DexCom, Inc. Aktie

Welcome to the 2026 Dexcom Investor Day. As a reminder, this presentation contains forward-looking statements. Please note our safe harbor statement included here as well as our filings with the Securities and Exchange Commission.

[Presentation]

Please welcome President and Chief Executive Officer, Jake Leach.

Hello, everybody, and welcome to Dexcom's 2026 Investor Day. It's great to see all of you here. Thank you so much for joining us. I'm Jake Leach, President and CEO. And today, we will review our priorities that are designed to drive the next phase of growth for Dexcom. There's many things that make Dexcom extraordinary, but one that really stands out to me is our ability to imagine and build a prosperous future while simultaneously impacting the lives of millions of people every day, helping improve their diabetes management. And at the same time, we're lowering the overall cost of care for this population. There are 3 key drivers that are going to define the next phase of Dexcom's journey. First, we have an advanced product portfolio that is focused on meeting valuable, distinct, highly important things for our customers. Second, the clinical and economic value we produce is going to significantly continue to expand access for people to CGM. And we believe that, that access is going to continue to grow at a rate faster than penetration. And then third, our scalable and category-leading solutions position us for durable double-digit growth combined with strong cash flow generation.

Now before I go forward, I want to briefly ground us in what has made Dexcom successful so far. And it's really that history, combined with our plans going forward that give us a picture of why we're so confident in the future of Dexcom. Everything starts with our customers. It is what drives us every day. From the beginning, Dexcom built a CGM that was specifically designed for people who had type 1 diabetes or people with type 2 diabetes on intensive insulin therapy. We started with this idea. We want to eliminate finger sticks, and we want to replace it with real-time insights that drive improved outcomes and quality of life. And achieving this goal and the focus on clinical outcomes has been very impactful. Dexcom has been the leader in producing clinical outcome data that has opened up access for CGM to millions of people around the world. It began back in 2016 with the readout of our DIAMOND randomized controlled trial at the ADA, the American Diabetes Association meeting that year. This study really opened up broad access for people with type 1 diabetes and type 2 diabetes on intensive insulin therapy and really led to CGM becoming the standard of care for that population.

We followed it up 5 years later with the MOBILE study, again, reading out in June of 2021, subsequently published in the Journal of the American Medical Association. And this was really a cornerstone trial that showed the impact of CGM in the type 2 basal insulin using population and was really the foundation of access expansion into that group. It's also when we really started to show that CGM was more than just a hypoglycemia protection safety component, it was all about behavior change and reducing A1c for a broad population of patients. Now our next randomized controlled trial will read out at ADA next month. And we believe that the data from this study will be a very powerful anchor to expand coverage into type 2, both here in the U.S. and abroad. So as we continue to build on the outcomes of these randomized controlled trials, we're also showing that CGM and glucose control is important to all metabolic health. Better glucose control has many benefits beyond just lowering and managing A1c. We're seeing reduced cardiovascular risk. We're seeing sustained weight loss. We're also seeing delayed progression of chronic kidney disease.

We also hear from our patients and physicians frequently about how CGM helps them reduce the medication burden because the CGM is so helpful at showing them how different medications are working allowing them to ultimately reduce the total number. All of this leads to improved health outcomes and economic outcomes. This is the latest cost data from the American Diabetes Association meeting. And you can see here, the estimates are that the average person with diabetes costs our health care system $20,000 a year. So what's interesting is if you look at that $20,000, 98% of it is spent in 3 places: inpatient care, outpatient care and prescription medicine. Now we have consistently demonstrated that CGM is part of a long-term plan and solution that directly address the costs and lowers the cost in these 3 areas. So that combination of lower health care costs and better health care outcomes has allowed Dexcom to really increase our impact. And that impact over the last 5 years has allowed us to more than double Dexcom, growing our revenue up to $4.6 billion last year. Looking at the number of patients we serve, we went from 900,000 in 2020 to over 3.5 million at the end of last year.

We've also been able to optimize our business model and are now operating at margins of over 20% with additional room to go as well as creating a very strong cash flow engine. Now these financial results are rewarding, but what's more rewarding is the impact we have on the lives of our patients. These results are part of something that's very fundamental. It's about creating solutions that meet the needs of users and then putting the needs of those users above anything else. So I do want to take a moment to sharpen our focus on the why behind Dexcom. It's all about our customers. It informs everything we do every day. Today, I'm honored to share a story from the next Dexcom Warrior. He's a hometown hero, San Diego Padres, Mason Miller. Now Mason is one of the most dominant pitchers, relieving pitchers in Major League Baseball. He routinely throws over 100 miles an hour. He's got a near-record strikeout rate, and he does all of this while managing type 1 diabetes. He's an incredible story. We're proud to announce our partnership here and to show you the world premiere of this video.

Let's take a look at Dexcom's latest warrior, Mason Miller.

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Pretty incredible story actually in talking to Mason. He was really struggling with baseball when he was in college and it wasn't until he got a Dexcom and was able to manage his diabetes that he became the dominant pitcher that now competes at the highest level. It's stories like Mason's and many of our other over 30,000 warriors around the world that are so important to help us educate people about what this technology can do to help them achieve their life goals in managing diabetes. It's so important because diabetes is one of the largest health crises we have around the globe. This is data from the International Diabetes Federation projects that by 2050, we're going to be more than 850 million people around the world living with diabetes. That is a pretty significant increase from the tremendously large numbers we already have today. And this growing prevalence of diabetes is really placing a pretty significant burden on our health care systems in the United States. We spend more than one of every four health care dollars treating diabetes. And if you look at the funnel, pre-diabetes is not slowing down.

The CDC actually recently updated their numbers. We now have approximately 115 million people in the United States living with diabetes that are -- prediabetes. That's 40% of the U.S. adult population. So the question is, how do we extend Dexcom's growth and make a dent in this metabolic crisis. Well, I've laid out 3 priorities for our organization that are set up to drive this next phase of growth. First, we intend to remain the premier glucose sensor for all people with diabetes, use that leadership and extend it to be the premier glucose sensing solution for all people. Second, we will set the standard for customer experience in glucose biosensing. And then finally, we have a significant opportunity that we will capitalize on to grow our international market share. All 3 of these priorities require us to focus on scale, which is one of the reasons why we're very excited to provide you guys later today with a tour of our high-volume U.S. plant here just down the road. And what's interesting is scale is not just about the manufacturing plants and the number of sensors we make.

It's about how we structure the organization going forward and planning for scalable innovation for many, many years. So over the past several months, we've made some pretty important changes to the internal team structure at Dexcom. The goal here is to increase our pace of innovation and ensure that we never compromise on quality or the trust of our customers. So first, we're in the process of recruiting a brand-new role at Dexcom, a Chief Product Officer. This is a role that's really focused on anchoring in customer-focused innovation as well as our product vision, our strategy and our product release cadence. We've also made another very important update. We've combined our manufacturing, supply chain and quality, all under a new leader, new to Dexcom named Zef Cisneros. He joins Dexcom with significant experience across med tech in high-volume manufacturing and lean practices. All of this is in a goal to execute on this opportunity in front of us and ensure we meet the needs of this growing customer base.

We're also excited to announce today that we've been working closely with Elliott Management to recruit 2 new Board directors to our Board, and it was particularly with experience in med tech and high-volume operations. We've had very constructive conversations with the team at Elliott. We've also decided to repurpose the mandate for our Technology Committee, one of our 4 Board committees into the Operations and Innovation Committee. So that committee will now have oversight over both innovation and technology, but also importantly, the operations of the company. These updates to the governance model and the structure -- internal structure of Dexcom are being made in an experience to ensure that we're taking advantage of this significant opportunity and really strengthening our capabilities. So all these changes in leadership are going to help fortify us as the leader in glucose sensing. All of the leadership in glucose sensing starts with a holistic vision of the diabetes ecosystem.

We understand that customers are multifaceted. It's not just the person that wears our CGM. It's also the prescriber, it's their caregivers, it's the payer and it's the channel partners. All of us are working together to provide an uninterrupted exceptional customer experience. And to execute on this vision, one of the things we've established is a competitive advantage in connectivity. We're the CGM partner of choice across automated insulin delivery and connected pens, and we were the first to begin integrating digital health apps into our ecosystem to amplify the value of the CGM data we produce. Also on the clinician side, our Dexcom Clarity software has earned strong recognition as an important tool to help physicians interpret CGM data and make using that data in their practice easier. We're now extending that advantage with direct integration with EHRs. Let's take a little closer look at these advantages. We established the AID category through a focus on sensor performance, clinical work and partnerships. And these are some of our most highly retained, highly satisfied customers.

And as a result, Dexcom is the leader in connected AID systems with more than 1 million users around the world wearing Dexcom sensors connected to an AID system. Going forward, we are going to extend our leadership here with a focus on accuracy, reliability, connectivity as well as the overall user experience for our joint customers with pump partners. But we're also addressing new clinical needs. One of the key struggles with type 2 basal insulin therapy initiation is what often happens is a physician initiates basal insulin therapy for a customer, and they put them at a low dose. And then after a number of months, patient comes back to the clinic, they check the A1c to determine if the dose is right. They often have to make a correction to make it more aggressive. What we see, and as you can see in this clinical study, pretty significant size clinical study, a dramatic increase in A1c once that basal insulin therapy was initiated, and that's because the dose was too low and it wasn't optimized for, in this example, up to 12 months. It took up to 12 months for this cohort of patients to get to an A1c that was slightly below where they started. We have a technology, Dexcom Smart Basal that's designed to solve this problem.

It uses real-time data, interacting with the clinician and the patient to get to the more effective dose faster and get that A1c for those patients moving in the right direction. Smart basal is able to change the time it takes to get to the right dose from over 12 weeks to fewer than 30 days. It is a much faster, more efficient solution and more satisfying for both the patient and the clinician. It really fits well into the workflow of the HCP because they don't have to have the patient come back for A1c tests and then use those A1c tests to modify the dose. It's all done automatically by the G7 product in the background, giving that user a recommended dose every day. This technology has already started rolling out. We've got it in a number of clinics around the U.S. We've learned some great things about the workflow in the clinic. We've already made some changes to how we're managing accounts to fit in with some of the workflows that we've learned about in these primary care offices.

And we look forward to rolling it out in the coming months across the U.S. and then ultimately rolling it out internationally as well. But Smart Basal is just one example of how we're differentiating our products with software. What's really interesting is despite all of the incredible advancements in automated insulin delivery systems and insulin pumps, approximately 94% of the people around the world that are on meal-time insulin are using injections, multiple daily injections. People on intensive insulin have to make all kinds of decisions every day about the carbohydrate intake, how much insulin to take, how much correction to take, making sure they don't go hypoglycemic. And it's no wonder that with all of those decisions, 30% to 40% of these folks suffer from diabetes distress, which is a term we use to assess the mental burden of diabetes. We see a very meaningful opportunity to improve this experience and outcome for these patients. Dexcom Smart Bolus is designed to make dosing safer and simpler for these MDI users. It incorporates CGM trends, nutrition information. It allows the patients to avoid hypoglycemia risk while also doing a better job of managing their glucose.

It really takes the variability and a lot of the math out of everyday life. It's a streamlined experience for those who may not have access to pump therapy. And at the same time, we're going to continue to invest in the clinical data and the clinical physicians' experience to enhance the efficiency of their practices. And this is just one more example of how we're doing that. Another interesting point is that clinicians often can't see CGM data inside the electronic health record, which is where labs and all of the other important clinical information resides. This gap produces friction and creates inefficiencies and extra steps for that physician to actually take that CGM data and turn it into something meaningful for their patient. This is one of the reasons why we believe we're seeing such a strong response to the Dexcom Direct EHR integration. This is an API technology, software technology that connects Dexcom CGM directly to the EHR system. It's unique to Dexcom, and it does not come with added costs to the health care system like many other integrations do.

We're seeing pretty rapid uptake. We have over 320 health systems that are either integrated or in the process of onboarding. Every time I report this, this number gets bigger. And this is mostly in the U.S., but we're starting to see uptake outside the U.S., and it is across multiple EHR systems, primarily Epic, but we're starting to see some of the other systems in the market adopt this connection as well. We do look forward to sharing more about this particular solution at the plant when you guys are doing your tour. We've got a full demo of this EHR integration up and running there. And as we continue to expand the experience for the clinician, we're also continuing to push forward on that core CGM technology. So we recently launched G7 15-day. It has an optimized algorithm and extended wear time. And we're hearing very strong response from our users and how much they are enjoying the extended sensor wear as well as that improved accuracy. It's consistently highlighted in their reviews when they talk about the product. And with an improved adhesive that we just got approval for recently, it's beginning to roll out.

We've already got customers in the field experiencing this new adhesive. We expect that this experience that they're having now is going to get even better. The rollout of G7 15-Day is going exactly as we expected. In fact, we are on track to convert nearly half of our U.S. base over to this product by the end of this year. And this month, we're also excited to have -- now have compatibility with Tandem with our 15-day products. So now Tandem joins Beta Bionics and Insulet in compatibility for 15-day. And then finally, we are working to extend this 15-day wear life to our international markets. We're going to start in the second half of this year. We'll start rolling G7 15-day out across those markets as we continue to get regulatory approvals. And as we think about the future, 15-day sensor wear becomes the baseline for all of our products going forward. So as I think back about the history of Dexcom, and I'm privileged to have been part of many of these step changes that the industry has experienced, they've been driven by Dexcom. We were the first to establish glucose alerts and alarms.

We were the first to establish the real-time remote monitoring system that, for many cases, gives parents the first time they can get a good night sleep. We were the first medical device to integrate directly with a smartphone. We're also -- we have had industry leadership in accuracy, reliability. We established the first single-digit MARD. We were the first to get the nonadjunctive claim. We eliminated finger sticks and then ultimately established the iCGM standards. So these are the types of step changes when I think about the history of the CGM category. And so the question is, what's the next step change? And how are we going to deliver it? Well, this is one of the fundamental questions that I've been addressing as I've stepped into the role of CEO, I want to make sure that our next product is a step change. And to help figure this out, we go to where we always go, which is our customers and our future potential customers. So we've been talking to patients, clinicians, people with diabetes, people with the diabetes community, many of which we've had partnerships for a long time.

I also recently formed the Customer Advisory Council because I really want my entire team tuned into the needs of the people that we serve. And what did we hear consistently from this group? We have heard that the #1 thing that this group wants is they want reliable glucose data. They want a product that's accurate, they want a product that's reliable, and they want a product that's easy to use. If you look at the current state of the CGM industry today, the top 2 reasons that an individual stops using their CGM is because they don't feel that the glucose data is reliable enough. You can see a point in statement here from a CGM customer from social media. What users like myself really want is the product to be accurate and reliable. And while we have great performance, industry-leading performance for accuracy and reliability and sense for wear with our G7 15-day product, it meets the needs of many users, but not all. So we see some pretty significant opportunities to enhance the performance of this product and ensure that it meets the needs of all users. And we hear this across the spectrum. It's not just G7. We hear it from our D1+ users in Europe.

We hear it from our Stelo users here in the United States. Everybody wants these systems to be more accurate and reliable. And so the question is, how do you actually improve sensor reliability and reduce the variability that we see? Well, to materially improve sensor reliability, there's basically 2 things you have to control. The first one is the design and the manufacturing process of the sensor. And frankly, today, and you're going to see it when you go to the factory, we've pretty much managed this variable. If you look at our -- the way we build our sensors, you're going to see this, you're going to see every step as we do our process controls. And then ultimately, you'll see that we factory calibrate and test every single sensor before it goes out the door. The other source of variability is a little bit harder to control. This variability comes about when you put a sensor -- when you insert the sensor under the skin in a person's body. We all have unique physiologies. We all react to these sensors slightly differently, which produces some variability for that sensor. And at the moment, CGMs have very little ability to adapt to this physiologic change.

One of the interesting things is Dexcom CGM today, you can calibrate it, right? You can take a finger stick and enter that into the device to calibrate it when this type of situation occurs. Some users today do. They do that feature. But if you think about it, and it's helpful for them. But if you think about it, it's burdensome and it comes with its own problems of what's the accuracy of that finger stick. So this really brings me to the next step of how are we going to make a step change performance in CGM. Well, the answer is the G8 product. Dexcom G8 builds on the G7. It's a 50% smaller form factor. It has advanced sensing capabilities. It's really about strengthening everything across accuracy, connectivity, system design. It doesn't just represent a step -- a small change. This is a step change. It is a completely new product platform. The improvements are very exciting, and they're much, much more than incremental. G8 is actually going to change everything. The way that it does this is it is a sensor that's going to adapt to that physiologic variability that I talked about. This data is from a clinical study, we've got G7 and G8.

One of the things you'll notice about the G7 is you've got a good distribution of performance there. This is an MARD graph, so a graph of performance. But you can see those outliers over on the side. Those are the most egregious ones, and those are the ones that really are generated by some of these physiologic changes that we see when a sensor is inserted. And those are the types of sensors that produce those experiences that cause customers to stop using CGM. The G8 system has additional technology built in based on a whole new silicon chip design and algorithm. Much of this has been in development for several decades at Dexcom because we've always had this idea of trying to do this, but now we're finally proving feasibility that we can make this happen in the G8 product. And what it's doing is it's measuring additional signals from that sensor beyond just glucose that allows it to adapt to those physiologic changes and reduce the outliers in real time and eliminate them. The G8 really combines the factory calibration with this adapting system that allows the CGM to self-adapt with every user.

It's a precise sensor that's going to adapt to the body over time. And we expect this to really enhance the user experience. Now our teams are marching rapidly towards submission of this product next year that will facilitate a launch either at the end of '27 or early '28 depending on the regulatory review timing. We have some pretty strong momentum going with G7 10-day and G7 15-day. We intend to carry that momentum forward into the launch of G8 in a multifaceted view of our customers. We have purposely focused on ensuring we meet the most important need for users in terms of accuracy and reliability of glucose readings. But right behind that product is a multi-analyte version of G8 that will add to the product portfolio. So I think what's important to know is about all of this technology is being developed for all people with diabetes, not a specific subset. And I think you've all seen it the coverage momentum for CGM across the world and across a broad spectrum of diabetes is continuing to build. Clinically speaking, these outcomes have been repeated multiple times by Dexcom.

This is data from our type 2 registry, where we've been showing reduced A1c, sustained weight loss as well as greater control and reduction of medications. This is in people with diabetes, type 2 that don't take insulin. We've also recently seen a very important update from the American Diabetes Association in their standards of care. They've added a recommendation, a broad recommendation for CGM for all people with diabetes. So we're really starting to see some good traction here.

We also, as you guys heard, on our last earnings call, we talked about another PBM, the next largest, starting to cover CGM for all people with diabetes this year. And while we really appreciate this momentum, we're not going to stop. We're going to keep generating the clinical evidence that we need to drive more and more access around the world for this technology. So we've set the standard for what clinical evidence in CGM looks like with the DIAMOND study and the MOBILE study, and we're very excited to be doing the next readout of the CONNECT trial. The CONNECT trial, just for a quick summary, the main point of the study is it's looking at A1c reduction in people with type 2 diabetes, not an insulin. One of the things you'll notice is there's a nice breadth of medications utilization in the study, so a pretty broad spectrum of patients, which we feel is important, including those that aren't even using glucose lowering medications. We feel that's important to capture the full spectrum and benefit for this population.

And we do believe that the study data from this is going to be a real anchor in our access story as we look to expand access to CGM for all people with diabetes, both here in the U.S. and internationally. The readout -- the full readout of this study is on Saturday, June 6, 1:45, the American Diabetes Association in New Orleans. We hope to see many of you there. And so based on this strong clinical data, we do expect a Medicare coverage decision anytime between now and the end of this year. And what we expect is the coverage to take place and count next year. It could -- that could kick in at any point. What we've decided in our plans is that we believe that coverage will come the middle of next year. It could come at any point. And when it does, we will be ready. But I want to be transparent about how we're thinking about it. We do expect again to hear before the end of the year on a coverage decision and for the coverage to take impact next year.

And John is going to cover this a little more, but this coverage decision will basically double the addressable market here in the United States in terms of those that are covered for CGM. And so you can see there's a ton of excitement building here, and there's lots ahead. But I do feel like we're still just getting started when you look at where we are as a CGM category and the opportunity there exists both here in the U.S. and abroad. So I'm going to close this section by reiterating a very simple point. Everything we do starts with customers. You're going to hear that theme throughout today. And I hope you experience it directly when you meet some more of our team members later this afternoon as well as some of our Dexcom warriors. And so when I think about what we as Dexcom need to do is I've instilled in my team, we need to dig in and execute on this amazing opportunity we have to have an impact on people with diabetes. So at that point, I want to introduce a new team member that we joined Dexcom last year. He's going to present in greater detail our commercial execution plans. Please welcome Jon Coleman, our EVP and Chief Commercial Officer to the stage.

Please welcome EVP, Chief Commercial Officer, Jon Coleman.

Good afternoon, everyone. I want to join Jake in thanking you for being here, making the effort to take the time to hear us articulate our vision for the company and to give you reasons to believe why we can execute on that vision. A little over a year ago, I was approached by [ Spencer Stuart ] about this opportunity at Dexcom as Chief Commercial Officer. And I had 2 impressions at the time, 2 thoughts. The first was how ambitious a vision the organization had to be able to be in a position to add millions of patients lives to the technology and also to grow the revenue by billions of dollars within a fairly short period of time. The second thought I had as I reviewed the job description was that what they were looking for in a Chief Commercial Officer aligned with my 15 years of experience at Masimo, where I helped roll out as the Chief Commercial Officer there, the extension of the brand across the globe and also leveraging some of my experience when I was at Pfizer Consumer Healthcare running a lot of their OTC businesses, where I had an opportunity to live about 10 years abroad.

So I -- as I thought about that in preparation for this meeting, I thought how interesting it is, I've had the last year to dig in with my teams, make some changes, spend time in the field, get to know the individuals that report to me and get a chance to get to know the organization and build this LRP from the ground up and not from the top down. Because my mandate was from Jake, from Kevin was to build it based on what we felt we could do, not build it based on an expectation of growth at a specific target. And that's exactly what we've done. And what I'd like to articulate is my confidence in what we're presenting to you today, why I believe we will achieve it, what are the facts behind it, what's the momentum that we have, and I'll give you specific reasons to believe why we are ready for this opportunity. So it's not just that we're relying on CMS to expand coverage, although that is built into the plan. There is so much more that we're ready for as we've prepared for this moment. We've done it both in the United States and we prepared internationally. And I'll explain in some detail what I'm referring to. First, we have the products that we need.

Jake described what those are and what they are going to be in the future. We expanded our sales force a couple of years ago. It wasn't just the expansion. It was the focus on where patients will be going to be cared for as they deal with their burden of diabetes. And then we worked aggressively to expand our coverage in pharmacy and other areas in the United States as well. At the same time, internationally, we looked at this and said, there are access opportunities, both in the short, medium and long term that we can leverage to really drive growth internationally and at the same time, be judicious in expanding our presence and footprint around the globe. I'll speak to some of those things as well. But let me speak first about the U.S. You're familiar with this data. We know on the far right side of this chart, there are 15 million covered lives in the U.S. We also know that there are an astounding 9 million people that are not on CGM. And it's our opportunity at Dexcom, our obligation to figure out how to align the needs of each of these different groups within diabetes and ensure that our products and the experience they have with us match those needs, and they are different needs across each of these categories.

Jake referenced this a minute ago. We expect that this coverage is going to double by 2027. Some of you may have seen our previous statements, we expect the CMS coverage to add 12 million lives. So then you say, okay, that's 15 million plus 12, 27, where is the other 3? We expect that, that will be following Medicaid formularies that will be coming online throughout the year as well, following on the footsteps, so to speak, of CMS. And I guess the point is there's just such extensive opportunity. But the thing that we have to do at Dexcom, again, is ensure that our messaging, the way we're speaking and delivering the experience to our customers aligns to their needs. Otherwise, when all of these people come in, you say, how do you keep them? That's the question we're asking ourselves every day. How do we help them? We do it by personalizing the experience. You know as you look at the left side of the slide, the people who are dealing with this burden of type 1 are dealing with dosing, insulin dosing decisions. They're dealing with avoiding hypoglycemic events, minimizing them as much as possible.

On the other extreme, for those who are at type 2 NITs, they're wondering how did I get here? And what do I need to do to change this to avoid it from progressing into something where I'm having to use insulin. They're wondering what part they played in that, maybe feeling guilty and overwhelmed by the burden of that. And we're there and our intent is to be there as an accountable companion to help them work through what they need to do with data, but with specific insights that we're going to give them, and I'll explain to you what I mean in a few minutes. Here are some of the things that these type 2 NIT patients are looking for. They want to resist many of them, resist food cravings. They want to be consistent in the way they use exercise to help them manage their glucose levels. They want to stick to a healthy diet, many of them. But they need to understand from us how exactly is Dexcom's data going to help them do all of those things, like understand what the food that they're consuming is doing to them and what the exercise that they -- some of them want to do is -- how it's going to benefit them.

So they have a lot of knowledge with our technology. What they need is a companion accountable to helping them get through it. And that means we've got to be very specific and nuanced in the way that we speak to them, and that's what we're working on. We've had the fortuitous opportunity to welcome Stelo into this portfolio about 1.5 years ago, and we have learned a ton. Some of you might think, okay, well, I thought Stelo was health and wellness. I thought Stelo was pre-diabetes. It is, but we found that a lot of type 2 NIT patients who don't even realize they have coverage have come into the franchise through Stelo, and we have gleaned a huge amount of information about how to speak to them, how to inform them and how to help them. And as one, for -- I used Stelo prior to joining the company. I found it extraordinarily helpful to appoint and so this next video that we're going to show you is going to explain to you what we've learned, what changes we're going to make to the app to enhance the information that we provide with the objective of being a companion, as I said, an accountability companion to our patients and those who use us.

And then you'll see in the video how it's not just our intent to keep it within Stelo, it's to migrate it into the G7 products to bring those technologies the same benefit and insights and those patients, the needed information they need to make changes and avoid potentially sliding further up the acuity scale. So here's the video.

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So I hope that you can see from that video, the things that we're going to be doing to enhance the Stelo experience through this enhanced app. But it's not stopping there. It's going to migrate its way and help us with type 2 NIT patients. to inform them as to what we can do to help them in a way that will really, really make a difference. Just briefly, I've been wearing this new version of Stelo for several months. I logged my meals. I get a meal score. So it tells me like I had a banana a couple of weeks ago. I had no idea that a banana would spike me to 190 and keep me at 190 for 2 hours. I didn't know that. And then I found that exercising at a certain time in a certain way, layering foods in a certain way was all helping me.

And then the app would tell me, hey, I noticed that you did this, and I noticed that you ate this time. I know you ate a little longer, a little later. And you might want -- and it gives me these insights. And I'm telling you, it is changing the way I am approaching this. So I've been worried about sliding into type 2.

And now I've got like an injection of hope around this app that's helping me understand what I can do differently. It's changing my behaviors. And that's what we're going to do here with the G Series as well with the aid of Stelo. We've already got a retention advantage versus our competitor. But I'm convinced that this sort of personalization is going to give people a reason to stay because they're going to see the reason for why they should use it, and they're going to see the impact on their lives. So we're going to see, we believe, this retention gap widen, our retention strengthen, and we've got work to do there, and we're doing it now. Because otherwise, you sit here and you say, you've got this tsunami of new patients coming your way. You want to help them. It's a burden. So you want to do everything you can to inform them, help them and make it easier for them. Now, we know that there are better clinical outcomes if people use the technology. This chart, there are 2 lines on this chart. And this is looking at A1c over 12 months.

The first line, the top line shows you an A1c reduction from using CGM less than 90 days in a year, which is great. I mean I'm glad that people are using it. They're using it though less than 90 days, and they're seeing an impact from that. But the bottom line is -- are those individuals who are type 2, who are using the technology more than 270 days a year. Look at what happens with their A1c reduction. It is profoundly improved. And what does that mean? I think you're all familiar with the concept of time and range. That difference means that an individual with type 2 will be in range 3 more hours per day 21 more hours per week, right? And over time, that makes a difference in clinical outcomes. The other thing I love, that was a study that was published in JAMA last year. That same study showed the combination of CGM with SGLT2s and also with GLP-1s, those top 2 graphs. And you can see, of course, the lighter green line shows improvement using those drugs, which is wonderful and great. But what's fascinating is long-term use of CGM in combination with those 2 medications does even more for patients and has an even more profound impact.

Now how do we tell people about this news? How do we let them know? Well, the way that we do it is to make sure that we ourselves are focused on where to go. You all know that endocrinologists are primarily dealing and helping type 1 patients. And you know that primary care physicians are primarily going to be working with the type 2 patients. So we need to make sure that we are focused in that same way and providing insights to those different groups who have very different needs. I mean there's a lot of information on this slide. But if you look down the left column, it talks about the endocrinologists and the primary care information, knowledge, brand knowledge, and then goes down through a bunch of criteria, including their confidence in CGM. And it won't surprise you that endocrinologists have a high level of confidence in CGM. Primary care physicians who are dealing with patients for a whole lot of reasons as we know, have limited confidence in the brand or in the technology. So we have to make sure that we're focused calling on, bringing them information that also lightens their burden that makes it easier for them to get people on the technology. So people are not going back to them, dealing with them on how to onboard, et cetera. We're helping them with that. We're giving them the information that enables the PCPs to see more people and not sort of continually informed people who have tried to get on the technology. This, again, is one of the reasons why prior to my arrival, there was a decision made to expand the sales force in the United States by 40%. It wasn't just the sheer size of it that we were trying to realize. It was making sure that we were calling on primary care physicians anticipating this wave of patients that would be coming through and seeing these PCPs.

We know it's working because we're seeing share gains. We're seeing share gains on the left side of this chart in these primary care offices. You see in the middle of that in 2023, a roughly 30% share. 2025 has grown close to 40%. We're just getting started. You go over to the right side of this chart, you'll see that Basal share has gone in a similar way between '23 and '25. The more we personalize and speak in a nuanced way to these patients, the more we inform the doctors, we lighten everyone's load, the more this share will grow, and it's happening now. So in summary on the U.S. before I transition for a few minutes over to international. We understand these customer needs. We're focusing our products on those needs. We've expanded the sales force. We're ready for the tsunami of new patients that are going to be coming, and we're confident that through the work we're doing, we're going to be able to lessen the burden for these patients and give them a reason to try and use the technology for extended periods of time in order to optimize their outcomes.

Now international. We're going to -- as I mentioned to you earlier, I lived in Brazil, I lived in Singapore. I lived in Toronto, I lived in the U.K. I love international. I've done a lot of work there, but we need to be careful in the way we spend and focus as we go forward, and we're going to do that. This gray area of the -- gray area of the world is where Dexcom was not in 2015. In 2015, $50 million in revenue, roughly 30,000 patients, only 3 countries with over $5 million in revenue and zero direct sales. All of this revenue is coming through distributors. Then you go back to 20 -- then you fast forward 10 years to 2025, and you'll see what we've done in that 10-year period of time. And you know that there -- as Jake alluded to earlier, there are 0.5 billion people today outside of the United States who have diabetes, and it's going to grow to something significantly more. So you can see the progress we've made in this time. But I think if you fast forward 5 years, you're going to see in the end of our LRP, you're going to see a multiplier effect on where we go with this. So you'll see multibillions of dollars in international, which we should do and we can do and we will do.

One of the reasons we're having success in this area is because we have a portfolio strategy, which recognizes the fact that one market in international is not all the markets in international. They have very different approaches to reimbursement. They're in different phases of reimbursement. There are some that have broad reimbursement. That's where we have our G Series product. There are places where there are tiered reimbursement, of course, and that's where we introduce our D1+ product, which is really being used for people who are not pumping insulin. And then finally, when there's limited reimbursement, we'll use a plethora of products. And there's one that we're going to be introducing very soon. We've already prelaunched it in Germany. We're calling it Flex. This product is going to be focused on people with type 2 diabetes, Basal NIT. It's going to be specifically geared toward them. The app is going to speak to them in a way that makes sense to them. And we're going to then after launching this in Germany in the short term, officially launching it, we will expand it internationally in many other locations.

We're also going to be expanding Stelo, starting this year in Korea, Australia and New Zealand and then soon thereafter in the U.K. Now our international growth strategy, as I mentioned at the beginning, is really based on 2 things. First, it's recognizing that access is coming. And we know where it's coming and we have a sense for when it's coming, and we're focusing on where to do that. And then as I mentioned, I'll briefly talk to some geographic expansion. A lot of flags and a lot of information on this chart. On the far right at the bottom, if you just tally that column, really, I think the first takeaway is in these 10 big international markets, there is roughly the same size of opportunity as there is in the U.S. So this is why we're going to focus and continue to go deep in these top 10. The second thing that you'll notice in the upper left -- on the left side is that the type 2 -- type 1 penetration is slightly at or above the U.S., which is great. But then when you look at type 2, you notice as you go down the slide in the center, there's a lot of opportunity for expansion in the type 2 space.

So what we're doing is simple. We're working with clinical bodies, leading clinicians in these different markets to put together what's needed, the clinical evidence needed to present to the governments to ensure that they understand what benefit could be had from their constituents using CGM for a prolonged period of time. And here's the way we sort of map this out these 10 markets in these different categories. So on the far left, you'll see what we think is near-term 1 to 2 years, medium, we're defining 2 to 3 and long term 4 plus. And then those 3 columns, type 2 IIT, type 2 Basal and type 2 NIT. What I love about this is we're not forcing or making this something up. We're taking it and looking at what's happening, what we're seeing on the ground, the research that we're creating and what it's going to take in order to penetrate these markets. We think this is a pragmatic approach, which extends itself out and across our long-range plan. The other thing we'll do, we'll do this carefully as well. We did a lot at Masimo, and we had great success. Dexcom had great success here going from distributors to direct markets basically transitioning.

When we did it in Germany where we bought that distributor several years ago, the revenue quadrupled within 2 years. We're doing the same thing in Japan. We just transitioned the sales force from a third-party group to our own. We've hired those people we're going. And we've done it as you see at the bottom in other places. And we have a road map of other places where we'll be doing this moving forward. Jake mentioned our scale. We're going to leverage that through the onboarding of our plant in Ireland. We're going to use those -- we're going to use that full capacity to help us expand. Jeremy is going to come up in a moment and talk about 15-day and how that incredible product is going to allow us to leverage opportunities around the world if and where we need to be more competitive in tenders, et cetera. And finally, we're going to leverage, you see all those products at the bottom where we need to across the portfolio and across these different markets. It's working now. It's going to work moving forward.

In the last couple of minutes, here's where -- here are some 3 of the biggest markets where we plan to enter in the next 2 years, hopefully sooner, India, Brazil, Mexico. You can see the total number of diagnosed patients with diabetes in those locations. It's a huge number. That's not necessarily what attracted us, although that is a reason -- there are a lot of people, 15 million among those 3 countries who are intensive insulin therapy users. And that, we believe, creates a major opportunity for us to go after them in the short term. So in summary, my impression a year ago about the ambition and vision of Dexcom to grow its patient base profoundly to grow its revenue dramatically. I think is backed up in the evidence that I presented today as we built this LRP from the ground up.

We're ready in the United States through our expanded sales force, which is settled in and focused where we have expanded pharmacy coverage and where we have the right products that are now really beginning, I think, to build on this legacy -- build on this idea of nuanced ways in speaking to type 2 diabetics to keep them and retain them and help them along their journey. And second, and finally, we have a great international plan. We have great people in the field. We have a really measured approach and we're going to execute it with excellence. So with that, I'll turn the time to my esteemed colleague, our CFO, Mr. Jereme Sylvain. Thank you very much.

Please welcome EVP, Chief Financial Officer, Jeremy Sylvain.

Thanks, everybody, and thanks for joining us here in Tempe. I think we're really excited to host you and host you at our facility later today. And I know you guys took a lot of time out getting out here to see us. So really thank you again. I really do appreciate it. What we want to talk about here is we've started with Jake talking about really our product portfolio, the clinical evidence we're generating over time and the really exciting opportunities ahead of us. And Jon came up and talked a lot about the commercial opportunities, and you can see there's a long way to go. So we're going to turn in to now talk about really the financial and the investment case. And I think Dexcom has an incredibly compelling investment case. We have a durable double-digit growth runway. That's certainly one. We believe and we know we have really a leading cash flow generation profile through gross margin, operating margin and cash flow generation over the coming 5 years and look forward to sharing with you a little bit of the how. And we believe there's a significant value creation opportunity available for us today.

It's enabled by what you can see at the bottom here is there's an incredibly large TAM that's available to today. We have an incredible product portfolio design. We have a massive unmet need, and we have investments targeted in driving that growth. And we look forward to talking a little bit about how those impact us over the course of the 5-year period. We've demonstrated the capability, and I think we'll demonstrate it a little bit more to walk through some of the leverage initiatives we have. And lastly, we're going to talk about our capital allocation strategy. It's been disciplined over time, and we're very excited about it. So let me just first start with our sustained double-digit revenue growth. We have a 10% plus every year, each year in our LRP through 2030. I want to be very clear. This is not a CAGR. This is not an average. It's 10% plus each year every year. And it's driven through multiple years of significant growth catalysts. And we're going to walk through them on the right through product launches and expansion.

And as we dig into it, I hope you're going to see we are going to unlock lives, coverage of lives significantly over the next few years where we're going to exit our LRP in a better position than when we even started. We'll talk about that in a second. I also want to let you know that this isn't a rosy sky outlook. This is a very grounded outlook. This includes competitive bidding assumptions starting in 2028. This includes competitor product launches over the course of time. This includes classic price mix work that we'll go through over time. And we still feel highly confident in 10% plus every year. And as you look at the growth catalysts, I'm going to walk you through those for some of the whys. Some of these have already been covered, but we're going to talk about launching 3 products outside the U.S. this year. Dexcom Flex, it's going to start in Germany, but make no mistake, it's going to go beyond Germany over time.

With the great feedback we've seen on Dexcom G7 15-day, we're going to launch that outside the U.S. this year. And we're launching, as Jon just said, 4 countries in Stelo. And that's going to continue to happen outside the U.S. We're going to continue to expand those. The following year is when we launched G8. Jake alluded to it at the end of '27, early '28. G8, an incredible step change in accuracy, a sensor that adapts to you. It's an incredible opportunity. And Dexcom ONE+ is going to launch in 15-day as we move into 2027. And we've seen incredible uptake across both our 15-day, and we expect to see incredible uptake with our G8 platform. We're going to launch G8 outside the U.S. and on Stelo in 2028 and then outside the U.S. on Dexcom ONE+. And that's just in what we've announced today. So those catalysts, as we put those in front of coverage expansion are going to be incredible opportunities. But now let's talk about the coverage expansion expected. And we'll get into it a little bit more on the next slide, but it's a very exciting opportunity here. Medicare.

Obviously, we expect an announcement any time now. We obviously -- for LRP purposes, we put it in the middle of 2027, but we expect an announcement at any time here, and we will be ready. We will be ready when that time comes. We'll be ready to serve the unmet need, and we'll be ready to serve it with product enhancements over time. I think you guys saw some of the app improvements we're launching with Stelo here recently. That will come over to the G Series. We expect that to be a differentiator longer term. You can see below it on Jon's slide, he laid it out. We expect expansion of coverage. This is just in the top 10 markets across type 2, IIT, Basal and type 2 NIT over these years. So there's an incredible opportunity that sits right in front of us today. And just to show you how big that opportunity is, let's talk about it. Let's talk about how many lives we're going to expand that to. This year, we have a little over 23 million lives covered around the world. We expect to exit around 52 million, more than double the covered lives by the end of this LRP. And maybe what's most interesting, the percentage of people that are on CGM as a percentage of covered lives will go down from where it sits today.

This is the opportunity ahead of us. And we're making these assumptions under a measured basis. We're not assuming hockey stick effects or anything along those lines. What this is, is a measured basis, a very reasonable grounded assumption. With this type of expansion in front of us is incredible opportunity. As we exit 2030, the expectation, just to give you some context as to where the penetration sits is in type 1 around the world getting close to 70%, 80% and intensive in the U.S. Similarly, but basal of mid-40s and type 2 in the 10% to 15% range. Everywhere outside the world, even lower than that. It just goes to show you even as we add all of these users over the next 5 -- 4, 5 years, you're going to expect to see even more opportunity as we exit the LRP. Now that's just in the U.S. and the top 10 markets. There's also the opportunity for geographic expansion. Jon alluded to it, there's 500 million people outside the U.S. that have type 2. And as you get into the countries outside of the top 10, many of these fingersticks are still the standard of care.

And we've shown time and time again as we move into these markets, and we're able to replace finger sticks, coverage comes. With Dexcom ONE+, we went into 7 countries, none of which had coverage, 6 of which established coverage within the next 18 months. This is the kind of opportunity we have outside the U.S., and we're going to go into some of these major markets. Over half the people with diabetes in the world sit in APAC. This is an opportunity, a massive opportunity in front of us. And then Stelo and the U.S. -- U.S. and international. Stelo is an opportunity to get out in front of really diabetes, prediabetes, health and wellness. As the world continues to look to be healthier where possible and technology advances, this is an opportunity to go deeper in the U.S. One of the things we have a great opportunity here, and we'll talk about it here in a second, is what and then what to do with it. Jon alluded to it earlier. Stelo will tell you what your glucose is. Now it's going to tell you what to do.

And that's really important when it comes to therapy and lifestyle change. That's also going to come into our G-Series product as well, but this is really important as we move Stelo deeper into the U.S., where there's more penetration, more opportunities for retention and utilization and certainly as we move outside the U.S., where there's a desire for this particular product. So we're really excited about the opportunity here. And maybe lastly, let's talk a little bit about the catalysts, right? This is a recap of what's gone on, but the catalysts across the organization are incredible. Obviously, we expect CMS coverage. We've talked about it for some time. It's not an if, it's a win, and we've given you the win, and we're really excited to share with you the results from our CONNECT trial in a few weeks. But there's an opportunity here. We've assumed that CMS penetration goes at half the rate of basal even after full coverage.

There's an opportunity there to potentially even do any more. International access, where we've moved direct into markets, and I'm going to move the 2 in the middle together, where we've gone deeper into markets and gone direct in markets, we've accelerated our opportunities there. And we have the right product portfolio to do it. We talked a little bit earlier about the portfolio. That portfolio was designed for tenders. It was also designed for coverage. It's really for both, and that's why we've ultimately built it. The Stelo expansion opportunity is incredible. We talked about diabetes being 550 million people across the globe, 589 million now. That number is even bigger for pre-diabetes. The opportunity is incredible there. And what is most interesting, and we haven't put any of this into our LRP, but it's a real big opportunity for us is retention and utilization. As we integrate more and more of this AI experience, so what to do with it, how do I improve it? What can I do with this product? How do I use it more? We're really excited to that product experience, combined with an elevated level of service provided by elevated levels of coverage to potentially increase our retention over time.

And again, that would be an upside opportunity across the board. So I hope you guys are excited as we are about the revenue opportunity that's ahead of us. And certainly, that's just one part of the case. But there's another part of the case, which was, what about the profitability over time? We expect gross margin to grow into the high 60s by the end of our LRP. And like I said, this is a base case on how we think about it. 15-day will be our platform across the board. That is our base. That is our expectation, and we will move on to 15-day over time. We also know that that's going to take some time to convert. So we've included this conversion schedule so that you guys can have a look at it. Please know that the graph to the right, nothing happens in an exact straight line. It's for depiction so that you guys can understand that transition over time. But these are all of the products that are moving over to 15-day, which provides an incredible opportunity around gross margin expansion. But we're not stopping there. G8, our expectation is it costs at least 10% less than it cost to make G7. And that includes all the upgrading of silicon, all the upgrading of capability, technology.

We are going to improve the product, and our expectation is it costs less. We're going to continue to improve our focus on optimizing freight and scrap. Some of the challenges we faced in the past, the opportunities ahead of us are incredible. And we're getting through those time and time again. You can see it in our improvements. This year, we expect to do even better over time. And this is a positive. You guys just make sure you consider it the warranty rate. While the warranty rate may go up a little bit, that's okay. It's a 15-day product. This is an excellent thing for us. We've also included the assumptions around price, channel, product mix. Again, we want to make sure we understand as we go outside the U.S., there may be some cash pay markets we have to go after. There may be some markets where it's lower down the acuity curve. We've also included that in this number. And we are including an assumption that there's cloud costs supporting GenAI features. A long time ago, we talked about shifting to a software company. You're starting to see us make that move. And I hope you see that through our product, our app, our experience.

The hardware and the technology continues to get better, but so does our app, the experience and what we really want to do, which is provide solutions to people at the end of the day. So this is a very exciting time across gross margin, but it doesn't just stop there. We also expect our non-GAAP operating margin to get to 29% to 30% by the end of the end of the LRP. That is getting to world-class margins. At that point, we'd be at the top end of medtech. And we're really, really excited about it. The way it works out, it's about 150 basis points a year, mostly anchored in gross margin expansion. But the expectation is we continue to make investments in our organization, investments in generating AI, generating clinical evidence, generating expansion capability capacity, going into new countries, and we'll lay out what some of those targets look like to do so and still get leverage across OpEx. And so it's an exciting time from that perspective. And just to put it into some context, this is our operating expenses as a percentage of revenue in 2025 and where we're going to go. You can see that we're going to continue to invest in R&D.

And I know Jake is going to come up here after me and talk about some incredible things we're working on longer term in R&D, which I think is going to be really exciting. We're going into all of these countries, and we are not going to starve the organization. We can create these world-class margins while not starving the organization and really fueling the growth engine longer term. And then lastly, G&A. Look, there's G&A work that's going to be done. We're going to have a team that invests in AI. We're going to have a team that invests in clinical evidence. We're going to have a team that supports infrastructure builds. Why? Because we have so much more to get after, but we're still going to get leverage across G&A. And doing so, we expect to hit that level. Now as we invest thoughtfully in these long-term levers, there's one other thing that I think is important to lay out, which we didn't lay out earlier, but I think it's also important in the back of your mind, which is through this process, we also have generated a ton of cash flow. We have one of the best cash flow models in all of MedTech. We expect our adjusted EBITDA margin to grow to 36% to 37%, again, as we get into those mid- to high 30s.

That's a very significant cash flow generation opportunity. And what we've done is as we've created profitability over time, we've done so in a way that ultimately generates free cash flow conversion. And you can see we've had an incredibly high free cash flow conversion rate over the years. And there's even more opportunities than this because one thing we haven't discussed yet, but I think it's an incredible item is what you see at the bottom of this slide. As we've gotten smarter and smarter over the years, we've thought about our machinery and our machinery and how it supports our growth algorithm. And I think many of you know, we've leaned into technology more and more. You're going to see it this afternoon. The lines you see this afternoon are the same lines you're going to see that are going to produce G8. That is a massive opportunity. And if you think about the CapEx we invest every year, it's an opportunity to leverage off that over time. So a very significant opportunity here across cash flow. Now you may ask, how are we going to do this? We talked a little bit about 15-day. We talked a little bit about, obviously, the revenue.

So how are you going to get the leverage? We started this 3 years ago, something called cost to execute. It's built into the fabric of our organization. And the way we think about cost is not just about how do we cut cost. It's about how do we spend our time and our opportunity cost to improve the life of the patient. That's at the end of the day. If it's not improving the life of the patient, the customer, the user, why are we doing it? How are we doing it? And so we want to put all of our costs into these areas. And through that process, we've created leverage. We are trying to eliminate the things that are necessary and invest in those things that are necessary. That framework has helped us out well. That framework was there last year as we got 300 basis points of operating expense improvement last year alone. But we're going to leverage our global infrastructure. These are investments that we've already made. And I think it's really important as you think about the next 5 years, these are the kind of things you're going to need to leverage it, and those investments are already in place now. So think about it, manufacturing at scale.

We've launched obviously in U.S. You guys are going to see our plant there, Malaysia, 1 million square foot facility up and running today and Ireland launching later this year. We invested in R&D centers of excellence. We turned San Diego last year into our innovation center where teams can come together, innovate quicker in person, more efficiently. We've also started in India, where we can leverage the talent base that's available in India to get ever more efficient around software development and hardware development. We've launched a new support model. And these support models are really important. We've built it on a platform that allows for things like agentification. We built it on a platform that allows for self-service that allows for us to have what's called my Dexcom account. So when you call, we know who you are. We know your history, we're able to be more efficient. We're able to elevate the customer experience but lower the cost of ultimately supporting it.

And many of you may already know this, but over 35% of our nonmanufacturing organization already sits in GBS locations. That was 0 in 2018. And that fixed leverage, that know-how that's built in these global shared service centers as we continue to get bigger and bigger and as we continue to expand globally, we're going to have the capability to leverage these centers to continue to get better. But it doesn't stop there because technology is advancing, and it's advancing pretty quickly. We have what's also called Dexcom AI. AI is going to be a springboard for efficiency really across the enterprise. We talk about it in our product, and it's going to be an important part of our product. There's no question. And we spend a lot of time talking publicly about the impact on our product. But the reality is internally, we spend a lot of time thinking about AI. In 2025 alone, 750,000 hours saved by leveraging AI. And we don't talk about it as much, but when you see 300 basis points of improvement, you know it's there. And those are the kind of things we're doing. Now I'm not going to get into all the use cases here today.

The reason is when you guys go over to our facility, our Chief Information Officer is going to be there, and we have an AI expo. So you're going to see what we're actually up to, which I think will be very helpful and very valuable. These are actual experiences that are taking place in companies today. These aren't PowerPoints. These are actual things that are taking place that are making us more efficient time and time again. So we're going to take you through that. But I think the big takeaway here is we know this platform, this technology is going to be important for the long term, and you can expect us to continue to invest in it time and time and time again. So I talked about revenue. We talked about being profitable. I think both are incredible pieces of the story as you think about our key stakeholders, our customers, our employees. But let's also talk about our shareholders. We have a disciplined approach to capital allocation. One of the things we're very happy to have is we spent a lot of time really having a fortified balance sheet. That's important to take advantage of opportunities over time.

And I hope that, that continues -- you guys see that. I think that's a continued opportunity for us. So when opportunities come up, we have the ability to deploy. What are we going to deploy it on? Well, certainly, we want to fund organic growth. We've been able to do that. Over the years, we've turned cash flow profitability to where we've been able to do that and have excess. We want to be able to support tuck-in M&A. We talked about where we can go and be effective longer term internationally. Every time we've acquired distribution, it's always led to an acceleration opportunity. So there's opportunities to continue to do that and look at distribution opportunities or where there's augmented technology that can help us enhance our technology a little bit quicker. So it's looking at targeted M&A. And we also want to make sure we're able to return value to shareholders through share purchases when we see there's a disconnect. And boy, we see a big one today. So we see an opportunity to return value. We're authorized -- we've already authorized a $1 billion repurchase authorization. It will be fully executed in 2026.

And going forward, we expect to apply 50%, at least 50% of our annual free cash flow to repurchases. We see an opportunity. We're going to take advantage of it. We're going to be aggressive in getting out where we see a disconnect in our share price today. So with all that being said, the revenue opportunity, long-term double-digit growth, we've walked through the catalyst there. Top-tier operating margin and cash flow generation. You've seen our history there, the demonstration we're able to do that, and we're putting in the pieces in place to continue that, and we are committed to returning value to shareholders starting now. We think this is an incredible value creation opportunity. So with that said, let me -- thank you guys for being here. Let me turn it back over to Jake to bring us on. Thank you very much.

Please welcome back Jake Leach.

All right. Hey, everybody. So you've heard from the team, you've seen our plans. I hope that you now see why we're so confident in this plan and our strategy. I've talked about our 3 priorities that are underlying the strategy. And this is all a strategy around durable double-digit growth, some really unique opportunities to expand margins. And as Jeremy mentioned, the ability to really expand free cash flow and use that to reinvest in our business through tuck-in M&A, capital expense as we continue to build out the infrastructure, it's going to take to service this huge market as well as the opportunity to return value to shareholders. And I think about the massive market opportunity in front of us, the decisive steps that Dexcom is taking, I believe it makes Dexcom one of the most compelling investment opportunities in health care today. And really, this plan is just get started. So as we look ahead to the future, I'm very proud of what we've built, but I'm more excited about where we're going. We built a legacy of innovation in biosensing, and all of that is going to help inform where we go next. It was many years ago that we stood up and said we're going to eliminate fingersticks.

And we said that long before we actually knew how we were going to eliminate fingersticks. But it's really that confidence that allowed our reach to expand beyond our grasp that is a very important part of Dexcom, and it's something that I intend to carry forward. So with that visionary spirit in mind, you guys are probably asking what else is next? And so what I thought is I'd spend a little bit of time talking about things that aren't really part of our LRP. There are opportunities that I see for this technology to have significant impact in the future. The first one is I truly envision a day where Dexcom doesn't just manage disease, but we're actually preventing disease. We're building a future towards CGM being able to identify disease risk, slow the acceleration of disease and ultimately prevent it. If you look at the incidence rates, I mentioned these earlier, of prediabetes continuing to rise, the need for change in how we're attacking this problem has never been more apparent.

Evidence shows that through continuous glucose insights, providing people the feedback they need, the education around nutrition, activity, all the things that our system -- that we're building into our systems, it gives people information on their health trajectory. And so we're moving from this idea of episodic health levels to dynamic measurements that really help understand the continuous nature of metabolic disease. The opportunity to intervene earlier and more precisely has never been more clear. And we've actually already started working on the building blocks for this. With our current products, we're generating a significant amount of real-world evidence in different populations of people, those with diabetes, prediabetes, health and wellness. And really, as we start to look at how those folks are improving their glucose control and their disease state with the products, I do really feel that through some focused clinical work, continued interest in preventative care, there's a tremendous opportunity for us to impact and change the lives and health outcomes of millions of people.

I envision a day where we all wear a CGM diagnostically as part of an annual checkup. Speaking of outcomes, there's another significant opportunity for continuous sensing in the hospital. It helps really with the decision-making and patient outcomes that we see in the hospital space. We've been making steady progress on our hospital program, and we do believe that we now have a clear path to FDA approval of the very first continuous glucose monitor for routine use in the hospital setting. The need for better tools to manage glucose in the hospital is quite obvious, and we are looking forward to launching a product in that space next year. At the same time, we also see a significant opportunity for us to have an impact in some of the chronic diseases that are adjacent to diabetes, particularly chronic kidney disease, cardiovascular disease. People with type 2 diabetes are often managing an additional chronic disease at the same time. And we believe that we can provide a value proposition to these patients that will help increase and improve their outcomes.

So when you look across the spectrum of chronic disease, diabetes, kidney disease, cardiovascular disease, we do believe that a multi-analyte system that combines continuous glucose measurement with continuous potassium measurement offers a solution to a very important unmet clinical need, which I'll explain here. So probably asking why glucose and potassium. Well, if you look at patients with diabetes and either chronic kidney disease or cardiovascular disease, they all suffer from dysglycemia, but they also all have challenges with dyskalemia. Dyskalemia is abnormal levels of potassium in the bloodstream. And as, for example, as chronic kidney disease progresses, the danger of hyperkalemia becomes very apparent and can become very costly. The incident rates of hyperkalemia, so high potassium levels in chronic kidney disease patients continues to become a higher and higher risk as that disease progresses. The unique thing here is that there are no home tests for potassium. To measure potassium today, you have to take a blood sample and it's either measured in a lab or in a hospital setting.

And so we intend to change this because we feel like that creates a pretty significant unmet need. And so by sensing glucose and potassium together, we can build a system when combined provides these patients with an early warning to system for hyperkalemia as well as helping them manage their glucose. And so we do believe that this is a significant opportunity for us to have an impact both within diabetes and chronic diseases. And it's simply just one of the things that a multi-analyte platform can do for Dexcom.

So simply put, I do believe we can do more. And these aspirations, they're not just a vision, they're well within our reach and our capabilities. These advancements aren't going to happen overnight, but we do believe that if we execute with our discipline, like we've seen in our 5-year plan that we can make this happen. And as we look to the end of our LRP that we presented today, the end of 2030, I believe we can emerge with an even larger market opportunity than that one that we actually see in front of us today. So with that, I'd like to thank you all for attending, and I'm going to invite Sean Christensen and the rest of the team up for Q&A. Thanks, everybody.

All right. Well, thank you again, everyone, for coming. We will take about a half hour now for Q&A. So we have Matt and Joe available out here. We have the analysts on this side. And as usually, you think by our fourth Investor Day, I would have learned that the stage lights always blind me. So Matt and Joe, if I might need a little help, but I think I can see most of you. So yes, why don't we go ahead and kick us off. So who's got the mic? Yes, David.

David Roman from Goldman Sachs. Maybe I'll just sort of start with one strategy question and maybe tie it to the financials here. Jake, you concluded there with really talking about very future vision for the company. Maybe you could talk a little bit about kind of how you're kind of pushing the bounds here of interstitial tissue monitoring and how that applies across multi parameters, including the hospital setting? And then maybe just I'll ask my related question here to Jeremy. As you kind of go through the LRP and talk about the 10% growth, is any further perspective you can help us to think about your assumptions around volume versus price and mix over that time horizon?

Yes. Thanks for that question. When we think about continuous sensing and the value it can provide, we've obviously found an extremely powerful use case in glucose, originally starting in diabetes, but now starting to expand into prediabetes, health and wellness, longevity options within the hospital. But I do feel that there's a significant opportunity to continue to expand that impact by bringing other analytes into our platform that sense. And when I think about what Dexcom is uniquely good at, we are good at creating technologies that sense subcutaneously, continuously for users. And so what the important thing to do is to figure out what are those analytes that are critically important to be able to really increase that impact. And so when we think about that other analytes, we think about potassium being, as I mentioned, a pretty significant opportunity for something that -- it's an unmet need today.

And there's quite a few others. Not all of them are enzymatic based, which is the type of sensors that our glucose sensors are. And so we're making investments in other sensing technologies that can be applied to the subcutaneous sensor probe so that we can sense multi-analytes all at the same time. So I do feel that over time, we're going to continue to lean into our flywheel, which is this idea of building this incredible wearable that creates this technology and senses anything that's helpful to be sensed interstitially. If there's already a way to do it, we're not going to lean into that. And we're going to continue to use our software capabilities to amplify the value of that data.

And to your question in terms of the price volume mix, the way to think about it is we've typically thought about 2% to 3% price kind of similar to you see today. Not every year created the same, right? We have assumptions around coverage comes when it kicks in. We have obviously assumptions around competitive bidding, but we do assume that mix comes down over the life. And so we're not going to talk about volume because it's 10% plus is our assumption. But I think as you at least pulled out the models and you can see what our coverage expansion expectations are 2% to 3% price, not every year the same mix coming down as we, for the most part, transitioned a significant amount of our product to the pharmacy in the U.S. coverage and CMS fee-for-service is going to be heavily in the DME given its Part B coverage. And so you start to see that mix clearly coming down going forward.

Go to our next question. Why don't we go to Jeff.

Jeffrey Johnson from Baird. Jake, can I maybe -- 2 questions, but let me just try to pin you down on the other analytes there. Just could you help us on the time line? I know you talked about late '27, early '28 for G8 and then I think you said just shortly thereafter, the other analytes, number one. Number two, I don't want to put words in your mouth, but I think in the past, you've made comments somewhere along the lines of if we need to get to ketones, we can get to ketones fairly quickly. No mention of ketones today. It seems like your biggest competitor is still making progress towards ketones, maybe sounded a little better this quarter than last, I thought on getting to ketones sometime this year or next. Just where is your pathway on ketones specifically?

Sure. So important question, and I'll be very clear. We do think there is a component of diabetes care where ketones are important when we think about the spectrum of care. But when we look at the current unmet needs out there, what we talked about in the priority on G8 is the accuracy and reliability of these sensors needs to be better. We are in the process of integrating ketone sensing into G8, but we did feel that the most important thing is to accelerate the technology around the accuracy and reliability of the product. And so that's why we're introducing this new technology that's going to be a step change in performance for all users. Ketones, it will be part of the G8 platform. They're just going to come afterwards. I'm not going to give any exact time lines because, frankly, we're in the midst of doing clinical data right now, figuring out how to make this an impactful metric for users. I think there's still quite a bit of clinical work that needs to be done to determine how to appropriately measure and appropriately communicate readings to users and what to do with that information. It's not nearly as clear as glucose.

And so we're working on those clinical studies right now. So once we have that determined of exactly how to go to market with it, we'll be there.

Fair enough. And then I don't know if this question is for you or for Jon, but outside the U.S., you're going to have a lot going on, it sounds like internationally in the next 2 or 3 years, 4 products, 3 new large markets you're talking about, T2 reimbursement expansion. One, what could go wrong there with all that -- all those balls in the air? And two, I think help me understand just how you're going to position maybe Stelo versus Flex versus D ONE+. Is there any markets where you're going to have all 4 in the same market? I guess I still am a little fuzzy on Flex versus D ONE+, just help me out there.

Yes. I'll start with a high level and then pass it to Jon. So -- it's critically important that we invest in our international infrastructure and our ability in the international markets because in the long run, that's actually where the bigger marketplace is. And so I'm incredibly excited about pushing harder and harder into those markets. We've built a lot of leadership in the United States. It's time to take that and all the learnings and apply it internationally. And so it's a significant -- as you see, it's one of my 3 focuses is to expand this international market share because the vast majority of people with diabetes do actually live outside the United States.

The role of Stelo is really going to be focused on health and wellness outside of the U.S. And the other 3 products will be focused on diabetes and those different groups within diabetes care.

That's the shortest way to sort of answer that. There are some people that migrate, as I mentioned earlier, from type 2 into Stelo. And we're informing them that they have coverage, if they do have coverage so that they can migrate over the G Series that's the way we'll in essence, be positioning those different products in the portfolio.

Yes. And maybe to your last question on the focus. And that's one of the reasons why when you see the investment in sales and marketing and the targeted investments, one of the things we've done, and this has been a key priority of Jake, is to carve out dollars to make sure we're supporting that international expansion. And so if you see leverage in the organization and from all the work that we've done, really the opportunity then is to invest back in growth verticals. And so I think what could have gone wrong is if you don't support it, invest in it the right way. But I think that's what we've particularly done in terms of how we set up the organization.

I want to go to the next question. How about Larry?

Larry Biegelsen, Wells Fargo. One for Jeremy, one for Jake. I'll just ask them both upfront. So Jeremy, any color on the sales and margin assumptions in terms of cadence? And then for Jake, on the type 2 non-insulin opportunity, why do you think it's taking longer for the CMS proposal? And is mid-2027 for the finalization a conservative assumption? And related to that, on the study that you're going to show at ADA, how important do you think it is to see a benefit in the patients on GLP-1s and oral meds?

Yes, I can start with the cadence. And so we haven't necessarily gone year by year. We'll do that as we kind of get into guidance by year. Clearly, I think an easy way to think about gross margin, at least in the near term is we talked about exiting this year in the U.S. kind of approaching 50% of our population moved over. But I think what's really helpful is as you then think about next year and your starting point is much, much higher as you roll forward that base. That's an opportunity on gross margin. When you combine that with some of the 15-day G7 work that we'll be doing, you can probably tell that there's some real interesting shorter-term gross margin opportunities given some of that 15-day base moving over. So maybe that gives you at least some context to it. We don't have a cadence to provide. We'll do that as part of our annual guidance.

Yes. And around NIT coverage from CMS we've been clear that we never anticipated that to happen in '26. We've mentioned we'd be ready, but we did always anticipate it would happen in '27. Again, it's hard to predict decisions from the federal government. But what I will say is we are confident that it's just a matter of time for when this decision happens. And so we figured it would be helpful to provide for the first time really our estimate of when we think it's going to happen. And so we're saying mid-'27 is when the coverage will actually kick in and be effective for users. If it comes earlier in the year, we'll be ready, and it's going to be upside.

Oh, I'm sorry, the study yes. So I think it's important to show -- it's actually why we enrolled the study we did. It's important to show the improvement in A1c across the entire spectrum of people with diabetes, including those that aren't even on a glucose lowering medication. You saw 8% of the patients in that study aren't on a lowering medication. And so it's really about showing the benefit of CGM in this entire population, which we have confidence. We've seen the data from our registry and what's happening there, and we're obviously confident in the outcome of the CONNECT study as well.

How about Joanne?

Joanne Wuensch from Citibank.

I think it's sort of the same question in terms of operating margin expansion and gross margin expansion is how to think about revenue over the next couple of years. You were pretty specific in saying it's not a CAGR for 10% plus, but at least 10% each year. You've got a lot of products and a lot of things going on, which years might be stronger than others? And then I guess my next question is, maybe I missed it, but what is it about Flex that you think works in the [ OUS ] environment that maybe makes sense to bring it to the U.S.

Yes. I'll start with the -- at least the conversation about the guide. Jon, you want to talk about Flex maybe? So I think while we're not giving guidance by year, we've tried to give you what was a lot of the catalysts by year, so you guys could take a look at it and say, hey, when is the coverage expansion taking place? When are your product launches going to take place? We've been very clear. We wanted to basically underwrite a base case for everybody and that 10% plus, I think, is a nice way to do that. We want to be conservative in terms of how we're thinking about providing a number and give you guys at least the building blocks to start to think about it. So that's the starting point, at least the 10% plus. From there, as we get into our annual guidance, we'll start to give more clarity as to what that looks like. But the hope is in looking at the LRP by providing all of those levers, it allows you at least to give some thought as to where those years you think might be interesting and interesting potentials for upside. But for now, 10% plus per year is what we're given by year, and we'll get more clarity as we move on.

Question about Flex, again, focused on type 2 NIT patients. and basal patients as well. The question about the U.S. vis-a-vis Flex is yet to be determined whether that is a different product and/or a software sort of app that's geared toward people who have those needs. That's the way I'd answer that question. We've not yet made that decision and/or are prepared to sort of speak to it more than that.

Se we go to Chris.

Chris Pasquale, Nephron. Two questions. One, when G8 comes to market, G7 won't be that long in the tooth, particularly the 15-day version. Are you anticipating any difference in the adoption curve here? Are you going to try and push this for a rapid conversion across the customer base? Or does it become maybe a premium product initially for patients that really value that extra accuracy? And then, Jeremy, could you just go into a little detail on competitive bidding, the latest thoughts there on how you expect that to change the market, the impact that you are baking in?

Yes. Thanks for the question. No specific plans on exactly how we convert, but I'll tell you how we're thinking about it. G8 is actually a cost reduction for us as well. So it would be a strong benefit for us to provide the technology to all of our users because it is a wearable cost improvement. And I do see that, that technology is going to be applicable across our entire customer base. So we're going to move it as fast as we can. As Jeremy mentioned, one of the benefits of this technology is we've taken a lot of learnings from all of the different launches we've done and all the scale that we've built. And so G8 can be built. We can retrofit the G7 lines to manufacture these G8 systems. And so that's really going to help us in our ability to have enough capacity to serve all the customers as we go. So I do want to see a rapid uptake and a rapid changeover because of all the benefits this product has for the users.

And to your question on competitive bidding. So our assumption there is 2028 is kind of letter of the laws is when that would play in. We've taken a look at what obviously the OIG report would have indicated, which didn't really appear that there was a lot of opportunity there. And we know that really CMS is heavily focused on fraud and potential risk around that. And so a lot of the concern we think is around fraudulent billing of CGMs that are actually never shipped and/or sold. And that's where a lot of the concern is.

In terms of our assumptions around it, look, we've put in assumptions for some nominal price impacts associated with it. The reality is, is we think it's appropriately priced, and we think it's appropriately transferred. So we want to get ahead of ourselves there. But obviously, we built a range of those assumptions into there to make sure that we were covered in the event that it did take place. But I think the most important part starting in 2028. That's what the LRP assumes. And if things change, we'll certainly come back to you with an update as how those assumptions play out.

I want to go to Matt O'Brien.

Matt O'Brien, Piper Sandler. I was curious about, I think, Jake, you mentioned OUS eventually being the same size as U.S. So the interplay just between U.S. and OUS growth over the LRP, how does that look? I'm assuming OUS is much faster. And then to Jeremy, the gross margin expansion is around 140 bps per year. How does that interplay OUS get -- or how does it influence gross margin over the LRP?

Yes. So some color on it. There's a lot in our plans that we control in terms of the products we build, where they're available in markets. One of the things we don't specifically control the exact timing on is access expansions. We can -- we work very hard to advocate for it. And because of the belief in the outcomes that we see from this technology, we do know that over time, access expansion, both here in the U.S., but particularly internationally, where it's trailing a little bit from the U.S. That access is going to continue to open. And one of the things we do see is that when we do get international access wins, we see pretty significant growth in those markets. I think we saw some of that in our Q1 results that most of that growth came from new markets where we just recently opened up access. So it's hard to exactly put out the cadence of how this happens, but we are confident over time that the access will grow and the international market is going to continue to grow.

Yes. So I think the answer is I wouldn't underplay either of them, right? There's a massive opportunity in the U.S., but there's also a massive opportunity outside the U.S. So there's -- they're both books of businesses, we think that have a real opportunity for growth.

To your other question -- sorry, what was the other question?

Gross margin.

Yes. So I think the gross margin, certainly, as you move outside the U.S. and we grow certainly volumes in that perspective with those moving to a 15-day as well, you might find that the higher reimbursed markets ultimately yield higher margins. But as a portfolio, the entire portfolio moves. So even as international grows, you're getting the benefit of shifting your G7 10-day OUS customers onto the 15-day platform as well, which is a significant piece of it. You're getting your Dexcom ONE+ customers outside the U.S. also moving on to a 15-day platform. So the best way to think about the cadence is to look at our product launch, and we kind of gave you product launches by year. That will help you kind of feel cadence between OUS, U.S. But really across the board, all of those regions are going to move to a 15-day.

Joe, why don't we go to your side, have a mic right there?

Great event, great info. A hardware question. Jake, I heard you mentioned 15 days rolling out great. You made an update to adhesive that's being received well. I thought the adhesion code had been cracked. What are you working on there? Is the overpatch forever in Dexcom's future? Is GA over patchless?

Awesome. No, I love adhesive technologies. So it's this crazy mix where you're trying to have a sensor adhered to a patient's body, think about little kids running around all the different ages, all the different stages of diabetes without obviously causing irritation. And so the code is definitely not cracked. We still have patches that don't last the entire time. It's not a high number, but we want all sensors to stay adhere as long as they possibly can. And so a big part of that is adding breathability to the adhesive. And so that is something that G7 launched with one version of a patch. We updated that patch. This is now the third update of patch technology to that product because we're always trying to improve the experience for users and obviously, the longevity of these sensors. And so this new patch has a pretty significant impact on patch survival for the G7 15-day product.

We're going to roll it out across the entire product portfolio over time. But we're never done. There's still going to be opportunities to enhance it. And then the over patch, yes, it's something that some users use, not everybody uses it. It's something that we feel is a nice option for people, but it shouldn't be mandatory. And so we're working towards it not being a mandatory component of our system. But we do think some patients do really like it. They come up with their own versions. You can see Amazon's story full of these different things. They work really hard to make sure these sensors stay on because they're so important.

Now why don't we go to your side in the back...

Maybe just a couple of questions. First, basal has been kind of the laggard here in terms of adoption, Jake, you spoke early on about smart basal. Is this the tool that opens up that opportunity? And maybe just, Jeremy, on that, I think you said mid-40% basal penetration exiting the LRP. What does the U.S. penetration look like in that?

Yes, it's a great question. We absolutely are designing products that are specifically geared towards capturing more share of a population and meeting the unmet needs out there. And you can see from that graph I showed, basal insulin therapy without this type of technology is not very satisfying for users. Their glucose is -- they go on to an injection sometimes for the very first time. They're injecting themselves once a day with this low dose of insulin that's not resulting in better glucose control. It's actually resulting in worse glucose control in many cases. And so that's pretty dissatisfying. You may not even keep taking the insulin. You got to keep working with the physician. Physicians is frustrated. We really think that this technology can accelerate that outcome to a point where the patient is interested in continuing that therapy, but also very interested in the value that CGM is bringing them.

So I do think it's a tool for capturing more share of new starts, getting more new starts and then ultimately retaining them. And so it is an important part of our strategy to expand in the basal. Today, in the U.S., the majority -- or the largest portion of our new customers are still insulin users in type 2 MDI and basal. That is the largest portion of customers, and that NIT number is continuing to increase. But there's some complexity in that NIT coverage right now, we're only 25% covered. So as we get more coverage there, I think we're going to see some similar growth there.

Yes. And to your question on basal, the number we said that was a U.S.-focused number. So it's really into that mid-40s -- from where this year, it's kind of crossing into that. We said 20% to 25% as we exited last year. So it's getting into that figure. Outside the U.S., very, very small relative to that. And so that's coverage unlocks today, really it's only in Japan and France. And as you get to 2030, again, we expect unlocks of coverage to take place pretty significantly over that period, but the number would be significantly less than that just given the approval time line. So it's a real opportunity. I think we're going to exit with a lot of opportunity for basal to penetrate those markets outside the U.S.

Okay. And maybe just a quick question. The role and focus of the new Board members, what do you expect them to add that you didn't have?

Yes, it's a great question. So it's really significant experience in scale, operations, med tech, quality. I mean, what we're looking for is no one's ever scaled a business like this before in med tech in terms of the number of patients we're serving and the speed at which this category is growing. And so it's really just to help provide additional advice and guidance. I'm a new to the CEO role. And so it will be helpful for -- to add that skill set to the Board. We don't have independent med tech directors on our Board right now. And so it will be helpful to have that experience as well as some high volume. One of the things is we've been pretty focused on refreshment of our Board. We've actually -- with the addition of these 2 new Board members, in the last 3 years, we've brought in 6 new -- so we already have 4 that we've added in the last 2.5 years across AI, health care.

Rick Osterloh from Google has really significant experience and scaled operations of consumer tech as well as AI integration with his experience at Google. So I really think that we're building a Board for the future for where we're headed and the med tech and operations directors are going to help us with that.

Joe, how about we go to Rich?

Rich Newitter, Truist Securities. So maybe just the first, going back to the way to just think of the components, U.S., OUS. I know it's probably an oversimplification because you have different launches and initiatives going on each year in each region -- set of regions. But should we be thinking of the OUS growth rate over the life of the long-range plan outpacing the U.S.? And if that's the case, how do we think about -- do we need type 2 NIT as you move up the penetration curve in '27 and beyond to kind of sustain a double-digit U.S. growth rate? Or should we keep that kind of in that high single digit, low double digits? Just help us toggle those components, specifically U.S., OUS.

Yes. I think we haven't necessarily gone down and gone down each OUS, U.S. in the LRP. The expectation is certainly, the unlocks across both of them, and you can see, obviously, the expectation of the CMS coverage here next year is a significant -- it's the biggest unlock out there. And so that's the reason why we're not talking down either because ultimately, 12 million, 15 million once the Medicaid lines come along would be the biggest expansion in the U.S. we've ever seen. And it's a massive opportunity to unlock there. At the same time, you've seen all the OUS countries, we think, that are coming in. So to talk down either or to say that both don't have opportunities, significant opportunities over the LRP, we haven't necessarily split those out. What I would say is our long-term algorithm, we've always said our long-term algorithm, coverage is what we've always aimed to do.

And so I think that's why we worked so hard to create the clinical evidence that ultimately drives coverage. And so what I would say is longer term, our expectation is coverage comes, and that's part of our growth algorithm is showing that CGM improves lives, showing it takes cost out of the system. So I think the best way to think about it is any sort of LRP we give, we do assume coverage is coming, and we're working hard to get that coverage rather than specific particular coverage unlocks. I would just expect us to continue to work -- to do the work around clinical coverage because that does unlock lives.

Got it. And then just on the NIT penetration forecast exiting the plan. Can you just remind me of what the type 2 percentage was you said that's embedded in the LRP? And what are you assuming for the where -- for the adherence or compliance?

So the assumption there is we exit at that 10% to 15% penetration across that population, U.S. OUS, obviously, very much, much smaller given the unlock comes later into the LRP. And the wear utilization is similar to what we have posted up on our website, the 75% to 80% utilization. Again, as you go deeper and deeper into that population, you could potentially see that change. But what we found is when coverage is there, and it kind of comes back to coverage, when coverage is there, you see people wear it and you see people wear it at a high clip. So that's what the assumptions are.

How do we go to Josh...

Josh Jennings from TD Cowen. Appreciate you guys hosting [indiscernible] Phoenix. Just Jeremy, you mentioned about coverage. And just wondering with the work being done in the prediabetes population, is the expectation that ultimately, you can deliver the clinical efficacy and cost effectiveness in that cohort -- in that large cohort? And where should we be thinking that that's where Stelo will live and breathe within this LRP?

You may start. Do you want to start?

You start.

Yes. So I think, look, certainly, we expect to be able to demonstrate outcomes in prediabetes. We've seen it. We see people wearing Stelo all the time that have prediabetes. And the outcome is very different than what you would typically measure today under diabetes, right? Diabetes typically, as you measure it, you're thinking about things like A1c, right? Prediabetes, your A1c hasn't risen to that level quite yet to where you'd expect to see it. But things like time and range, health care reductions and preventative care, you can measure those types of things over time. So Jake alluded to a day when everybody is wearing a sensor as just part of your annual physical or as part of what you would do to prevent diabetes. We do expect over time for that to be a use case that ultimately plays out because we know we can demonstrate the benefits of doing so.

Whether that's coverage, whether it's employers covering it as part of health and wellness plans, whether it's through programmatic approaches, those are the things I think we're still working through and how we demonstrate that clinical evidence. But make no mistake, we're building a product to help folks prevent ever getting into diabetes. And that obviously focuses on that prediabetes space and then, of course, in the health and wellness space.

Yes. All I'll add is that we do see it as a very powerful screening tool. We've already started working on algorithms with some of the real-world data we have to come up with better ways to diagnose the actual condition of diabetes instead of the typical A1c test or oral glucose tolerance test. We're also doing some work in gestational diabetes and pregnancy that gestational diabetes impacts 10% of pregnancies. And right now, it's usually not diagnosed until later in the pregnancy, and we do feel that using CGM as a screening tool there can find the diabetes earlier and help the mother and baby have much better outcomes. And so there's an opportunity for this tool to be used pretty widely in terms of just screening. And then there's the whole aspect of treating once you understand you have a potential issue, helping with the education and the learning around how to improve the health condition.

You put a lot of analyte menu expansion action on the table here today. Sorry to ask this question, but I think just earlier in the year, I think you made some public comments and I think in some of our discussions with the team, you alluded to a potential to go beyond kind of this enzymatic testing process and interstitial fluid and looking at other mechanisms of testing to expand the menu even further. And I think on my mind, I was thinking BNP, creatinine and some other biomarkers. But maybe you can just talk about where you are in that development process, maybe not in this LRP, but I'd love to hear any updates there.

Yes, fantastic. We definitely see, as I mentioned, this opportunity for us to lean into this capability we have around developing technology that subcutaneously senses multi-analytes and our ability to scale that technology. And so we are making investments and working R&D on other mechanisms for sensing because some of these analytes, like you mentioned, creatine, you can't sense it with an enzyme, so you need something else. And so enzymatic technology is what we founded our glucose sensor on and some of the other ketone sensors lactaples all using enzymes, potassium does not.

And so we're moving into this realm of not just enzymatic sensing. And so our venture group has been making investments in companies that have some alternate sensing technologies, and we're also working on some of them internally that are non-enzyme-based. More to come early days. But when we think about the long run of this company and what we're capable of, it goes far beyond diabetes.

We're close to time. So why don't we sneak in one last question, if we can keep it to a single-part question. Why don't we close with Shagun?

Shagun Singh from RBC. I think the big focus here is capitalizing on the large TAM. And from that standpoint, you also indicated that access is growing faster than penetration. Just from a commercial standpoint, where is the biggest focus in order to unlock that or drive penetration higher so that you could have confidence in a base case that's greater than 10%?

I'll start and then, Jon, if you want to follow. So the #1 priority right now is ensuring that users -- that we have the best solution for users because there's a lot of people who see their physician that have coverage for CGM and aren't walking out of there with a prescription. And so that's really around building the right experience for those users and their physician, making sure the awareness is there. Right now, we're working through this coverage on NIT where only 25% of people are covered. It adds some complexity. Whenever coverage expansion happens, we see a bolus, just like we saw in early '25 when we started to see the PBMs covering CGM for all people. We get this bolus, but then there's a lot of work to educate around the access that exists and that access paradigm continues to change and continues to open up.

And so I think as we build better solutions that meet more of these customer needs, I think G8 is a big part of that. It's around capturing more share and understanding, basically increasing the number of new patients that are coming on the CGM therapy. I do think by focusing on the experience and the products that we can do that.

Jon, do you have...

I think that was great. I think the matching experience and needs is number one. And then the second is taking the learnings from Stelo and this new app that we're going to be launching in the short term and leveraging it like crazy across the portfolio.

This will -- I think this concludes our portion of the event here as we prepare for the manufacturing tour. Maybe defer to management, if you want any closing words.

I just want to really thank all of you guys for traveling out here. We're so excited to host you and show you our plans for the future. As I mentioned when I came up on stage that I'm incredibly proud of what we've built over the last 25 years, but I'm even more excited about the future and the impact that Dexcom can have around the world. Thank you, guys. Thank you, everyone.

Ladies and gentlemen, welcome to the DexCom First Quarter 2026 Earnings Release Conference Call. My name is Abby, and I will be your operator for today's call. [Operator Instructions] As a reminder, the conference is being recorded. I will now turn the call over to Sean Christensen, Senior Vice President of Finance and Investor Relations. Mr. Christensen, you may begin.

Thank you, operator, and welcome to DexCom's First Quarter 2026 Earnings Call. Our agenda begins with Jake Leach, DexCom's President and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jereme 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 1 question each so we can provide an opportunity for everyone participating today. .

Please note that there are also slides available related to our first quarter 2026 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 these forward-looking statements.

The factors 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-K, 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 first quarter 2026 earnings call for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Now I will turn it over to Jake.

Thank you, Sean, and thank you, everyone, for joining us. Today, we reported first quarter revenue growth of 15% compared to the first quarter of 2025 and organic revenue growth of 12%. This reflected strong demand for DexCom CGM globally as we benefited from broader access, new product launches and continued active base growth. We also continued to drive operational improvement over the course of the quarter, which included an outstanding launch of G7 15 Day, improvements in field performance across all of our products, a good response to our MyDexcom account and enhanced web-based service and support and continued progress on new product initiatives.

This helped us deliver solid margin performance, cash flow generation and earnings for Q1. In the U.S., we are generating good momentum across the spectrum of diabetes care. This was especially pronounced across the categories of type 2 diabetes, where our expanded reach and product momentum led to strong first quarter share gains with the biggest increase coming from people with type 2 diabetes who are not on insulin. This performance reflects growing clinical awareness of the greater than 6 million noninsulin lives currently covered for DexCom CGM across the 3 largest PBMs. Our team has done a great job driving this awareness in the field, and this message will become even stronger as type 2 coverage continues to build.

Along those lines, I'm excited to announce another recent reimbursement win for the commercial type 2 non-insulin population. As of this summer, Prime Therapeutics will begin covering DexCom CGM for all people with diabetes. This puts us on track to have commercial coverage for more than 7 million type 2 non-insulin lives by the end of this year. It's also another clear demonstration that payers are recognizing the value of DexCom CGM in driving health and economic outcomes for this population. While this is a great start, we won't be happy until we have coverage for all people with diabetes, and the largest single driver towards that goal would be CMS coverage for the type 2 non-insulin population as around half of those with type 2 diabetes not using insulin sit within the Medicare population.

As we've said before, we continue to view this decision as only a matter of time. In recent months, we've seen upgraded recommendations in the ADA standards of care recommending CGM use for all people with diabetes and the level of real-world evidence for CGM driven health outcomes continues to grow. As one example, at ATTD, we recently provided a full readout of our 12-month type 2 non-insulin registry data. In this real-world study, DexCom CGM delivered a statistically significant A1c reduction over a 1-year period across a broad population of people with type 2 diabetes with strong utilization.

These are the types of outcomes that we are consistently demonstrating across this group, which gives us high confidence that the coverage will continue to grow. And to further strengthen our case, we're currently completing our randomized controlled trial for people with type 2 diabetes who are not on insulin. Similar to how our Diamond and mobile RCT's reshaped clinical perspectives for those using insulin, we expect this trial can become the defining study for the non-insulin population. This readout will also form the cornerstone of our evidence base for any global payer that is waiting to see RCT level data. We look forward to sharing a full readout of this study with you at the ADA's 2026 scientific sessions in a few weeks.

As I mentioned earlier, during the first quarter, we also expanded the launch of our DexCom G7 15-based system across all channels in the U.S. This broad rollout has been very well received, and most importantly, the feedback from customers and physicians has been excellent. The positive response goes well beyond the longer wear time. One of the most consistent points of feedback is around the new sensor algorithm, which delivers our highest level of accuracy to date. Combined, we believe these updates can attract new customers into our ecosystem, and we're now working to build broader awareness of DexCom G7 15 day in the market.

We're also excited for more of our existing base to shift to this product so they can experience this longer wear time and improved performance firsthand. Of course, we're not stopping there. We're always working to improve the performance across our product portfolio. As one example, we recently began manufacturing with our new patch technology that received FDA clearance earlier this year. We expect this upgraded adhesive to strengthen sensor survivability across our product portfolio and improve wear experience for our customers. We expect this new technology to reach the market in the coming weeks.

We also have several software updates planned, including a complete redesign of Stelo. In the coming weeks, we'll introduce this new experience to all customers, which will offer a more consumer-friendly feel, more AI-driven personalized insights and additional food logging capabilities, including detailed macronutrient information. For our G Series products, we're currently expanding access within our pilot [indiscernible] for our DexCom smart Basal feature. This personalized dosing module has the potential to reinvent basal insulin management by driving more accurate insulin titration, accelerating the time needed to reach [indiscernible] dose and delivering improved outcomes for customers and physicians.

Each of these updates were built specifically around customer feedback. We will always keep the customer at the center of future product innovation, which we believe can help us build an ecosystem that is more personalized and engaging for all customers. Our international markets provide a great example of what product personalization can do for our business. by offering a portfolio of products that can be tailored to each market and reimbursement system, we've been able to consistently secure broader access and drive growth within these regions.

Our first quarter results were another great demonstration of this story. Once again, we delivered some of our strongest growth in markets where we've established broader access in recent quarters. Even in some of our largest markets, recent reimbursement wins have helped us reach a new cohort of customers and drive greater share. We'll continue to build on this international growth strategy, including through the launch of new products. In 2026, this will include the international launch of Stelo as well as a new CGM system that is designed to further extend our market reach.

We look forward to going into greater detail on these product launches, software updates and more at our upcoming May Investor Day. You may recall that earlier this year, I laid out my 3 priorities for DexCom's next phase of growth: number one, be the premier glucose sensing solution for all. number two, set the standard for customer experience; and three, expand international market share. At our Investor Day, I'm looking forward to exploring each of these topics in further detail as we share our vision for DexCom's next chapter.

For those joining in person, we're also planning to visit our Mesa manufacturing facility to provide a glimpse into our original high-scale CGM manufacturing location and the level of precision that this work requires. We look forward to showcasing the quality and automation that we have built and that we feel positions us well to lead the CGM category into the future. We hope to see you there.

With that, I'll turn it over to Jereme.

Thank you, Jake. 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 first quarter of 2026, we reported worldwide revenue of $1.19 billion compared to $1.04 billion for the first quarter of 2025, representing growth of 15% on a reported basis and 12% on an 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 12 months.

U.S. revenue totaled $832 million for the first quarter compared to $751 million in the first quarter of 2025, representing an increase of 11%. As Jake mentioned, in the U.S., we saw momentum build across the spectrum of Diabetes Care in the first quarter. This reflected both growing awareness of the broader type 2 coverage and the launch of our G7 15-day product, which has generated a lot of excitement in the market. We have been very encouraged by the initial 15-day uptake and the market feedback and look forward to seeing the active base continue to transition as we progress over the course of the year.

International revenue grew 26%, totaling $360 million in the first quarter. International organic revenue growth was 17% for the first quarter. Our international growth was widespread across our core markets this quarter with some of the largest increases coming from geographies where we have recently expanded access, such as France and Canada. Our first quarter gross profit was $757.4 million or 63.5% of revenue, compared to 57.5% of revenue in the first quarter of 2025. We are excited by our progress on gross margin performance in Q1, which was up significantly on a year-over-year basis and flat compared to the fourth quarter despite our typical Q1 seasonality.

This performance reflected strong execution across our operations and supply chain as we delivered continued manufacturing efficiencies, more normalized freight costs as we've improved our global inventory levels and initial benefit from the switchover to G7 15 day. Operating expenses were $493.0 million for Q1 of 2026, compared to $453.1 million in Q1 of 2025. Operating income was $264.4 million or 22.2% of revenue in the first quarter of 2026 compared to $143.1 million or 13.8% of revenue in the same quarter of 2025. We are really proud of the team and the discipline demonstrated over the course of the quarter, both on operations, but also all of the support teams that work tirelessly for our customers. This is a demonstration of the ability to deliver for our customers, our employees and our shareholders.

Adjusted EBITDA was $364.5 million or 30.6% of revenue for the first quarter compared to $230.4 million or 22.2% of revenue for the first quarter of 2025. We Net income for the first quarter was $216.3 million or $0.56 per share, representing 75% growth over the first quarter of 2025. We remain in a great financial position. closing the quarter with approximately $2.4 billion of cash and cash equivalents. This was up over $400 million compared to year-end 2025, which reflected our significant free cash flow performance in the first quarter. This cash balance, along with our growing free cash flow profile, continues to provide us with a lot of flexibility as we assess ongoing capital allocation opportunities.

Turning to guidance. We are reaffirming our prior revenue guidance of $5.16 billion to $5.25 billion, representing growth of 11% to 13% for the year. For margins, we are reiterating our previous full year non-GAAP gross profit margin guidance of 63% to 64%, and increasing our non-GAAP operating profit margin guidance and adjusted EBITDA margin guidance to 23% to 23.5% and 31% to 31.5%, respectively. While our Q1 gross margin performance leaves us tracking well relative to our current guidance, we left gross margin guidance unchanged to account for the current geopolitical environment, including uncertainties with fuel prices and shipping routes. Regardless, our strong cost control over the quarter positioned us to raise our full year non-GAAP operating profit and adjusted EBITDA margin guidance.

With that, we can open up the call for Q&A. Sean?

Thank you, Jereme. As a reminder, we ask our audience to limit themselves to only 1 question at this time and then reenter the queue if necessary. Operator, please provide the Q&A instructions. .

[Operator Instructions] And our first question comes from the line of David Roman with Goldman Sachs.

I guess when we look at the totality of the U.S. market now with 2 major players having reported, it does look like the market is in a period of slower growth. And as your competitor noted that may be due to no major coverage expansion or new indications. So could you maybe just give us your perspective on how you're seeing the U.S. market unfold here? And what's assumed in your guidance? And any details you can provide whether it's new patient starts or other metrics to kind of corporate the health of both the U.S. market and your business would be helpful as we think about the balance of the year.

Yes. Thanks, Dave, for the question. If you take a step back and look at the U.S. market, there's still a pretty significant opportunity. If we think about it about 30% penetration into the covered lives is where we are as a category. That means that only 1 in 3 people that have coverage for CGM are using it. So that other 2/3 is out there today, and that's before we talk about any expanded coverage. So I think as we look at new patients, we are always striving for a record number of new patients every quarter.

And this quarter came in, in the U.S., very close to a record and is a global number of patients. across the entire globe. So we feel like the category, there's a lot of strength here. But if we just focus in on the U.S., there's still a long runway to go. We mentioned a new PBM now covering CGM by the end of the year, that's going to add another 1 million lives to that noninsulin-using population. And so when you think about that, that provides a lot of opportunity.

And frankly, our team is getting much better at targeting this new coverage as we saw in some of the share gains that we had in this group. And so I think we're -- there's still a solid rate of growth going forward for the U.S.

And our next question comes from the line of Travis Steed with Bank of America.

I'll start maybe asking on 15-day -- kind of a 2-part on 15-day or you think about the better algorithm and the better customer experience. Is that something where maybe that product helps new starts as it launches? And also maybe kind of talk about kind of the margin impact. And I know you look gross margin guide unchanged. So I don't know how much inflation you're baking in. But just kind of curious how to think about the margin impact of the 15-day rolls out versus kind of the inflationary impact on margins?

Yes, sure. I'll take the part around the product and the starts and then Jereme will fill in with the margin perspective. So I absolutely believe that the 15-day product is helping drive the momentum that we're seeing. We did see improved performance across our entire portfolio when it comes to the reliability of our product. But when you think about the 15-day, in particular, it has that new algorithm and the extended wear. And so that is something that patients very much value the convenience of the longer wear and then the algorithm, the performance and reliability of that product is really driving new starts as well as converts over to it, and we're making good progress towards converting the base over to that product. We estimate nearly 50% will be converted by the end of the year over to this new 15-day product.

Jereme, do you want to fill in on margin?

Yes. So on margin, you're exactly right, Travis. We kept it in hold just because of the impact of oil on both fuels and resins, and obviously, resins play a large part in our product as well. There's probably about 50 to 100 basis points of potential risk associated with fuels and resins over the course of the year. So Absent that, we would be raising the gross margin guidance. And you can see in the first quarter, we had a really solid performance. Typically, we step back from Q4 into Q1. And with some of the work that we've done over the course of the year, that was flat coming into Q1, which obviously should give, hopefully, you and everybody else, a lot of confidence that the work we've been putting in place to help improve throughput quality and really yields is really starting to play out.

So think about it that way, it's about 50 to 100 basis points. Obviously, if oil prices come back down to normal. We'll certainly revisit it, revise it at that point. But right now, we've got a placeholder for that, the underlying performance of the business though is outperforming expectations as we got into the year.

And our next question comes from the line of Larry Biegelsen with Wells Fargo.

This is [ Simeon ] for Larry. I just wanted to ask on type 2 non-insulin. So we did hear the RCT presentation is slated for ADA. Just wondering, could we see a publication before ADA? And do you plan to share any color on the trial results at the Investor Day. And maybe just a broader question on type 2 non-insulin. Any color on how we should think about this unlocking or recatalyzing the next leg of growth in the U.S. CGM market? Maybe even stepping back to that strong double-digit growth that you've talked about in the past, Jake, in terms of the CGM market going forward?

Yes. Thanks for the question. So speaking of the randomized controlled trial for the non-insulin using population, we are planning to do the full readout at ADA, and we are anticipating the results there are going to be similar to what we've seen when we look at our registry data and all the other data that we generated in this population really significant improvements in the glucose outcomes for these. These folks that frankly aren't usually measuring glucose in any way. There are many of them aren't taking fingersticks. So when you prevent them with real-time feedback from our CGM.

They're making the changes, the behavior modification, they're learning about how to better manage their diabetes. And so therefore, getting the A1c reduction, which is what that study is powered for. We don't plan on publishing. It will be featured in a major publication, but it won't be before the readout. The readout at ADA will be the first time we do the readouts. And as we think about the unlocking of coverage, we've got both continued unlocking of commercial coverage and then obviously, this large population of NIT folks that sit in Medicare. It has the potential to really provide durable growth for a long time here in the U.S. when you think about that opportunity.

And we're going to continue to advance access for these folks. And as we think about the field and how we're building out our products and serving this population. We're going to continue to build products that help us grow that active user base. When we think about new patients, it's also retention and utilization in these populations. The more we do with the product and the service and the experience, the more that active base is going to grow.

And our next question comes from the line of Robbie Marcus with JPMorgan.

Great. Wanted to ask, you said it was close to a record new patient start. And I think that's been the language in the past 4 quarters. So we're now a full year without a record new patient start. And if I remember on the fourth quarter call, you said the top end of the sales guide assumed a record and the bottom end assume no new record patient starts. So I guess sort of a 2-part question. One, do you feel like the lower end is maybe more appropriate if we don't see a record. And then two, do you think you can maintain the current sales growth if you don't put up a new record in the future?

Sure. Thanks, Robbie. Thanks for the question. Let me be clear, globally, we did have a record new patient quarter this quarter. So globally, it was a record. And so I think that's helpful to give that context. In the U.S., it was close to a record in the U.S. Sequentially, it was an improvement from Q4. And so we're certainly seeing the momentum building behind 15 day and as we move into the year. So I certainly think we're seeing some spreads in our case of performance there. And we did take share both in the U.S. and internationally. .

So hopefully, that gives some clarity around record, and that helps at least give you that context. So you talked about the full year. being the low end would be not records globally. The high end would be records globally. Obviously, we're tracking well given the first quarter is a record. And so I think that's -- that gives you some context for that. So in terms of the year, as you think about the year, I think our goal here is as we move forward over the course of the year, and our goal is to continue to unlock coverage. We talked about one being in Prime Therapeutics in the U.S. commercial space.

We haven't talked a lot about outside the U.S., but outside the U.S., we have plans to unlock coverage over the course of the year. Our expectation is to continue to unlock that coverage and help drive that growth algorithm. So I -- now that you kind of have that context, hopefully, it gives you at least our viewpoint on the year, how we started the year. Obviously, it's a good start to the first quarter. Certainly, the momentum building with G7 15-Day. Jake alluded to it a little bit earlier. We have Stelo launching here with a new skin, which will be an excellent new app experience that's going to launch outside the U.S. as well, which I think is going to be an awesome opportunity to bring Stelo outside the U.S. And obviously, we're looking at 15-day opportunities outside the U.S. as well.

And given what we've seen in the U.S. with performance of 15 days, we're really excited to bring that outside the U.S. So I think we have a lot of irons in the fire as we move into the year with, of course, some big unlocks potentially happening here. We expect them to happen just timing-wise, we're going through with the CMS coverage unlock. So there's just a lot of opportunities here, a lot of catalysts over the course of the year, but it starts with a record in the quarter and it was a record globally in the quarter.

And our next question comes from the line of Matt Taylor with Jefferies.

I just wanted to double-click on the CMS coverage. Your competitors said they're not going to call the month basically implying it could happen soon. I know you don't know exactly when it's going to happen, but what are your thoughts on whether that could come before kind of the usual process of going through the RCT and submitting your application, Kind of what's the range of outcomes for when that could happen, you think?

Yes. Thanks for the question, Matt. At this point in time, the RCT may not be required for that CMS coverage. I think in my conversations with the folks at CMS, it's very clear that they understand the benefit of CGM for this category. So hard to estimate exactly when this coverage is getting come. But as we've said before, it's really just a matter of time. And when that coverage does come, it provides a great opportunity for some durable growth here and also continued patient impact, right?

This product does provide significant benefits for all people with diabetes. And so as I said in my prepared remarks, we're not going to be happy to everybody with diabetes has coverage for this product. And we're looking for that globally. And so again, hard to call exactly, but we do know that the benefits are clear, and we look forward to the decision.

And our next question comes from the line of Jeff Johnson with Baird.

Jereme, you talked about some of the coverage unlocks outside the U.S. are you inching closer? Is there any progress or any even body language or gut feel on moving towards some basal coverage in some of the other bigger markets out there where we don't have it outside the U.S. at this point? Any update there? And was there anything onetime timing, tender, anything that helped that 17% OUS constant currency organic growth rate, anything that we have to think about as a tough comp for next year in the 1Q or anything like that?

Yes. Thanks, Jeff. Outside the U.S., there's mounting bodies of evidence that continue to grow. Obviously, we've had mobile and other studies have come out there. And so the dialogue with a lot of the international bodies has continued to progress in a good way. And so we're continuing to look to unlock that basal coverage. We're in lots of different conversations about how to do so, whether it's in private or payers and whether those start to make it on tenders. So there's a lot of things moving by country, and I would expect to have wind and pockets here and there over the course of the year. We'll give some updates on those as they come.

And then certainly, in markets where Basal already exists, clearly, the study we've done around type 2 is going to be some evidence to really keep moving there. As Jake mentioned, around the world, we're not going to stop until everybody has access. So stay tuned, but there's a lot of good underlying work happening there. In terms of any kind of one-timers no, there really wasn't. We pay attention and we've heard some kind of comments about tenders and timing and onetime. And the reality is the way tenders work is folks use this product repeatedly. If you don't use it once and then you move away.

So most of the time, in fact, all the time, tenders typically allocate our product for some time because people use the product year-round. And so we haven't seen any of that. And any tenders out there. We've been putting up tenders for some time. We've been winning quite a few tenders. Our product portfolio approach has gone into quite a few different tenders that may have been exclusive with a competitor that are now dual formula, and that's happened in many of the cases we've seen over the course of the year. So it's our opportunity to get into these markets with a product portfolio that makes sense and take share, and you're seeing that taking place.

And our next question comes from the line of Marie Thibault with BTIG.

I wanted to drill down a little bit more on your comments about the share gains in the type 2 population this quarter. I wanted to just sort of understand how sustainable some of that momentum feels to you out in the field, what you've seen since the quarter end, and just how much of it you think is linked to the 15-day launch versus sustainable momentum from your sales force and making progress that way?

Yes, I can start, and Jake, certainly chime in as you see fit. There's a few things that we've seen playing out, which I think are all good things around share taking and really kind of the outlook longer term. I think, first and foremost, we paid close attention to customer satisfaction. And our NPS scores have jumped up with 15 days. And we saw that playing out in the first quarter. That is sustainable, right? The customer experience is moving in the right direction. I think that's an exciting moment for us.

Certainly, the launch of 15-day helps. If there was some questions around where we maybe had an opportunity to extend wear length. We've taken advantage of those. And certainly, the new algorithm has wowed customers. So when you have a product like that out into the market and you have the coverage wins that we've had over the course of time with our low co-pays, it's really providing an opportunity to get in front of physicians demonstrate the value of the product, but also make sure we're letting physicians know we have the lowest co-pays, the most coverage really across the board.

And so we don't stop until -- we're not going to stop until we win in these categories. And given we have the best coverage, I don't think there's any reason we wouldn't look to do so. So I think our opportunity is to continue to take share. We continue to take share until we're market leaders in every category. We're obviously market leaders in some of those categories, and we have some room to go in the categories that historically didn't have coverage. I think having the 15-day product, having the customer satisfaction score is moving and having the best coverage, I think all of those bode well to taking share for some time to come.

What I'd add is when you think about the long run and as we are developing this product portfolio for the different categories of patients, if you think about a feature like our Smart basal, that is really designed to change the experience around going on to basal insulin. And we're still seeing the majority of our new patients, the largest category of new patients is actually still in that type 2 insulin using population, both the IoT and the basal. And then that basal penetration still being around 20%, 25% as a category. There's still a lot of opportunity for us to grow and take share there. And so that's what that system is really designed to make that the experience that both users and physicians are looking for in both driving outcomes and ease of use. .

And our next question comes from the line of Matthew O'Brien with Piper Sandler.

This is [ Anna ] on for Matt. I know there's always a focus on new patient starts, but I also wanted to ask on the retention side. What trends you're seeing there today, particularly in the domestic market and how that contributed to the results in the quarter? And then do you expect this metric to evolve from here? That would be super helpful.

Anna, when we think about retention, it's been fairly consistent within a band. And as we look at both retention and utilization because both of those really helped drive the active base, and when we look at that, we targeted increasing our experience in really setting the standards, both with the product and also the service behind it. And as Jereme mentioned, our NPS scores have been going up quite a bit. And I do think that bodes well for the future when we do think about things like retention and utilization. But it's been fairly consistent for a period of time now, but one of our goals is to improve it so that we can continue to improve the active base growth. .

And our next question comes from the line of Joanne Wuensch with Citi.

I'm curious how we should think about the next couple of quarters? And if you can sort of comment on thoughts for revenue growth rate throughout the remainder of the year and in particular, for the second quarter, if there's anything else we should be aware of as we think of our models?

Yes. So while we don't necessarily guide to quarters, it's a good question. And I'll give you maybe some things to think about over the course of the year. As we think about -- and I think it's best to give maybe a little bit of comps and then just kind of reset on where the guidance was. So when we guided the year, we're obviously 11% to 13% organic growth. And we said it'd be relatively split across U.S. and OUS, and that really hasn't changed. What you do see is the U.S. comps are a little bit more difficult in the first part of the year and a little bit easier in the back half of the year. And vice versa, you see the international comps are a little bit easier in the first half of the year and a little bit more difficult in the back half of the year.

So we still are anchoring around the same commentary around the split across the 2. And that's the way I think we would think about it. So Hopefully, that gives some context. That really hasn't changed. We'll certainly be happy to talk. But the way folks have typically thought about it over the course of the year, I think, for the most part, folks are thinking about the cadence relatively well. There's a few folks that are perhaps outliers. But for the most part, I think most folks the way of thinking about our business with the pretty consistent over the course of the year have done a really nice job.

And our next question comes from the line of Jayson Bedford with Raymond James.

Just I apologize if I missed it. The smart basal launch, I think it was early access in 1Q. When do you expand this launch?

Yes. Thanks, Jason. So the -- we are still in a pilot launch and what -- the idea of what we're doing is we're really making sure that the system as design fits into the workflow because it's designed to be a very broad use product. And so we're talking about lots of different clinical environments. You got in those offices, large diabetes clinics and then small primary care offices. And so the work that we're doing right now is learning as we've done this pilot launch in a number of sites is really making sure that, that is flowing well.

And we actually learned a couple of things where I made some updates to the system. We're not validating the algorithm. We know that the patient experience around this system is excellent. It's more around has to fit into the clinical workflow. Because when we broaden the launch, we want it to be extremely easy and very successful for users and physicians. We do plan to do that throughout the year. And we just want to make sure that we've got all the bases covered on that workflow before we do it. But once we figure all of that out, we're going to launch it in a very big way.

And our next question comes from the line of Jonathan Block with Stifel.

Great. Maybe if I could just come back to the prior question and push a little bit on the 11% to 13% organic revenue growth being essentially evenly weighted or split, pardon me, between U.S. and international. Just pushing there like why, if you would. If you look at 1Q, 17% international, I think you said there was nothing sort of abnormal in terms of tenders. [ T2NIT ] seems certainly more of a '27 event than the '26. And I'm just looking at what seems to be a high level of sensitivity from investors around that U.S. number. Maybe if you can just tell us why you've got the conviction and why wouldn't it be more -- I hate to split hairs, but like [ USD 10 ] plus this year. poised to maybe accelerate next year with T2 and NIT instead of that equally weighted specific to '26.

Yes. Look, I think the question you're asking is fair. If you think about as we exited last year, we exited last year with a relatively split U.S. and OUS business. And when you look at the comps year-over-year, you can see where there's some wins, and you can see some opportunities there as we saw a ramp in the international business into the back half of last year and obviously as we comp some easier first half, you can see where -- looking at Q1 in isolation can be sometimes one quarter in isolation can be sometimes a bit of a challenge as you kind of zoom out and you look at our performance over the course of last year. And to us, as we look at the opportunities ahead of us, I mean, we still feel very, very excited about the opportunities in the U.S. business. We still feel very, very excited about the opportunities in the international business.

We see a continued momentum really across both. If we come back to you and at the end of the year, it's slightly different. We'll certainly keep you posted over the course of the year. But as we look at it, we still see a lot of opportunity in the U.S., especially when you think about the coverage wins, when you talk about prime therapeutics and some opportunities to get out in front of that as well as some of the tender wins that we'd expect to win over the course of the year. So we still think it's balanced. If the numbers are slightly off by 0.5% or something like that by the end of the year, we'll always look back and have a conversation about it. But as we looked into the crystal ball when we started the year, nothing's changed, that we felt it was going to look about split, and we continue to believe that both businesses can operate quite strongly over the course of the year.

And our next question comes from the line of Issie Kirby with Redburn.

I wanted to ask about Stelo and just how that's tracking. What has really [indiscernible], I guess, the redesign there? And then with the international launch, just how broad do you expect to go? And is this a product that you could see pushing into markets where you're not currently present?

Thanks, Issie. Yes, we have seen Stelo as a fantastic opportunity to reach more patients. And it's tracking well to our estimate that we kind of set up at the beginning of the year. We did, though, as we've launched it, it's been out there for over a year, and we've learned quite a bit. And one of the main things that we're hearing from users is they want more context around the real-time glucose data. And so over time, we started adding features to the current version of Stelo particularly focused around capture of nutrition. So feel the meal logging using AI to analyze those meals. .

And then as we took a step back, we looked at the current version of Stelo and how we were implementing that. And it gave us an opportunity to really look at redesigning the experience to better match what customers are looking for, both in the aesthetics of the mobile app, but also in the functionality. So this new Stelo app that we're going to launch here very shortly is a complete redesign of the user interface. It has a much more technology forward aesthetic as well as the insights that are provided to users around the basically adding context to their glucose experience, their glucose excursions, their glucose variability as well as their nutrition.

We're finding that nutrition is actually a really important part of helping users connect the dots in how to make sense of their glucose data and then also how to make healthy lifestyle changes. And so this new version of the app puts those insights front and center and has a pretty significantly overhauled insight engine. I think the insights that the Stelo app provides today are helpful, but we wanted to make them much more personalized and take more advantage of data that we're integrating into the system such as what comes from the different activity trackers people are using the or ring, the sleep scores, all of that, bringing more context and more analysis of that personalized data for each user.

And so that's built into Stelo, the new version that we're going to launch. And so really excited about that being a great opportunity for people who maybe tried Stelo, but wanted -- didn't meet their needs. And so this is a great opportunity for them to try it again. Also a great opportunity to enhance the experience of our current customers and future customers. So speaking of the international launches. So we are looking at countries both in EMEA and APAC region. We'll start with a smaller number and then continue to expand it, but I do feel like it is an opportunity for many, many markets for us to have an entry point with a product that really meets the needs of the users.

And our next question comes from the line of Mike Kratky with Leerink Partners.

This is [ Brett ] on for Mike. Just wanted to go back to the type 2 in Idea hate to be a broken record here, but going into the Analyst Day, obviously, we're going to see the data at ADA, and you say it's a matter of time there in CMS. But for your LRP and thinking long term about the algorithm, would you expect to have the assumption that CMS coverage is coming within that number? Or do you think we would need to actually have that coverage in hand before that's included with the your long-range plan?

Look, I think for long-range plans, I would expect us to include our assumptions around that. And so while I don't want to get into what we're going to do at our Investor Day, I think it's an opportunity for us to talk about it. When we talk about things like if -- when not if, I mean, obviously, we'll have some line of sight into when we'll give our thoughts around it in terms of how we think about it. And then from there, obviously, it doesn't stop the fact that we'll push hard to go as soon as possible to getting the coverage because at the end of the day, there's a lot of folks who need this product. .

So I would expect us to talk about it, talk about our assumptions. And if those assumptions end up differing based on timing of approval, great, we'll have that conversation at that point. But yes, we will give kind of our viewpoint into the next -- into the future and assumptions around that. So you can expect to get more information around that at Investor Day.

And our next question comes from the line of Richard Newitter with Truist Securities.

One's a clarification, and then I have a follow-up. Just on -- did you say that you have an incremental 150 basis point headwind that you're now contemplating in Q2 to 4Q that's getting absorbed in your reiterated gross margin guidance. Did I hear that correctly?

It's 50 to 100 basis points.

Okay. Got it. Okay. So 50 to 100 basis points incremental to what you had heading into the year. Okay. And then just on the Prime Therapeutics win, congratulations on that. I guess how long does it take for these things usually to work into having an impact, if you could give us something there. And I know that you brought that up as one of the factors that gives you confidence in the 11% to 13% also applied to the U.S. I guess, does that mean that you're banking on contribution from that incremental coverage to get there? Or is that something that has been largely left as upside?

Yes. So I think -- so I'll start with the coverage in the way it typically works. So as you kind of go on typical, what I'd say, national formularies and Prime has a national formulary, the second, it's turned on, if you have a script and you go to the physician, you're covered. And so it's generally immediate on those national formularies. And so you should see it here essentially this summer. It's going to be turned on for everybody that's covered there. And so that will ultimately help. And I think you know that new patients, while they are certainly helpful and they're helpful for a long-range engine, New patients aren't the only driver, obviously, retention utilization, price mix, all of that plays into the guide.

So while this is certainly helpful, and I think it gives us a lot of bullishness around the business and penetration adoption going forward. At the end of the day, it wasn't necessarily counted on something that was a major contributor to the original guide. We talked about the original guide saying normal kind of nominal wins over the course of the year, but really coverage for the most part as is. And so as we get more unlocks, that certainly helps over the course of the year. So I hope that give you some context. Obviously, we're excited as we start to unlock more and more over time.

The one thing that always comes up and our sales force has seen it across, by the way, multiple different coverage expansions is when you go see your physician today, if you have 6 million covered lives in the space, but 24 million people impacted, 25 million people impacted with type 2 diabetes. That means 25% of the people that see their physician that have type 2 diabetes have coverage. And the faster we can go to get coverage to where there's a much higher likelihood that, okay, you have commercial coverage, okay, now you have a greater than 50% chance of having coverage great. It really unlocks the ability for physicians to then go deeper into existing coverage opportunities.

So they feel like much more comfortable writing scripts and allowing folks to go to the pharmacy where they have leverage there. certainly, we'd expect a similar type phenomenon with the MS coverage as that can help kind of a rising tide. So hopefully, it gives you some context why it's helpful across the board, but also gives you some context to how we thought about the guide and the timing and the process.

And our next question comes from the line of Chris Pasquale with Nephron.

Jereme, you touched on the gross margin strength, but leverage in the middle of the income statement was excellent this quarter as well. I know you tweaked up the high end of your operating margin EBITDA ranges a little bit there. But does seem pretty conservative given where you're starting and the normal cadence we see throughout the year. So did some spending get pushed out from 1Q that's going to come back later. that might make this year look a little bit different. I look in particular at R&D being flat in dollar terms is a bit of an outlier. Any color there would be great.

Yes. I'm glad you brought it up because it's been a lot of work by the team to get there and to do the work. We do a lot of that work in the back half of last year. And one of the reasons we felt good about raising the guidance, we typically don't like to raise guidance after 1 quarter. But on operating expenses, you saw it in the fourth quarter as well as now in the first quarter. So you saw some good performance there. .

What I would say is in terms of the way to think about the operating margin guide, obviously, raised the midpoint by 75 basis points. It's a pretty big raise considering just 1 quarter behind us. What we'd expect is we do expect R&D spend to continue to increase. And so we did some good work around, I think, managing expenses and taking on some initiatives. We've leaned into things like AI to be more efficient. But we're not going to pull back on spend into R&D. So you're right, being flat year-over-year. I wouldn't expect that to continue. We're going to continue to invest in Ireland. In Ireland, we'll keep ramping up over the course of the year as that manufacturing facility continues to ramp up.

And if you think about it, you really start to ramp a manufacturing facility right before you turn it on. And we turn it on in the fourth quarter. So you can probably imagine Q2 and Q3, we ramp up a little bit going into that. So I don't know if it's necessarily pushed back. It's always been part of the plan and there's things going on underneath it. that make a ton of sense. But I do appreciate you acknowledging it. There's been a lot of leverage. We had 300 basis points leverage in operating expenses spend last year. That's playing through a little bit this year. And ultimately, our underlying business is continuing to get leverage just like the investments in Ireland, and that's the reasons we brought it up.

Our next question comes from the line of Joshua Jennings with TD Cowen.

This is Colin on for Josh. I wanted to come at the CMS [indiscernible] people seem to treating it as a binary event, but is it possible that there's any language around stipulating that patients are on orals or other diabetes medications, and would that change your expectations for the adoption trajectory over the next couple of years?

Yes. Thanks for the question. I think there's -- it's a question that's out there, which is to say what are the stipulations CMS would require in order to get coverage. And CMS has always had a requirement. I mean it's one of the ways that they make sure that you qualify for coverage, right? When it was intensive insulin, you had to prove that you were taking multiple shots per day. You need to submit glucose logs, when it moved to basal or modifications of restrictions, but you had to demonstrate you were taking 1 shot a day and that's the way you ultimately had to document it.

So CMS has always put things in there to make sure that folks qualify. I think our big takeaway is, there's a lot of conversation, what if you require a metformin or something along those lines to demonstrate it. Most folks who are diagnosed with diabetes are ultimately then diagnosed with medication. So from our point of view, whether it's all folks or all folks with some sort of medication, this is a massive expansion and a massive opportunity to help serve this population. I wouldn't be surprised if CMS put something in there just to make sure you're approved, you have it, whether it's script or whether it's scrip, plus that.

But either way, that's the majority of the diabetes population. That's going to be who you cover there. So not necessarily all that concern from that perspective. And when you say is it binary or not, I mean typically, the way the CMS does, it's coverage expansion. And so it is a bit binary in terms of how they expand it, the process in which they expand it. But in terms of the thought process around whether there's limiters, I wouldn't expect that any limiters really truly limit the ability to impact the population in a meaningful way or that it changes the opportunity for us to grow in this space.

And our next question comes from the line of Daniel Markowitz with Evercore ISI.

It's great to hear the call out on share gains in type 2 non-insulin. It sounds like the 15 day is helping a bit. But is there anything you're doing to the organization or the sales force in order to prepare for this market unlock, maybe more focus on PCPs versus endos or -- and also attached to that, how should we think about the OpEx impact related to increasing contribution from type 2 non-insulin market going forward?

Yes. Thanks, Daniel. Yes, we're continually evolving both the product portfolio and the service and also the way our field team is calling to make sure that we're serving all the people that have coverage for this product. And those that don't have coverage, we have our Stelo over-the-counter product available. And so we have continued to advance the service. And so as I mentioned in the prepared remarks, we've made a lot of updates to our technical support, our web forms, the digital tools that folks can use, and that's one of the reasons why we believe we see our user satisfaction scores improving. And it is a big deal for this population, this type 2 NIT population. .

And so we do feel that it's the product, as you mentioned, the 15-day is definitely helping us here in driving share gain, but it's also the experience they're having with DexCom and making sure that we meet all of their needs. And so we're going to continue to do that. When we talk about the sales force, we are using some advanced tools to analyze the data that's out there and target find these patients, find their prescribers and really, the #1 thing we need to do is continue to educate all the different pockets here around the coverage that exists because, as Jereme mentioned, when only 25% of this population is covered today, it can be complicated, particularly for those primary care physicians that aren't prescribing CGM every day for many, many patients, right? They don't know. So we -- that's what our skill team is doing. We're finding the folks that are seeing these patients, making sure they're aware of the coverage.

And then helping make sure they know how to write the prescription for CGM because many of it -- it's new for many of these folks. And so as we continue to expand. We're going to continue to look for efficiencies and productivity across the sales force, but as you mentioned, primary care is the main location where these folks are being seen. It's why we expanded our sales force in 2024 was really to gear up so that we could call on this broader group of physicians.

And our next question comes line of Bill Plovanic with Canaccord Genuity.

So really impressive free cash flow in the first quarter, especially considering the first quarter is typically not so good for free cash flow. I mean with that cash balance, the commentary in the press release on priority exploring new opportunities. Just help us understand what does that mean? Does that mean you're -- I mean, you have more than enough to pay back the convert if you so choose to do so at that time, like another $1.2 billion. Are you looking to buy something? What's that use of cash?

Yes. Thanks for the question. I appreciate the comment. Obviously, that's something near and dear to my heart, and we worked obviously quite hard on that. In terms of uses of cash, you're certainly right. As we're able to generate cash, we paid down our convert last quarter, and that's one of the reasons to isolate cash. We did $500 million of share buybacks in the last -- back half of last year. Having the extra cash on the balance sheet, I think, provides us multiple opportunities. I think it does provide us the opportunities to look at -- which we've always talked about, tuck-in M&A that makes sense, whether it's geographic expansion or capabilities we don't have. .

So we'll certainly always look at that and having the capital to do that's important. But it's also important to have it in the event that we do want to do things around capital markets, and we haven't been shy about share buybacks. What I think we plan to do is talk to you a little bit more about it here in a couple of weeks at Investor Day. Obviously, we're going to have a section there talking about capital allocation. So I expect to dig into it a little bit more there. But thank you for noticing. I think it's important. I think it's important that folks understand we are able to generate quite a bit of cash in this business, and it's something that we'll be focused on here for the foreseeable future.

And our next question comes from the line of Shagun Singh with RBC Capital Markets.

I was just wondering if you can talk a little bit about what the right growth rate in your view is for your U.S. and OUS business, excluding Stelo. How should we think about those underlying growth rates? And also as we think about the NCD and the type 2 non-insulin intensive market opening up? Any comments you can make if you haven't already on just lifetime patient value and how does that impact financials going forward?

Yes. Let me -- I'll anchor on what we said this year. And I think as we get out beyond this year, I'll really punt it to Investor Day because we'll start to get into more longer-term conversations. This year, we talked about the 11% to 13%. We talked about it being split across U.S., OUS and about 1 point contribution from Stelo. So it really gets you down to what the core clinical markets are. Stelo won't be a meaningful contributor outside the U.S. this year in terms of total dollar value. So you can assume it's de minimis in terms of contribution to the overall business.

What's most important is we get outside the U.S. because this starts to roll up over time. In terms of lifetime value of customer, ultimately, when you think about folks getting on our product, it's why retention and utilization is something we pay so much attention to and it varies based on how you play with those variables over time. And that's why we spend so much time thinking about product launches. Jake alluded to Smart Basel. That's a real valuable long-term way to titrate basal and make sure that you're always getting the most out of insulin usage.

So I think clearly, the longer we keep folks on the better lifetime value of customer. You've seen our bands, if you will, of utilization, type 1, type 2 intensive, basal and then we have that on our website. Obviously, you can imagine utilization then plays into it. And so therefore, the lifetime value of customer differs based on the use cases. And so as we move into more use cases that are maybe, say, 70% to 80% utilization. The value is a little bit less, but still it's a massive unmet need and the economics per purchase are generally around the same.

So the goal here is ultimately making sure that we're always keeping a close eye on our cost to acquire, and we have a whole team that does that. And making sure we meet the unmet need and keep patients on our products. So happy to go into more details if it makes sense. But we are paying attention to that, making sure we balance our operating expenditures along with what that value is over time. And then as we get into the longer out years, we can talk about that at Investor Day.

And the final question comes from the line of Anthony Petrone with Mizuho.

Just one on the RCT and just looking at some of the historical data out there. The mobile study a few years back, there's Libre studies out there, there's registry data. There's meta analyses. And you look at the A1c reductions across that sample and you can see an A1c reduction as low as 50 basis points, let's say, up to 2.5%. This is a less intense population. So I'm assuming that the starting A1c levels are a little bit lower. So how do you level set the expectation on what we should be looking for, for a statistically meaningful A1c reduction out of the RCT.

Yes, I appreciate the question. It's an important question when we think about care and also the A1c reduction. And so I think our [indiscernible] data is a good example of this population. They do come in kind of as you noted, with a spectrum of A1c, some are quite high actually because they have not yet progressed to insulin, and they're on some other glucose lowering medication. But a big part that we know of managing diabetes is there's a behavior component to it. There's also a medication adherence component to it. And so those are 2 things that CGM absolutely targets, and that's why we see the improvements that we see.

So I think as we looked at our registry data, that is a reasonable estimate for what we expect. I think the main thing we're expecting is a statistically significant improvement that meets the threshold for reimbursement. I think we're confident that CGM will drive that type of an outcome in these patients. And so we do really look forward to sharing the full readout with everybody at the ADA here coming up next month.

And that concludes our question-and-answer session. I will now turn the call back over to Mr. Jake Leach for closing remarks.

Thank you, operator. And as we close out the call, I just want to take a moment to say thank you, first, to our employees. The results that we shared today are a direct reflection of your execution, your resilience and your commitment to doing the hard work the right way. I'm incredibly proud of what you've delivered and how you show up for our customers every day.

I also want to thank the Customer Advisory Council. We met multiple times this past quarter and your candid input and your partnership is playing a critical role in shaping our strategy and improving the experiences that we deliver. The progress we're making is stronger because of your voice.

And so with that, I'd like to thank all of you for joining us. We look forward to seeing many of you at our Investor Day in a few weeks. Thanks, everybody.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Welcome to the 47th Annual Raymond James Institutional Investors Conference. My name is Jayson Bedford. I cover the med tech sector here at Ray Jay. It's really my privilege to introduce DexCom. We have the company's CFO, Jereme Sylvain, DexCom has been a loyal participant at this conference for many years. So Jereme, thank you for your participation, and thank you all for coming. So with that, I'll pass it over to Jereme.

All right. Thank you, and thank you, everyone, for being here. It's always exciting to talk about DexCom on a Monday afternoon now. And so happy to go through this. Let me first start with the safe harbor statement. I'm sure you guys can all read this. But what it says is we will talk about some forward-looking statements. And if you want to read it in detail, you're more than welcome to. It's on our website.

Let me first start with just maybe an introduction to DexCom, who we are, what we do and really a little bit about our history because I think it's helpful as we talk about our future, we talk about our history and what we've been rooted in. So DexCom, we make biosensing industry, really continuous glucose monitors. And as you look at the organization over time, there's a litany of firsts that come here. And what you can see is the first to use alerts or the first to create the iCGM standards, the first to have a Share/Follow, the first to connect and clear without a prescription for those that have used Stelo. We've been the first to integrate GenAI into our product.

All of these firsts, they all really come out of a knowledge and a depth and a breadth in this industry that really we helped to create. And I think it's one of those things that it sometimes gets lost as we need to remind folks that as one of the 2 major CGM players, and I know there's more than that, but there's 2 that really lead the industry, we are the one that drives the first in the industry. So when you think about the advancement of technology, our hope is that you can associate that with DexCom. And going forward, we expect to do just that.

But as we start to think about it, what I'd really like to do is step back and say, okay, now we know we're a continuous glucose monitoring company. What are we trying to solve here? And I think this is really the area that remains near and dear to all of our hearts. This is a crisis that continues to grow. And for those that know us over time, you've seen reference to this slide. But if you look at it, the crisis is mounting globally.

Right now, there's almost 600 million people with a diabetes diagnosis. The IDF expects that to be $853 million by the year of 2050, and that takes into account all of the technology and therapies that are out there. And we know that when you have diabetes, it's about a 2.6x cost to the system. And we also know that 1/4 of our dollars in the U.S. certainly go there. And the big question then is saying, well, how is it progressing over time?

Well, unfortunately, approximately 40% of the U.S. population has prediabetes, which is obviously the feeder into this. So there's a massive unmet need. And what's interesting at the core of all of this is there's an underlying thought process that CGM has penetrated. The reality is only about 2% of this population has access or use a CGM at this point. And so there's a massive market to unfold. There's a massive opportunity to help bend this curve. And we intend to be at the beginning of it.

Now for those of you that we recently had Kevin Sayer, ultimately retire. He's going to be our Executive Chairman; and Jake Leach. So Jake's been with the company for 21 years, stepping into the CEO role. You wouldn't know it by looking at them, but he's been with DexCom for 21 years. And prior to that, he was at MiniMed and ultimately, the organization sold to Medtronic over time.

Jake has been part of the team that ultimately has helped build these sensors. And as he steps into the CEO seat, I think there's 3 key areas that we're going to be focusing on as we drive this business forward. And one is being the premier glucose sensing solution for all. Jake comes from technology. Our organization was based in technology. We listed the first for our organization.

The expectation is we continue to lead in technology. And when you look at the ability of what glucose can do for the body in addition with other data, you can really -- if you can be the premier glucose sensing solution for all, you can ultimately drive massive improvements, both in folks using it and folks that haven't yet used it. We also want to set the standard for customer experience. I think it's really important to understand, as this product gets into more and more hands, you would put up with maybe challenges in customer experience because of what the product did.

But over time, it's going to be really important to make sure we make it easier, easier to get access to help, easier to request replacements, easier for you to get through to navigate through the reimbursement landscape and easier for you to use the product in a way that it was intended for. And so we're going to be looking at a bunch of different solutions that make the customer experience a differentiator.

And lastly, we are under-indexed outside the United States. We didn't start. We started heavily in the United States. And to this point, while we're the #2 player globally, we're the #2 by a relatively large margin relative to a competitor there. There's a massive opportunity to take our product outside the United States. We'll talk a little bit more about the product portfolio strategy.

So those are the 3 foundations and all of it is built on a scalable foundation really important. Pretty soon, we'll make as many sensors as Apple makes iPhones, and we have to be able to do that in a scalable way for it to make sense for everybody. So it becomes real, real important.

And lastly, as we go through this, this mission remains personal. Our company has many, many, many folks who are ultimately on our product in all different phases. And at the end of this presentation, we'll have some of the pictures. But the moments that matter in people's lives, they're depicted here. And ultimately, the solution that we offer provides it, whether it's meeting with your physician, whether it's working through a pregnancy, whether it's going to your daughter's recital, allowing yourself to sleep at night. All of these areas become very, very personal, and those who have been exposed to the technology understand it. It's personal for everybody here at the company.

So let me take a step back before we take a step forward. I'll recap 2025. If anybody wants to see it in more detail, we filed it, and there's a bunch online to see. But essentially, we grew revenues about 15% organically in 2025. And we grew the active base by a little bit north of 20%. So really exciting for us. We've got about 3.5 million customers globally, and that excludes those who use our Stelo product on our product.

Really all in all, it was a year of some significant advancement, but a lot of learnings, and we'll be the first to acknowledge there were a lot of learnings over the course of the year. But let's talk about some strategic updates, and then I'll turn the page on the learnings lead to longer term.

So we did secure coverage, all of the largest PBMs in the United States now cover our product for type 2. So think about that, that's type 1, type 2 intensive, that's multiple shots for the day. Type 2 basal that's 1 shot a day and now for those that are not on insulin shots. We also received clearance for Smart Basal.

Now for those that don't know what Smart Basal is, Smart Basal is an opportunity to titrate your insulin remotely, remotely from your physician's office with your physician in the loop. This is a first of its kind of experience. that's going to be available on our CGM here in the relatively near future. We're already rolling it out in select clinics across the United States.

We did launch our G7 15-day system, really important advancement over time. It's an opportunity for us to ultimately drive adoption. There's a differentiator here in terms of Smart Basal DexCom. Smart Basal will be on this 15-day platform, in addition to the elimination of the amount of day 1 and obviously, from an investor point of view, it's more efficient from a margin perspective. And we did progress our Ireland manufacturing, we will launch that in 2026.

But I mentioned there were a lot of learnings over the course of the year, we had to deal with scale. And when we talk about building this organization on a scalable foundation, we have been able to navigate through a lot of those, which leads us to a good position as we think about 2026. We've guided to revenue of 11% to 13%. This assumes no significant incremental new coverage. And so I think this is an opportunity for us to really demonstrate the core growth, and obviously, our team is highly incentivized to continue to unlock coverage, something we've done over the course of our history.

We've guided to the margins. You can see 63% to 64% gross, 22%, 23% operating and 30% to 31% EBITDA and at the end, we'll talk about it, but it's over $1 billion in free cash flow. And I kind of rewind back to -- I was thinking about the days of, call it, 7 or 8 years ago, we were a negative free cash flow company breaking even. I think this is a demonstration of what scale can do and how we've built and leaned into scale over time. And I think some of the lessons we learned over 2025 will help us scale even further.

We do expect with the gross margin expansion for there to be improved freight and manufacturing efficiencies. For those that have followed the story as we had some supply challenges. And as we brought in some new suppliers, we've had to navigate through a few of those challenges. Those are probably behind us at this point. And so for us, it's really full steam ahead.

We do expect operating margin expansion that was partially masked by our Ireland investments. We made -- we talked about launching our Ireland facility. Certainly, some of that will be in our run rate as well. So really excited about being able to maintain operating margins while launching a very large facility. And so we're really excited about that. This provides a really scalable opportunity. And I think all the things we're going to talk about you'll start to see how the scale plays through in things like 15-day or operating margin expansion even as we move out of 2026 and into future years. So it's a very exciting opportunity for us.

As we acclimate where we're going, this is always helpful to size the market. This is the market today. And what's interesting is there's more people who have coverage today that are not on CGM than ever before. So this provides a massive runway for us. And as you see down the side, type 1 is that market size approaches $2 million at this point. You can see the penetration there is still 60% to 65%. The opportunity there, of course, is to get to 80%, and similar in type 2 IIT, the opportunity there is to get to 80% as well. And we are what we call full coverage at this point. For the most part, you have coverage if you're in these spaces, all the way down through Medicaid.

We have type 2 basal, which is only 20% to 25% penetrated. We expect it to get to 60% over time. This is a massive opportunity for us. We've crossed 25% as we moved into this year. And I think this also is at full coverage. And then the big one, non-insulin type 2. We've only got about a quarter of coverage at this point. It's only about 5% penetrated. And there's a lot of opportunity for us ahead. And we'll talk a little bit about that as we move forward. But the market is still out there and it's massive, which is a very exciting opportunity for us.

So what are we doing in type 2? And how are we going to unlock it? Well, we've already got a type 2 IIT registry out there. And this data is already in front of the regulatory authorities who are looking to get coverage for, which essentially shown what you would expect. If you're on a CGM sensor and it's giving you feedback into your glucose in real time, it's given you feedback as you go and take a walk around the block and you see what happens to your glucose levels, we've seen significant reductions in A1c, weight and BMI.

All really important things to longevity of health, and it's all based on changes to diet and lifestyle. It's not a pharmaceutical intervention. It's improvement has been sustained. These are lifestyle changes, really important if you want to bend the curve and it's -- what's really interesting is the utilization rates remain high. And this is important.

This is real-world data, and which means folks in the real world are using sensors and they're using them often which is really important as you think about progressing benefits over time, we want folks on sensors because it's like a mirror. You see in real time what you're doing and how it impacts you and you yield the most benefit from that. Now we also want to talk about how this is going to work from a durable growth opportunity.

So we talked about coverage being at the core of it. We talked about there being about 9 million folks with access to therapy. We also expect CMS coverage for type 2 and IT over time. And that opportunity for coverage would essentially be about 12 million lives in locks. We talked about 9 million available. There's 12 million more with that coverage. And what are we doing around it? We've obviously built the pathway through clinical evidence that's unlocked CMS coverage historically.

Our DIaMonD control trial was ultimately the reason for CMS coverage for type 1 and type 2 intensive. Fast forward our mobile RCT ultimately was the baseline for basal coverage. And we're going to have a readout here in the first half of 2026. We've talked about it being either at our Investor Day or at ADA around our non-insulin RCT and very exciting about this opportunity.

Clearly, I think we know it's going to demonstrate really solid feedback given what we've seen in the real world. We continue to be the leader in clinical trials, and I think that's really important because we're also going to be using this as we think about a national access. International access is a big opportunity for us. Like I said, we're under-indexed relative to competition there. And you can see over time the work we've done to help expand access.

We've certainly done it in Japan, and Japan now covers everybody using insulin, which includes basal. In 2024, we had France expansion of coverage in France is one of our fastest-growing markets outside the United States. And in 2025, we expanded further in Canada. The opportunities outside the U.S. to expand the U.S. as well -- outside the U.S., it's well behind the U.S. in terms of access to coverage. And the opportunity is massive. You see the flags of the various countries there. But our largest countries in the world still don't have basal coverage.

These are folks that have a dangerous exposure to hypo events given the use of insulin and basal over the course of time. So we'd expect through all the work that we're doing to unlock coverage here over time and looking really forward to driving that expansion. And how we're going to do that in terms of how we slot things in. Outside the U.S., we have a tiered product portfolio. We use G Series as our, call it, high-risk product. We have DexCom ONE and DexCom ONE+ which effectively is our product that slots into tenders that maybe don't require high risk or AID type work.

And then where there's limited reimbursement, we certainly step in with DexCom ONE+ and we're excited to know that 2026, we'll launch another product targeted in this portfolio, which is really designed to make sure we're meeting all of the various needs based on where folks are clinically through the process. So we're really excited about doing this opportunity combined with expanded coverage to grow that international market. And as I mentioned before, Jake is highly focused, and we'll be making a significant amount of investment in this area.

We're also leaning into technology, and we've led the way on automated instant delivery over the years. You can see our partners down below with AID connectivity. And most importantly, we have 2.5 million patient years currently right now under AID product. That becomes really important as you think about all the little things that you have to think about as you have connectivity in this space. All of these folks algorithms were tuned based on a DexCom algorithm. And that becomes really important when you think about the effectiveness of the studies and the work and all that takes place and going into managing someone's day-to-day diabetes.

And so it's an exciting opportunity for us to remind folks here to remind folks of the technology and our product, how it enables this as well, it enables the ecosystem around it. And to that, we've launched DexCom 715 day. One of the big questions was always asked is, well, how do you move out for longer where? What's the opportunity here given that a competitor was already in this space, and we've launched that. We launched it in the DME channel, the durable medical equipment channel in December, and we launched it in the retail channel here in January. And we're happy to say that so far, the feedback has been excellent.

We have an updated algorithm and algorithm drives our already leading accuracy, even lower. It's -- like I said, a longer wear time. It's 15 days, but we have a good feature, which is a 12-hour warm up or warm down process. And the great news is when you start your new sensor, you can start it during that window, and it warms up independent of the other one, a real opportunity there, and it's easy to use.

I've also mentioned that DexCom, that DexCom transforming the customer experience. and I'll get to Smart Basal in a second, but my DexCom account, when we say lead with customer support, while this seems -- it seems common to have support online-based and being able to pull in your account data. It is something that in medical device we've collectively struggled on given the regulatory nature of our product. And so what we have now is the digital experience that's streamlined.

And ultimately, we expect this to be, from a patient perspective, a much better journey as you're navigating through whatever it might be, where is my sense or has it shifted? Have you sent a tech support? What is my timing? We're going to have all of your account data available linked into our systems and also start leaning into technologies to make it easier, whether it's RPA, AI, to make your experience with DexCom more consistent over time. So we expect to have quite a few more updates here to come over the course of 2026, but that journey on improving the patient experience has started here and continues.

We talked a little bit about Dexcom Smart Basal as an advancement. Here's a great example of what we're trying to do in meeting an unmet need. The basal population and those folks that are navigating through it typically struggle to ever reach the optimal dose of basal. What happens is, is you'll go in and you'll see your physician, you'll get a recommended dose over time.

That doesn't change until you see your physician again, and you're never able to really titrate it down. And you find that folks never actually reach the time and range that they've been targeting. What we have here now is in real time with a doctor in loop, we have a faster solution to walk through it. And the way it works is you ultimately navigate through DexCom Clarity clinic. You're able to navigate through that into what your dose is, your doctor is able to provide parameters around it.

And every day, we can update your dosing based on what your CGM tracings are to help titrate you over time is the first of its kind algorithm of this sort. We did it in conjunction with our TypeZero group that's now been in-house for years now. And this should help our HCPs. As you show up at the physician's office, they'll be able to see. Did you log your dosage, how much did you take? What did you say you were going to do?

Ultimately, the goal here is giving physicians more ability to help in giving our patients more opportunity to reach their goals. And this is exciting. So this is out in clinics right now. We'll see it rolling out even further as we move forward through the year. But this kind of technology advancement is really excited for us. And we talked about making things easier direct EHR integration. We've been at this for years now. We actually navigate predominantly through Epic, but we are working across multiple EHRs. And again, the goal here is how to make things easy, make it easy for your prescriber to ultimately help you on your journey.

It's one of the biggest challenges you find is the CGM is incredibly helpful data. It's very rich data. But if your physician doesn't have it in hand, and can't reference your history. Sometimes it's difficult to make those decisions. We're looking to do that and there's 160 health systems that are either live or onboarding into this. We believe this can be a differentiator across the board.

Stelo. So as we talked about our -- the first over-the-counter product, we launched Stelo in 2024 in the back half of 2024. And we're happy to say that over the course of 2025, we had $130 million of revenue, over 500,000 people have downloaded and used it since launch. When you think about medical devices and over-the-counter medical devices, certainly, this is one of the most successful launches in the history of the space. And so what we're really excited about is where we can go over time.

We've got a very engaged user base. We've got a lot of folks that want to use it. And I think what's interesting is always the what's next. Because this is a population that we can help bend the curve on, but we have to make it easy for those folks to use. We have to give them data to do something with it. And so this is what the new next step on our journey is. We've got essentially a new interface with more insights and logging.

And these are screenshots of what you should see launching here in the relative near future, which is the app which is going to allow folks to engage to see very clearly where your glucose is, but it's also going to have an AI coach in there. It's going to have meal logging. It's going to have all the things that you need to ultimately make real-time decisions about your health going forward. And obviously, this technology is applicable not only to Stelo over time but also to our G Series over time. So we're really excited about the opportunity here to really drive this further into the population and really help folks bend that curve.

Now one of the things we do want to make sure is as we talk about hundreds of millions of sensors being made, we do need to advance our scalability. And we talked about 2025 being a year of learning. We have enhanced our quality management system. For those folks that don't know, we did go through some challenges both on a supply. We had an FDA warning letter. And as going through that process, we have enhanced that system.

We've done a lot of work around supply chain development. One of the things we've learned from scale in the past is through our 4 walls, we needed to build resiliency. But ultimately, it's beyond our 4 walls as we get bigger and bigger, we also need to build resiliency. And so that's through our supply chain presence and development.

And we're also going to launch our facility in Ireland. One of the abilities to have global access to global suppliers is to avoid any sort of geopolitical issues that do come up over time. And having that launch in Ireland here in the back half of 2026 is going to be an exciting development for us.

So what's next? We talked about all the opportunities there, but we also want to talk about our next major product, and we have DexCom G8. We started with Dex. You Can see the history here with G6 and G7. Certainly, G6 had some amazing firsts in the industry, and you can see them with finger sticks and auto applicator. And at that point, we moved it to 10-day wear. But now you see G7. G7 was a 60% smaller form factor. It wasn't a 2-piece solution. It included the new software architecture, but G8 is going to be the most accurate sensor and it's going to be a step change in glucose.

At our Investor Day, we're going to share a little bit more about how we do that. It's very exciting. There are some new technologies that are available. But I think what you're going to find are going to really change the way people think about accuracy in this space. We also have the smallest sensor on the market. This is going to be a significant reduction. And while G7 is already pretty small, and it's not necessarily a massive complaint.

The reality is the smaller the sensor, the less chance you can get caught on something and the less worry you have walking through the doorway and you might clip it on a door. These are the kind of things that are really important. We help navigate through as you think about children the smaller it is, the easier it is to stay on children and pets. We're very excited about that. And we are building with advanced sensing capabilities. So it will come with the chipset that ultimately allows it to sense dual analyzes over time. And I think we're really excited about the opportunity to build that through our products.

So G8 is coming here. We expect to share more at our Investor Day. Our Investor Day is in Mesa, Arizona in May and looking forward to sharing more about that. We also have a big opportunity here in future markets. Gestational diabetes near and dear to my heart. Having a wife that went through some challenges here and having to go back for multiple oral glucose tests.

There's an opportunity here. There's a 50% reduction in C-sections, NICU admissions, et cetera, by folks wearing our sensor. It's an opportunity to really change the trajectory of mothers challenging going through the jet challenge. Another big challenge, of course, is it's highly likely if you're a mother with gestational diabetes, you develop type 2 within 5 years. We can hopefully avoid that through this process.

Obviously, in the hospital space, there's 14 million dysglycemic events. We are working towards that over time. And there's opportunities there and of course, in prediabetes. As we talked about it earlier, this is -- the curve is not bending at this point despite all the advancements we're seeing. And the reason is, is we have incredible therapies. We're partners with Lilly and Novo, and there's incredible GLP-1s out there. But those need to be combined with lifestyle change. And CGM is the tool that helps you really drive lifestyle change.

So really exciting opportunity there. So I promised Jayson would talk for a little bit here, but let me just summarize the investment case in 2026. I think it's always helpful at investment conferences to do that. We do expect obviously double-digit growth, and that's without expansion of coverage. And we do expect, over time, obviously, expansions of coverage. That's what we've built our organization on. But as a base case, that's the case.

We do expect over 200 basis points in gross margin expansion. And that's only going to go up over time as 15-day penetrates our organization more and more. More than $1.5 billion in adjusted EBITDA and certainly over $1 billion in free cash flow. All of that off of what I'd say is a base case year and obviously, a lot of opportunity for coverage expansion in the future.

So with that said, Jayson, I just close here and just -- I promised you I'd show you the employees of DexCom. I'll come over there. These are all the folks that work at DexCom that make this possible, all in their various moments that matter. So really important. You can see everybody going through many things, whether it's a wedding, having children doing activities outdoor indoors. On behalf of all of them, this is our purpose. So thank you.

Thanks, Jereme. Maybe a simple question, perhaps requires a complex answer, but you had a slide up there, 9 million people have coverage but are not using CGM. So the simple question is, why not? What's the biggest factor there? And then what are the top couple of factors that you can control to increase adoption?

Yes. I think the biggest one, and this is where our sales force is out there spreading the word and our marketing team is awareness. There's a lot of folks that are aware of CGM but are they aware that coverage exists for them. Historically, it was one that type 1 traditionally struggled to get coverage. And we had to fight to win that battle.

I think over time, what you're seeing now is -- and we saw the same thing happen when we expanded into basal, physicians maybe didn't know. Or how do I navigate through this complicated landscape. And I think it's up to us to go through it with our sales force, with our tools, and we go into offices, and we're very able to quickly identify who does and who does not have coverage.

Make sure that our primary care physicians, the endocrinologists out there really understand who does and who does not have coverage. And in many cases, the co-pay for folks is very, very low. And in a lot of cases, at 0. And so it provides the opportunity, once folks have that awareness and know that this tool is out there and available, I think that will be a very effective tool. Just again, it takes time for that to soak in. And it's taken time for us over the years. It's taking time, but the opportunity and the demand is there.

I felt like the business was playing a lot of defense in '25 with the warning letter, supply challenges. It feels like there's the potential to play a lot more offense in '26 new products potentially new coverage. One, is that a fair way of assessing it? And what would you point to as drivers, the key drivers of the potential momentum?

Yes. I think you always you always kind of reflect back on 2025, and we talked about it being a year of learnings. Part of those learnings were some of the work we had to do around the defensive side. And to your point, there was a warning letter. We had challenges and disruptions in supply and as a result of some of that, we also had -- when we changed suppliers, we had some deployment challenges.

And I think as we've made those changes, the conversation as we get into physicians' offices, when we're on stage, when we're talking to clinicians across the world or even patients across the world is less about how do we fix the current issues at hand but more about let's get back to what this product can do for you.

Let's get back to the road map of all the improvements we're going to be making over time. And let's talk about your coverage and the opportunities there. And I think that's something I would say internally, we're incredibly excited about. It's having the conversations really about what this can do for you, what the future looks like. And so -- and really, we have no problem addressing the lessons learned. And I think that's one of the other things is we're happy to say, look, we learn these lessons.

I think these lessons will help us scale. And I think we are incredibly excited about those conversations as we move forward in 2026 and beyond and taking advantage of, like you said, the coverage that's out there and the conversations about how we can maximize that.

Okay. We've got 20 seconds left, so multiple choice. 15-day launch. Has it gone as expected, better than expected or slower than expected?

So I would say it's gone as expected with our high expectations. So we had high expectations for this launch, and it's gone as expected. And I'd say the anecdotal feedback continues to be excellent. So we're really excited about it.

All right. We can carry this conversation on in [ Amarante 1 ] to breakout downstairs. Thank you, Jereme.

Thank you. Appreciate it.

Ladies and gentlemen, good afternoon, and welcome to the DexCom Fourth Quarter and Fiscal Year 2025 Earnings Release Conference Call. My name is Andy, and I will be your operator today. [Operator Instructions] As a reminder, the conference is being recorded.

I will now turn the call over to Mr. Sean Christensen, Vice President of Finance and Investor Relations. Mr. Christensen, you may begin.

Thank you operator, and welcome to DexCom's Fourth Quarter and Fiscal Year 2025 Earnings Call. Our agenda begins with Jake Leach, DexCom's President and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jereme 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 1 question each so we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our fourth quarter and fiscal year 2025 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-K, 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 fourth quarter and fiscal year 2025 earnings call for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Now I will turn it over to Jake.

Thank you, Sean, and thank you, everyone, for joining us. It's an honor to join you today with my first earnings call since officially stepping into the role of CEO last month. As many of you know, in more than 20 years at DexCom, I've had the privilege of helping build the CGM category and redefine diabetes care. But as I reflect on all the innovation and impact we delivered, I believe we are still early in our journey. There remains a massive opportunity to help improve metabolic health for our customers globally, and I'm excited to lead DexCom into our next chapter.

I recently had the opportunity to share my initial vision as CEO and highlight 3 key areas of focus for our organization. First, we will be the premier glucose sensing solution for all. glucose remains central to all stages of metabolic health management, and we still see significant opportunity to improve the experience of glucose sensing. This will include greater sensor accuracy, improved liability stronger connectivity and more. We'll always keep pushing to enhance this experience for our customers and further entrench our position as the market innovator. A great example of this can be seen today with the broad rollout of our DexCom G7 15 Day system. As of early January, this product is now available across all channels in the U.S. And while it's still early, the initial feedback has been excellent.

Customers and physicians have been thrilled with the longer wear time, which reduces the number of sensor changes required each month as well as the new algorithm, which offers our greatest accuracy to date. We're currently in the process of building greater awareness of this product availability in the market, and we'll be working hard to get G7 15 Day into the hands of as many people as possible. Our second strategic priority is that we will set the standard for customer experience. This includes raising the bar for all of our customers, not only the individuals that wear our sensors, but also prescribers, caregivers, distribution partners, payers and more. We want DexCom to consistently create experiences that delight our customers and make their lives easier.

We recently highlighted several new products and features that do just that. This includes My Dexcom Account, our newly launched digital support system, which is significantly streamlining the customer support experience and saving valuable time for our customers. We also have additional offerings planned as we further integrate AI into this customer experience in the near future. We are also excited to start the early access launch for Dexcom Smart Basal this month. We've always looked for ways to ease customer burden and improve outcomes and Smart Basal has the potential to become the new standard for any person managing type 2 diabetes with basal insulin. We believe this personalized dosing module can lead to more accurate basal insulin titration, accelerate the time to reach optimal dose significantly simplify workflows for the prescriber and most importantly, improve outcomes for those using our products.

Our DexCom Direct EHR integration, which is now live or onboarding at over 160 health systems provides a quick and easy connection to customer CGM data across multiple EHR platforms. This is something that the prescribing community has been requesting for years, and we are happy to be the first to provide this in our industry. For Stelo, we recently announced a comprehensive nutrition database that will be launched shortly in our smart food logging feature. Following this update, Stelo can provide a detailed breakdown of macro nutrient information for each meal giving customers a better understanding of how food choices impact their glucose. We will also be following this up with a completely redesigned app experience later this year, which will offer a more consumer-friendly experience and enhanced customer insights.

And just last week, we received clearance for a new patch technology that we believe will provide an even better experience for customers across our entire product portfolio. This technology has demonstrated in clinical trials the ability to strengthen sensor survival on our G7 system, including G7 15 Day. This is the type of customer-focused innovation that we need to continuously deliver we want to create meaningful, seamless experiences for our customers that drive greater satisfaction, engagement and utilization. Ultimately, this can also increase customer lifetime value and serve as a growth driver for our business.

Our third strategic priority is that we will expand international market share. The core pillars of our international playbook remain the same. We can drive growth and share through broader DexCom awareness and by expanding CGM access for more people globally. In recent years, we've also broadened our market reach with the expansion of our CGM product portfolio. which can be tailored to the needs of each market and reimbursement system. We now have several examples of how this tiered offering has enabled us to win new coverage and greater share.

We also plan to add to our portfolio in 2026 with Stelo and a new CGM system in our international markets to expand access to new segments of the market. I couldn't be more excited about the significant opportunity across our international markets. In fact, as we look across the evolving market landscape internationally, there is a path for this opportunity to become even larger than our core U.S. market. As you can tell, there is a lot to be energized about as I step into the role of CEO. I'm also very encouraged by the way we closed out 2025.

In the fourth quarter, we delivered revenue growth of 13%, which brought our full year revenue above the high end of our most recent guidance. This reflected continued strong new customer demand and encouraging sell-through trends as the quarter progressed. We'll now look to build on this momentum as we move into the new year. I also want to call out continued progress from our manufacturing and logistics teams, which left us exiting the year at an operational high note. Over the course of Q4, we built our inventory toward preferred levels of finished goods reestablished more efficient shipping routes through ocean freight and continued to strengthen performance throughout our supply chain. As expected, this helped us deliver nice sequential improvement in gross margin and drove the expected reduction in the sensor deployment issues that we identified earlier last year.

Our team was able to manage all of this while simultaneously preparing for our G7 15 Day product launch. We know that first impressions matter. So we've been incredibly focused on product performance and ensuring a great initial experience. It's been rewarding to now see that effort be recognized in the market. In summary, we have a lot to be excited about in both 2026 and in the coming years. Along those lines, we're currently planning an Investor Day for May 2026, where we plan to provide additional details on our outlook. We hope to see you there.

With that, I'll turn it over to Jereme.

Thank you, Jake. As a reminder, unless otherwise noted, the financial metrics 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 fourth quarter of 2025, we reported worldwide revenue of $1.26 billion compared to $1.11 billion for the fourth quarter of 2024, representing growth of 13% on a reported basis and 12% on an 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 12 months.

U.S. revenue totaled $892 million for the fourth quarter compared to $803 million in the fourth quarter of 2024, representing an increase of 11%. As Jake mentioned, we saw sell-through trends build over the course of the fourth quarter, which we're now also seeing carry into the new year. This has correlated well with our broader G7 15 Day product launch, which has already generated a lot of interest among customers and prescribers. International revenue grew 18%, totaling $368 million in the fourth quarter. International organic revenue growth was 15% for the fourth quarter.

Our international business finished the year well with particular strength in some of our largest markets, including Germany, the United Kingdom and France. France ended the year as one of our fastest-growing markets as we benefited from significant type 2 access expansion at the end of last year. This is a great example of our ability to drive growth and market share as broader type 2 coverage forms across the globe. Our fourth quarter gross profit was $799.8 million or 63.5% of revenue compared to 59.4% of revenue in the fourth quarter of 2024.

As expected, we drove more than 200 basis points of sequential gross margin improvement during the fourth quarter. This reflected continued progress in our freight expense as we were able to reestablish ocean shipping during the quarter as well as continued improvement in our scrap rates as we strengthened supply chain performance throughout the quarter. Given some of the supply challenges we had in 2025, this demonstrates the dedication and incredible work by our team for our customers.

Operating expenses were $468.3 million for Q4 of 2025 compared to $451.7 million in Q4 of 2024. Operating income was $331.5 million or 26.3% of revenue in the fourth quarter of 2025 compared to $209.5 million or 18.8% of revenue in the same quarter of 2024. Adjusted EBITDA was $422.2 million or 33.5% of revenue for the fourth quarter compared to $300.1 million or 27.0% of revenue for the fourth quarter of 2024. Net income in the fourth quarter was $265.1 million or $0.68 per share. We remain in a great financial position, closing the quarter with approximately $2 billion of cash and cash equivalents.

Our strong cash position provides us with significant financial flexibility. This was evident during the fourth quarter as we both settled our expiring $1.2 billion convertible notes in cash and repurchased another $300 million of stock in the open market. Even after this activity, we remain in a great financial position. This is also supported by our growing free cash flow profile. In 2025, we've surpassed $1 billion of free cash flow for the first time.

Turning to 2026 guidance. As we stated last month, we anticipate total revenue to be in a range of $5.16 billion to $5.25 billion, representing growth of 11% to 13% for the year. This guidance assumes continued strong category growth and incremental growth contribution from Stelo and new product advancements across our platform. It also assumes that the coverage landscape remains predominantly the same as it stands today, but we'll continue to push for additional CGM access globally.

From a margin perspective, we expect full year non-GAAP gross profit margin to be in the range of 63% to 64%, non-GAAP operating profit margin to be approximately 22% to 23% and adjusted EBITDA margin of approximately 30% to 31%. Our guidance assumes gross margin will improve 200 to 300 basis points in 2026 as we benefit from lower freight expenses, additional manufacturing efficiencies and the growing contribution from G7 15 Day. We also expect that gross margin expansion to play through an operating margin expansion in 2026 even as we have incremental hiring and spending plans to support sales, innovation and the launch of our Ireland manufacturing facility late in the year. These investments will better position us to capitalize on broader global coverage, including our expectation for Medicare coverage for the type 2 non-insulin population.

With that, we can open up the call for Q&A. Sean?

Thank you, Jereme. As a reminder, we ask our audience to limit themselves to only 1 question at this time and then reenter the queue if necessary. Operator, please provide the Q&A instructions. .

[Operator Instructions] And our first question comes from the line of Matt Taylor with Jefferies.

Jake, I wanted to ask you on your first call as CEO, to talk a little bit more about some big picture items. You mentioned in your comments that feel like the company is early on the glucose journey on the fencing journey. And I guess I'd imagine a lot of that has to do with the potential coverage to come here in the future. So I wanted to have you talk a little bit more about where the existing legacy and core markets could go in the coming years, but also with an eye to non-intensive type 2 coverage that we could see coming over the next 12 to 24 months.

Thanks, Matt. I really do think we're in the early innings of a game here with -- when you think about the size of the problem out there with metabolic health and the growth of diabetes globally. And then you look at the solutions that we provide with our technology and the outcomes that we can drive. If you look across every segment of patients that we serve, whether it's type 1, type 2 insulin users or type 2 non-insulin users. We drive significant outcomes, both health outcomes for the user and their prescribing physicians, but also financial outcomes for the health systems.

And so the awareness of those outcomes continues to grow. And we've been generating evidence for years to help unlock the access for millions of users. And so as you mentioned, as we look at the landscape of coverage. We've started towards last year, seeing coverage unlock commercially for type 2 non-insulin users. And we are on the verge of expansion into the broader group of type 2 that are covered by Medicare. And so when that expansion happens, it's almost 12 million people that would then suddenly get access to CGM. So that's why when I think about the road ahead and the durable years of growth we've got, there's just this tremendous opportunity to have an impact on the lives of many people.

And as you think internationally, too, the opportunity there is pretty significant. And as I mentioned in my comments, it's -- we see this being larger than the U.S. over time. Now internationally, typically, the coverage trails a bit from the U.S. But with the evidence we continue to generate and the awareness we continue to generate. We're confident that over time as access is going to continue to open and provide opportunity for us to impact more lives.

And our next question comes from the line of Larry Biegelsen with Wells Fargo.

I guess I'll follow up on type 2 non-insulin. Jake, based on your response there, it sounds like you think it's coming soon, the CMS -- I'm asking about the CMS proposal. Your main competitor is saying first half 2026, are you in agreement with that? And when should we expect to see the RCT data? And just maybe lastly, how do you want us to think about the kind of potential impact from CMS coverage of type 2 non-insulin -- non-insulin?

Yes. Thanks, Larry. As we continue to work with CMS, actually, as we've been sitting here waiting for the coverage decision from them. We've actually had the ADA update their guidelines for type 2 non-insulin and really further moving towards recommending the product for that group and recommending if they have a choice. And so I think that's clearly based on the real-world outcomes that we've been generating. So we mentioned at JPMorgan around the registry that we've started for non-insulin users, and that's basically, people that have coverage today that are type 2 non-insulin users.

And looking at those outcomes, we're seeing great sustained outcome in terms of health improvement and high sensor utilization. And so that gives us confidence that we know that we can make an impact in this population. And clearly, the private payers have seen that and have started moving the direction of coverage. And so we're going to continue to do everything we can do to support a coverage decision here with Medicare, which one of the things you mentioned is our randomized controlled trial in type 2 non-insulin users. That trial, we're very excited to read that trial out here towards the middle of this year. And it's a trial about 300 people got 2 arms, those who weren't using CGM and those using standard care methods. And we are fairly excited to share the results of that as we get towards the end of the study.

And our next question comes from the line of Travis Steed with Bank of America.

I wanted to ask about 15 Day and both how we should think about the rollout of that, the impact on margins? And also kind of the use of that to open up new markets, I heard you mentioned new products launching internationally and talking about international getting to be bigger than the U.S., that's only 30% of your company today. So a lot of international growth there. So I just wondered if you kind of touch on those 2 topics.

Yes. Sure, Travis. This is Jereme. I can certainly start on the margin side, and then I can turn it over to Jake in terms of talking about long-term opportunities outside the U.S. So as you think about the 15 Day product, clearly, in the U.S., it's launched today, and we'd expect that to certainly start to contribute to margins over the course of this year. The reality is, it starts to contribute to margins even more in future years because this is a year about getting folks interested making sure they understand the benefits and really converting a base over time. We'll start with new patients, and we'll convert the base. So the contribution, yes, there will be some -- certainly some help this year, and you can see that in our gross margin guidance. .

The real opportunity starts as you get further out. Obviously, Stelo is on a 15 Day platform. G7 has moved to that platform. You can imagine most of our products move to that platform over time. And as we launch out new product platforms, that's obviously the focus. So you can see where that becomes kind of the basis for launching and that cost ultimately, it becomes a bit of an advantage, right, in terms of going into new markets. It's really hard to get into this space. There's really a few companies that can really produce it at scale and at scale is how you're able to build the product at a cost that as you move into, say, some emerging markets where you can take advantage of those opportunities, both wear length and cost and ultimately delivering the highest quality product within those confines.

So I don't think it does provide us an opportunity not only from a margin perspective but also from the opportunity of expanding and driving new opportunities where there's a fit for need purpose for our product. You've already seen us move to fit for need where you start to see our product portfolio strategy outside the U.S. This just helps us continue to drive down that pathway. Jake, do you want to give some just thoughts longer term on international and what we can do with that?

Sure. Yes, absolutely. The 15 Day product wear time, we'll be extending that to the portfolio globally. So we've launched it on Stelo. We launched in the G7. Here in the U.S., we're going to extend it globally. And the feedback from users has been pretty incredible. One note that's important is that over the time frame that we've had G7 in the market, we've made a lot of enhancements to the product and to the technology, to the processes, everything about how we build that sensor and provide it to users has been enhanced. And so the 15 Day product got all of that from day 1. So as we launch this new version of G7, we're seeing great feedback about both the longevity of the sensor, the reliability but also the accuracy.

This is the most accurate sensor we've ever produced. And users are noticing it. You can see it out there in the blocks, you can see it in customer feedback. They really are seeing that this algorithm enhancement we've made is playing through in their experience, which is important as we are striving to continue to be the premier glucose sensing solution for all. And so excited about the ability to continue to expand 15 Day across the portfolio.

And our next question comes from the line of Robbie Marcus with JPMorgan.

Great. Jereme, I wanted to ask on the OpEx guide. You have a 63% to 64% gross margin. And when I do the math, it looks like you're getting about 100 basis points of deleverage on OpEx to get to the range. So what are you spending it on after such a great year of expense control. Where are you kind of loosening the flow a little bit in 2026?

Yes. It's a fair question, Robbie. And look, we had a really great year this year in terms of OpEx control. In fact, I think Q4, you look at the spend profile sequentially from Q3 to Q4, our spend is essentially flat. And so a really great job done by the team there. As you roll forward the math. I mean, if you kind of use it in round numbers, the goal isn't necessarily to delever. I think if you kind of -- I know you got to play within the ranges a bit to get there. But the goal isn't necessarily to delever. The point is -- the leverage in the P&L next year predominantly will flow through gross margin. And the goal is to keep the op margin or the op expenses as a percent flat.

Now what's running through that P&L is the launch of our Ireland manufacturing facility. And so we have a facility in Ireland that you guys are all aware of it. We're going to be hiring and staffing up. We'll obviously be turning on depreciation. There will be a lot of folks there in training we'll be running validation samples across those lines, we expense those that happen. So there's a big investment in that manufacturing facility. We'll turn that on here likely in the fourth quarter of this year, at which point those costs will come out of OpEx and up into COGS.

But as we ramp up those expenses over the course of the year, you'll see those playing through. That's what really soaks it up. So obviously, that's a bit of a onetime thing when you're opening up a facility. Those will dissipate as we move obviously turn that facility on a into 2027. So underneath all of that, Robbie, I think it's important to note that because you are still getting leverage, it's just there's an investment we're making into a facility though, obviously, that investment in leverage will obviously then play through in 2027. So we're still getting leverage there. We're still getting leverage obviously in gross margin. The work continues. It's just this year gross margin is going to do a little bit of the work while there's some, I would say, temporal things running through OpEx.

And our next question comes from the line of Danielle Antalffy with UBS.

Jake or Jereme, whichever one wants to take this. I had a question on how you guys are thinking about utilization. And obviously, a basal ramps, I suspect utilization is coming down a bit. And as we do get coverage for non-insulin using type 2 utilization will also look different there. And I'm just curious, as you guys are sort of thinking about not only 2026, but beyond, and obviously, I don't want to front run the Analyst Day, but even qualitatively, how to think about utilization based on what you know today?

Yes. Thanks, Danielle. As we look at the spectrum of users with our -- the highest utilization we see in those AID users type 1 on automated on delivery systems. They're well north of 90% utilization, which makes sense because those AID systems don't operate without sensor connect to them and they are the ease of use and the outcomes that they drive are so powerful. That's what we see there. Tech-IT and non-AID type 1s, it's very similar. It was kind of in that 90% to 85% range. And those utilization rates have remained fairly consistent over time. And so we're not seeing much change there.

To your question around basal and also the NIT users. So Basal, we've had a longer time frame with those users as coverage opened up a number of years ago. And so that group has about an 85% to 80% utilization rate. That's actually what we saw in our studies. And we've seen it play out in the real world, which is always great when you see the clinical trial actually reflect real-world use. And so 80% to 85% in that type 2 basal. Some of the more recent learnings is from our registry where we always anticipated that type 2 non-insulin users might not have the same rate of utilization as those type 2 Basal users just because of the difference in the insulin they're out taking a dose insulin, there's not the risk of hypoglycemia. A number of those things. So we kind of assume there might be slightly less utilization in that group.

But in the registry, which is this new group of patients that have coverage for CGM that are type 2 non-insulin users, that registry is about 12 months old, and we are seeing high utilization rates in that group, very similar to those basal users when you're in a reimbursed environment. I think that's a key. We see the best utilization when our patients have coverage. And so we're seeing good utilization there, and we'll continue to track it. But so far, those rates have remained pretty stable. And it's an important aspect as we think about our expansion globally and as we continue to see more customers come on to the products.

And it's important also because type 2 is our largest opportunity as we think about the long term. And so we'll keep those in mind. But we're feeling good about what we're seeing. If you look at user experience, too, there's really an opportunity to drive further utilization as we get more engagement with the product. And so as we make the software updates, we start adding more AI insights to the technology, the idea is can we drive utilization even higher. So I think that's still a question to be out there, but I'd like to see it improve even further.

Yes, I think the best way to take it, Danielle, is at least back to the models is think about it as the utilization, the trends have remained the same. In fact, there's work we're doing obviously to make them better. It's just really more of the mix. And as you guys are modeling by cohort. Think about it that way versus utilization by cohort going down to make sure you have the mix, right, and that should help out.

And our next question comes from the line of David Roman with Goldman Sachs.

I wanted to maybe dig a little bit more into the 2026 revenue look and maybe specifically around just the new patient dynamic, I think sometimes we get wrapped around the axle on this record new patient dynamic that may or may not be significant as we look forward here. But can you maybe just give us some broader perspective on what is assumed from sort of underlying volume growth at different ends of the guidance range? And what are other factors operationally that need to play out that would put you at the 13% level? And what would put you at the 11% level?

Yes. It's a fair question. And at the end of the day, I know we do spend a lot of time talking about new patients. At the end of the day, what drives revenue is remission base. And obviously, a key component to that is how many new patients you add, but it's also what you do around retention utilization and then, of course, price. And so as you think about the puts and takes into next year, think about it this way. We start at the exit of the year, and I'll talk about this in the core, I'll say, G&D series business. We actually you're talking about patient base growing at about 20% or north of 20%. And so that's your starting point for what you'd expect in terms of starting point for volumes as you move into the year.

Over the course of the year, our expectation is we have a couple of points of price, and that's been consistent. And the remainder in the delta between what I would say is any anticipation around unit volumes would be around mix. And the reason mix is still there. It's much smaller than it used to be. But we do still have a lot of new coverage coming on, specifically in the PBM space for type 2 non-insulin. And then outside the U.S., we are winning a lot of tenders in DexCom ONE+ and it comes at a different price point. So that mix is still there. And it will come down from 2025, that mix impact. So that puts your unit volume growth there just south of that 20%, of which in the mid- to upper teens. And that gives you kind of presumptions around unit volume.

From there, in terms of that, if you're thinking about the inputs, we talked a little bit about this at JPMorgan, so we're happy to reiterate it. We don't necessarily need a record new patients to hit the low end of our guidance. And you want to hit a record new patient to certainly hit the top end of the range and beyond. And so that's the way we're going to run the business. Obviously, we had a record new patient year in 2025. We'll obviously focus on setting high targets internally and achieving those targets internally. But that gives you some of the puts and takes in the guidance.

The other piece of the guidance, I think it's just important to note, this assumes coverage stays predominantly the same. And so obviously, if things change around coverage, that would change our new patient outlook, certainly. And then we'd have to kind of give you guys an update as that moves to the year. Hopefully, that gives you some puts and takes. You're right, though, David. At the end of the day, these are all puts and takes around a user base and how that user base grows and moves over time. And that's why it's really important we always acclimate everybody with how did our user base grow year-over-year? And you guys have the most recent update based on our last touchpoint. So what the puts and takes and any other questions we have to follow up there.

And our next question comes from the line of Jeff Johnson with Baird.

Jereme or Jake, I think you pointed in your prepared remarks about strengthening U.S. sensor uptake trends in the fourth quarter and said those continued into the first quarter. Maybe you could just flesh that out a little bit for us. What was that -- some of the recovery from the sensor deployment issues kind of midyear? Was that continued strength in maybe T2 AID uptake? Anything you can point to there? And just talk about maybe, Jereme, you also mentioned your installed base being an important driver of growth. Just how stable that T1 and IIT2 user base has been now as Les starting to launch in the U.S.?

Yes. Thanks, Jeff, for the question. I think as you look at the -- we look at what's called sell-through trends. And that's our way of looking at who's ultimately going to the pharmacy or going to the DME picking up product, that becomes really important. You can look at other things. There's various other data points we use, but we certainly use those as well because that people actually physically picking up and using the product. And we saw that improve over the course of the fourth quarter and continue.

Now there's a couple of different reasons out there. And certainly, part of it is going to be certainly some work we've done around certainly sensor deployments Jake alluded to it earlier, we've done some really nice work around that. We've seen our warranty rates coming down and certainly our complaint rates coming down, moving into the year. That's exciting to see. It also helps to have launched our 15 Day product. We only launched it in the DME in the fourth quarter. So that's not necessarily a large piece of it, but certainly, we expect having that new product out there to be a really good opportunity.

And then naturally, as you would expect, as we get out in front of physicians 1, 2, 3, 4 times, and they can see a coverage landscape changing for those non-insulin users, that certainly starts to play out a little bit as well. So I think what you're seeing is a little bit of all that. I mean all of these things are intertwined. At the end of the day, providing a 15 Day product and all the features and the accuracy associated with great having less sensor deployment challenges is great. and certainly having our sales force out calling on folks, all those things really coming together. So we're seeing that play through.

In terms of stability of the user base retention utilization, you're kind of alluding more to the retention side. It's been stable. I mean, we haven't seen many changes at all over that time frame. Certainly, there was a lot of -- there was some noise over the course of the summer. I think we've been very focused on making sure that we've gotten in front of those and that the experience that folks have when using a product is an excellent one. Jake alluded to it earlier, I spent a ton of time really focused on this speaking to patients, speaking to physicians, speaking to advocacy groups over the course of time and making sure we're listening and to the extent that we do need to make changes, make those changes.

All in all, at the end of the day, I think what it proves is DexCom has built an incredible product built on amazing accuracy. And I think people are passionate about, one, using the product and making sure they're getting all the benefit out of it. And I think you're seeing that as we're getting out into the field. So we've seen that stable. And I would expect to see that stable moving forward. even with other even competitive product launches out there.

And our next question comes from the line of Marie Thibault with BTIG.

Jereme, I want to do a discussion on price. And you mentioned a couple of points of pricing is one of the factors being from the commercial unlock of the type 2 non-inpatient population. How would you have us thinking about any potential facing headwinds as we think about the Medicare unlock that could be coming here in the next 12 months or so. And of course, volume will be an offset. The amount of volume mix will make a difference. But how would you have us thinking about that in regards to the couple of points that you referenced with the commercial?

Sure. Every year, when we go through negotiations, it's interesting. We're always asking for more coverage and for good reason, right? There's a lot of folks who ultimately need it, and we know that we can deliver value really to all pathologies. But every year, there's the classic volume price conversations and everybody goes through it. And it's been pretty stable for some time. As your -- so nothing new this year, but in the context of how you're thinking about CMS and coverage and how that unlocks, I think the way CMS at least has done work around this space is they've done the work around competitive really, that's where the rubber hits the road in terms of how they're thinking about it from that perspective.

If you think about how the approvals work, there's an LCD code, ultimately, that is proved. And that coding applies to where the coverage ultimately sits, that typically does is the approval, pathology approval, it's the guidelines, the rules pricing is typically handled separately from that. And so I think what you've got is you've already got a natural mechanism in place for what is a fair value is through the competitive bidding process, which we'll obviously work through and we'd expect that to kick in really here more in 2028. So I think that's at least how we're thinking about it in terms of how that unlock would play out statutorily is maybe the best way to put should something change, we'll certainly keep you posted. But at least that's our read on kind of how that would play out. And a lot more, right?

Obviously, we're excited about CMS coverage. We talked about it. We're building for it as we speak. I mean, as we start to build capacity today, we're building to be ready for it as if it came tomorrow. So I mean that's how bullish we are on it coming. And so we'll certainly give you more feedback as we go because we obviously expect it to be a key part of everything we do this year, including obviously an RCT readout which, again, we'll have here in the first half. Jake, in the middle of the year, obviously, it's going to be in the first half. We committed to that, but as we kind of move here over the next few months.

And our next question comes from the line of Matthew O'Brien with Piper Sandler.

Jake and Jereme, I would love to double quick on that commentary on international. Just saying that you're going to basically make up. I think it's about a $2 billion delta between our U.S. and our OUS business. And I know it's going to take time. But can you talk about -- you've got a big competitor out there, they've got a huge international business. How do you do that? How do you close that $2 billion delta? And I'm assuming you're just talking revenues and not just volume. How do you do that over what time frame? Is it 15 years? Is it 5 years? And then Jereme, what kind of impact does it have -- do we have any pockets of weakness on the margin side as you're scaling that business that it's becoming a bigger portion of the overall revenue base?

Yes. Thanks, Matt. When I look at the international opportunity, there's big pieces, right? There is the opportunity to continue to expand within the markets we're already present in. If you think about we've established pretty strong businesses throughout Europe, and we're just getting started in the Asia Pacific region. And so when you think about just going deeper in the patient populations, coverage across the international markets, as I mentioned earlier, trails the U.S. So there's really a lot of coverage to still unlock when we think about the international patients.

Type 2 basal is only starting to see coverage wins. We got a win in France, we've seen Japan move there. and we're looking towards Germany to start -- we've got some coverage there basal insulin users. But that's to basal. I mean, there's still the opportunity for NIT around the globe. If you look at the sheer volume of patients and the impact that we know that our technology can make, the opportunity is there. The key and the unlock is for us to generate the evidence make sure there's awareness of the evidence, the advocacy from both the clinicians and the patients and basically drive that through each of these markets. We've been very successful. We basically -- we've been the leader in driving evidence generation for the unlock for millions of lives. And so we're going to keep doing that around the globe.

It takes work. Every health care system is slightly different. It's actually reflection of that is in the fact that we have a pretty substantial product portfolio outside the U.S. to really meet the needs of both different segments of users, but also the different tiered structures or pricing that we see outside the United States. And so, we're going to continue, as we mentioned, add another product to that portfolio, which will help us expand access to customers that we don't have today.

And so we're going to be very focused on driving access and also making sure we have a product portfolio that takes advantage of that access when it comes, and we'll be ready. I think previously, with our focus in the United States, we -- there was more opportunity outside of the United States that we didn't take advantage of, as you mentioned, that our competitor did. But we're going to be ready this time as more access opens, we're going to be there to be the one for taking the share there.

Yes. In terms of time frame, it will take a little while. It's not going to be in the next 5 years. And the reason is, is we have a lot of bullish expectations still here in the U.S. And so that's why I think it's really important. We'll talk about, obviously, we're going to be talking about it until we see the coverage with the CMS expansion, obviously. And we won't stop there. We'll be looking to try to expand into prediabetes and beyond.

And so the U.S. has a long runway ahead of it. As you think about the international markets, though, we're still not in tons of markets around the world. And so Jake alluded to the markets we're already in, there's an opportunity to go deeper. There's certainly an opportunity to work on taking share, and we'll do that. And I think we've done a really nice job over the years. But boy, there's a lot of markets we're going to need to go into over the years, and we have plans to do that. And we'll talk a little bit more about it in May at our Investor Day.

But a lot of opportunity that's not even in our P&L or our revenue today that we can see ahead of us. And so yes, it's a longer-term vision, absolutely. But when you start to sit down and think about the countries we're not in today and you think about how many folks around the world are impacted the diabetes and the coverage that's starting to kick up when we show up in countries, you can see the opportunity is immense and it's really on us to get out there, make sure we get into those countries, and we're in those countries take share. So it's more than 5 years. It's a fair point, and we'll have a little bit more color as we get into May.

And our next question comes from the line of Jayson Bedford with Raymond James.

I had a question on basal, which is -- seems to be the segment of the market that's taken a little longer to evolve. What's been the hurdle to deeper adoption into this segment? And do you view smart Basal as a tool to kind of reintroduce G7 to this population and draw better growth?

Yes. Thanks for the question. To your point, we do feel like Smart Basal is a great opportunity for us to meet the needs of the patients. I think we've seen good growth in basal given the population and the coverage and as we continue to want to expand that across the globe, we're going to use this new tool, and it's really designed to improve the user experience, both for the patient and the prescriber. So that when they think about a patient who's going to go on to basal insulin therapy. This is the product they should get. They should get a G7 paired up with Smart Basal in the system.

We're very excited to start piloting that technology this month, so we've got a number of clinics across the United States already selected. They'll come on, and we intend to learn from the workflows and how this product fits in seamlessly to their workflow and drives the outcomes that both the patients and the physicians are after, getting to the right dose faster so that they can really see the benefit of that insulin therapy. I think as we do that and we get the experiences around it, it's going to drive more and more share of that patient population.

A little better, Jayson.

And our next question comes from the line of Michael Polark with Wolfe Research.

I have a gross margin question, maybe 2 parter. So in 2025, I think there were 325 basis points of one-timers called out, scrap, freight and small receiver recall. If I look at the '26 guide, the midpoint calls for 270 bps of expansion. So not even getting all of that one-timer stuff back and also not considering credit for 15 Day, which is starting. So the question is why is this the right gross margin guide? And do you agree or where are we on the scrap and freight kind of overhang? And if I could sneak in one related item, just on hardware mix in the U.S. excluding Stelo in '25, what was G6 versus G7 10 Day? And by the end of '26, what will G6 mix versus G7, 10 Day G7 15 Day?

Got it. So I'll answer the first one. I think you have a little bit too much math in what I'd call the COGS associated with that. It's a little bit less than that. And so what you should see as you think about the year, if you were rolling it forward, as you'll see improvements across the certainly old COGS a little bit of that will spill here into Q1 just because you cap enroll certain variances. And obviously, freight and scrap stays in, but there are certain variances as you're getting up to speed. So you just have to be mindful of that. It doesn't go away immediately overnight because you do roll those in.

But it was a little bit less than the number you have a little bit of a roll into the year. you'll see the improvements play through. You'll also see 15 Day. So you'll see those numbers. And likely, what they'll do is you'll pop out of the top end of our guidance range. But just remember, in the fourth quarter, we turn on Ireland. And so all of those fixed costs we talked earlier with Robbie about that weigh down the P&L in the first 3 quarters in the op margin side or the OpEx side flip to COGS. And so we'd actually expect a decline in our gross margin into the fourth quarter as you have a full facility turning on all those costs, but the production levels will be much lower.

And so there's a lot of fixed overhead that you won't pick up in CAP and enroll that. So I think that at least helps understand that's why there's some geography that might help there a little bit. And obviously, the converse of that, you'd expect to see op expenses come down in the fourth quarter. It's all a moot point across the board when you get op margin. because it's all geography. But hopefully, that helps you at least as you're kind of penciling out the year. And then you're thinking about the sequencing over the course of the year.

Just a little bit too about the customer base and the products they're using. So we've seen rapid obviously, declines of G6 users as they've switched over to G7. And so the vast majority of our base here in the U.S. is on G7. And as we have launched the 15 Day actually in December, we started seeing quite a few upgrades from G6 to G7 15 Day. And so we anticipate that will continue. And our intent is towards the middle of this year is when she said G6 will really start phasing out and so we'll start building in more capacity for G7.

And the next question comes from the line of Joanne Wuensch with Citi.

Can you tease out what the seller contribution was to the 2025 results? And what is embedded in your 2026 guidance? And any color you can give on how that's going, that would be wonderful.

Sure. Yes. So we talked about $130 million of Stelo revenue in 2025. And so kind of at the top end of our 2% to 3% number. So that certainly, we're happy to see that. And a lot of great progress over the course of the year, channel-wise and really excited about the new, and we shared a little bit of some of the pictures at JPMorgan on our presentation. So you'll see it on our website. We've got a new app coming for Stelo here in the coming months. So really excited about that.

In terms of 2026, we have talked about it contributing about one point to growth in 2026. So you guys can do the math on that. Obviously, those are big round numbers just given how big the organization is. But again, we still expect it to be a nice contributor to growth, albeit the base you'll actually have a base this year versus, obviously, in 2025, you didn't have a base to compare it to.

And Joanne, just when you think about the -- how it's going with Stelo, as Jereme mentioned, we're really excited about the new innovation that we're bringing. We have a whole new redesigned app we're launching a new smart -- been enhancing the smart food logging that we already had that now will capture macronutrients and things. But -- and what we're seeing is a whole spectrum of different types of users start using Stelo. And particularly, one of the groups that we've got our eye on is this type 2 non-insulin users. These are the folks that don't have coverage for CGM. And so they're using the stellar product over the counter.

But over time, what we're seeing is there's a real opportunity for those folks for us to transition them from Stelo to G7 as coverage emerges. And so if Stelo becomes a very important part of our portfolio, not just for prediabetes and health and wellness, but also to get type 2 access to the technology early and then transition them to a covered product as coverage continues to unlock.

And our next question comes from the line of Brandon Vazquez with William Blair.

I wanted to focus a little bit on the innovation pipeline, but I know there's a lot to be done on the hardware still. We're talking about a G and things like that. But there's a lot of software you guys are coming out with like Smart Basal, just talking about Stelo and [indiscernible] and things like that. Maybe just spend a minute, talk to us a little bit about what is left in the pipeline and the software side. But what else can you do here? What else can you leverage the software side for? And then maybe the kind of follow-up to that is, do you think, at some point, you need to start to validate these features in clinical trials for them to make more meaningful impact and drive kind of large-scale adoption?

Yes. Thanks, Brandon. Fantastic question. No, we are nowhere near done. There's so much more we can do on both, as you mentioned, the hardware but also on the software. Our goal is to be the premier glucose sensing solution for all people, which what that really means is that it takes into account all the different journeys that a patient has from becoming aware of our product to a physician prescribing it to the patient onboarding to them using it and driving the outcomes that are so important.

And then, of course, service. In all of those aspects, if you think about that whole journey, there's many things that we can continue to enhance digitally through software, whether it's for the physician or for the patients themselves to help them onboard faster. So really, our goal is to remove friction to [indiscernible] kind of speed bumps so that they get the experience that is the highest caliber. And so we're trying to develop the best solution plus the best experience. And we do feel like, over time, that's going to be the winning formula because you've got folks that are not only seeing any outcomes, but they're also sticky and staying retained and having a wonderful experience for many years to come, basically increasing the lifetime value driving those outcomes, as you mentioned, is very important for us to run clinicals and/or generate real-world evidence that shows the outcome of how those new features do actually drive outcomes.

And we've done that basically through all the different patient segments. We've done some recent work with real-world evidence in type 2. But even things like our delayed high alert, which is an innovative feature that is built into the product that basically delays the high alert and it has clinical outcomes associated with it. And so that's something that as our sales force gets out there and talks to physicians, they can talk about the difference, the competitive difference that we provide and the outcomes that we drive. And I'm just wondering I wanted to mention is our sales force is so fired up right now based on the 15 Day and all the enhancements we've made and all the enhancements we have coming. We're really looking forward to spend some time with them with the national sales meeting in a couple of weeks. But there's so much more we can do. And I can't wait to show you guys over time to all the innovation that we're going to bring.

And to your question, the whole clinical validation of features. I think the -- for example, I mean, most of these that's exactly what you do, right? I mean think about Dex Basal that their Smart Basal that goes through, obviously, a 510(k) clearance, U.S., OUS. So just think about all these features, they're all going through the appropriate clinical pathways where appropriate and where meaningful. So expect us to continue to do that, but also expect us to look at new and novel ways to navigate technical features into the hands of users over time and work with the administration on how we do that.

And then there's obviously a lot of guidance coming out now about how to bring innovation quicker and Jake's team is teed up to do just that. The R&D team is teed up just to do that is to bring innovation quicker and quicker and put in the hands of users.

And our next question comes from the line of Josh Jennings with TD Cowen.

I wanted to ask to partner on G7 15 Day. It sounds like the early patient experience has been strong. great durability with census lasting out to 15 Day. I just wanted to see if there's any more color on any or any data you have just on that durability of where? And does the patch that you just got approved the new adhesive technology maybe improve the percentage of sensors that get out to 15 Day out into the 90% range. And then I guess it's a 3-parter. But just any rebate dynamics that we should be thinking about in 2026 as G7 15 Day enters the pharma channel?

Yes. Thanks, Josh. Yes, sensor survival longevity, as we call it, is a super important part of the CGM portfolio. And as we extend sensor where it's obviously something we look closely at. And it's actually the -- our goal is to ensure a good user experience. So we don't unlock that extended life until we're confident in its performance. And so in the field, what we're seeing is very consistent across the patient spectrum with what we saw in our clinical studies.

Now we recognize that from the very early days of CGM, when our first CGM only lasted 3 days, not all sensors last and often is, as you mentioned, related to adhetive. And so we have been driving adhesive innovation for several decades. And with the new version of the patch for G7. We are excited that it does drive a pretty meaningful improvement in survival, and we will put it across the whole portfolio of DexCom ONE+ and Stelo, so that all of our patients get the benefit. So it will continue to drive that performance. For any sensor that doesn't last a period of time, we have a very robust program that we continue to enhance around how to ensure patients always have the sensors they need because we know how important this technology is to all of our users and the benefits they get from it. So that goes back to that the idea of setting the bar for service and being the gold star there. We are making investments there. We're continuing to enhance the way that we handle those types of situations to ensure our users get the best experience.

Yes. And then just your question on rebates. There's 2 ways to think about rebates. One is what is the rebate rate and what is the net price. And then the second piece is how many folks select the -- essentially the rebate rate in those plans. The rebate rates in terms of the pricing slotted right into the G7 10 Day. So effectively, G7 15 Day, G710 Day are effectively the same price. So that -- for a month supply, I think that's important. So effectively same revenue per month.

On the flip side, in terms of utilization, our expectation -- utilization of selection inclusion into that rebate catalog, our expectation is 100% of all those sensors. So sometimes you start at 96, 97, 98, you move up those areas, someone folks say not preferred or not covered. 15 Day essentially is slotting in right where G7 is. So we're at 100%, 100%. We shouldn't see any changes essentially in rebate trends as a result of moving over 15 Day.

And our next question comes from the line of Richard Newitter with Truist Securities.

Just a simple one for me. I just wonder if you can comment on revenue cadence at all specifically the 1Q, but anything else throughout the year. I think Street said about a 6% sequential -- sequentially lower 1Q versus 4Q. Is that a reasonable place and way to think about it or anything else you'd call out?

Yes, good question, fair question. I think cadence-wise for the full year, our expectation is continuing to see a little less into Q4 and a little more into Q1. And it just -- it's a slow evolution over time. But as more and more goes to the pharmacy and less and less goes through the DME commercial part of the business in terms of lease of total patients, still both good businesses. You don't have that stocking dynamic you typically see in houses in the fourth quarter where someone tries to maximize benefits. You still have that. You still have a decent sized business, but it's just less of a percentage of the business. So the expectation is, obviously, Q1 is a little bit higher than typically in Q4.

I would say last year, we talked about Q1 being a 7% to 8% decline and we came in closer to 7% in that range. I would say this year, we've been talking about. We talked about this at JPMorgan on stage. We think it's a 6% to 7% decline. So I think the Street is a little bit is within the range or probably at the higher end of that range, but not far out of it. It's a pretty safe place to be. So 6% to 7% sequential is about what we would think, and this is a little bit less seasonality this year than last year.

And our final question comes from the line of Bill Plovanic with Canaccord Genuity.

Zachary on for Bill. So I guess back to the G7 non-intensive type 2. So in the past, you say, right now, we have 6 million covered lives, and we get to 25 million. You said Medicare would be 12 million. So just where do we stand today? And then and just, I guess, [indiscernible] guess the cadence of our lives could look like?

Sure. Yes. So you're really thinking about the commercial side of the house. Obviously, the Medicare side of the house will start with fee-for-service and then you move into Med Advantage. So it will go Part B then into Part C and we can talk about that as it comes, but that should happen pretty quickly. On the commercial side, kind of the side, I think you're more alluding to and progress we've made. We talked about 6 million lives. It was the 3 big PBMs, and we talked about knocking down some additional plans, et cetera. I think the expectation is we've knocked down another 5-ish percent of that market over the course of renewals this year that will continue to take place. We keep working that.

It doesn't have to happen just annually. It's something that we'll continue to do over the course of that would be individual plans, kind of smaller PBMs, PBMs on custom formularies. So we got another good chunk of it, I think, but we'll keep chipping away at that. So it puts you at maybe [ 6.5 million ] of the [ 12.5 million ], maybe a little bit higher than that even. But we'll keep chipping away at, but that's at least the updates. We have a few more in there that continue and I would expect to give you updates over the course of the year as we keep chipping away and try to get that to full coverage over time.

That concludes our question-and-answer session. I will now turn the call back over to Mr. Jake Leach for closing remarks. .

Thank you, operator, and I'd actually like to take this moment to thank our employees around the world. This past quarter and frankly, this past year, demanded focus, resilience teamwork. And are people really delivered, what makes DexCom special. It isn't just our technology. It's the people behind it. Our team's commitment shows up in our execution and in the trust that millions of people place in DexCom.

So on behalf of the leadership team and our Board, thank you to our employees for everything you do. And thank you all for joining us today. We look forward to updating you next quarter.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Good morning, everyone. I'm Robbie Marcus, the med tech analyst at JPMorgan. Thanks for joining us at the first session to kick off the 2026 JPMorgan Healthcare Conference. I'll give a warm welcome to the DexCom's CEO, Jake Leach. It's his first time as President and CEO up on stage here. Jake?

All right. Good morning, everybody. Thank you, Robbie. It's an absolute privilege to be able to kick off the conference this year, particularly as my first year as President and CEO of DexCom. And one thing I just have to say, I'm incredibly excited about the opportunity that DexCom has to make an impact on metabolic health.

Before I jump in, a quick reminder of our safe harbor statement, and I assure you this presentation does include some forward-looking statements. DexCom is synonymous with pioneering in the CGM industry. You can literally map the history and the development of this category based on the innovations that DexCom has brought to the market, being the first CGM to ever have a real-time hypoglycemia alert, the first CGM to have a remote monitoring system for caregivers and loved ones, the first CGM to replace finger sticks and the very first CGM to be available over the counter. All of this innovation has changed the way diabetes is managed. And we've paired all of this innovation with very robust clinical data and randomized controlled trials that have led to access and coverage for CGM for millions of people around the world.

I really love speaking to our customers about how this innovation has changed their life. I remember speaking to a mother of a child with type 1 diabetes right after we launched our remote monitoring system, the Follow app. And she used to plan her entire day around going to her daughter's school to double check her glucose after lunch to make sure she's eaten the right amount of food, make sure she has taken her insulin. With the launch of that new feature, she was able to completely change her life. She could just open up an app and check on her daughter any time.

Now innovation like that comes from being relentlessly focused on bringing new technology to the market that solves real problems for real customers. So the technology that actually sat behind that remote monitoring system was the connectivity to smartphones. When we first started prototyping that many, many years ago, we were actually working with BlackBerries. You guys remember that, we all love those keyboards. It was literally the technology at that time. And what we found very rapidly was the Bluetooth technology was too power hungry, [indiscernible] bank our wearables too big. We couldn't do it.

So we actually went and advocated to Apple, to Samsung, travel to Korea, travel to all these manufacturers trying to advocate for a better way to connect our device to a smartphone. And they all looked at us and said like, "You guys are med tech. What in the world are you talking about?" And we said we want to combine the experience of this type of technology with a smartphone. And so ultimately, once Apple adopted low-energy Bluetooth, all of the other companies did as well. And that is now -- that technology is at the core of most connectivity for diabetes devices.

So I'm -- as I step into the role of CEO, I recognize that my journey is DexCom's journey. And despite all that we have accomplished, diabetes remains an escalating health and economic crisis with so many health care dollars spent treating diabetes and the complications of diabetes. And if you look at the population of people with diabetes in the world and as it continues to grow every year, and let's think about that against the backdrop of CGM category growth.

CGM over the past decade has been one of the largest, fastest-growing categories in med tech. Today, we estimate that there's about 10 million people around the world using CGM. And if you think about that 10 million against the backdrop of the diabetes population, it's less than 2% of the population is using CGM. If you look at prediabetes, 40% of adults in the United States have prediabetes. This crisis is not slowing down, and we have a technology that can make a significant impact. And so what this tells me is that we're nowhere near done, and we need to lean into our leadership in innovation and patient outcomes to really shape the future.

So I laid out 3 key priorities for the DexCom organization to really help us unlock our next phase of our growth. The first is we will be the premier glucose solution for all: that's all customers, all prescribers and all partners. Glucose is at the heart of managing diabetes and metabolic disease, and we're going to enhance every aspect of our CGM sensing solution.

The second is we will set the standard for customer experience in this category. Our customers expect meaningful and seamless interactions and we are going to continue to enhance every aspect of their journey with DexCom.

And finally, we're going to expand our international market share. We've built our company based on leadership in the United States. We're going to now take that and apply it to the international markets, particularly our ability to open up access and coverage for people with CGM to unlock new opportunities that don't exist today.

This requires our team to focus and operate on a scalable foundation and infrastructure and the opportunity in front of us is tremendous. Our teams are motivated to execute and help guide people towards better metabolic health. And it's because DexCom's impact is human impact, our mission is personal. These are all pictures of personal moments that are enabled by DexCom's technology. And my commitment to you and to the employees of DexCom and to the diabetes community is that the customers are at the center of everything we do. My background is an engineer. I value precision, I value problem-solving and continuous improvement. And that -- those values align well with DexCom's mission to innovate and drive patient impact.

Now our journey forward requires us to balance the successes that we've had with all the learnings that we've had along the way. And I would say 2025 was a year of success and learnings for DexCom. Today, we announced full year 2025 revenue of approximately $4.662 billion. That represents growth of 16% or 15% on an organic basis over 2024. Now that is just above the guidance that we gave on our Q3 earnings call, that we raised on the Q3 earnings call. We did this by adding a record number of new patients to DexCom.

We exit 2025 with approximately 3.5 million active customers, which is an increase of over 20% from where we exited 2024. We also saw a significant uptake of our Stelo product. One thing to note is the 3.5 million active base does not include those Stelo customers. But if we look at Stelo, it was a really nice tailwind for our growth with $130 million in revenue in 2025.

We also saw in 2025, the most significant expansion for coverage of CGM in the United States in the history of our company with now the top largest 3 PBMs in the United States now covering DexCom for all people with diabetes. That was really adding in those non-insulin users to the category. We also received approval for 2 very important new products that will help ensure our growth into 2026 and beyond. The first is Smart Basal, which is really a technology that's designed to improve the user experience for both the patient and the physician with basal insulin therapy.

We also got approval and launched the G7 15 Day sensor. Very excited to get that out. We launched it at the end of last year in our durable medical equipment supply channels, and now we're in full launch across all channels in the United States. And then finally, we made significant progress on our next unlock of sensor manufacturing capacity with our Ireland facility, which we anticipate will come online later next year.

We also had some learnings in 2025 that we feel really set us up well operationally stronger for 2026 and beyond and really to build on the momentum of the '25. So today, we expect another strong year of growth for DexCom in 2026 with annual revenue of $5.16 billion to $5.25 billion, which represents growth of 11% to 13%. An important note about the basis for this guidance and the assumptions is that right now, we're assuming that the coverage landscape for CGM around the world remains largely the same as it does today. So in other words, this doesn't anticipate any large coverage unlock in 2026, although we are working hard around the world to unlock coverage, and we do anticipate that coverage will come at some point soon.

We also are anticipating an expansion in our gross margin really based on the success that we had in the back half of '25 in improving gross margins as well as further uptake of our G7 15 Day as more customers begin using that product. We also anticipate operating margin to expand to 22% to 23%. And one reminder on that, that includes the additional spending and hiring that we need to do to bring up our Ireland facility. We've built a strong foundation for this top line growth, and we do have the levers to continue expanding our earnings as well as cash flow.

All of this, we're executing against these metrics with a strong commitment to the community and an unbelievable market opportunity still in front of us. There are over 9 million people in the United States that have coverage for CGM that aren't using it today. So in other words, with all the expansion and all the growth that we've experienced in all the patients using CGM, not half of the ones that have coverage are using CGM today. And we believe we're on the cusp of some pretty significant expansion in that type 2 NIT, making that little green circle quite a bit more green based on Medicare expansion for NIT as well as some further commercial coverage.

The reason we're so confident in that coverage is because of the data that we have created with our type 2 registry. So when we started to see at the beginning of 2025, late '24, some coverage for this population of users that have diabetes that aren't on insulin, we started this registry where we could track these patients from the time they start CGM through their experience. We've reported on this data before. We've reported 6-month outcomes. This is the first time we're talking about our 12-month outcomes in this population.

And there's 2 really important takeaways here. The first one is that we're seeing sensor utilization rates in this population that is very similar to what we see in those basal insulin using patients. That was, I think, a question that we were all interested in understanding. And in this environment where people have coverage, we're seeing great sensor utilization. The other thing we're seeing is that the rapid improvements in A1c and glucose metrics that occur pretty much in the first 3 months of use of this technology are sustained for that 12 months, which pretty much makes sense to be because of the high sensor utilization. People are using this technology and they're getting the benefit.

So as I said, for the past couple of years, we have pretty strong clinical support from physicians. The ADA just recently updated their guidance for this population, and we're building the clinical evidence. And this year, we anticipate releasing the strongest clinical evidence to date for this population, a randomized controlled trial in patients with diabetes, not on insulin.

So like a quick rewind real fast is that 10 years ago, we gave the results of the DIAMOND study, which was a randomized controlled trial for intensive insulin users, both type 1 and type 2, and that led to expanded coverage. We then followed that up with another large randomized controlled trial, our MOBILE study for basal users, basal insulin. That was the cornerstone to coverage expansion for that group. And now this year, we'll be releasing the randomized controlled trial results from our non-insulin study, which we really feel will set us up well for global expansion of coverage for this population.

And one of the keys to increasing international market share is driving awareness for CGM and driving the coverage. We've had some good results in the last couple of years with Japan and France now covering CGM for all insulin users. We also saw some great wins last year in Canada around type 2 users. And we do anticipate that in 2026, we'll see some additional access wins for type 2 patients in Western Europe as well as in Australia.

Now one of the keys to our strategy here is when that access comes, we want to be ready to grab that share. And this comes from the design of our portfolio of products that are designed for patients and health care systems around the world. It starts with our G Series product, which is a sensor that's specifically designed for integration with AID systems as well as a whole host of programmable glucose alerts and alarms for patients.

The next product in the lineup is DexCom ONE+. That is a product that is extremely important for users that are not on automated insulin delivery systems, but are still taking insulin. That does represent the vast majority of insulin users outside the United States. And in 2026, to increase our flexibility to capture more share internationally, we're going to introduce a new product into this category, and we'll talk a little bit more about that as we get closer to the launch.

We're also going to continue to innovate across all segments of our business, starting with our type 1 automated insulin delivery and type 2 automated insulin delivery customers. We have had a broad strategy for partnerships for many, many years, and we've come a very long way from the first systems that I worked on 15 years ago integrating CGMs and sensors. We're very proud of the results that we've created for patients here with our partners. Together, we've generated over 2.5 million patient years of insulin delivery, and we're going to continue to extend our leadership in this category by focusing on faster developments with our partners, more accurate sensors as well as enhanced connectivity, really focusing on the distinct needs of this customer base.

As I mentioned, we're also in the midst of our G7 15 Day launch, which is going extremely well. It's the most accurate, longest-lasting CGM on the market available. And the feedback that I've heard from patients that have tried this sensor, particularly ones that have upgraded from previous -- from the G7 10 Day and G6, it's the best CGM experience they have ever had. By reducing the number of sensor changes per month, we're significantly enhancing the user experience around CGM.

And now that we have pump compatibility with Insulet and Beta Bionics, Tandem will pump very soon with this product. We're excited to continue to build on this momentum of this launch throughout 2026. We're also looking at continuing to enhance the user experience beyond just the product. Service is a critical important part of CGM experience. We launched the My DexCom Account, which is a whole new digital experience. We launched it in North America last year. This year, we're going to bring it out across all of our markets globally. And the early feedback is it's saving patients' time, it's reducing friction and everyone is having a good experience with it. We intend to continue to enhance this. We're just getting started here. There's a lot we can do to continue to enhance the user experience digitally.

Another innovation that I mentioned is the DexCom Smart Basal. This is really focused on one of our key growth segments. That's been one of our strongest areas of growth for the last couple of years, which is the basal insulin using market. This is a technology that's designed to help a patient and physician get to the optimum dose of insulin for that patient in approximately 4 weeks. Normally, this takes many months. Normally, a physician prescribes an initial dose for the patient and then they don't adjust that dose until the next visit. This is a system powered by CGM that does it automatically and recommends to the patient every day how much insulin to take until they get to that ideal dose.

And what the physicians have commented about, the ones that have used the technology so far is that they're getting the outcomes that they want with that Basal Insulin so much faster, and they're seeing better adherence because patients are seeing the result of that insulin.

Focusing on prescribers is a really important part of expanding and capturing more share. We've been working on direct EHR integrations for a number of years. Several years ago, we announced this particular technology at a diabetes conference where the clinicians and the audience gave us a standing ovation because they finally had a tool that fits into their workflow, allows them to look at CGM metrics and output and help focus on the patient during their visit instead of trying to analyze all the data.

We have over 160 health care systems either up and running or in the process of onboarding with this technology. We do expect that to continue to grow. It's the first time that it is truly a seamless experience from within the EHR and -- both with the prescribing as well as the viewing of CGM data.

And turning to Stelo, which is another very important part of our portfolio. It's -- for those of you who are newer to our story, this is our over-the-counter CGM. And we launched it at the end of 2024. 2025 was really for us about expanding access to this product through different channels and partners. One of the big ones was we went live on the Amazon storefront. We've had since launch over 500,000 people try this product, and many of them have signed up for subscriptions to continue receiving the product and using it. As I mentioned, we have approximately $130 million in revenue for 2025 from Stelo, and we anticipate that continuing to grow.

The other thing we did with Stelo over the course of '25 is we continue to enhance it. We actually introduced a feature that is AI-based. It's a meal logging feature that allows users to easily enter their meals into their system by just taking a quick picture. We have over 10 million meals logged already in the system. And we're going to continue to innovate on Stelo.

So this year, we'll be introducing a completely new revamped user interface and experience with Stelo. It's a brand-new app. We took design cues from some of the most loved consumer technology apps out there. It really is designed to surface the insights that we gather from all of the CGM data as well as the other data. Our partnership with OURA is a key part of bringing in additional sensing technologies into our portfolio so that we can provide users with enhanced insights.

We're also building out an even more robust meal logging feature. It will include the macro nutrients in addition to the meal description. So all of that information really helps us with users and connecting the dots between their CGM data and what's driving the variability, whether it's nutrition, or activity levels. As you can see, we have a lot of new products and new technology coming to market in 2026.

It's also important that we learn from the different challenges we've had over time. And one of the most important things is ensuring that we have a strong infrastructure that is resilient to serve both the millions of customers we have today but the millions that we're going to add. We've made significant updates to our quality management system, test procedures. We've reorganized our teams. We've brought in some key talent. I'm very proud of how the teams have responded to this charge to enhance everything about the quality of our product, the quality of our service.

We've also spent a good amount of time investing in our supply chain. One of the lessons we learned was that both our current and future suppliers are an absolute key unlock for our scale, and we have continued to invest more in those suppliers. And then finally, we have our next unlock of capacity for sensor manufacturing coming later this year with the Ireland facility, which is on track to launch in Q4 and begin production.

So with this type of scale, it is critical that we have it so that we can introduce the next generation of hardware for DexCom. Every system that we've introduced has raised the bar for CGM. G6 was the very first iCGM ever approved. G7 significantly improved the user experience, reduced the size of the wearable and also significantly increased the accuracy of CGM.

G8 is going to raise the bar again. It's going to be the most advanced wearable system we've ever produced. It is going to be another step change improvement in accuracy and reliability of the glucose sensor, ensuring we maintain the most accurate sensor on the market. It's also a significant reduction in the size of the wearables, a 50% reduction from G7. It will make it the smallest CGM available as well as significant redesign of the electronics internal to the system, which really gives us advanced sensing capabilities, advanced error detection and really a lot of technology that's been under development for almost 2 decades, is coming out in this product.

We also plan to use this product as a way to expand into other opportunities in the market and other clinical areas. Gestational diabetes is an area where we've built good coverage, but we're still driving awareness of the outcomes: the outcomes of reduced emergency C-sections, reduced NICU admissions. The results in this -- from this sensor use in this population is very significant. It should be the standard of care CGM in this population.

There is another significant opportunity in the hospital setting with over 14 million dysglycemic events. There's a significant need for a better way to manage and monitor glucose. As a reminder, there's no continuous glucose monitor CGM subcutaneous that's ever been approved for use in the hospital. So we do feel that this is a technology that could be well applied there. And then finally, prediabetes with almost 100 million people in the U.S. living with prediabetes, there's a significant opportunity.

I was actually talking to one of our warriors the other day, her name is Norma, and she had prediabetes and wanted to donate a liver to her brother and her doctor said, you got to get your prediabetes under control. You got to get it down. And so basically, she used Stelo over a 6-month period. By just changing her behavior, she got her A1c back down to normal levels and was able to provide that kidney to her brother.

There's no reason why anyone who is either diagnosed or concerned about prediabetes doesn't start with a sensor as the first-line defense. It's about education and training, behavior modification. It's an amazing opportunity for us to make a huge impact.

And so if I was to summarize that entire overview that I just gave you in a very simple investment case for 2026, we expect strong top line revenue growth with the foundation of making this growth durable through the access expansion that we're working on around the globe. We also anticipate operating at top-tier cash flow metrics with a $1 billion of free cash flow delivered in 2026 and $1.5 billion in adjusted EBITDA. And we are executing against these metrics with a strengthened commitment to the entire diabetes community, to bring new innovation, to help change their lives.

And so with that, I want to end on the pictures and faces of some of the amazing employees at DexCom that I have the privilege of leading every day. These are also pictures of people that have diabetes. I think at DexCom, we probably have more people with type 1 diabetes than any other company. And we innovate for them. They're counting on us. We innovate for the diabetes community because we are the diabetes community. It's what motivates us. It's what keeps us going every day because they're counting on us to succeed. Thank you.

Great. There's a lot to talk about. Maybe we could kick it off with the fourth quarter preannouncement. You beat the Street by about $18 million in sales. Any color you can give us on how that split U.S., OUS? And any color on patient trends or interesting things you saw in the quarter?

Yes. It was a very strong new patient trend for us. I think we've really been over the course of the year, building some strong momentum in new patient adds. I think the 15 -- as we looked at -- we just launched 15 Day in the back half of the quarter, but we saw some real nice momentum there. I've seen -- I was talking to a physician the other day, some of the patients that were waiting to upgrade from G6 when the 15 Day product came out, that was something that they were really looking forward to, and they've been upgrading more and more folks to that.

So I think that's been a key in strengthening the confidence in our system as well as understanding the performance and accuracy we can deliver. New patients are also starting up on 15 Day. And so we're excited, particularly when we think about some of our key growth areas like basal and type 2 IIT as well as the non-insulin users. It's really an opportunity for people to experience the best sensor out there.

You talked about 2025 as a record new patient year for DexCom. Did that also hold in fourth quarter?

It does. It was a record number of patients for '25. It's really close, probably too close to call at this point, but it was a very strong quarter for new patients. We want to continue to build on that as we go into '26.

I know we'll get a lot more color on the fourth quarter call. Anything you could add on U.S. trends versus outside U.S. trends in the fourth quarter?

Do you want to take that?

Yes. So I think what you saw -- and really, it was OUS and in the U.S. We really saw some really interesting sell-through as we progress through the quarter. And sell-through, again, alluding back to Jake's point, new patients takes a little bit of time to tabulate that data, get it in from the various sources. But sell-through is an indicator of usage and usage pattern in the field. And we saw really strong usage patterns in the field in the U.S. and outside the U.S. as the quarter progressed. So certainly, I think that's a good thing for the community.

If we turn to 2026 guidance, sales growth of 11% to 13%, same as you announced on the third quarter earnings call. You talked about how that doesn't include any expansion in coverage. What does it include? I imagine, I think you mentioned record new patient starts in there. How are you thinking about the building blocks to get to 11% to 13%?

Yes. That's a great question, Robbie. So new patient adds is extremely important. So it will require a significant number of new patients near record levels. And again, that's based on the current coverage. And as I mentioned, there's 9 million people just here in the U.S. that have coverage that aren't yet using CGM. So there is a significant opportunity for us to bring in new patients and also bring innovation to the patients that we have and continue to retain them.

The concept of building the best user experience, it's not just a talking point. It's actually a growth driver because it increases the lifetime value of a customer, the longer we retain them. So it is extremely important for us to continue to innovate across the whole portfolio, both new patients and existing ones.

Yes. And Robbie, we'll push the organization. I think you could imagine, obviously, we have our Chief Commercial Officer sitting here, so no pressure. But we'll push the organization to achieve record new. I mean that's always the goal. And Jake alluded to a massive untapped market out there. So the push is going to do that. We gave you a range, right? And we gave you a range for a reason. There's multiple outcomes that can happen within that range.

But make no mistake, our goals internally are always to push for that. Some other -- you asked for some other puts and takes. Look, no massive coverage unlocks. I think you'd expect to continue to see the revenue volume deltas come in over time as that matures. And then there's a nominal contribution from Stelo from a percentage growth perspective. I think we said approximately about 1 point or so would be from Stelo. So a majority of the growth is going to come from our [ GMD ] series.

One of the things we've seen progress over the past several years as more patients are in the pharmacy and as international continues to grow and get bigger as a percentage of sales, some of the seasonality trends are a bit different than people are used to from 5, 7 years ago. So how do you want people to think about first quarter is top of mind for everyone here. I know you typically give a percentage of sales and how to think about it?

You want me to start?

Yes, sure.

Yes. So I think the first quarter, I think what you've seen, and I'll use just maybe sequential growth as a good example. Historically, what you would see is from Q4 to Q1 globally, you'd see a mid-teens sequential decline. That came down to low double digits. Last year, it was 7% to 8%. We'd expect to see another point of progression there. And so it's that continued progression where Q4 would maybe come down a little bit, Q1 comes up a little bit relative to that sequential total company growth.

Maybe we can jump to margins. And this is where I think you have -- there's a lot of interesting avenues and margins. And I'll say, to me, the guidance looks particularly conservative when I think about 15-day sensors and just mathematically, you're spreading the cost of goods out over 50% more days, but there's a lot of upside there. 63.5% is where the Street was coming in today on gross margin, guidance of 63% to 64%. Maybe same sort of question, what's assumed in that? What percentage of U.S. sales or 15-day sensor built into that? And I know you're launching -- breaking ground on the manufacturing facility in the fourth quarter. I imagine there's some start-up costs involved with that. Maybe just some of the components there?

Yes, sure. So you're right, Robbie, the 15-day product does give us a lot of flexibility on our margins. Now it does take time for people to upgrade to that product. So we'll be starting new customers on it, and then we'll upgrade our base over time. It does require a new prescription and a visit to the physician's office. But we do feel that with the performance of that product, we're counting on significant uptake across the whole portfolio.

We're also working on launching it across -- outside the U.S., working through the different tenders and regulatory approvals to get that product launched. Over time, we intend to take the whole base over to 15 Day, but it's going to take a little time. And you're right, there is some additional spending that's already built into the gross margin and op margin for the year on bringing up that Ireland facility, which is really important for our ability to produce enough sensors to meet this market demand.

Yes. So geography-wise, just so you have it -- I think you expect there to be a bit of a burden on the Ireland manufacturing in OpEx for the first 3 quarters. But in that fourth quarter, you're going to turn on a factory with pretty low volumes. That's all going to sit in COGS. That's all been contemplated in the 63% to 64%. So it's important to have that. The underlying performance in the base is even obviously, therefore, a little bit better than that. But naturally, this is just part of every evolution. You had this when we launched Malaysia. You'll have it again when we launch Ireland, but eventually, Ireland will be a contributor to marginal volume.

Down in OpEx, R&D and SG&A, where is the incremental dollars going right now? I know a lot of the incremental patients are coming more and more from primary care channels than endocrinologists. So is that where the dollars are going?

So speaking of -- first, just starting with the question around R&D, it's really across the board. We have a significant investment going in our software, but also as we're working on our G8 system, that's a next-generation platform. All the work we're doing in the factories as we're standing up Ireland, we're designing the systems to be able to manufacture both the current G7 and DexCom ONE+ and Stelo wearables, but also this G8 wearables. There's a significant investment going on there, but it's really across the board.

Yes. And then in terms of just the rest of the P&L, obviously, in G&A, a lot of that's in Ireland. But in sales and marketing, I think if you look at our P&L over time, I think we've done a really nice job creating leverage there. The leverage is to then pour it back into investments like in our sales and marketing team, which is where a lot of the dollars are going to go, which is about raising awareness with all of this incremental coverage, expansion outside the U.S., it's a key priority for us.

We'll continue to get leverage across the classic G&A functions in all of those areas. You might not see it always playing through quarter-by-quarter because of this Ireland investment, but you can obviously imagine as that Ireland investment comes out, you'll see the underlying leverage we're getting to the P&L.

There's a lot going on. You talked about R&D. You mentioned the G8 sensor. I'd love to get a time line if you're willing to share. But the question is really more -- as you're stepping into the CEO role, there's new products you're rolling out. There's a new product you're working on. I'm sure there are several in the pipeline. We're hopefully waiting for Medicare to open up coverage for non-intensive patients. International is still a large untapped opportunity. Where are you spending most of your time? And what would you say are your biggest strategic priorities for the next 1 to 3 years?

So the priority is basically ensuring that we remain the optimum solution for all glucose monitoring needs. So that's the whole spectrum. When you think about type 1, we're still significantly innovating for that group all the way down the spectrum and introducing new products and keeping that cadence going so that when a user goes on to a DexCom system, they understand that they're going to continually get updates. They are going to enhance their experience over and over again.

And the significant investment in our systems around customer support, we already started launching those last year. That's another very important part of serving our customers for the long run. So I am spending quite a bit of time there. Also, obviously, out on the road talking to physicians and patients and understanding where we can continue to improve what we do.

The next-generation hardware is a very key part. I mean many of the projects that I mentioned are being built into that new generation. We started in the early days of DexCom with an idea that we might be able to introduce this type of technology. And finally, with G8, a lot of those things are coming together to build the most advanced CGM system available. Also driving awareness and outcomes, right? We're running large randomized controlled trials and making the investments required to expand coverage because expanded coverage is the key for growth in this category. And we have this evidence that shows just the benefits to both the users, but also to the economics around the health care systems on CGM being a very cost-effective way to manage this global crisis of diabetes. And so we're investing across all those different avenues.

You talked about in the fall last year about DexCom being a sustainable double-digit growth company for the long run. So maybe I'll flip it around. Of those you just talked about, which are the most important to keeping DexCom's strong double-digit grower for the long run?

Continuing -- there's 2 really. It's continuing to expand the access internationally. The opportunity international is actually bigger than the U.S. opportunity over time if you think about the populations and the impact that we can have. And so expanding that coverage globally is extremely important as well as in the United States. As you mentioned, Robbie, we're waiting for Medicare approval here for NIT. And so that's a key part.

But also driving share, right, driving share towards DexCom and ensuring that we have the best solution out there for patients when that coverage comes. And so I think those are 2 of the important keys to sustaining -- making that growth durable.

As I look international outside the U.S., there's millions and millions of patients, many without insurance coverage. Is there a world where DexCom can come out with a product that's at a low enough price point to move into that part of the world? Or are you really commenting more on the parts of the world with insurance coverage and DexCom's ability to help improve that coverage over time?

We look at all aspects. I mean, certainly, there are certain markets that are more price sensitive. I mean, in almost all markets, we see that the out-of-pocket cost does impact sensor utilization even in the reimbursed markets, right? So as we -- one of our focus when we do expand coverage, is to ensure that out-of-pocket costs are the lowest possible. But we will be bringing Stelo to international markets this year. And so we intend to continue to launch an over-the-counter cash pay option across the world.

Now it is one of the ways that we've been able to actually accelerate coverage is bringing a product to market that's available with a cash pay opportunity for users. And then once we start to see traction in that country, often reimbursement comes. We saw that in Eastern Europe, some coverage come quite quickly once we launched DexCom ONE there. And so we do believe that Stelo is a great opportunity to introduce CGM to a market and then potentially build coverage after that.

Well, unfortunately, we're out of time. Congrats on a nice fourth quarter and into 2025 and look forward to a lot more.

Thank you, Robbie.

Thank you.

Ladies and gentlemen, welcome to the DexCom Third Quarter 2025 Earnings Release Conference Call. My name is Abby, and I will be your operator for today's call. [Operator Instructions]. As a reminder, the conference is being recorded.

I will now turn the call over to Sean Christensen, Vice President of Finance and Investor Relations. You may begin.

Thank you, operator, and welcome to DexCom's Third Quarter 2020 Earnings Call. Our agenda begins with Jake Leach, DexCom's President and Interim CEO, who will summarize our recent highlights and ongoing strategic initiatives followed by a financial review and outlook from Jereme 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 third quarter 2025 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-K, 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 third quarter earnings call for a reconciliation of these measures to their most directly comparable GAAP financial measure.

Now I will turn it over to Jake.

Thank you, Sean, and thank you, everyone, for joining us. Before we begin, I'd like to take a moment to recognize Kevin Sayer, who's not on the call today, and as many of you know, has taken a temporary medical leave. Kevin, I know you're listening today, and I look forward to catching up with you after the call.

Now on to the quarter. Today, we reported third quarter organic revenue growth of 20% compared to the third quarter of 2024. We continue to benefit from category growth, recent CGM access expansion and solid share performance in both our U.S. and international businesses. In the U.S., we again saw more of our new customer starts coming from the entire type 2 population as we benefited from the growing type 2 coverage and expanded reach within primary care.

As a reminder, we now have coverage established for anyone with diabetes with the national formularies of 3 of the largest commercial PBMs. This includes active coverage for nearly 6 million type 2 non-insulin lives, which represents about half of the Type 2 NIT commercial population in the U.S. Of course, the journey is not done, and we will continue to work tirelessly until we have coverage for this entire population of more than 25 million Americans.

What continues to give us confidence is the growing body of CGM outcomes evidence for this population. This leads us to believe that this access expansion is a matter of when, not if. Given the significant level of CGM usage that already exists among this cohort, we have more real-world evidence available today than we have ever had in any of our prior advocacy campaigns.

We also already have seen positive updates to the latest standards of care for this group, which we expect to be further strengthened as randomized controlled trial data continues to emerge. This summer, we saw the first wave of noninsulin RCT outcomes presented at the annual ADA conference, and we are now working to build on that with our own well-designed RCT. We built our trial to be representative of the wide spectrum of people with type 2 diabetes and look forward to providing a readout early next year.

Similar to our mobile and DIAMOND studies, we believe this data set can become the cornerstone of our ongoing type 2 evidence road map. This not only helps us advocate for the remaining type 2 lives in the U.S., but it also helps us as we push for greater type 2 coverage across the globe. As our customer base becomes increasingly diversified with this broader coverage, we have also continued to iterate our product experience to make it more personalized for each of our users. One example that I'm particularly excited about is a new feature called DexCom Smart Basil. As we continue to learn more about the type 2 customers on basal insulin and their health care providers, we've observed several trends.

First, there's apprehension to start basal insulin for those who truly need it. More than 1 in 3 patients avoid basal insulin altogether because of the fear of hypoglycemia. For those who are on basal insulin, about half of the customers who ultimately progress to meal-time insulin never reach an optimal dose of basal insulin. And for those that do, it typically takes several months to find the right dose.

We have an opportunity to make this experience so much better for our customers. DexCom Smart Basal Is a titration module built within the Dexcom app that is designed to make basal insulin titration and management simpler, faster and personalized for our customers. Our algorithm team designed this new software to learn from the daily glucose patterns customers and better identify the ideal timing and dose of their basal insulin. With Smart Basal, we also expect to improve adherence and greatly reduce the required workflow for the prescribing community. As titration has historically required ongoing manual inputs in frequent office visits.

DexCom Smart Basal is currently under review with the FDA and for CE Mark. Once available, this feature will further advance our value proposition amongst the type 2 basal population and for the physicians that treat them. We also continue to enhance the value proposition of Stelo with ongoing software updates. Broader distribution and new metabolic health partners. I'm very proud of how far Stelo has come in such a short period of time.

In just the first 12 months in the market, Stelo has surpassed $100 million in revenue and has increased awareness of what CGM can do for everyone to improve metabolic health. We are continuously making the app more personalized and engaging. We simplified ordering and reordering and our growing base of partners has enabled broader health insights for our customers, and this is just the beginning.

We'll continue to make this feel like more of a consumer experience over time. We've also been getting a lot of inbound interest recently in bringing Stelo to the international market and look forward to these extensions in relatively short order. In addition, everyone at DexCom is very excited for the broader launch of our G7 15-day system.

Over the past few months, our team has done an incredible job securing reimbursement for this product at the same net price to DexCom and low out-of-pocket costs for our customers. In fact, we now have contracts finalized with Medicare, every major commercial payer and our commercial DME partners. By finalizing these contracts, we've cleared a key step to enable our broad-based launch.

As we previously mentioned, we're currently in our initial launch with our warrior community as we gather feedback for our broader launch. We are looking forward to our broader rollout in the coming weeks. As we expand this launch, we are also continuing to innovate on the entire customer service experience.

We recently introduced a completely new digital experience called myDexcom account, which is rolling out country by country as we speak. My Dexcom account is a new online account portal it streamlines and simplifies the Dexcom digital experience built on direct customer feedback, this new platform will allow instant connectivity for online support, real-time visibility into orders or open tickets and active tracking for sensors.

It will also greatly simplify service requests for our customers as the site can auto fill necessary user information, including the serial number of a sensor that may require service. Between updates like this, our new pharmacy replacement model, ongoing software investment and our continued focus on product performance, we are demonstrating our commitment to advancing the customer experience. And this is just as true today despite some of the media that has been circulating on this topic.

So let me make one thing clear. The customer is and will always be the North Star for this company. This is what drives us every single day, and it's what's also driven me here at DexCom for over 20 years. That will not change. I recognize the investment community is attempting to interpret data on this topic. As we recently shared, our complaint rates for G7 have been largely stable over the past couple of years, and this continues to be the case across important categories, including sensor performance. But I also want to speak to our loyal customers and prescribing community today.

If any of you have an experience with DexCom that does not meet your expectations, we understand, and that is not good enough for us. We're always listening and we're always making improvements as a result. For G7, this has included improvements in Bluetooth connectivity, improvements to the adhesive and most recently, addressing deployment challenges that we identified earlier this year. Through this ongoing work, our product continues to get better. Status quo has not and will never be our guiding light. I'm confident to say that the quality of the sensors coming off our lines today is exceptional and meets our high standards and the expectations of our customers.

To close, I just want to note that I'm honored and excited to be serving as DexCom's next CEO. During the fall conference circuit, I had the opportunity to lay out my initial vision as the next CEO and share my conviction in this business over the long term. I look forward to sharing even more over the coming months. Our future remains very bright. Our team is incredibly strong and the opportunity ahead of us to transform metabolic health is unlike that at any company I can think of.

With that, I'll turn it over to Jereme for a financial update.

Thank you, Jake. As a reminder, unless otherwise noted, the financial metrics 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 third quarter of 2025, we reported worldwide revenue of $1.21 billion compared to $994 million for the third quarter of 2024. And representing growth of 22% on a reported basis and 20% on an 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 12 months. U.S. revenue totaled $852 million for the third quarter compared to $702 million in the third quarter of 2024, representing an increase of 21%.

As Jake mentioned, we continue to see all areas of type 2 diabetes become a bigger contributor to our U.S. new starts given our broader presence within primary care, significant new coverage within the non-insulin market and the continued growth of the basal market. We'll work to further build on this momentum, particularly as we push for even broader coverage for this group.

International revenue grew 22%, totaling $357.4 million in the third quarter. International organic revenue growth was 18% for the third quarter. This marked our third straight quarter of accelerating growth internationally with particular strength coming from regions where we have expanded access in recent quarters. For example, France continues to stand out as one of our fastest-growing markets year-to-date. In fact, our growth in France has accelerated during every quarter of 2025 as we have built off the significant new coverage that we finalized late last year.

Canada also performed very well during Q3 as we saw a nice uptick in demand, follow quickly behind our new coverage in Ontario. As a reminder, in both of these markets, we now have coverage secured through basal insulin use, and we expect more markets to move this way over time. These are great examples of the type of growth we can deliver as this type 2 coverage emerges.

Our third quarter gross profit was $741.3 million or 61.3% of revenue compared to 63.0% of revenue in the third quarter of 2024. During the third quarter, we made continued progress in stabilizing our global sensor supply as we were able to fully restock our level of educational samples in the field and further rebuild our finished goods inventory levels internally.

Given this progress, we were able to taper back our investment in expedited shipping by the end of Q3 and -- in fact, we recently began shipping via ocean freight once again, beginning the transition back to more cost-efficient methods of transportation as we close 2025.

While these supply dynamics have progressed in line with our plan, our third quarter gross margin was impacted by scrap rates at our manufacturing facilities that were higher than expected, albeit an improvement from the second quarter.

As Jake mentioned, earlier this year, our team identified certain third-party components that were contributing to an uptick in deployment issues for our sensors. While we have since addressed that issue directly, we have chosen to provide extra scrutiny to supplied products to ensure the highest quality product gets into the field, even if this results in higher cost in the near term. We expect these scrap rates to continue to improve in the coming months.

Operating expenses were $468.4 million for Q3 of 2025 compared to $413.9 million in Q3 of 2024. Despite some of the challenges on gross margin, the company has been incredibly focused on managing operating expenses even as we increase our investment in R&D spend. Operating income was $272.9 million or 22.6% of revenue in the third quarter of 2025 compared to $212.0 million or 21.3% of revenue in the same quarter of 2024.

Adjusted EBITDA was $368.4 million or 30.5% of revenue for the third quarter compared to $300.1 million or 30.2% of revenue for the third quarter of 2024. Net income for the third quarter was $242.5 million or $0.61 per share. This was the highest quarterly earnings per share in the history of our company. We remain in great financial position, closing the quarter with greater than $3.3 billion of cash and cash equivalents.

We had a very strong free cash flow quarter, which helped us increase our cash and cash equivalents balance by nearly $400 million, even as we repurchased shares over the course of the quarter. This cash level provides us with significant flexibility. And given where our shares are currently priced, we plan to settle our upcoming $1.2 billion of convertible notes in cash. In addition, we plan to remain in the market this quarter, repurchasing additional shares. Even after settlement of this convert, we'll have plenty of cash on hand to assess ongoing capital allocation opportunities, including additional repurchases.

Turning to guidance. We are raising our revenue guidance to a range of $4.630 billion to $4.650 billion, representing growth of approximately 15% for the year. For margins, we are lowering our 2025 non-GAAP gross profit margin guidance to approximately 61% to reflect the additional scrap dynamics we discussed earlier. For both non-GAAP operating margin and adjusted EBITDA margin, we are now guiding to a range of 20% to 21% and 29% to 30%, respectively, as we expect to offset some of the gross margin pressure through continued OpEx leverage.

With that, we can open up the call for Q&A. Sean?

Thank you, Jereme. 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&A instructions.

[Operator Instructions]. And our first question comes from the line of Travis Steed with Bank of America.

First, I want to send well wishes to Kevin, I hope things are going well. We look forward to having you back. But the question is there's been a lot of attention on Street 26 estimates and what your growth might look at -- look like in '26? And just curious if there's any color you could share with us today as we start to think about our 2026 growth and the modeling at a high level.

Yes. Thanks, Travis. While we're not going to provide specific guidance for '26, I'm happy to give you a little color on how we think about framing up our guide for '26. So -- the way we look at it is we're building it up for the year, when you start the year, there's a lot of different variables that can play out throughout the course of operating throughout the year, a lot of puts and takes.

And so we -- obviously, that's why we often frame it based on a range -- and so when I think about the current coverage landscape that exists today globally, so those that today have coverage and access to it certainly unlocks and affords a nice runway of growth for the next couple of years. I'm certainly in that double-digit range. But I think as we look at our range, the top end of our range is probably slightly below where -- the Street is today for our base case.

Certainly, there are opportunities for us to outperform should they happen, things like expanded access and our ability to take share based on our innovation pipeline. But from a base case perspective, we really think that top end of that range probably comes in just under where the Street is.

And our next question comes from the line of Larry Biegelsen with Wells Fargo.

This is Simran on for Larry. So I just wanted to maybe start off with the commentary around G7 and G7 performance and the noise during the quarter. It sounds like those issues have been resolved from an engineering standpoint or a manufacturing standpoint. So can you just please confirm that? And then has the noise been disruptive to new starts or prescribing patterns in Q3 at all? And do you expect it to be disruptive in Q4 or 2026?

Yes. Thanks, Simran, for the question. So -- as I mentioned, we feel really good about the quality of the sensors that we're producing, both from accuracy, reliability and also addressing those deployment challenges that we ran into at the beginning of the year. Our teams learned a tremendous amount about those and been able to really solve them in the factory. So we're feeling great about the product.

I've actually been out in the field recently talking to customers spending quite a bit of time with both prescribers and those using our products and really listening and making sure that we're addressing all their concerns and understanding what they're experiencing. And I am hearing from all of them that things have improved since those deployment challenges we experienced in the front half of the year. So we feel really good about where we're headed.

Yes. And then to your question on potential impact on patients in the field, around the fringes, we have heard questions out there -- and so those are things we're out addressing, as Jacob mentioned, getting out into the field and making sure folks understand what happened. And the reality is we see that the complaint rates, while they're consistent with where they've been in the past, we know those types of complaints are the frustrating ones.

So there's likely been a bit of an impact on new starts here over the course of the third quarter. The good news is, we're still hundreds of thousands of new customer starts in the U.S. and certainly strong outside the U.S. as well. So while the quarter was impacted by slightly below a record still really strong performance over the course of this quarter and really proud of that.

I'm really excited about what happens now as we've addressed any of these concerns out there. We're really excited to see how this impact along with our sales force, along with some of the educational samples that are available along with supply being in a good position. It will impact us here in the fourth quarter and beyond.

And our next question comes from the line of Robbie Marcus with JPMorgan.

Great. I wanted to ask -- as you look at the new patients, where are you seeing the most growth? Is it kind of slowing down in type 1 and type 2 intensive and getting most from basal and non-intensive, and do you need to do anything differently out in the market and whether it's advertising or the field force to keep driving uptake of these increasingly new and important patient groups?

Sure, Robbie. This is Jereme. If I can answer that. I think where we see the growth, we still see strong performance really across all the type 2 markets. That includes intensive as well. So we've seen a lot of new patients coming in type 2 intensive basal and certainly in non-insulin as coverage is out there. We still see a decent amount of type 1 patients. But of course, as you know, type 1 is most penetrated and smallest population.

So naturally, as we get bigger and more coverage, you're going to see that. And to your question then, how do we go to market and where do we go? You're 100% right. I mean our teams are constantly looking at where we call, who we call on which channels we market in and where folks go. And so we do think about it a little bit differently. I often compare it to shaking a tree, right? Sometimes you shake a tree, you got to move to the next tree to shake it. And so we are doing those kinds of things as we look at where the opportunities are. So we'll take in something I know the internal team has been looking at and we'll continue to look at is making sure that we continue to drive the growth and find the patients. I mean when you look at how much coverage is out there, there are many more people with covers than there are people that are already using CGM. So there's a lot of opportunity out there to go get.

And our next question comes from the line of Danielle Antalffy with UBS.

Jake, I just wanted to follow up on Travis' question, and thanks for the color you gave in the framing. I guess I just want to clarify 1 point and that is, so it sounds like that is assuming no expanded coverage I mean, how -- what are your latest thoughts on potential for expanded coverage in 2026? And I guess the bigger question is, will you guide according to your thoughts on expanded coverage? Or will you only reflect guidance based on coverage today? And I'll leave it at that.

Yes. Thanks, Danielle. Yes, to be clear, when we think about a base case for next year's guide, it includes the coverage that we have today, what the landscape looks like, both across insulin use and no insulin use and then as we look globally. So that's really how we're going to think about our base case guide for the year.

Yes. And as we move through the course of the year, we'll make sure we point out the wins that are significant, right? There's always little wins here and there, but the wins that are significant. And you know there's some potential big wins out there, both across noninsulin basal and even really even as you get into some more emerging markets. So there's a lot of opportunities for wind, but again, our base case won't include those.

And our next question comes from the line of Matt Taylor with Jefferies.

I guess I'll say on this thread for a minute. You've gotten the 6 million commercial lives covered. I think based on mobile and prior analogies, we might expect it will be natural to see you have that readout submit it and get NIT 2 coverage by the end of next year around that time frame. But there's been some chatter that maybe that comes earlier, I don't know exactly where that's coming from. Could you talk about the potential to get broader NITI coverage earlier in 2016? And what would be the mechanism to do that?

Yes. Thanks, Matt. So I think as I mentioned before, this is really our expectation is it's not if, it's just when this coverage is going to come. The benefits for users are so clear in this population of noninsulin users as we continue to see further expansion, whether you look at it from a the cost savings perspective to a payer in the first year? Or you really look at those outcome results that patients get.

One of the things I think about is the study that we did in primary care in a very focused area in Ohio, where when we started that trial, the patients, there's over 170 patients in that study, only one of them was meeting the ADA's recommended guidelines around A1c and then within the 12-month period, more than half of that group was hitting the recommended target, and that was all based on CGM use, and this is, again, not a non-insulin population.

So just that type of powerful outcome is clearly some of the things that's powering this expanded coverage over time. So timing is hard to predict, but we're going to be ready for it when that coverage comes.

And our next question comes from the line of Joanne Wuench with Citibank.

And Kevin, I hope you feel well soon. My question has to do with the 15-day sensor. It sounds like it's a limited launch right now with the Warriors and then it will expand. What does it take to expand into a broader group? And how do we think about the revenue contribution as well as the operating margin or gross margin potential?

Yes. Thanks for that question. We are incredibly excited about this product launch. And it is in the warrior community today. We've got a number of folks on the sensors. And we're getting great feedback both about the performance of the sensors as well as the new extended duration of the accuracy of the product. And so we plan to be shipping into -- with our channel partners here in the next couple of weeks to really begin out that broader launch.

And a lot of like getting ready for that was around making sure we got the coverage, as I mentioned, making sure we're working with our insulin partners on the integrations and really just doing all the training and everything necessary to make this a very successful introduction of our next innovation.

Yes. And to your question on the margin impact, given the timing of the rollout, we've never really expected it to be a big contributor this year. It will have a pretty nominal contribution from a gross margin perspective. and from a revenue perspective.

We do expect next year, it becomes an opportunity to go after additional patients for those folks that certainly are looking for longer wear time. I think it's a great opportunity there. And clearly, from a margin perspective, all of the things we've historically said around the 15-day product, that still all rings true. So I think as that rolls out, we'll be pushing it out into the field and we'll give you updates over the course of 2026 based on how that rollout is taking place. But we sit here in a great position to launch it because our coverage is going to be robust when we launch it.

Obviously, we're going to have partners that are going to be ready to catch it and handle it and integrate it. And so having both of those ready, I think, is going to provide for a really exciting 2026.

And our next question comes from the line of David Roman with Goldman Sachs.

I appreciate the feedback and updates regarding the performance of G7 and what you're seeing in your own data. Can you maybe go into a little bit more detail about some of the actions you're going to undertake to ensure that, that message is clear within the broader community. And one of the just highlights that comes to mind here is the extent to which there is such a consumer element to this category versus some of the other segments that all of us follow. You have a much broader swath of stakeholders to target.

So maybe just touch on what the plan is to make sure that the message is consistent across all relevant stakeholders and maybe what investments you're making to enable that.

Yes. Thanks for the question, David. So we are out in the field. That's 1 of our primary communication points with customers, both the prescribers and our users. So we're out there making sure they understand all the things we've done to address this issue.

One of the things I'd like to introduce is the fact that we mentioned that our complaint rates have been generally stable over time, and that is true. One of the things we have seen though is, at the beginning of the year, we saw those complaints around out-of-box failures increase. And what was really good to see is that the -- those increases in rates there were offset by decreases in accuracy, complaints, Bluetooth complaints, a lot of things over time that we've been working on. So as we fixed the issue with the deployment, we really do anticipate seeing those complaint rates come down overall, which has really been our goal for a while.

When it comes to engagement with consumers, we're really looking at how do we make sure that the message is clear on exactly what performance looks like and how much we've done to improve things. And so that's really the message that I'm carrying as well as our entire sales team and all of our team members here are really focused on interacting directly with our customers.

And our next question comes from the line of Marie Thibault with BTIG.

Just wanted to go back to the scrap rate issue, make sure I understand that better. It sounds like that had to do with materials around deployment. Is that to do with the inserter specifically? And as we think about it improving, is that something we can put in the rear view going into 2026 going into the 15-day rollout? What's kind of the timing on putting that all behind us?

Yes. Then that's -- the way you think about it is exactly that. It's how the needle ultimately drops the sensor off into the skin. And I think you can expect to see that really play out. We're expecting some of that to dissipate here into Q4.

The underlying -- when you look at the underlying standard performance and the standard cost and margin, that's been really, really solid year-over-year. In fact, what you would see is you'd be really pleased with what that looks like. So what you're seeing is and what's playing through in the results is a few hundred basis points of what's played out in the combination of freight and some of the scrapping we're doing around these deployments.

So what I would expect to see as we move into 2026 and as Jake alluded to, we're really putting this behind us. would expect a lot of that to dissipate. That gets you back to more of where we expect it to be a more normalized margin rate. And then you have the contributions, of course, with 15 days. We do expect to be in a good position as we exit this year and get into next year, and with some of the things Jake alluded to with lower warranty rates around Bluetooth, complaints around either accuracy and/or adhesives, as these get to be fixed as well. I think that's also a potential opportunity.

So some work to be done here, but I think we're putting it behind us. Obviously, we see -- we've improved a little bit from Q2. We expect to improve again in Q4, and you can see that implied by our guidance. which puts us in a good spot as we move into 2026. And we'll give you a little more clarity when we give official guidance for 2026 here in the next few months.

And our next question comes from the line of Matthew O'Brien with Piper Sandler.

And again, I hope Kevin [ speedy ] recovery right now. But I just wanted to talk about the the guidance for Q4. We -- on a 2-year stack basis, we've decelerated here in Q3, especially domestically. And I think Q4 is also implying a pretty -- another step down on a 2-year stack basis. And I think, again, most of that's probably domestic based on how what you're doing internationally. Why is that decelerating?

And then if you do the 2-year stack in Q4, it's a little less than 10% growth. why are we comfortable in low double digits in '26 if you've got some deceleration here at the end of '24 -- sorry, end of '25.

Sure. Yes. Let me maybe talk about the quarter and just especially maybe more importantly the guide something which you're getting at is exit rates, and we understand we are getting at. So I'd first and foremost say, when you look at the year over time. The one thing to be mindful of is we are starting to see a more normalization in the seasonality of our business.

So I think first, you have to remember, and that's been happening over years now. And I think as you go back, you'll see it where the contribution as a percentage of the full year has been declining in Q4 and the contribution from Q1 has been increasing. And I would expect that to continue to take place this year. So as you're as you're comparing it, I think the one thing to be thoughtful about is Q1 actually has now a seasonality benefit. You saw it this year, quite frankly.

So I think you expect to look at it from that perspective. When you peel that back, actually, what you're seeing is a pretty solid stack growth rate. I mean when you peel back those -- remember, that that Q4 dynamic now has been happening now for multiple years. So I think it's important that as you zoom out and you think of it from that perspective, you look at the underlying patient base, which I think your models will show the underlying user growth has been solid.

I think what you're also expecting to see is the delta between unit volume growth and revenue start to come closer. You're seeing it here in the third quarter, and you're going to see it here for the back half of the year. So you put all those together, solid underlying user growth, which is how we really measure the business, and that continues to go well with consistent pricing and then the seasonality effect in effect, I think you can start to see exactly how we're thinking about next year. And that's just as a base case.

So hopefully, that gives you some context. Always happy to talk further about it, but I would include those as you're assessing kind of modeling seasonality.

And our next question comes from the line of Michael Polark with Wolfe Research.

I wanted to ask on gross margin and the fourth quarter implied guide, which were the last 2 questions. So I guess I'll follow up on the gross margin, Jereme. I heard a few hundred basis points cumulatively from scrap and freight, can you spike out or remind us on just how much is the freight component, how much is the scrap component as we run that out through the rest of the year? into '26.

Yes. It's a little -- it's basically 50-50. It's in that ballpark of the impact. If you remember, we had in Q1, we had to expedite some freight that we talked about for the rest of the year. being about 75 bps for the rest of the year -- on the full year numbers, by the way. So you can see why on the full year when you put it all together, it's about 50-50 -- now as we get back to more ocean freight, and we expect to do that here, obviously, we've put some stuff on ocean here exiting the third quarter and into the fourth quarter. Next year, the goal is to have a majority, if not all of our product, really moving via ocean, especially as it comes over from Malaysia. So I'd expect to see certainly some benefit there.

And as again, as Jake alluded to, the out-of-box failures through the work we're doing around sensor deployment as that comes down, again, we expect to see that dissipate. So think about 50-50 on both of those, and you can think about that on this year. So it gives you your jumping point exiting off of 2025 as to how to think about 2026.

And our next question comes from the line of Jason Bedford with Raymond James.

Maybe just for me on the Type 2 uptake. Can you just comment on the utilization within this user base versus those type 1 users?

Yes. Thanks, Jason. So when we think about the utilization of our system across different customers, obviously, AID customers have the highest utilization greater than 90% or so. So really because of the fact that they need those sensors to power their system, their high utilization in that group.

And as you kind of step down into the intensive insulin users not on ANZ, you're still in that north 85% utilization for that group, again, because of all the benefits of the CGM and the fact that they're on intensive insulin, so I want to make sure they don't have the issues with hypoglycemia or anything.

Now if we start to take a look at the broader type 2 starting with basal, that group historically has been pretty strong on utilization between like 80% to 85%. So pretty close to those IIT users. And that, again, really comes from the benefit -- shows the benefit they're getting from the product. And we saw that in our mobile study. We asked patients after they participated in that study, we want to continue using and 95% of them said, yes, and we saw high utilization rates during that study. And that's what we see in our field data.

And as we step down into the non-insulin type 2, it's lower than the previous categories, but still around that 75% utilization mark. And so something that we're seeing also in our Stelo product as we have quite a few type 2 non-insulin users there that don't yet have coverage for CGM. They're using Stelo, and that's definitely the highest utilization group for our Stelo product.

And our next question comes from the line of Shagun Singh with RBC Capital Markets.

I was just wondering to what extent are the quality issues impacting new patient starts or did in Q3, when do you expect to return to record levels? And do you need that expanded access to return to record levels again?

Yes. So I think we covered a little bit earlier and I know you're jumping between calls, the expectation is there's a little bit of an impact here in Q3, and we've seen it. And we've said basically that was still hundreds of thousands of patients, but just slightly below a record here.

The expectation is certainly, as we move into Q4, I mean, the internal expectations for Q4 is to push and get back to those records. And obviously, next year and we get into 2026, our assumption is going to be record new year for patients in 2026. And that's, again, in our base case. And so -- and that's with existing coverage. So I don't think we need necessarily new coverage to push into that, and that wouldn't be our expectation going into it. Obviously, more coverage provides more opportunity. But those would be our expectations. And hopefully, that gives you some context.

And our next question comes from the line of Brandon Vazquez with William Blair.

Jereme, you were talking a little bit about the gap between growth in the volume and pricing closing a little bit. I was curious if you could quantify at all where if you do the math kind of in the U.S., especially where our model suggests something like 1,400 to 1,500 annual revenue per patient somewhere in that ballpark, down a lot over the past couple of years as you've alluded to, where are we in the ballpark there on that pricing?

And then how does that pricing trend over the coming years, where do pricing declines on a year-over-year basis start to level out?

Sure. Yes. I don't think you're far off. I mean at the end of the day, we give patient numbers at the end of the year, and you can do the math globally, and we've talked about kind of the various splits. So I think you're in the general ballpark there. The price -- the year-over-year price isn't much of an impact channel by channel. And so I think that's really important to note. We don't necessarily have significant pricing impacts, say, retail to retail or DME to DME year-over-year. Those typically fall in that 2% to 3% range. Where we typically see it is in mix. And in mix, it's where you have folks moving -- typically, there's been a move to the pharmacy over time. That has been stabilizing over time.

And so what you're seeing is you're starting to see that coming in. And you'd expect it to see it come in, and we talked about this at the beginning of the year. So it's playing out as we expected. The interesting thing going forward is just going to be -- and this is why it's not necessarily giving a number, but it's just talking through how it's going to work. As you start to think about where coverage exists today and as coverage gets knocked down, most of the new coverage opportunities are coming via the pharmacy. So you think about type 2 coverage type 2 coverage in NIT is coming through the pharmacy. So that's where your volume is going to continue to grow.

On the flip side, there's been a lot of talk about CMS coverage for type 2 and where that would be. And a lot of that would come through our DME partners where you have Medicare fee-for-service going. And that would then change the method over time. In both of those models, remember the price year-over-year isn't necessarily impact. It's where patients are getting access to their product and then therefore, the underlying mix that makes that up.

So I think what I would say is price isn't the challenge. It isn't the headwinds more mix. And the mix has really stabilized. But usually, what happens is when we pick up a lot of new coverage, that's a good thing at the end of the day. And obviously, a lot of coverage in type 2, that's a great thing. And hopefully and I know we've kind of talked about it a little bit here earlier on the call, we're expecting a time when there's CMS coverage over type 2 non-insulin and that could swing it the other way. So it's just important to have your model set up that way. It'll help you follow along.

And our next question comes from the line of Jon Block with Stifel.

The OpEx leverage has made up for some of the gross margin shortfalls throughout 2025 to help with margin expansion this year. And so I'm just curious, when we think about 2026, is that sort of like a pure role reversal due to 15-day in Germany, you mentioned the underlying GM getting better? Or are there arguably additional OpEx opportunities that you still have? I guess where I'm getting at is how do we think about catch-up spend, if that's the right way to frame it into '26 on the OpEx line.

Yes. So what I would say is the work we've done this year is less about catch-up spend and deferral and things along those lines. It's really the work we've done is more around -- how do we get more efficient leaning into tools, leverage? Where do we hire folks in the world? And how do we support things? How do we leverage the investments we've already made in technologies that we've made quite frankly, years ago. So I don't necessarily know that there's a lot of catch-up spend, but we have done a lot of great work around it this year. And so we'll give you a guide next year as we get there. But I mean, we do obviously talk about opportunities for gross margin in 2026, and we expect there to be those opportunities there.

In turn, I think there's an opportunity to continue to lever in OpEx over time. We'll see the pace in which we do that. I think there's we want to balance investment and don't want to necessarily miss out on opportunities. If there happens to be expansions in coverage next year, we want to be well suited to take advantage of that. So we'll make sure we balance the 2. But we know at the end of the day, our goal is to continue to deliver operational margin improvement over time. So we'll make sure we balance those 2 in the best interest of growing the business long term, but also delivering results back to shareholders.

And our next question comes from the line of William Plovanic with Canaccord.

The first off is really -- I was wondering if you could talk just about the cadence of the new patient starts as we went through the quarter, was it back-end loaded, front-end loaded to give us confidence that the fourth quarter might become a a record quarter.

And then I just -- I know you talked in general about attrition rates, but have you seen any trends in the attrition rates, especially as you dealt with some of the quality issues.

Yes, I'll start with the second one first. The attrition rates have been relatively stable. It's all within in the normal kind of ranges we look at. We pay a lot of attention to it. We track it really every week. We have a report out, we pay close attention. So we keep a close eye on it and then they've been stable.

In terms of trends over the course of the quarter, I think what we're seeing -- at least I'll maybe say anecdotally because I think it's -- it takes us a little time to get all the patient data in. I think you guys know this, it takes about 45 to get it all in. So I don't want to make any sort of statements about the back half of September other than I think it's very easy to take some of the anecdotal evidence. And we're hearing a lot of very positive anecdotal evidence.

As we speak to our sales leadership and as they kind of pulse the field. I think the sensor deployment issues as those have waned in samples in the field and those have waned in the doctor's offices, you're seeing a lot of anecdotal positive feedback.

And obviously, that then typically leads to performance. So it would be too premature for me to give you a readout on September until I have all the data in the hands, and that's the prudent thing to do. But anecdotally, I think we're very encouraged by what we're hearing. And Jake, you've been meeting with physicians all the time. Maybe you can walk through kind of what you've been hearing out there.

Yes, certainly. So we are hearing from our prescribers that they had some challenges earlier first half of this year, in particular, around some of those deployments kind of flowing through into both their offices and then into the customers' hands.

And when customers have issues, they tell their prescribers about it, and we heard from everybody. And so when we saw it, we jumped on it and we resolved it and it very consistent feedback as I talk to users and prescribers that things have improved dramatically.

That being said, issues can still happen, right? You can have an accuracy issue. You can have sensor falloff all those things, that's why we're making the investment in our service platform and making sure ultimately that it is a competitive advantage for us.

To the digital investments that we've made are just the beginning around making it easy for customers to get exactly what they need. And that's been a focus of mine, particularly over the last 6 months looking at how can we improve what we're doing. We've got a lot of plans that have been in place and I think we've got a lot more coming.

So it is a real area of focus for us to make sure that the experience of our users is the best possible.

And our next question comes from the line of Mike Kratky with Leerink Partners.

I'd echo sending our best to Kevin. I'd like to circle back on a prior question, just about the breakdown of price versus volume growth in your U.S. 3Q number. So our expectation is that we would probably start to see you anniversary some of the significant pricing headwinds that you've seen just coming from channel shifts. So to what extent do you really see that in the third quarter? How should we think about that moving forward, both in 4Q and '26?

Yes, it's a good question. You clearly see some of it based on the growth number, right? And the unit volume growth is based on a patient base and our ultimate unit volumes don't necessarily change as much quarter-to-quarter. They're based on underlying patient growth. And so what you see is a comp delta there.

And that comp delta, as you know, is a channel mix issue last year. that certainly hit us that we're anniversary-ing this year, and that's why you see the growth rate number there. So clearly, what you're seeing is a narrowing based on the growth rate this year, but it's a bit artificial. It's a little bit -- this is a bit a bit higher than you otherwise would have seen because of the comp to last year. But nevertheless, you are seeing it.

And so I think you can see it here playing out in the third quarter. I think you'll see it play out in the next quarter as well. Certainly, the comps get a little bit different next quarter. So I think that's important to be mindful of -- but as you step back over the course of the year and you look at the growth rate in the U.S.

I think what you're going to see is underlying unit volumes and revenue performance are starting to tighten up. And that's what we've talked about over the course of the year. So quarter-by-quarter, it can get a little lumpy just based on some of the challenges we had last year. But step back, you can see that playing out over time. And to your point, we do expect to see that playing out in 2026.

And our next question comes from the line of Richard Newitter with Truist Securities.

I was just wondering, keeping with the very preliminary 2026 commentary. Can you describe what's in your base case for any kind of competitive dynamics, possibly even intensifying you have it coming out with dual analyte. Would love to just kind of hear what you're factoring in there? And then same, kind of question, just what else are you willing to tell us about 2026 puts and takes as the base case as we're thinking about next year?

Yes. And I appreciate the question. Our goal in at least talking to this was to give you guys some directional feedback as to what the base case would look like next year. Now the base case doesn't represent what I would say is what we aspire to be over time, right? The base case is what I would say is a prudent way to start with the puts on the year. And so things like assumption around competitor product, those are absolutely always considered in there.

Obviously, we'll be thinking through anything from coverage -- from known coverage decisions this year, which are already obviously in those base numbers. We'll consider all of that really around the world. So that's why we give you some of that context. And getting into the specifics, I think we got to give you the official guidance before we then get into the official specifics. And that's why we're little hesitant to start walking through each of the specifics. Obviously, we have a budget for next year. We have a long-range plan, a 5-year long-range plan that we all have in-house here. We'll meet with the board here in December and roll that out for you guys as we get into next year.

But again, I think the context was trying to make sure everybody had an idea for how we were thinking about base case, and we'll get into those specifics when we officially give guidance because then you can put math officially to the numbers.

And our next question comes from the line of Josh Jennings with TD Cowen.

I wanted to just I know it's only been a couple of months since ADA in the 2Q call, but just any updates on the G8 platform and whether or not key tone sensing has kind of moved up the priority list. And any time lines when we could learn more or any timeline you can provide just in terms of when G8 could move forward towards commercialization.

Yes. G8 is an incredibly important part of our product portfolio in the future and our future innovation. It is a multi-analyte platform and -- as we think about -- just in general, the cadence of innovation and what we're looking at is we're really focused on meeting broad user needs. So unmet needs across a broad space, we think about it in the type one space. We also think about it in some of the higher growth segments as well as the market like our smart basal technology that we're talking about, that's a really important way to drive growth in that basal population really meet those unmet needs.

So yes, certainly, multi-analyte is an important part of the future platform. But as we look at G8, we're not going to get into the time lines now, but we will -- one thing I want to let everybody know is we are planning to put together an investor event first half of next year. We're going to actually going to hold at our Mesa manufacturing facility to give you guys a glimpse into our operations and our high-volume manufacturing plant. And that will be a good opportunity for us to talk about things like LRP and the portfolio of products and all the things we plan to do to drive this business forward.

And our next question comes from the line of Matt Miksic with Barclays.

So one question. I'm not sure if this has come up, but -- it's one of the things we hear in the community recently as some folks holding on to G6 or going back to G6. And I'm just wondering if that's a factor in sort of the manufacturing efficiency or line management and what your thoughts are on how and when you'll be able to transition off of that. And 1 quick follow-up, if I could.

So for -- yes, for G6, we are consistently transitioning customers over to G7 and so the number of G6 users is consistently coming down. We have heard some folks going back to G6. And it's a very small number. It doesn't really move the needle much at all.

And we're going to continue to make sure that G7 meets the needs of all users across the whole spectrum. So no one has a reason to stick with G6. And we know that, as we've seen in some of our previous upgrades between generations when people are familiar with the technology, and they're happy with what they got, they're going to -- they may stick with it, right? And so over time, we're going to keep moving people over to G7, and we haven't announced the official conclusion of G6 in the market. We will when the time is right, and we'll make sure we give people a heads up when that's going to happen.

Okay. That's great. And then on just general product strategy, the DexCom 1 strategy overseas, I think has been successful in some geographies and kind of met the need that you had set out for that program. But generally, DexCom, of course, has been kind of a core central line product with much of the innovation billing, the generation is around the same the central platform.

And I was just wondering if at some point, you're thinking about adjacencies or alternative approaches to helping patients manage diabetes or other glycemic elements of their life, but with a truly different platform, not a different version of G7 or G8. I'd love to get your thoughts.

Yes. I appreciate that question. Really going into the thinking of broad markets and how do you address those unmet needs. DexCom ONE+ is doing great. A lot of that growth in France that we talked about is on that that platform, and it's really allowed us to compete in a market segment that we weren't previously because we were focused on the G-Series products and the more acute end of the diabetes spectrum.

So yes, DexCom ONE+ is a super important part of our portfolio approach to serving the needs of different customers. And the mobile apps and the experience are different there. I mean 1 -- another example I can point to is we expand the opportunity here is Stelo, right? Stelo is a product that spans a pretty broad spectrum of users from type 2 all the way down to prediabetes and then those that are looking at better understanding the metabolic health. We will be taking that product internationally next year, and so we'll see it in a number of markets. where we had a pretty good request in demand for Stelo outside the U.S. And we are -- DexBasal a great example.

I kind of mentioned it before, but that ability to help a prescriber in a patient really get to the right outcome safely in the clinical study around DexBasal, it was focused on getting people to the optimal dose as fast as possible with no hypoglycemia, and that's what we saw in that study. And we're also excited about the opportunity for it to drive better adherence. So once users, they're going on insulin for the very first time, they've taken injection they've maybe never done injections before. There's some apprehension there.

But when you show them how much better their diabetes control is when they've got the right dose of basal insulin. It's pretty motivating. And so we do expect to see some adherence improvements there. And really just drive general outcomes. So focusing on outcomes for the broad population is what we're trying to do here, and we do it a number of different ways through different products and different software experiences.

And our final question comes from the line of Anthony Petrone with Mizuho.

And best wishes to Kevin as well. Maybe 1 on gross margin as it relates to the G7 transition and 1 on just penetration. When you think about the transition to G7, how long do you think it will take to fully roll over the 10-day to 15-day -- and what does that do to gross margin once you're kind of on a 15-day heavier user base?

And then some shadow just on penetration, even competitive results. When you think about type 2 non-insulin intensive hypo risk and basal only. You have basal-only penetration at 20 to 25 and non-insulin intensive high blood under 5%. What do you think a reasonable penetration for those 2 segments is over your long-range plan?

Yes. So I'll start with maybe the second, which is getting into the markets. And we've always talked about basal as an example, being a market that should get to about 60% penetration over time. And that's kind of our crystal ball. But it's been pretty darn accurate as we thought about type 1 historically in type 2 intensive.

So it's what we think about, obviously, somebody taking insulin, having that sensor on there is a really nice thing. And we've proven time and time again, the combination of the sensor plus insulin plus now, obviously, Dexcom Smart Basal in there. That's a huge opportunity to meet an unmet need in a growing market. So we're really excited about that offering and that can help people manage it.

So we do expect that in the non-insulin and the type 2 hyporisk population, it's hard to know. That's such a big wide swath of population, especially type 2. And those hypo risk folks, while they're covered, they do kind of sit typically, they're typically seen like a type 2 patient, right? So we expect that to be -- I don't know, 60% is obviously higher than we would -- it would be a high mark there just given where we think Basal is, but anything more than 5%, which is where it is. And as it goes up to 10, 15, 20, you're talking about millions and millions and millions of people. on the product. So more to come as we go there. We know it's a lot more than today. And we know that with coverage, it's going to be a lot more done today. So we're really excited about that.

Now to your first question on gross margin, what can 15-day do and how long will it take? -- if you look at historical patterns of how long it's taken from G5 to G6, G6 to G7, it does take a couple of years. As Jake alluded to, folks do get comfortable with technology and to get folks to change over. It does take a little bit of time. Our goal is obviously to go faster. And obviously, with the form factor, very similar across 10-day and 15-day I think there's an opportunity, but it does require a different script.

So we're going to work on it over time. We'll give you more feedback as it's getting out into the field. We obviously, as we get into guidance next year, we'll give you a little more color about what our assumptions are, and we'll have a little bit of time under our belt, so more to come on that one, but the impact obviously is significant for us as we move more and more from 10-day to 15-day and 3 sensors to 2. And obviously, the impact on margin can be be significant.

But it could also allow us to grow the business more going into markets where with maybe a Dexcom ONE1+ product or other products where that 15-day warlike allows us to really compete with what would be a cash pay or a lower reimbursement market. So it allows both. It allows top line growth and going after more markets, and it allows opportunities to expand margin. Very excited about it.

And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the call back over to Mr. Jake Leach for closing remarks.

Okay. Thank you, everyone, for joining us today, and thank you for the well wishes that Kevin. I know he really appreciates that. And I'd like to wrap up the call today by expressing my deep appreciation to all the employees of DexCom. I'm extremely proud of this team and how we've continued to focus on serving our customers and not getting distracted. In the end, our core values are clear, and we will continue to be unrelenting in our mission to empower people to take control of health. We have a remarkable opportunity to improve the lives of millions of people around the world, and I couldn't be more excited about the future. Thanks, everybody.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Next presentation this afternoon is from DexCom, a leader in developing and commercializing continuous glucose monitoring systems for people with diabetes and I'm sure in the future beyond diabetes.

With us today from DexCom, we're happy to have Vice President of Finance and Investor Relations, Sean Christensen. Sean, I'll turn it over to you if you have any remarks you want to make to start off, but then we can go straight into Q&A.

Yes, I don't have too many remarks other than just happy to be here. Thanks for hosting us, Jeff. And yes, looking forward to the presentation and good to see everyone.

Yes, sure. So thanks for being here. I know it's a busy week for you guys as a company, and I think Board meetings this week. So 2Q was another -- second quarter was another strong quarter of new patient starts for you. It sounds like new starts were kind of right in line with 1Q levels, and we've had a couple of prior quarters, 4Q and 1Q of record new starts. So it seems like the business is on good footing. I mean what are you just seeing from an end market demand perspective for CGM right now?

Yes. I think you stated it well, Jeff. I think what we see is a healthy end market. I think certainly, as we start off the year, you've heard us talk a lot about a focus in 2025 on executing to our plans, and that's what we've done. We are pleased in the second quarter to be able then to be in a position to raise the guidance at that point and certainly feel good about the trajectory and the momentum that we're carrying forward.

Yes. Any distinction you'd make between U.S. and international markets at this point from a demand perspective, pull-through side?

I wouldn't say so from a demand perspective. I think the nuances and what you see between the markets are really more based on coverage and the status. U.S. certainly leading the way. We've talked a lot this year about the emergence of type 2 non-insulin coverage, and you hear us talking very forthrightly about the pathway for coverage there moving forward.

International market is very similar in terms of growing awareness, growing adoption and acceptance in the clinical community, a little bit behind the U.S. in terms of the pace of access and the growth, particularly in the type 2 side. And that's a great opportunity for us as we move forward.

Okay. And I think you talked about raising 2025 guidance on the last quarter's call. I think to be fair, that guidance wasn't raised as much as maybe you had beaten by in the couple of quarters in the first half of the year was a bit less than buy side was anticipating. Is that meant to signal any type of market concern for the second half of this year or to your point, just really trying to execute to plan this year given maybe some challenges last year?

Yes, I think that's -- it's a fair question. I think as we've talked about our approach to guidance throughout this year and to your question, Jeff, anchoring it back to last year, dating back to mid-summer last year, we kind of put a stake in the ground and said, we have a pathway forward to kind of the lower end of our LRP at the time of that $4.6 billion in revenue and have been executing to that plan ever since.

Keeping that stake in the ground and making sure that we are aligned on our messaging is also why we started this year with a point estimate as our guide. And so that was a little bit different as well. But we wanted to make sure that we are communicating the trajectory of reacceleration of building momentum throughout the business, and that has continued certainly in the first quarter and in the second quarter.

And like I said, in the second quarter, then in a position to raise that guidance. So I think from our perspective, not signaling anything by any means, really just looking to see 2025 as a year of execution, continuing that commitment that we've made. And therefore, hopefully, in the second half, if we're able to be in a position to continue to execute against that.

All right. Fair enough. Over the next few months, maybe by the end of this year, we're expecting Abbott to launch its instinct sensor, which would be used with Medtronic 780G system. As we've done back of the envelope math, we could convince ourselves there might be 100,000 U.S. DexCom users who are using kind of an open loop 780G, just not using a CGM to power that, but using your CGM, obviously, for monitoring reasons.

Maybe there's even 200,000 DexCom users across the globe who are using a Medtronic pump. Anything we need to think about there as Abbott and Medtronic get closer together on the sensor integration side?

Yes. I would just say that personally speaking, I haven't seen anything that would substantiate numbers quite that large. And speaking anecdotally, I could say I've only really only met one person over the years, utilizing our sensor with that particular competitor's pump. And that person actually converted over to an AID system.

So I think the reason why we don't see too many of those left in the field at this point is because most people would have had the opportunity to switch over to a system that is integrated rather than relying on kind of our sensor with a pump that's out of the auto mode.

So I think it's not something we are too concerned about. And I think as we look at our AID competitively more broadly, that's an area certainly where we have flourished where we've been a leader in working with a diverse set of pump partners over the years to give a great patient experience.

I think at this point, we're at over 2.6 cumulative million years of patient experience on AID systems driven by DexCom sensors. So we have very much a leadership position that is known clinically, that is relied upon by our customers, and those tend to be our highest loyalty customers.

All right. Fair enough. I think most of your new start growth in the U.S. this year has come from the non-insulin type 2 side. Obviously, that's a growing part of the market. What's happening with the type 1 and intensive type 2? Obviously, basal still a big growth.

But are you bringing in, do you think, fewer new type 1 patients this year than last year and fewer new type 1s last year than the year prior? Are we in that point where the type 1 and maybe even the intensive type 2, mainly from a U.S. perspective, but probably in some of your developed markets as well. Is that a fair way to set up our models and think about backfilling with other indications?

So I wouldn't go quite that far to say that the type 2 non-insulin would represent a majority by any means at this point. What we see on the intensive insulin side actually this year relative to last year and years prior, actually pretty consistent growth.

So on an absolute basis, you're talking relatively consistent across the type 1 and type 2 intensive groupings. Obviously, then as we've expanded access so much on the type 2 non-insulin side and the basal side in recent years, you're talking about larger patient pools to go after.

And so those are certainly growing contributors to the business. But I don't think you want to necessarily write off the intensive side yet as a growth contributor even as the contribution on the nonintensive side of things continues to ramp for us.

And when you say similar to last year, is that in an absolute number of new patients coming in? Absolute.

Absolute number. So obviously, we're talking higher levels of total new patient adds for our communications, and that's because of the growth in access in the basal and the type 2 non-insulin side.

And you would still peg type 1 penetration in the U.S., 60%, 65%?

Yes, I think that's what we're seeing.

Okay. It seems a little lower than I get to, but that's fine. On basal-only, so you've kind of been -- and we've tried to track this through script trends. It's hard to do, obviously. We don't see indications necessarily there. But 30% to 35% win rate, is that about where you've been trending? Any change in that win rate versus your biggest competitor yet?

Yes. I would actually tie this one back to what we've experienced last year as we broadened our sales force. You've heard us communicate, particularly as we got toward the end of the third quarter last year into the fourth quarter, really our sales force hitting their stride, continue to ramp in productivity, then that aligning to some of our record new patient disclosures.

I would say aligned to that time line, we saw a nice uptick on the basal side, too. And so our new patient capture rate would be higher than those levels, I think certainly above the 40% level, tying back to that point. And I would say by no means do we view that as a ceiling on what we can do in that category, too.

I think as we look forward, continue to broaden our presence in the primary care settings that are more aligned to the basal population. There's things we can do within the product itself to personalize the experience for our customers there. I think we feel very confident about the opportunity ahead to really capitalize on that growth market for us.

Okay. And that north of 40% number, was I wrong in my baseline on the 30%, 35%? Or is that what it was about this time last year, and now it's improved north of 40%?

Yes. I wouldn't say it's an area we've typically talked too much about. I think some of those could be from some of our competitor comments or things of that nature. We break this down pretty significantly within all channels, especially having the granularity on the pharmacy side, and that's a -- we've seen nice uptick there.

So you feel like your share win rate on new patients in basal has increased in the U.S. over the last few quarters?

Correct.

Yes. Okay. All right. Outside the U.S., I mean, you brought it up. I think it's a fair comment that international markets tend to be behind the U.S. on CGM adoption. Obviously, in some parts of Europe, as I mentioned, I think type 1 penetration is almost as high, if not as high as it is in the U.S.

But on the type 2 side, we're starting to see some early moves towards basal-only coverage, Japan, Germany, a couple of others. We've seen some new studies out just in the last month or two in Italy and Spain. Now those tend to be studies run by your competitor, but it's just like they used to benefit when you would get studies out there and get coverage, you could benefit from the same.

How should we think about basal-only coverage developing in Europe, maybe in 2026, 2027? Are there some bigger new markets that could come on board?

Yes. I think you should view as a great opportunity for us. I would even tie it not just to the Europe markets or Japan that you mentioned, Jeff, but we talked on our second quarter call about getting access to the Ontario drug benefit in Canada. So the largest province in Canada covering DexCom CGM now down through basal insulin. I think that's a huge win for us and a nice indicator of the direction that we're seeing.

To your point in terms of kind of running the studies and who benefits whom, I think for us, we have a market access team that operates globally and is assessing the most likely places for coverage to unlock. And I think for us, it's a matter of having an access and advocacy pathway to ensure that we are there and then having the right product once that access emerges to be able to take advantage of it.

And I think as we look certainly to some of the Western markets you mentioned, Germany is at certain pockets of coverage right now on the private payer side. I think there's other places that will continue to emerge on the basal side, and we'll be there to participate in the growth of that category right from the start. And even basal, there's places to take advantage of from a market access standpoint, the type 2 intensive side as well, where there's real opportunity there.

Yes. Are those mostly in Eastern European? And what other markets on the intense type 2 where we've had maybe less coverage recently?

I think there's certainly on -- as you mentioned, the Eastern European side, even in Western Europe, Australia, certain tender opportunities emerging in the Middle East. I think those are all places that will be sources of growth for us.

Would most of those be D ONE+ markets or any of them G Series markets?

It's a little bit of both. It depends on the nuances of how they choose to split the market and whether they're kind of nuancing between different types of acuity. We've seen markets like Japan and Germany historically served kind of by the G Series entirely. Canada is like that as well at this point. And then you have markets that kind of nuance the coverage. So the key for us is having the portfolio that allows us to take advantage of the access however they choose to open that up.

All right. All right. A couple of other questions here. On the non-insulin type 2, you've had 6 million to 7 million lives under coverage since the start of this year. How has your win rate been going there?

I think legacy-wise, because Abbott has always had the co-pay buydowns and the patient assistance programs on that non-insulin type 2 market, docs have just gotten accustomed to if that's the patient in my chair, that's why I write the script for an Abbott product.

So it's been kind of inherently necessary for your sales reps to go out and really kind of change that thought process from docs. So what have you been seeing in the first 8 or 9 months of this year in win rate in that -- those covered lives of non-insulin? And is there opportunity to take that win rate higher as you kind of go in and reeducate those docs?

Yes, I'll start with your latter question and say that, yes, definitely an opportunity there and one that we look forward to executing against. I think the way you frame the question is right as well. There's been a historical experience where doctors have typically leaned toward our competitor in certain scenarios there for the type 2 non-insulin side.

The question you have to ask is why. And as you mentioned, sometimes related to access and co-pay buydowns. And so our team is doing a great job of making sure that doctors are aware of the emerging coverage that has come and coverage that we have a leading position in with the lowest out-of-pocket cost for the customer.

You tie into that, if you take our sales reps, they're able to get -- present not only the new coverage, but Stelo in conjunction with the coverage. And so for a doctor whose desires to have all people with diabetes on the device, the sales reps able to go in and present the new coverage opportunities, but also have an OTC device that is accessible on a cash pay basis for that doctor to have the full range of diabetes covered.

And so Stelo has also been a really nice opportunity for us to get our foot in the door and to present really a broad-based opportunity for CGM use in the type 2 non-insulin setting.

All right. And on that basal market and even the non-insulin market, you've put, I think, since the start of this year, some compliance rates out in various slide decks. And I think it was just at the start of this year, you started quantifying those, right?

Correct.

Frankly, we're higher than we thought, which was a good thing. But I think we've all been assuming that as you move into broader parts of the population and not just the early adopters, the early adopters are going to be more compliant than the mass adopters. Have we started to see those compliance rates shift? Or is that still, as you look at your data, kind of where we can build our compliance rates at least for the short term?

Yes. I would say those rates are holding firm very nicely. And I think part of that is when we gave those, we understood the question would emerge. We wanted to provide a reassurance on really the quality from a lifetime value perspective of those customers and really just what we're seeing in the real world in terms of the benefits and desire to wear the product that we were seeing.

The baseline for when we gave that data, even in the type 2 non-insulin space at the start of the year was built off a really strong base. It wasn't, call it, 10s or 20s, but you're talking several hundred thousand or a couple of hundred thousand at that point.

So a good baseline, and we have seen that continue. And I think as we look at the feature set of how you personalize the experience for people with type 2 non-insulin or people with basal insulin use only, I think there's opportunities even to drive that higher over time with a better product experience.

All right. All right. And if we stick on the non-insulin side, so you've got the 6 million to 7 million lives under coverage right now. There's probably, what, 25 million, 26 million of those patients in the U.S. in total. A big chunk of those, is it 50% or so probably are in the Medicare/Medicaid population.

I found it interesting. So Jake is going to move from the Chief Operating Officer role to CEO early next year. He was at a conference last week. He made a comment that the RCT data, which I want to come back to, but your randomized controlled trial that you're running on non-insulin type 2 CGM use right now, should read out by later this year. We should start to see those results either later this year or early next year.

But he made a comment at a conference last week that he is -- historically, you have seen some Medicare coverage even before RCT big pivotal trial data rolls out. It just struck me as a -- for an incoming CEO, why get investors over their skis unless he really thinks we might get a positive CMS decision sooner than even seeing that RCT data.

Yes. Yes. I think what you're hearing reflected in the commentary last week is a lot of optimism and frankly, momentum that we're seeing in type 2 non-insulin. I think you have to break it down into several areas in which we see that momentum playing out.

First of all, relative to kind of the prior expansions of coverage for -- with CMS in CGM, we have -- we start from a baseline of significantly more real-world evidence at this point and study evidence on type 2 non-insulin. Obviously, we have the RCT that we are running that will read out, and we talked about that being early next year.

There have been RCTs already. There was one ADA run with DexCom CGM this year that had pretty strong outcomes on top of the decision from ADA last year to already classify real-time CGM as B-level evidence at the time for type 2 non-insulin use.

So I think when we look in aggregate at the positioning of the advocacy organizations of the scientific evidence that has already been presented and you look at the clinical momentum, and then you have this commercial piece that has unlocked this year where now you have people already adopting CGM who will start to age into Medicare coverage and potentially run into a coverage gap.

You combine those things with an overall perspective from CMS and the administration that seems favorable toward wearables, and I think we just see growing confidence there as to that expansion.

All right. Fair enough. And then your win rate in non-insulin type 2, I might have already asked that question. But just generally speaking, and forget about your win rate even, I guess, let me -- if Medicare coverage comes along and we enter 2026 with 12 million more lives under coverage, what does that do to your growth rate? I mean it just seems like it could be a sizable catalyst. Or would it be slower than that?

No. Look, it's a great catalyst for the company. I think, again, without commenting on specific timing or the immediate kind of quantification of what that growth looks like. I think what we have to say is do we have the pieces in place to capitalize on that expansion of coverage if it comes and when it comes. And I think that's one of the things we feel confident that we do.

I think we feel like we have a great product in place that continues to get better, and we feel like we're giving a customer experience for the type 2 non-insulin side, particularly as we expand to a 15-day product, particularly as we continue to build on the software profile and some of the personalization features that are unique to that patient population.

I just think we feel very good about our ability to capitalize on that growth. when it comes after CMS makes the determination. So again, not necessarily a comment on the exact timing or the direct quantification of the growth, but I think we feel great about our positioning once it comes.

All right. Fair enough. And then the other stub of that we haven't talked about really is the other 6 million to 7 million that would be on maybe some of the employer-sponsored side of the commercial plans that aren't yet covered.

So you've got 6 million to 7 million that are covered in commercial, 6 million to 7 million in commercial, not covered and then another 12 million or so Medicare, Medicaid. That 6 million to 7 million, what has to happen, I guess, to move from some of these health care plans on the pharmacy side covering in some plans in the national plans, but not necessarily in some of the specialty plans?

Yes. And maybe I'll just give a background for the audience in case we're not in the weeds of the details here. So we've announced this year the largest 3 PBMs have expanded coverage in the pharmacy for all people with diabetes. So as of July, we had the third PBM go live. Those are on their national formularies, and that's representing the 6 million to 7 million lives that Jeff referenced.

So there are another, call it, double that of commercial lives out there. Some of those are just on smaller plans, so different companies. Those are ones that we'll continue to advocate for and having the momentum and having the 3 largest covering it does provide some advantages to continue to push that momentum.

But a good portion of that, to Jeff's point, are these specialty plans or regional plans. And I think some of that, the biggest factor is simply going to be time. They'll have time to opt in and start to kind of build momentum off of the national formularies.

So in terms of what needs to be done, we do have a market access team that is very focused on kind of all those nuances, but I do think some of that is just a rolling time dynamic here that we'll continue to build off of.

All right. Fair enough. A couple of questions maybe on 2026. I know you haven't guided yet. You're not going to guide here, obviously. Jake did discuss last week, though, that he foresees strong double-digit growth, and I think he even said that's not teetering on 8% or 9%. He qualified it more strong double digits. How do you quantify strong double digits?

Per his words, not teetering on 9% or 10%.

Teeter on 12% or 13%?

Great question. I want to decouple a little bit the angle of the question and because 2026 and what we were talking about specifically that comment are a little bit different. I think what we've said very consistently with regard to our 2026 numbers and that performance is that as we talk about a year of execution here in 2025, the single best thing we can do to ensure and maximize our 2026 growth is to execute a great 2025.

That is the reality of the business that we serve is that we need to continue to grow our new patients. These are recurring patients for us and build that momentum that way. And then lay the foundation through access expansions and commercial execution so that we are positioned for next year. So that has been consistent commentary for us.

Relative to Jake's strong double-digit comment, I think when we look at the market opportunity and you see a long-term vision of the number of people with diabetes, the number of people who have yet to adopt CGM in the categories that are already covered and then the growing confidence in the potential expansion of coverage into the type 2 non-insulin space.

I think what you heard was a lot of excitement and confidence, not only in a market that has the potential to grow for a long duration, but the ability of this company to participate in that growth. And so that was really the nuance of Jake's answer at that point. It was in the context of a broader question around even kind of 5- to 10-year visions for the company. And I think you heard incoming CEO who's very excited and very confident in that pathway.

All right. Fair enough. There has been some chatter over the last few weeks around G7 quality, reliability issues, things like that. Anything you want to address on that? I mean, we try to watch the chat boards pretty closely. I would -- well, I don't even want to bias you, but I would argue that, yes, when G7 first came out, we saw a lot of chatter back and forth about reliability and maybe losing signal, things like that.

It feels like anecdotally less to me over the last couple of months. But just what do you see? I'm sure you can track it a lot more strictly than we can just through chat boards.

Yes. Let me answer this question in two ways, and I think they're equally important. We are constantly monitoring the performance of our sensor platforms in the field. With G7, we launched a great product that we feel is certainly best-in-class. And then we have teams that right after launch, they work and are constantly working to improve the experience for our customers, address issues.

So even with G7 in the spirit of continuous improvement, post launch, we have strengthened the adhesive. We've broadened the Bluetooth range by more than 50%. We've enhanced connectivity. We've updated the app and added features throughout this experience. And so I think we feel good about the overall improvements to the platform that continue to be made on behalf of our users.

We do see overall system complaint rates flat to down certainly since launch. So you see those improvements playing out. And there's every once in a while, you have pockets of issues that emerge and you have to work through those.

The other perspective I would say, Jeff, I was at my daughter's birthday party for my 6 years old friend this past weekend, and there was a young boy there, type 1 diabetes and a mom there with type 1 diabetes. So in a small group, we had 2 people, and I was just listening to their lives and you get a sense for just how complex it is to manage diabetes, the amount of decisions that they are balancing and how reliant they are on their CGM. They're both DexCom users. We're incredibly happy.

But just listening to their experience of the amount of decisions being made, you get that perspective and you realize that when there is an issue in the rare circumstances with a sensor, it's why we invest so much in our customer experience. It's why you hear us innovating even there with things like our nationwide pharmacy replacement rollout recently.

These are things because we want to make sure that the customers are cared for and taken care of appropriately. So I think it's both of those things, the spirit of continuous improvement, making a best-in-class experience even better and taking care of our customers well.

Okay. And when you talk about those pockets of issues can come up at times, I mean, anything that would be big enough to rise to the level of something we need to worry about from the next couple of quarters?

No, no, by no means. I think you heard one reflected upon Jake last week. Earlier in the year, you had kind of a deployment dynamic related to one element of the supply chain. Team did a good job isolating it, recognizing it and putting in place mitigations toward that. So minor dynamics like that.

Okay. And then just on the -- moving to G7 15-day, just remind us the time line there and how you expect that to phase in. You're in the DexCom Warriors rollout right now, but just how do we think about the phase-in of the 15-day?

Yes. So we are starting that imminently with this DexCom Warriors launch, so kind of a limited basis there and then extending it more broadly into the DME and pharmacy channels here as we work into the end of the year. I think as we move forward then, relative to kind of the prior conversions of our base, we just went G6 to G7.

Here with the 10-day to 15-day platform, there's good elements such as the pump integrations. I think because it's a very similar hardware profile to the 10-day platform, we expect those to move relatively quickly. We'll expect, obviously, to put many of our new users directly on the 15-day platform. Then it's really just about the pace of conversion and the gating factor there becomes the script necessity.

So you can think of it on kind of a rolling cadence from there and something that certainly will build momentum over the course of 2026. But probably the best base case scenario would be to look at kind of the pace of conversion from G6 to G7. And then obviously, anything we can do to move that quickly, we will.

Okay. And would it be crazy to think of the majority of U.S. G7 users on 15-day by the end of 2026?

I don't know if -- we'll have to look at that, especially. I don't know if we're in a point ready to call out that exact pace yet, but I think it's going to be dependent on ultimately how quickly we can get those scripts moving forward and the overall interest there relative to the new patient demand.

It's kind of a growing element through your new patients versus that base cutover. On the U.S. side, I think the accessibility will be there. International is a little bit more of a gating factor dependent on tender timing and things like that.

Yes. There's been some discussion, I'd say, between investors on -- or amongst investors on how much of that move from 10-day to 15-day G7 you guys will capture financially versus do some of the DME partners keep a bigger chunk, not DME partners, more of the payers keep a bigger chunk of that. I mean how much of that flows through to you when you go to 2 sensors a month versus 3 sensors a month right now?

Yes. I would say, obviously, you guys have probably heard us talking about longer duration sensor wear. That vision started before I was at DexCom in 2018. So this is not new. This is something certainly that's been prefaced with the payers.

The contracts that we have are largely structured on a per member per month, per member per year as the starting point of those discussions. And so that has positioned us well to make sure that as we innovate and as we bring forth to market a product that we think is even better, we're not being inhibited ourselves on the economics of that.

So again, I think we're certainly bringing that to the payers in what we feel is a compelling manner of saying, here's an innovative product. We're just looking for the same payment. And that's, I think, something that we expect.

So just to be direct on that, on your PMPM contract or your per member per month contracts, if you're being paid $10 a month per patient and you're currently supplying them 2 -- 3 sensors a month, you go to 2, you would still expect to get that $10 a month for the 2 sensors instead of the 3.

That's correct.

Yes. Okay. All right. Fair enough. Well, we're 10 seconds. I don't think there's necessarily a competitive bidding question you can answer in 10 seconds. Major risk, minor risk, 2027, 2028, how do you think about it?

Yes. I think it's -- you're right on timing, 2027, 2028. I think as we look at it, you're looking at, obviously, a lot to work out. The proposal itself would -- is looking at a category that right now has more than 2,000 distributors and recommended going down to 9. So we submitted our comments.

We're primarily focused around ensuring that there's little customer disruption because that is a pretty significant possibility in that scenario, and so our recommendation was to delay that process. I think as we think about our positioning, I think we feel very good about the value and the price we bring in that channel.

And I think, obviously, if there is vendor consolidation on the supplier side, certainly, there's benefits that they would have from a growth perspective and volume perspective. So I think overall, we feel good about our positioning and the opportunity to grow there.

All right. Fair enough. I think we're going to have to wrap it there. And so please join me in thanking Sean for a great overview here of DexCom.

Welome back. I am Larry Biegelsen, medical device analyst at Wells Fargo. And it's my pleasure to host this fireside chat with the management team from DexCom. With us, we have Jake Leach, President and COO and the incoming CEO; and Jereme Sylvain, the CFO.

So I think this is Jake's first fireside chat since being promoted to the CEO role, which is official January 1, 2026.

That's right.

So Jereme and Jake, thank you very much for being here.

Thanks for having us, Larry.

Yes, it's a pleasure.

So let's start off with the recent CEO announcement. Jake, congratulations on the new role. Please talk about your vision for DexCom over the next 5 to 10 years.

Yes, of course. So thanks, everyone, for being here. Thanks, Larry, for having us. As I look at the future for DexCom, I couldn't be more excited to lead this incredible company into the future. I've been at DexCom for 21 years, and I've been a part of many of the pivotal innovations in the CGM category. starting all the way back with the first real-time CGM and then transitioning to connectivity with insulin pumps, mobile phone, smartphone connectivity, the non-adjunctive claims, the replacement of finger sticks and then the most recent innovations around over-the-counter CGM.

And I think as we look at the opportunity in front of us, there's so much benefit that CGM can bring to the world. If we look at just the coverage landscape that we have right now for continuous glucose monitoring, there are more people today that have coverage for CGM that are using CGM. So there's -- that are not using CGM. So it really is a strong benefit for the growth of the company. And that coverage is only going to expand as we go forward. When I think about DexCom in the long run, we're really building a metabolic health platform. Today, we're very focused on diabetes, and we're going to continue on that focus. But with our launch of Stelo and over-the-counter CGM, we're just starting to see the benefits of what we can provide to a much, much broader population.

That's helpful. And for those on the webcast, I would say I've never seen this many people in a fireside chat really before. So definitely a good sign.

So, Jake, what are your strategic priorities over the next, call it, 12 to 24 months?

Sure. So most important, top priority right now is executing 2025. We put a commitment out there for revenue and operating margin, and we intend to hit that. Last year, we did not meet our commitments. So executing on '25 is super important for us, for me and the management team. As I look out a little farther, continuing to gain access for CGM pushing for more coverage globally. When I think about that opportunity, there are so many people that still don't have coverage for CGM around the world. That's going to be a big priority.

The other priority is continue to look at how we scaled our business. We've grown substantially, but we still have quite a bit to do. I've been very involved in much of the operations and manufacturing, and I look forward to continue to look at other parts of the business around our technical support, how we support customers.

And the other big focus for me that may be a little different than what we've done in the past is our international presence. I want us to be ready to take advantage of coverage when it comes internationally. Historically, we're very focused on a certain segments of the market in those kind of top-tier high-risk type 1. Moving forward, as coverage opens up in type 2 insulin use and beyond, DexCom is going to be ready to take advantage of that. So we need to look at our commercial infrastructure, look at what markets we're direct in, what new distributor markets we're going to bring. That's some of the priorities for the next 24 months.

That's helpful. So Jake, we'll talk about '26 later, but I wanted to ask you at a high level how you think about the growth algorithm for DexCom going forward. This year, you're guiding to 14% to 15% top line growth, about 200 basis points of operating margin leverage, but it's all off of arguably an easy comp because of some of the issues you had last year.

So maybe just give us some high-level thoughts about -- I know you don't have an LRP, maybe when you plan to issue a new LRP and how you want kind of new investors to think about the growth algorithm for the company?

Yes. So when I look at the coverage that exists today, health care coverage and the coverage that's going to come and you look at the scale that we've built and the opportunity out there, I don't see any reason why this business isn't a strong double-digit growth into the foreseeable future. And I'm not talking about like teetering on 9% low single-digit percent. We're talking about strong double-digit growth. There's no reason why we can't achieve that. And we are working on -- we have an LRP as an incoming CEO, it's important for me to pressure test that and make sure I'm comfortable with it. We have a new Chief Commercial Officer. It's about 90 days in role, Jon Coleman.

And so he and I and Jereme and the rest of the management team are working on our LRP. We will be bringing that to you. It's important. It's a commitment that we're making to investors and to ourselves, and we will be bringing that soon.

2026. Early sometime in '26.

Soon, soon.

Could be sooner than '26?

Yes. We know our current LRP runs out of 2025, and so we need to make sure...

So sometime this year, it sounds like it's the goal.

Soon.

Yes.

Soon. Okay, very soon.

Just soon.

Okay. I got it. You keep highlighting...

Working on your calendar is way too busy, Larry.

Keep looking for time. It's not available.

Okay. Good to hear. So before we move on to the business, I wanted to give you an opportunity to respond to some of the concerns in the market. A few weeks ago, there was a third-party report highlighting some concerns around G7 reliability and accuracy issues. Just talk about your reaction to those concerns that the report raised and how you're addressing those, please?

Yes, certainly. So obviously, we saw the report, too. It doesn't reflect what we're hearing from the market. There's a number of things in that report, specifically about the reliability of G7. If we look at the history of G7 from the time we launched it several years ago, we've made significant enhancements to the platform. We've added a new patch. We've done a lot on the sensor Pro processing deployment. So if you look at our metrics, things like warranty replacements, complaint rates, performance of the sensor accuracy, all of that has continued to improve over time.

And we haven't seen anything that has changed that trajectory. There is one thing though we have experienced earlier this year, we did have some deployment challenges where the systems when you deploy a sensor at G7, it would not deploy properly, and so it would fail quickly. It was a pretty bad experience for users. They weren't happy with it. It was unusual for them to have a sensor fail that quickly. We did see that start to pop up earlier this year.

We addressed it. Had to do with a number of supplier component issues that we addressed. And so we fixed it, and we've seen that number start coming down. I do believe that, that's part of what has caused people to mention their issues is that, that deployment challenge did occur, but the numbers are going back down. When it comes to accuracy, days of wear, all those things, we've seen nothing but improvements in that.

One of the other interesting parts of that report, I wish I knew who they talk to there because I'd love to make sure that they've got a good understanding of what's really going on. But there was also some concern about DME relationships. And there's -- we've been very focused on communicating with all of our large DME partners and making sure that we understand what's important to them and they understand what's important to us. And they're very important partners going forward as we think about continued business in that channel as well as Medicare expansion at some point in time that fee-for-service Medicare goes through DME. So they're an important partner. And so not sure who they spoke to, but we feel very comfortable with our relationships with our DME suppliers.

And how do you ensure these issues don't impact the upcoming 15 Day sensor launch?

So I think we've put a lot of additional technology in the 15 Day. We've got the 15 Day Warrior launch is ongoing now. So 15 Day is out commercially in a small community of influencers. We're basically building up the collateral for the launch. We will launch the product imminently. We feel very confident about the quality of that product as it goes out the door.

And remind us of the transition, how long you think it's going to take from 10 Day to 15 Day?

Yes, it's important. Our #1 concern here is making sure that we don't cause any kind of disruption in the market. As someone either upgrades to 15 Day or as a new patient to 15 Day, we want to make sure that the insurance coverage is there. They have a very smooth experience as well as the AID compatibility with an AID system, either one that they're currently on or one that they want to begin using. We got to make sure that compatibility is there. So that's been part of the planning for 15 Day launch. So we have compatibility with the vast majority of our pump partners. We have one that's going to be compatible very soon.

So the launch is going to take a little time. It's a new prescription required. So to go on to a 15 Day product, the user needs to use their 10 Day supplies and then upgrade with the new prescription to 15 Day. Obviously, someone who is a new user can go straight to 15 Day. So it's not going to look too dissimilar from our G6 upgrade. So it's going to take a little bit of time. We won't push users there immediately. We want them to have the choice, but we do believe that over time, everybody is going to transition to that 15 Day sensor.

Got it. So let's transition to the business, 2025 outlook. You posted 15%, I think, organic growth in the second quarter. I think the guidance implied kind of stable growth in the second half of the year. So I guess my question is, how are you thinking about how the rest of the year plays out? And given that the comps are a little bit easier, why wouldn't growth accelerate?

Yes. So I can certainly take that one. The way we really thought about guidance is, and Jake alluded to it a little bit earlier, it's really about a commitment and holding firm to our commitments as we started the year. Obviously, last year, we didn't hit those commitments. And so after 2 quarters and 2 really good quarters, I think it was a demonstration of really strong patient performance. I think it was really just our intent to live up to those commitments versus taking any sort of victory lap or any sort of pound-our-chest moment.

So I don't want to say that our guidance is what it is. And we've done the math, and we understand the comp challenges. I think what we would say is, look, let's live up to our commitments. We owe it to you a year of living to those commitments. And if we can outperform that, Larry, we'll pass it right along. I think that's the best way to do it, kind of earning back some of that confidence that we are going to execute to what we say we're going to do.

And any color on Q3, Q4 cadence and the Street properly calibrated that kind of thing?

Yes. Look, I think we came out of the quarter, I think where folks heads were at over the course of the year is in line with our guidance. While we don't guide to quarters, we didn't do anything. And then folks, I think where folks are coming to is in line with our guidance.

So as long as folks are staying in line with our guidance, we feel good about the year. We obviously reiterated and increased the year by a little bit. So I think that's the way to think about it. Obviously, we're very bullish on CGM. This is going -- Q3 is going to be the first quarter where we actually have all 3 PBMs in the market now covering non-insulin diabetes. So that's a real good opportunity -- sorry, non-insulin diabetes. That's a real good opportunity for us. On top of some of the international wins that we've seen build up, we talked about Ontario drug benefit, big win for us.

Historically, we were not in that market. And so there's a big win and big opportunity for us there along with some other wins outside the United States. So look, I like the way the best of the back half of the year is going to show up for us. I just think it's up for us to make sure we deliver against our execution, deliver a little bit more, we will.

Okay. Perfect. I definitely want to drill down on the 2 topics you mentioned, non-insulin, type 2 non-insulin and then international. Maybe just start with non -- with international, I'm sorry. It has slowed a little bit, maybe 12% to 14% in the first half of the year. How are you thinking, Jake, about international going forward?

So one of the things that's important to think about as we move into international markets and push harder there is, we have a tiered pricing model in international markets. So you have the G7 and then you've got our Dexcom ONE+ product that comes in at a different price point. That Dexcom ONE+ is in markets where we were not historically. And so all of that is incremental growth. And so if you look at volume growth, it is higher than that top line revenue growth. The way I think about international markets is there's a lot of opportunity. We have a great product portfolio to compete in those markets. And as more coverage comes, we're going to continue to execute and be ready to take advantage of it.

And we're going to enter more markets. We're going to go direct in more markets when it makes sense when the opportunity is there. And so it's an important part of what will be different about the way DexCom is executing in the future versus how we've done in the past.

And switching back to the U.S. Stelo has been very successful, at least relative to our expectations. And I think your expectation is at 2% to 3% looks like it's coming towards the 3%. But the flip side of that is it makes it look like the U.S. core G-Series Prescription business is a little bit slower. And we see kind of a disconnect between patient growth, which looks good versus the revenue growth.

So the question is, when do we see -- is that accurate that the patient growth is faster than the revenue growth for the G-Series in the U.S.? And when do we see those converge?

Yes. So I think the underlying patient growth, it is faster than the revenue growth rate, but that's been pretty consistent with what we've seen. As you expect to see those volume and revenue trends come in. If you kind of go back to Q4, Q1 and Q2, you really started to see it coming in a little bit in Q4, a little bit more in Q1, a little bit more in Q2. And I'd expect it to continue to come in over time. We talked about lapping a rebate challenge from last year and stabilizing and lapping a DME transition. If you think about it, remember, last year, a lot of the DME challenges we had really occurred over the second and third quarter.

We're now lapping that on an annualization basis. So having some of that come into line is our expectations over the course of the year. And I would expect that to continue into out years where we start to lap it and start to get more stable. Remember, we're at 100% rebate rate right now. So you can't go higher than that, right? Every unit we send out now, we assume is subject to a full rebate. That helps us ultimately as we start to lap that.

And you -- Larry, you started the question with your comments around Stelo, and we have been kind of happy with how Stelo has performed. We just lapped the 12-month anniversary of the launch. So we launched Stelo last year in August. And in the first 12 months, we've done $100 million in revenue. There's a few wearables, I think, that have been able to do that in the first 12 months. And we really are just starting to get going. We've made quite a bit of updates to the app. We've brought in nutrition information.

We're now the photo meal logging where you can take a picture of the app. We're going to bring in all kinds of additional insight around nutrition because we really think that, that's one of the opportunities as we look broadly at the Stelo opportunity to bring that nutrition in.

So to follow up on Stelo, $100 million in the first 12 months. That's new to me. I don't know if you've disclosed that before. Any way to think about peak sales in the next 5 years? And how big can this product be?

Yes. We'll get to that when we give you the LRP soon. And when we have that, we'll ultimately give you some context. The reason why we want to talk about it that we do want to lay it out because we talked about type 2 coverage coming in. That's a great win for us because ultimately, we know when there's coverage, we know that folks tend to use the product more often. And so we're going to combine that with the Stelo platform. We're also going to bring Stelo outside the United States. And so we want to lay that all out for you in an LRP, but it's not 100. Obviously, it's hundreds and hundreds of millions is what we expect it to be. But give us time. We'll give you a specific number in the LRP, which I think will give you some comfort around it. It's a big, massive opportunity for us.

Soon, of course. soon.

Yes. We do intend also to bring that product to international markets. Today, it's only available in the U.S. That's been our focus. But as time goes on, we want to launch it in multiple different geographies.

That's helpful. So type 2, a few questions. I guess, before the RCT and the CMS coverage. You have 6-million-or-so covered lives or expected by the end of this year. How -- are you able to access those? I mean, are you seeing a benefit? Are you accessing those patients today? You're able to target the right physicians and patients? Talk about the opportunity before CMS coverage?

Yes. We -- it's a big expansion in the number of lives that have access to CGM. And so as we look at, we are seeing traction there. We're taking share certainly in the non-insulin using space where we historically haven't been. And one of the keys to success here is making sure when a doctor writes a prescription for one of these patients, they have confidence that they're going to be covered when they go into the physician's office. So the idea of writing a prescription and having a patient go to the pharmacy and be quoted a cash pay price because they're not covered is not something a physician wants.

So our sales force carries tools to help physicians better understand exactly who in their practices are covered, what insurance coverage looks like, and that's only going to continue to improve. And that awareness around the out-of-pocket cost and the benefit of CGM is something that's part of the main message for our sales force as we've expanded to primary care.

So if I think about the big catalysts that investors are excited about with DexCom, one is the type 2 non-insulin opportunity. The other is the gross margin opportunity with 15 Day. So we'll get to that later. But on type 2, my question is non-insulin, you're doing the RCT. I don't think you've disclosed kind of the design. So it's hard for us to assess. But how confident are you that, that study is going to be positive. We're going to see results like we saw in MOBILE. Anything you can say?

Sure. Yes. So it's a randomized controlled trial that we're running in patients that have type 2 but don't use insulin. And it's a pretty large swath of users. So you think about folks that are taking GLP-1s, people that are on oral medications, the whole SGLT2s. It's the whole gamut of type 2 diabetes. And what we're powered it for is showing benefit in A1c reduction as well as time and range of metrics for this population.

And based on everything we've seen in previously run studies and previous evidence is that there will be a strong benefit. We're shooting for as good or maybe even better than what we saw in the MOBILE study. That study -- our RCT will read out the first part of next year. And so we look forward to sharing that with everyone. That evidence will be used to support a number of different access submissions for type 2 around the globe, just as we've used the previous studies like MOBILE to gain access in countries outside the U.S. as well as in the U.S.

So if it reads out early next year, ATTD or ADA, any -- which one is more likely for presentation?

We may do it there. We may do a unique presentation. We'll see. It depends on when we finally get the last patients out, but it will be in the first half of the year for sure. The other important aspect is CMS coverage may come before that trial is done. We're running it because we know the importance of that evidence for the future of DexCom. But in previous years, we've been surprised at how coverage has come. We do see that commercial coverage is moving pretty fast in this category. So CMS wants to be able to offer their beneficiaries the best opportunities to take care of themselves. So who knows it could move faster.

So that's new to me. Maybe I'm just not paying close attention. What is giving you the confidence that -- or what signals are you seeing that suggest CMS coverage might come before early next year?

There's a lot of groundswell out there. I mean if you look at -- it's funny, CGM has somehow made it into late-night talk show conversations. I don't think we ever thought that was going to happen before. Certainly, you hear it on the agenda of the current administration, all different levels of it.

And so we've been meeting over time with CMS and other various legislative bodies. And we know there's interest in ultimately bending this curve. That's a bit of a challenge to really the entire population. We also know based on our history, all the approvals that have taken place in CMS coverage expansion have happened on non-normal cycles to where they publish kind of out sort of normal trends.

So I think while we know the RCT and going that process and getting ADA coverage to move from B evidence to A evidence and pulling that package together is the most sure fire way to follow it. There's been a lot of groundswell and interest in CGM and expanding it to the population. And so it gives us some confidence that, hey, maybe things could happen earlier. We're planning for it as if it doesn't. We're also planning for it capacity-wise in case it does.

So MOBILE, it happened 3 to 6 months after the data was presented, something like that?

Yes, It was quick.

It was very quick.

I think it was 3 months actually.

It sounds like you're hopeful that it could be at least it might be -- that's almost like a worst-case scenario, but it could be even better?

We -- yes, our goal is to be ready when it does come, make sure we've got the capability to make the product and get it to patients. I mean if I'm CMS and I'm looking at my beneficiary population, there's 1 in 3 of the population has diabetes, 3 out of 4 have diabetes or prediabetes. So that's a pretty significant issue for CMS to manage. And so I think we all know how the benefits of CGM. And so it's just a matter of time.

That's helpful. And then -- so -- okay, let me ask about then the other -- which is G8, the other pipeline product. And in the context of dual ketones and additional analytes, I mean you know as well as I, there's concerns about Abbott coming out with the dual ketone glucose sensor sometime next year.

There's debate about the clinical utility of that. But I think investors are concerned that they're going to have something you don't have. What can you put -- you've talked about G8 being able to measure multiple analytes, but I don't think you've said is ketone one of those analytes. And I don't think you've been very precise on the timing. Maybe just talk about the competitive threat there and anything else you can say on when you can kind of neutralize that?

Sure. Yes. When you mentioned concern, I thought you're talking there is definitely concern about the idea of continuous ketone sensing and the actual outcomes you can drive with it, what does it actually provide? How do you -- there's no clinical guidelines out there for it. So how is this going to work with a glucose signal and a ketone sensor signal. So I think that is an important issue to tackle. But when it comes to our G8 product, G8 is a super important part of our product pipeline. It is the next generation of our wearable. So it will go across -- we call it G8, but it will go across all of our products like Stelo and the Dexcom ONE+ and other products similar to the way we've done that with our G7.

That platform is 50% smaller, but has a whole lot more functionality built into it. It's got a new generation of electronics in it. So it's lower power. That's how we make the device smaller, but it also has additional functionality for multiple analytes. So you have the capability to do that. It also has some really advanced features in order to enhance accuracy and reliability even further because as we've seen over time, accuracy and reliability is one of the most important things CGM does, whether it's powering an AID system or it's someone who is determining, hey, do I have an issue with my metabolic health. Accuracy and reliability is key for that, and that's part of that G8 platform. To the specifics on the analytes that there are multiple that we're working on, we see a multitude of use cases for a wearable that can measure glucose continuously as well as other analytes.

Ketones is certainly one of those. When I think about ketones, though I think about there's opportunity outside of diabetes more in the ketogenic diets, people who are doing intermittent fasting, it really could be a benefit to have a continuous ketone sensor in that type of an environment alongside of a glucose sensor. I think that's one of the things we're exploring. We're also looking at alternate analyte technologies to put inside glucose to look at other chronic diseases, kidney disease, liver disease.

There's some opportunities there that we feel we could make an impact. And so we're in the process of both looking at those business opportunities as well as the technology to drive it. But G8 is certainly designed to be a multi-analyte platform.

So Jereme, remind me on the timing. You gave some window after G7, I don't know, it's like 2 to 4 years or something like that. Can you be -- can you remind us of what you've said that window? And could you be -- talk about whether it's on the early or later end because it's pretty wide?

We typically -- in terms of -- you're talking about G8 launch time frame. So we typically go in 4-, 4.5-year launch cycles. And so we launched G7 late '22, early '23, and we typically go in those 4-, 4.5-year launch cycles. And this wouldn't -- this is tracking in that general ballpark.

We'll have more specifics as we get closer to it. We've got a history, right? G6 launched in 2018, 4.5 years later, we launched G7. Certainly, G5 to G6 was about a similar time frame, a little shorter than that. So we've shown you that's about the windows that make sense. And that's how we typically plan our business and our capital investment cycles, et cetera.

So it sounds like if, for example, G8 comes out in 2027 and Abbott's out with the dual ketone glucose sensor in '26, you don't think this is a big competitive threat to you at least in '26?

No, not really because the way you got to think about it is the patient population and the products. And if you look at G7 and what it offers people with diabetes, particularly on insulin, which is what we're talking about here, the most important safety feature of a product for someone with diabetes on insulin is hypoglycemia safety, right? Safety from going low. That can be deadly if not managed properly. And G7 has the Urgent Low Soon alert, which gives our users a heads-up alert when they're going low so that they can actually treat that low before it actually occurs.

That's a really critical clinically proven feature of G7 that resonates really well with prescribers and patients. And that's obviously something you give up if you're going to try a different product. There's all the other features around G7 as well. When you think about diabetes, ketoacidosis, DKA, and that's a lot of what we're talking about here with ketone sensing levels, the #1 way to avoid DKA is to maintain normal blood glucose levels. And the best way to predict the ketone level is off of a glucose level.

So we do think that in all the clinical studies that we've seen, especially the ones that we've run with DexCom, DKA events go down to almost 0 when you've got someone using a CGM sensor because they're managing their glucose and they're not getting into this condition where their body glucose is too high, they can't use it, so they're using -- producing ketones.

So we do feel that while a part of the portfolio going forward, we're not concerned about that. We'll obviously watch it and we'll watch how the clinical environment evolves over time and how standards evolve. But at this point in time, we're comfortable with our portfolio and how it's going to compete.

Okay. That's helpful. Let's move to 2026. We talked a little bit about the LRP already. The Street is modeling about 16% next year growth versus about 14% this year. Talk about just kind of the puts and takes and just kind of reaction to where you think where consensus is right now?

Yes. So we don't want to get into 2026 until we provide guidance for it. And so -- and I understand the questions out there. It's why when we talk about an LRP and Jake is alluding to strong double-digit growth, as we are very, very bullish on this business. I mean, to the point, I mean, we're buying shares back right now. So for what it's worth, I know our share buybacks out there. We're buying them because we do believe in this business.

In terms of how you're thinking about 2026 and what the factors are, look, the factors are we've got the biggest expansion we've ever had in coverage in type 2 NID. Just really starting in this third quarter is our third PBM. All of those things annualize as you move into next year. So those are certainly interesting tailwinds. A lot of the price volume deltas we've even talked about start to peel off a bit. We talked about the drivers in the back half of this year. All of those annualize as you move into next year, and there's multiple wins that are coming. We also know behind the scenes we're getting more wins in the non-insulin space as we go into the renewal cycle.

So the major formularies have covered us, but then the sub-formularies, we're in the process of winning across those as well. So you've got massive expansions in coverage. A sales force that's finally got a year underneath their belt is able to really get out and get on to those call points, samples in the covered, supply ultimately coming up to the levels we'd expect it to do.

International wins as well as we move out there, product portfolio with both G7, Dexcom ONE+ competing in tenders. But again, remember, these tenders some in 3-year cycles, and we're winning more and more tenders as we move out there. There's a lot of opportunities in that growth algorithm to really finish out 2025 strong. And the best way to have a great 2026 is to finish 2025 out strong. So that's what we're working on right now. And we'll give you the 2026 numbers as we get closer.

That's helpful. Jereme, on the margins, I mean, the guidance this year implies you kind of exit this year at like 66% gross margin, somewhere in that ballpark. And I think that's come up on maybe one of the last few earnings calls. Pretty steep ramp. My question is with 15 Day we can all do the math, that's a big gross margin tailwind. I think the guidance this year is about 62% and it's for the full year. You exited 66% about. How should we think about next year?

You were at 65%, I think, peak. It seems like given the exit rate here in 15 Day, you should at least be at 65% next year?

Yes. So again, we'll give 2026 guidance, but let me give you some detail points, which I think is helpful as you start to think about it. Clearly, we talked about getting to a $10 sensor and then going beyond that over time. And we talked about doing that by the end of 2025 into 2026. We're right on that pathway in our standard costs. So that's an excellent driver. That becomes part of all of our plans around margin. Then you throw in a 15 Day sensor, right? That's a significant opportunity as well.

So those 2 opportunities plus some of the -- again, the channel mix dynamics kind of slowing down over the course of future years really puts us in a great position from a margin perspective. So while we're not ready to give margin numbers for '26 and beyond, it will be part of the LRP.

We will be going through it, but there's a lot of tailwinds, right? We had a pretty tough first half of the year with some -- I'm not call them standard COGS, but OCOGS. So your classic freight and we had some write-offs. We had a recall reserve that we put on the books in the second quarter. That was about 100 bps of a headwind. So I think when you start to think those things and you peel all of those off, you can see how our trajectory over the course of the year is moving, and that's consistent with the volume [ you see ] going through the channels, the economies of scale you see playing out in Malaysia, the standard cost coming down to 10, 15 Day just continuing to be a bigger and bigger piece of our P&L going forward. All those things leave us excited for '26, and we'll give you some numbers around that and future years here soon.

Yes. Just some additional color around. We're still expediting quite a bit of freight for this year. That's continuing to decrease as we get to the back half of the year it's helping. We will be starting up our new factory in Ireland next year.

So that will be a part of the gross margin. I'll factor in there, too. But I think as we look at the business going forward, 15 Day and ultimately, our G8 product, G8 has been designed with very aggressive cost targets that Jereme talked about the $10 sensor on the G7 -- standard cost on G7. Obviously, G8 is set below that by a pretty aggressive target. And the team is doing a really nice job kind of coming in line with what we want we targeted for it. So there's a lot of opportunity for gross margin expansion there over time as we continue to look at it.

And I just wanted to ask about competitive bidding before we run out of time. I believe you submitted comments. I don't think they've posted publicly yet. Is there anything you could share on what you're recommending to CMS?

Sure. So as we look at competitive bidding, there's the proposal that was out there, there's a lot of different aspects to it. I think our #1 focus here is ensuring that there's not an interruption of beneficiaries. Today, there are thousands of DME suppliers, over 2,000 that supply CGM to beneficiaries and bill Medicare. And so as part of this proposal is to reduce that number to a smaller set. And our goal there in thinking about that is let's -- how would you do that and not be disruptive.

So we've actually recommended that CMS delay this process and think more about the supplier base as well as some of the changes in the categorization of CGM moving to the pay-as-you-go, the rental type model, which we think is not a bad idea because it allows people access to the latest technologies. But it's something that needs to be taken carefully because this is -- could be quite disruptive and the last thing CMS or DexCom or anybody really wants is disruption to beneficiaries.

That's perfect. So Jake, about 30 seconds left, feel free to go a little bit over, but I want to give you the last word here, really a good discussion. Appreciate you being here, both you and Jereme. Any closing remarks? Anything you want to highlight that we didn't touch upon?

Yes. I would just say, as we look to the future, it's extremely bright. We have this tremendous opportunity with the current market as well as continued coverage expansion. And I think if you look at -- as an investor, if you look at the -- how DexCom is valued at this point in time, I think our growth rates of strong double digit into the future are maybe not reflective in the current valuation.

All right. Perfect. We'll end it there. Thank you.

Ladies and gentlemen, welcome to the DexCom Second Quarter 2025 Earnings Release Conference Call. My name is Abby, and I'll be your conference operator today. [Operator Instructions] As a reminder, this conference is being recorded.

And I will now turn the call over to Sean Christensen, Vice President of Finance and Investor Relations. Mr. Christensen, you may begin.

Thank you, operator, and welcome to DexCom's Second Quarter 2025 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 Jereme 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 2025 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-K, 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.

Thank you, Sean, and thank you, everyone, for joining us. Today, we reported second quarter organic revenue growth of 15% compared to the second quarter of 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 2 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 3 largest commercial PBMs in the U.S. As previously stated, this will provide us with coverage for nearly 6 million type 2 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 million person population in the U.S. 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 2 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 2/9 ] insulin population, which helped us take share in this quickly growing part of the market. With more opportunity than we've ever had, we are 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 Stelo, our over-the-counter glucose biosensor, also continued to grow during the second quarter. In fact, as of this summer, the Stelo app has been downloaded more than 400,000 times. This reflects both the improving brand awareness for Stelo, particularly as more customers share their early success stories as well as broader consumer movement toward health wearables and personalized metabolic health management. Physicians are also more broadly leveraging Stelo 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 Stelo's 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 Stelo app experience. For example, our integration with OURA 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 data set 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 Stelo and G7 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 [indiscernible] the post-neoglycemic 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 15-day G7 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 15-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 Stelo, G-Series and DexCom ONE+ core products in the first half of 2025. These updates address real needs for our users and their caregivers, things that take complex diabetes and metabolic health management, and simplifying 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've 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 disruption to 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 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 and 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 are in a much better position than they were even 90 days ago.

Finally, we were thrilled to showcase our latest collection of clinical evidence at the American Diabetes Association's 85th 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 in areas where market access remains more limited today. This included the readout of 2 randomized controlled trials which study DexCom CGM usage for gestational diabetes and type 2 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 2 non-insulin population was abundantly clear during the weekend, building on the update to the ADA standard of care that we saw at the end of 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 2 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 3-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 Jereme.

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 second quarter of 2025, we reported worldwide revenue of $1.16 billion compared to $1 billion for the second quarter of 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 12 months. U.S. revenue totaled $841 million for the second quarter compared to $732 million for the second quarter of 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 2 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 million 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 ONE+ platform. Several of our key type 2 coverage wins recently have been for DexCom ONE+, 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 2 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 2 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 $695.9 million or 60.1% of revenue compared to 63.5% of revenue in the second quarter of 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 $474.1 million for Q2 of 2025 compared to $442.7 million in Q2 of 2024. Operating income was $221.8 million or 19.2% of revenue in the second quarter of 2025 compared to $195.4 million or 19.5% of revenue in the same quarter of 2024. Adjusted EBITDA was $327.6 million or 28.3% of revenue for the second quarter compared to $283.9 million or 28.3% of revenue for the second quarter of 2024. Net income for the second quarter was $192.8 million or $0.48 per share.

We remain in a great financial position, closing the quarter with approximately $2.9 billion of cash and cash equivalents. This cash level, 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 2025 convertible notes, along with any other strategic uses of capital.

Turning to guidance. We are raising our revenue guidance to a range of $4.6 billion to $4.625 billion, 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?

As many of you saw in the press release today, I also want to take the opportunity to formally announce our succession plan, as I will hand over my CEO responsibilities to Jake Leach at the beginning of 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&A, I'll hand it over to Jake for a few words. Jake?

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&A.

Thank you, Jake. As a reminder, we ask our audience to limit themselves to only 1 question at this time and then reenter the queue if necessary. Operator, please provide the Q&A instructions.

[Operator Instructions] And our first question comes from the line of Travis Steed with Bank of America.

I guess first, Kevin, congrats on a long, successful career. And I wanted to ask -- I'll get you on these calls. And I ask about the ability to already raise the guidance in the full year, and it was 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.

Travis, thank you. This is Jereme. Happy to certainly cover that. We saw -- we continue to see, especially kind of harkening back to when we started the year, talking about the 3 PBMs, the 3 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 what we believe is the best product on the market, combined with the opportunity with Stelo, which also covers a lot of folks in that space and as folks are kind of moving through their journey. And you put that in the hands of our sales team, and they've done a 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 the third quarter, and so that's online now. It gave us the confidence with the performance in the first half of the year to give a little bit of an increase there for the full year on the guide. Recognizing, of course, we want to make sure that we provide -- we commit -- I guess we provide 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. And 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 in some of the access wins we're seeing open up for us.

And our next question comes from the line of Larry Biegelsen with Wells Fargo.

And 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 if finalized as proposed, how might that impact your price in that channel? And lastly, when do you expect it to start? Is 2027 the earliest?

Larry, this is all very early. I'm going to pass it over to Jake, let him do that.

Yes. Thanks, Larry, for the question. Obviously, we're staying close to the CMS basically proposal for competitive bidding. We've been studying it. And at this point in time, as we work through it, 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 you just kind of think of that, that's the group that we're talking about.

And if you look at 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 dollars saved. So this is going to be a process where there's going to be a response first. I think there's some 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 going to be.

I think the #1 thing that we want to 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 #1 focus to make sure customers can get the products they need.

Yes. And then just, Larry, to your question on when it kicks in and all -- 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 would likely see it is 2027. And so that's the earliest you'd likely see it. Of course, that's based on historical precedents.

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

So let's walk through it. We'll be vocal with you throughout the process. We're obviously staying incredibly close to it. 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 if it's introduced, it's introduced in a way that's beneficial for really our patients and those that use our product.

And our next question comes from the line of Robbie Marcus with JPMorgan.

Great. Kevin, I'll also, I guess, add my congratulations to a long and very successful career. And Jake, I 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. It sounds like you still have a little bit of inventory building to go, but 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?

Sure. Thanks, Robbie. This is Jereme. I can answer that one. I think you hit on it well. I think you looked at the progression, I would say, from Q1 to Q2, and you saw a few hundred 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. 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. I'd expect a sequential improvement of a couple of hundred basis points more as we move into Q3 and then again into Q4. And as you kind of 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 Q1 to Q2, especially when you adjust for the accrual we made for the recall. And I would expect to see more progress throughout the course of the year, especially as inventories start to return to our shelf. Kevin alluded to it 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 and then our customers weren't interrupted.

So hopefully, that 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 expect to see that play out.

And our next question comes from the line of Joanne Wuensch with Citibank.

Good afternoon, and congrats to both of you. Awesome. And thinking about next steps, I'm thinking about G8, 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 whether you think about competitive dual analyte sensors and what it may mean for how I started the question on G8?

Yes. Thanks, Joanne, for the question. So when we think about G8, we're extremely excited about it. It's our next-generation wearable platform. Some of the key components of it, it's 50% smaller and wearable size on the body. And so you take that smaller package, and we packed even more functionality into it. So it has a next-generation custom chipset that does support multiple analyte sensing. So 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 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 the users.

So when you think about timing, we are deep in development of G8, and we'll be sharing more around time lines as we progress through the clinical studies required and we get closer to a launch time line. When we think about the competitive nature around multi-analyte 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, continuous ketone measurement at the same time as measuring glucose. When I think about a competitive offering for CGM, it's about what you bring to the user. And when you focus on things like safety, the #1 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 sun ] 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 only alerts users if they've been too high for too long and they need to take a little more insulin.

So 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 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.

And our next question comes from the line of Matt Taylor with Jefferies.

Congrats on the transition there and looking forward to working with you, Jake. So I wanted to just ask if you could give us 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 maybe just touch on the outlook for 15 days, you're going to be launching that here in the second half of the year.

Yes. Fantastic. Thanks for the question. The -- yes. 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 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 15-day launch, again, another very exciting development for DexCom, getting our 15-day product out into the market. So you will be seeing 15-day sensors soon in our [ Warrior ] population. We're getting it out there in 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 G7 15-day.

And our next question comes from the line of Danielle Antalffy with UBS.

Kevin, congratulations. I mean, you are DexCom. So to be -- 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 and 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 1 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?

I'll start with that, and then Jake can add some other technology, if you like. We've got more than 2 million 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 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 the DexCom CGM sensor. So we're very comfortable with our position, but we'll never sit still if our patients and our partners need something to make the systems better. We communicate with them all frequently and we work very hard to make that happen. I don't know if you have anything else to add to that one?

The only thing I'd add, I think Kevin covered the long history we have with -- automated some delivery partners and the integrations and powering all those years of outcomes. The other thing I'd add is that -- it also -- all the components that come with our system, all the features, all the benefits, we're going to 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 what else comes with it. And so I think that positions us really well.

And as Kevin mentioned, we're going to continue to innovate. We're not stopping here. And so we're going to innovate both for our users, but also for our partners.

And our next question comes from the line of David Roman with Goldman Sachs.

Kevin, I'm sorry, I 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 as you broaden out the population to include the type 2 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.

David, yes, this is Jereme. I think in terms of -- maybe we just start with the specifics around utilization. And if you look at our presentation on our website, it kind of has kind of utilization trends for covered users. And I think what's quite interesting is the utilization, especially as you're thinking about that type 2 population, the utilization in a covered population is still 75% to 80%. So pretty high utilization, and sometimes that surprises folks.

And the reason, of course, is people see the value in utilizing the product. The feedback loop that's provided really helps them modify their lives. And so you really -- you kind of beat me to it in terms of the features that we're ultimately offering out there that can drive more utilization. OURA, certainly, that integration helps integrate into individuals' lives. Things like share and follow 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 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 going to 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 G8, 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 Stelo, we'll be continuing to offer those to all the users of DexCom going forward.

And our next question comes from the line of Jayson Bedford with Raymond James.

And congrats to both of you. Just maybe on Stelo, the over 400,000 app downloads is certainly higher than we thought. Is the guide still -- I think last week we checked, it was 2% to 3% of sales for the year. Does that still stand? And then if there's any way to comment maybe on the mix between people with diabetes, wellness or maybe prediabetes?

Sure, again. Let me start with the guide. Yes, the guide is still 2% to 3%, off to a great start in the first half of the year, Jayson. So I think we're excited about that. But yes, I think we haven't necessarily changed that range. In terms of the user base, Kevin, do you want to kind of cover the user base, who's using it?

When we first started, Jayson, it was very much geared towards the type 2 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 2 coverage for non-insulin users. So early days, that was the group who was buying it very much and they were the biggest group. As time has gone on and now G7 has coverage by the 3 largest PBMs in the country, we're seeing a shift from those type 2 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 type 2 non-intensive insulin after that. And we'll continue to design and develop and work with the app to make sure we hit the features of the user base that's going to be most relevant in what we're doing. Our partners, OURA, and our distribution partners, 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.

And our next question comes from the line of Matthew O'Brien with Piper Sandler.

Kevin, best of luck in the future. And Jake, best of luck in the new role, and congratulations. I would love to just talk about guidance a little bit more in the back half. I don't know if this is a question for Jereme or not, but it did come up a little bit, but it is less than the beat that we see in Q2, suggests a pretty meaningful 2-year stack deceleration at a time where I think you're getting -- you should see less of the negative mix shifts. So I'm just trying to figure out how much of that is new CEO coming in, want to be conservative versus any kind of competitive concerns or lack of type 2 adoption that you're seeing in the business, maybe with Abbott coming in on the insulin pump side of things or anything else like that to call out specifically versus just being really conservative with the guide in the back half?

Sure. Yes, I can answer that. And thanks for the question. I would say this. We're bullish on this business, maybe full stop there. And as we get into the back half of the year, we talked about the downloads in Stelo. We've talked about type 2 coverage coming in for our third PBM. We've obviously seen some good work over the first half of the year.

I think our commitment at the start of the year was $4.6 billion. 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 is coming from. I think our answer is, look, we need to make sure we meet our commitments. We're going to make sure we deliver against those commitments. It's our focus. It's why -- it's how we're thinking about the guidance 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 the way to think about it is we made a commitment, we plan on executing against that commitment. If we can outperform that commitment, we'll certainly pass it along.

And our next question comes from the line of Marie Thibault with BTIG.

Congrats on the nice quarter. Also passing 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 2 non-insulin patient population when it comes to securing reimbursement coverage for these patients. I wanted an update here then 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?

Yes. I'm happy to update you on the randomized controlled trial that we're running. So we are actively running a trial in this broad population of type 2 non-insulin users. So on lots of different therapies, including GLP-1s, SGLT2s, just basically anybody who's not on insulin. And so that trial is actively running. The outcome that we're looking for that it's powered for is improvements in glycemic control time and range, all the typical things as well as A1c. We also have a number of registries around the world, where we are producing real-world evidence from this same population of users who are already using G7 or DexCom ONE+. And the outcomes that we're seeing there in terms of their improvement in glycemic control and their ability to hit their goals around A1c and time in range is phenomenal. So we're really excited for that study. It's definitely on track, and looking to read it out early next year.

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 2 diabetes not on insulin to support the outcomes, 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, somebody uses it. So we will keep pushing. We are working all over the country with respect to understanding things we can do to move this forward and we'll continue to do so.

And our next question comes from the line of Issie Kirby with Redburn Atlantic.

Echoing my congratulations to you both. I wanted to talk about the sales force 1 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 expect it 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 U.S. with the sales force transition? And what are you seeing in terms of the prescription rates from these new docs that you've onboarded?

Yes, sure. I can start. And certainly, if anyone else wants to add in, please feel free to do so. We've been talking about being about -- we'll start with -- we're in a much -- we're in a good position at this point. I think you can see based on the patient performance, the new patient performance over the course of this year so far, the sales team is doing a wonderful job in terms of getting in front of new physicians and demonstrating the value of DexCom CGM. And I think having Stelo out there as well, you can see -- Kevin alluded to it earlier, where coverage exists for G-Series, great, but Stelo's also been a really effective tool and getting folks to adopt CGM and having our sales teams out there with access to that product, I think, has been great.

So 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 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 tweaking as needed to get better and better. I don't think you'll ever find a sales force that says, "Hey, we're at max productivity." I think everybody -- sales force 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 90 days behind where we thought we would be. I don't think anything has changed from that perspective. And that just really dates back to last year in terms of how we kind of kicked off the ground. Across the board, lessons learned, learning those, implying them. I think right now the entire teams at midyear sales meetings, and again, applying all the lessons learned over the course of even of this year. And so I think the team is doing a really nice job there.

In terms of prescribers, it's hard now to parse out which ones are new as a result of the sales force versus just organic growth. But I think it's safe to say we have well over 100,000 prescribers at this point writing DexCom scripts. And what we've seen is the classic thing we want to see, which is when you look at expanding the prescriber base, the average scripts written by a physician tends to stay the same. And what that means 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 of the curve, in terms of the prescription curves, and we 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.

And our next question comes from the line of Steve Lichtman with Oppenheimer.

Congrats on the quarter and congratulations, Kevin and Jake. I wanted 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 U.S.?

Sure, Steve. Thanks. This is Jereme again. I'll cover it briefly. The international business, obviously, there was some acceleration from Q1. I think the good underneath all of it -- and we talked a little bit about it in Q1 with the business, in some cases, being a little bit choppy -- is underlying new patient adds in Q1 were very solid. That continued here in Q2 in our international business. So the underlying volumes continue to perform well.

And what we're seeing is it starts with some of the DexCom ONE+ coverage. 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 ] basal 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 approved coverage for DexCom now for all insulin users, so all the way down through basal. And so you're seeing both pockets of coverage 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 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 -- of the established markets. Lastly, the emerging markets for which there is limited coverage.

As we've gone into some of these markets, we've used the BELL example in the past, Bulgaria, Estonia, Latvia, Lithuania, where there wasn't coverage for type 1. We moved into that category with DexCom ONE and DexCom ONE+ and coverage ultimately came. And so it's establishing coverage and even the most intensive users and using that as kind of a starting point to demonstrate their capabilities.

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 U.S. business.

And our next question comes from the line of Shagun Singh with RBC.

Great. 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? And are there any goal posts 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?

Yes, absolutely. Thanks for the question. 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 the 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 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 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 that includes our end users, which is becoming a much broader group of people. Think type 1, type 2, pre-diabetes and those who are looking to have a health -- more healthy metabolic condition. Those are our customers, those end users, but also when we think about our prescribers. And 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 a preference for DexCom because our technology is the best, and we want people to have 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 really around the 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 and how we scale our business and how we provide efficiencies in the future so we can continue to invest in that innovation.

And our next question comes from the line of Richard Newitter with Truist Securities.

This is [ Ravi ] in for Rich. 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 U.S. volume and revenue growth converging. How should we kind of still think about that in the back half, kind of given that reiterated Stelo guide and strength in terms of what appears to be a pretty robust growth, OUS?

Sure. Yes. I mean, let's start -- it's a bit of 2 questions, right? It's the U.S. question around what I would say is volume and revenue percentage growth and then just outside the U.S. performance. I think we came into the year talking about the OUS business effectively growing faster than the U.S. business. That's been our historical norm for the past. And we said this year, we would feel a little bit similar until we get to a 70-30 split.

Look, if the U.S. business and Stelo can continue, great, we'd be happy to tell you that it's outperforming there. But I think that's the general thinking we came into the year, and it's still our general thinking for the rest of the year.

As you then turn to the U.S. 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 as you saw in the first quarter and here 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, 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 going to lead us into the back half of the year, but we also want to not get ahead of ourselves when it comes to our guidance. And that's the way we're thinking about the guidance for the balance of the year.

And our next question comes from the line of Michael Polark with Wolfe Research.

I want to follow up on a prepared remarks comment. You announced that you've rolled out a nationwide warranty program for your pharmacy customers. My question is, is this financially consequential? If so, how? Why now? And is this something that's different than your competitor or not as similar?

Sure. Yes, we can answer that. In terms of financially, it's indifferent at this point. And so should effectively be net neutral from a cost perspective. In terms of its technology, it's leveraging technology and partners that are in place to help us do that. And so as that technology and those partners who are 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 wait for them, and it's just fine.

For those that have -- that are 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 when 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 our customers to choose which way they want to get it. And I think that choice is value additive. And so we went forward with it and excited for customers to experience it.

And our next question comes from the line of Josh Jennings with TD Cowen.

I apologize if you addressed this already, but I 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 do you feel like that channel has been stabilized and the DME partnerships are back to where they started at the end of 2023?

Yes. This is Kevin. I'll take that. We've spent a lot of time with our DME partners to learn 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 get them enough inventory to keep everybody stocked up and to be able to serve patients with what is typically a 3-month supply. We communicate regularly with them. 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 going to be very important to us as we go through this competitive bidding process. This is not something we're going to 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.

And our next question comes from the line of Brandon Vazquez with William Blair.

Congrats to Kevin and Jake on the transition. I just wanted to ask on 15 days 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 a kind of 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 10 neighbors, the 15-day now that we know that, just to kind of hone in on our models?

Sure. Thanks, Brandon. I think the negotiations are really -- and they have been for some time. It's really about -- everything really evolves 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 negotiate, that's exactly how we think about it is. What is the monthly reimbursement. And so by way of multiplying by that 12 in annual reimbursement, we would expect something -- the exact same approach to apply to the 15-day sensor. And that's how we're going about it. You'd expect that across really all business lines as well. So we've been doing that across our commercial business lines. And of course, CMS has reimbursed that way for some time. So I wouldn't expect much of a change from that perspective.

And our final question comes from the line of Bill Plovanic with Canaccord Genuity.

Great. Just wanted to switch over to the pregnancy, the type 1 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 kind of how do you see this playing out over the next year or two? And remind us again of the TAM of that market.

So yes, thanks, Bill. The -- I think we're still early in the penetration there. It's basically 1 in 10 pregnancies in the United States is impacted by gestational diabetes. So it's quite a large population. And so as we think about the product, we actually made some updates to G7 very recently, just better serve this population. We added in a fasting glucose measurement as well as customizable target ranges because for pregnancy, the physicians often want a little bit tighter control during pregnancy. So we implemented all of that into G7 to help drive more of the utility of CGM in this population.

So our teams are starting to call in these offices. And I think there's multiple things 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 the reimbursement, making sure we can navigate 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 at ADA that was presented was, as you mentioned, was around the benefits of mothers' gift from wearing CGM and the CGM group compared to the control group that was doing finger sticks that had spatial diabetes, significant decrease in unscheduled C-sections and admissions to the NICU in the population that was using CGM. So the outcomes are very clear. And so now it's our job to drive awareness.

And ladies and gentlemen, that concludes our question-and-answer session. I would now like to turn the call back over to Mr. Kevin Sayer for closing remarks.

Thank you, everybody, and thanks for the kind words today. I just want to remind you all that I'm not riding the retirement wave out of here right now. I got about 5 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 in the 5 months I'm still CEO, and I'm an Executive Chairman after that. So I totally look forward to being around this company for a while and learning 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.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.