunity in 2026 as rollout scales.

• Question from David Roman (Goldman Sachs): How will you ensure messaging about G7 improvements reaches prescribers and consumers?
  Response: Management is proactively engaging prescribers and users in the field, communicating fixes and improvements, and expects complaint rates to decline.

• Question from Marie Thibault (BTIG): Is the scrap rate tied to the inserter/deployment and when will it be behind you?
  Response: Scrap is linked to deployment/inserter issues; management expects material improvement in Q4 and normalization into 2026.

• Question from Matthew O'Brien (Piper Sandler): Why the Q3/Q4 deceleration and how does that reconcile with comfort in low double digits for 2026?
  Response: Deceleration reflects a normalizing seasonality and channel/mix effects; underlying user growth remains solid, supporting the 2026 base case.

• Question from Michael Polark (Wolfe Research): How much of the gross‑margin hit is freight vs scrap?
  Response: Approximately 50/50 between freight and scrap; freight impact is receding as shipments return to ocean, aiding 2026 margins.

• Question from Jayson Bedford (Raymond James): How does utilization compare across customer cohorts?
  Response: Utilization: AID users >90%; intensive insulin users ~85%+; basal type‑2 ~80–85%; non‑insulin type‑2 ~75%; Stelo shows high engagement among non‑insulin users.

• Question from Shagun Singh Chadha (RBC): To what extent did quality issues impact new customer starts in Q3 and do you need expanded access to return to record levels?
  Response: Quality issues slightly reduced Q3 new starts; management expects to return to record new‑start levels in Q4 and 2026 using existing coverage.

• Question from Brandon Vazquez (William Blair): Is ~$1,400–$1,500 annual revenue per patient a reasonable U.S. figure and how will pricing trend?
  Response: That range is in the general ballpark; price per channel is relatively stable (2–3% year‑over‑year), and mix shifts—not price—drive revenue changes.

• Question from Jonathan Block (Stifel): Are OpEx savings catch‑up or permanent and how will you approach 2026 spend?
  Response: Savings result from efficiency and tool leverage (not one‑time catch‑up); management will balance OpEx leverage with selective investment to capture coverage expansion opportunities.

• Question from William Plovanic (Canaccord): Cadence of new patient starts through the quarter and attrition trends?
  Response: Attrition has been stable; anecdotal field feedback late in Q3 is positive on new starts as deployment issues wane, with full data pending.

• Question from Michael Kratky (Leerink): How much of U.S. Q3 growth was price vs volume and how should we think about moving forward?
  Response: Q3 reflects channel/mix comps from last year; unit volume growth and revenue are converging and that trend should continue into 2026.

• Question from Richard Newitter (Truist): How are you factoring competitive moves (e.g., dual‑analyte entrants) into the 2026 base case?
  Response: Competitive scenarios are considered in the prudent base case, but detailed assumptions will be disclosed with formal 2026 guidance.

• Question from Joshua Jennings (TD Cowen): Any updates/timeline on G8 and ketone sensing commercialization?
  Response: G8 (multi‑analyte) is strategic but no commercialization timeline disclosed; more portfolio detail will be shared at an investor event in H1 next year.

• Question from Matthew Miksic (Barclays): Are users reverting to G6 affecting manufacturing and transition plans?
  Response: Reversions to G6 are minimal; transition to G7 continues and any G6 holdouts are not material to manufacturing plans.

• Question from Anthony Petrone (Mizuho): How long to roll over 10‑day to 15‑day, margin impact, and long‑term penetration targets for basal and non‑insulin cohorts?
  Response: Transition historically takes years but could be faster; 15‑day materially improves margin (2 sensors → 3 sensors economics) and expands markets; management targets ~60% long‑term basal penetration and sees large but uncertain upside in non‑insulin cohorts.

Contradiction Point 1

New Start Retrieval and Scrap Rate Issues

It directly impacts expectations regarding the growth trajectory and operational efficiency of the company, potentially influencing revenue and investor expectations.

好的，我现在需要处理用户提供的这个任务。用户希望我作为专业的金融文章作者，总结并精简来自美股上市公司财报电话会议中的问题。首先，我要仔细阅读用户的具体要求，确保理解每一个细节。首先，用户强调要简化问题，保持原意，去掉多余的装饰词。同时，输出必须符合美式英语习惯，只输出简化后的问题，并且以问号结尾。用户给出的例子是关于G7问题和季度影响的提问，我需要参考这个例子来调整我的处理方式。接下来，我需要分析用户提供的具体问题：“Can you confirm if G7 issues have been resolved? Were there any disruptions in new starts or prescribing patterns in Q3, and what about Q4 or 2026?” 这个问题有两个部分，第一部分询问G7问题是否解决，第二部分询问Q3是否有新开始或处方模式的中断，并延伸到Q4和2026年。我的任务是将这两个问题简化。首先处理第一个问题，原句是“Can you confirm if G7 issues have been resolved?” 这里“Can you confirm if”可以简化为“Have”，因为问题本身是在确认，所以直接问“Have G7 issues been resolved?”更简洁。第二个问题比较复杂，原句是“Were there any disruptions in new starts or prescribing patterns in Q3, and what about Q4 or 2026?” 这里需要合并两个部分。首先，“Were there any disruptions in new starts or prescribing patterns in Q3?” 可以简化为“Did Q3 see disruptions in new starts or prescribing patterns?” 但用户可能希望更简洁，所以可能用“Were there Q3 disruptions in new starts/prescribing patterns?” 这里的斜杠可以代替“or”，节省空间。然后，关于Q4和2026的问题，原句是“what about Q4 or 2026?”，可以简化为“Q4 or 2026?”，但需要保持问句结构，所以可能需要调整成“Were there Q4 or 2026 disruptions?” 但这样可能不够准确。或者，可以合并成“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但用户可能需要更连贯的结构。另一种方式是将整个第二部分合并为“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但这样可能不够清晰。可能需要重新排列，比如“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但这样可能显得断断续续。或者，可以写成“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但需要确保问题结构正确。可能更好的方式是将第二个问题拆分为两个独立的问题，但用户可能希望保持一个连贯的问题。所以最终可能需要写成“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 这样虽然用问号分隔，但可能更符合用户的要求。现在检查是否符合美式英语习惯，比如使用“Q3”而不是“Q3”，没有问题。同时，确保没有多余的词，比如“any”可以省略，因为“Were there”已经隐含了“any”。另外，使用斜杠连接“new starts or prescribing patterns”是常见的缩写方式，符合要求。最后，确保输出只有简化后的问题，没有其他内容，并且以问号结尾。因此，最终的简化问题应该是：Have G7 issues been resolved? Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?但可能需要调整第二个问题的结构，使其更连贯。例如，将Q4和2026作为后续的问题部分。或者可能需要将整个问题合并成一个，但用户可能希望分开处理。根据用户提供的例子，他们将两个问题分开，所以可能需要保持两个独立的问题。因此，正确的简化应该是：Have G7 issues been resolved? Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?但可能需要将第二个问题更明确地连接到Q4和2026，例如：“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但这样可能不够清晰。或许更好的方式是：“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但这样可能不够连贯。或者，可以合并成一个句子：“Were there Q3 disruptions in new starts/prescribing patterns? Q4 or 2026?” 但这样可能显得不够自然 - Gursimran Kaur(Wells Fargo Securities)

2025Q3: Deployment challenges have been resolved. While complaint rates are stable, there may have been some impact on new starts in Q3. However, current expectations are to return to record new starts in Q4 and beyond. - Jacob Leach(CFO)

Can you discuss the ability to raise full-year revenue guidance at this stage, including insights on non-insulin new starts and current confidence levels? - Travis Lee Steed(Bank of America)

2025Q2: We've put in a lot of work in the last 6 months to reduce the gap, and we feel like we're there. - Jake Leach(CFO)

Contradiction Point 2

Pricing Stability and Pricing Trends

It involves the stability of pricing and pricing trends in the market, which are critical factors for revenue forecasting and financial planning.

What are the pricing trends for U.S. patient growth? - Brandon Vazquez (William Blair & Company L.L.C., Research Division)

2025Q3: Pricing has stabilized, with year-over-year impacts in product mix rather than price levels. The increase in pharmacy channel distribution will continue to influence revenue. - Jereme Sylvain(Executive VP, CFO & Chief Accounting Officer)

Can you provide an update on the 15-day G7 sensor and its market penetration expectations? - Travis Steed (Bank of America)

2024Q4: We expect another year of pricing discipline, with pricing expected to be flat year-over-year. - Jereme Sylvain(CFO)

Contradiction Point 3

15-Day Sensor Launch and Market Strategy

It involves strategic decisions and market positioning, which are crucial for understanding the company's competitive strategy and market penetration.

What are the expected revenue and margin impacts from expanding the 15-day sensor launch? - Joanne Wuensch(Citigroup Inc.)

2025Q3: The 15-day sensor launch is not expected to have a significant impact this year, but it will provide a major opportunity for additional patients with longer wear time in 2026. - Jereme Sylvain

Can you provide an update on FDA progress and the timeline for the 15-day sensor launch? - Matt Taylor(Jefferies)

2025Q2: Our FDA response has seen rapid progress with updates and process improvements. The 15-day G7 sensor is on track for launch in the second half of the year, initially for the Warrior program, with a broader launch to follow. - Jake Leach

Contradiction Point 4

G7 Deployment Challenges and New Patient Starts

It involves the resolution of deployment challenges with G7 and the impact on new patient starts, which directly affects revenue growth and market penetration.

Have G7 issues been resolved? Did Q3 see disruptions in new starts or prescribing patterns, and Q4 or 2026? - Gursimran Kaur (Wells Fargo Securities)

2025Q3: Deployment challenges have been resolved. While complaint rates are stable, there may have been some impact on new starts in Q3. However, current expectations are to return to record new starts in Q4 and beyond. - Jacob Leach(Interim CEO, President & COO), Jereme Sylvain(Executive VP, CFO & Chief Accounting Officer)

Can you update us on the status and progress of the sales force and DME issues from the Q2 call and their impact on 2024 versus 2025? - Larry Biegelsen (Wells Fargo)

2024Q4: We have resolved the sensor supply issues that emerged earlier this year and are back on track to deliver record new starts. - Jereme Sylvain(CFO)

Contradiction Point 5

Gross Margin Guidance and Impact of Scrap and Freight Costs

It involves the guidance on gross margins and the impact of scrap and freight costs, which directly affect financial performance and profitability.

Can you detail the gross margin guidance and impact from scrap and freight costs? - Michael Polark (Wolfe Research, LLC)

2025Q3: Gross margin pressure from scrap and freight is expected to dissipate soon, with a 50-50 split in impact. Ocean freight will be increasingly utilized, improving efficiency and margins in 2026. - Jereme Sylvain(Executive VP, CFO & Chief Accounting Officer)

What's the update on the 15-day G7 sensor and its market penetration expectations? - Travis Steed (Bank of America)

2024Q4: We expect that gross margins will benefit from steady improvements in yields and economies of scale. - Jereme Sylvain(CFO)