DEXCOM INC

DexCom, Inc. operates as a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring (CGM) systems for the management of diabetes and metabolic health by patients, caregivers, and clinicians around the world. The International Diabetes Federation estimates that in 2024, 589 million adults (aged 20-79) around the world had diabetes, and estimates that by 2050 the worldwide incidence will reach 853 million. According to the Centers for Disease Control and Prevention, crude estimates for the prevalence of diabetes in the United States as of 2021 include 38.4 million people with diabetes, of which 29.7 million people have diagnosed diabetes. The American Diabetes Association reported that one in every four healthcare dollars was spent on treating people with diabetes in 2022, and the direct medical costs and indirect expenditures attributable to diabetes in the United States were an estimated $413 billion, an inflation-adjusted increase of approximately 35% since 2012.

In selling its current CGM systems, DexCom competes directly with the Diabetes Care division of Abbott Laboratories; Medtronic plc's Diabetes Group (which implemented a spinoff of its diabetes business into a separate company called MiniMed); Roche Diabetes Care, a division of Roche Diagnostics; privately-held LifeScan, Inc.; Ascensia Diabetes Care; and other smaller market entrants. The company also competes with Abbott and their Libre family of CGM products, Medtronic (MiniMed) and its Guardian Connect and Simplera products, and companies outside the traditional medical device sector attempting to develop competitive products and services. DexCom believes the principal competitive factors in its market include safe, reliable and high-quality performance of products; cost of products and eligibility for reimbursement; comfort and ease of use; effective sales, marketing and distribution networks; brand awareness and strong acceptance by healthcare professionals; customer service and support; speed of product innovation; regulatory expertise; and technological leadership and superiority.

DexCom generates revenue primarily through the sale of its CGM systems, which include disposable sensors, transmitters, and receivers, as well as through related services such as its cloud-based reporting software Dexcom Clarity. The company's revenue model is predominantly transactional, driven by recurring purchases of disposable sensors by patients, supplemented by sales of durable components like transmitters and receivers. Primary customer segments include people with Type 1 and Type 2 diabetes who utilize insulin therapy, as well as certain non-insulin using people with diabetes that struggle with hypoglycemia, and through its Stelo product, adults with prediabetes and Type 2 diabetes who do not use insulin. The company's ecosystem dynamics include integration with insulin pumps and smart insulin pens, Apple Watch, Garmin and other digital health apps, and its Dexcom Share and Dexcom Follow remote monitoring systems that allow glucose information to be shared with up to ten designated recipients.

DexCom's product portfolio includes the Dexcom G7 Continuous Glucose Monitoring System (G7), launched in 2023, and the Dexcom G7 15 Day Continuous Glucose Monitoring System (G7 15 Day), launched in late 2025. The G7 is an integrated continuous glucose monitoring system (iCGM) classified as a Class II device by the FDA, cleared in the United States for all people with diabetes ages two years and older. The G7 15 Day, which obtained FDA marketing authorization in April 2025 via the 510(k) review process for people over the age of 18 with diabetes in the United States, extends the wear period to 15.5 days and has an overall Mean Absolute Relative Difference (MARD) of 8.0%, as well as 94.2% of values within 20% of their comparator. The G7 features a 30-minute sensor warm up, a 12-hour grace period to replace finished sensors, and is 60% smaller than the prior generation G6. The Dexcom G6, which received FDA marketing authorization in March 2018 via the de novo process as the first type of CGM system permitted to be used as part of an integrated system with other compatible medical devices, is anticipated to be transitioned to G7 and G7 15 Day by the end of 2026. In November 2023, DexCom obtained CE Mark approval for Dexcom ONE+, which has been launched in several countries in Europe and is indicated for persons, including pregnant women, ages 2 years and older. In August 2024, DexCom launched Stelo, its biosensor designed for adults with prediabetes and Type 2 diabetes who do not use insulin, as the first over-the-counter glucose biosensor in the U.S.

In March 2025, DexCom received an FDA warning letter following inspections of its facilities in San Diego, California, and Mesa, Arizona, citing observed non-conformities in manufacturing processes and the quality management system. The company has submitted responses to the Form 483 and to the FDA warning letter, and while the warning letter does not restrict the company's ability to produce, market, manufacture or distribute products, require recall of any products, nor restrict its ability to seek FDA 510(k) clearance of new products, failure to satisfy regulatory requirements could result in enforcement actions. In late 2025, CMS extended the DMEPOS competitive bidding program to include DexCom's CGMs and receivers beginning with contracting in 2027 and payment changes effective January 1, 2028, with CMS anticipating that ten contracts will be awarded for CGMs. The company is currently building out a new manufacturing facility in Athenry, Ireland, which it anticipates will add substantial manufacturing capacity. As of December 31, 2025, DexCom had approximately 11,100 employees around the globe, including 11,000 full-time employees.

For the fiscal year ended December 31, 2025, DexCom's total revenue was $4.554 billion, compared to $4.034 billion in the prior year. Net income was $1.060 billion, and diluted earnings per share was $2.72. The company's revenue growth was driven by increased adoption of its CGM systems, including the G7 and Stelo, and international operations accounted for approximately 28% of revenue for the twelve months ended December 31, 2025. Gross profit was $2.914 billion, and operating income was $1.316 billion. The company generated cash from operations of $1.425 billion and had cash, cash equivalents, and short-term marketable securities of $2.596 billion as of December 31, 2025.

A key growth vector for DexCom is the expansion of its CGM systems into broader patient populations and new market segments. The company is extending its commercial efforts for the broader Type 2 population that does not utilize insulin or have hypoglycemia risk, a group it estimates to be greater than 25 million people in the United States alone. The launch of Stelo in August 2024 as the first over-the-counter glucose biosensor in the U.S. targets adults with prediabetes and Type 2 diabetes who do not use insulin, expanding access beyond people with diabetes to those seeking to optimize metabolic health. DexCom is also pursuing expansion of use of its products to other patient care settings and demographics, including use for people with Type 2 diabetes who are not on intensive insulin therapy, population health, patient monitoring including in the hospital setting, and people who are pregnant. The company plans to expand its product offering to people who are pregnant and cleared/approved indications to address people with pre-diabetes, people who are obese, and people in the hospital setting.

Another significant growth vector is geographic expansion and international market penetration. DexCom has expanded its operations to include additional markets in North America, Africa, Asia Pacific, Europe, Latin America and the Middle East. The company is building a new manufacturing facility in Athenry, Ireland, which it anticipates will add substantial manufacturing capacity to support international growth. In 2023, DexCom completed the initial phase of construction of its new facility in Malaysia and commenced commercial manufacturing. The company's international operations accounted for approximately 28% of its revenue for the twelve months ended December 31, 2025, and it intends to continue to pursue growth opportunities in sales outside the United States, especially in Asia and Europe. DexCom is also pursuing development partnerships with insulin pump companies and companies or institutions developing insulin delivery systems, including automated insulin delivery systems, and with consumer technology product companies that seek to provide metabolic health insights to their customers.

DexCom faces margin pressure from decreasing prices for its products due to future reimbursement changes under Medicare and pricing pressure from managed care organizations and other third-party payors. The company expects that Medicare reimbursement for its CGM systems will decrease beginning in 2028 as a result of the DMEPOS competitive bidding program, which will set a single payment amount for covered items at the 75th percentile of the winning bids. The company anticipates that it will continue to experience decreasing prices for its products and may be unable to reduce its expenses, including the per unit cost of producing its products. DexCom is investing in new manufacturing facilities in Malaysia and Ireland to scale up manufacturing capacity, which requires the investment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control and technical personnel.

DexCom's operational outlook includes the continued development and expansion of its manufacturing capabilities. The company primarily manufactures its products at facilities in Mesa, Arizona and Penang, Malaysia, and is currently building out a new manufacturing facility in Athenry, Ireland. There are technical challenges to increasing manufacturing capacity, including finding or enhancing new manufacturing facilities capable of meeting regulatory requirements, government licensure of manufacturing facilities, equipment design and automation, material procurement, problems with production yields, and quality control and assurance. The company's facilities are subject to inspections by the FDA and corresponding state and international agencies on an ongoing basis, and it must comply with Good Manufacturing Practices and the FDA Quality System Regulation. DexCom is also investing in technology infrastructure, including its cloud-based data repository platform that enables people with diabetes to aggregate and analyze data from numerous diabetes devices and share the data with their healthcare providers.

DexCom's capital allocation strategy includes significant investment in research and development, capital expenditures for manufacturing capacity expansion, and share repurchases. The company's research and development expenses were $1.001 billion for the fiscal year ended December 31, 2025. Capital expenditures are directed toward building out the new manufacturing facility in Ireland and other operational needs. In April 2025, the company's Board of Directors authorized a new share repurchase program, and during the fiscal year ended December 31, 2025, the company repurchased shares of its common stock. The company does not pay a dividend on its common stock. As of December 31, 2025, DexCom had $2.596 billion in cash, cash equivalents, and short-term marketable securities, and $2.496 billion in convertible senior notes outstanding.

DexCom faces structural headwinds from the implementation of the DMEPOS competitive bidding program for CGMs, which is expected to result in lower Medicare reimbursement beginning in 2028. The company also faces headwinds from increasing use of GLP-1 products for the treatment of obesity and Type 2 diabetes, which could potentially compete with its CGM systems and reduce sales. Additionally, the company is subject to risks from the FDA warning letter received in March 2025, which could result in additional legal or regulatory action if the issues are not resolved to the FDA's satisfaction. The company also faces headwinds from the change in presidential administration in 2025, which has caused and may continue to cause shifts in health policy priorities, including potential impacts on Medicare coverage and reimbursement, and the One Big Beautiful Bill Act signed in July 2025 includes significant changes to federal Medicaid funding and ACA enrollment requirements that are expected to result in decreased Medicaid reimbursement and loss of coverage for individuals.

DexCom faces execution risks related to its international expansion efforts, including the new manufacturing facilities in Malaysia and the facility under construction in Ireland, which may not be successful and could experience difficulties in scaling. The company is subject to risks from fluctuations in foreign currency exchange rates, trade protection measures, import and export licensing requirements, and political and economic instability in the countries where it operates. The company also faces risks from the evolving regulatory environment, including the EU's Medical Device Regulation (MDR), the EU AI Act, and various data protection and privacy laws such as the GDPR, which could impose additional compliance costs and operational restrictions. The company's reliance on single and sole source suppliers for certain components, including application-specific integrated circuits used in transmitters and certain polymers used to synthesize polymeric membranes for sensors, creates vulnerability to supply disruptions.

DexCom faces material risks from the implementation of the DMEPOS competitive bidding program for CGMs, which CMS extended in late 2025 with contracting beginning in 2027 and payment changes effective January 1, 2028 ¹. CMS anticipates that ten contracts will be awarded for CGMs ², and the bid process is expected to result in lower Medicare reimbursement, particularly because CMS is changing pricing under the RID CBA by setting a single payment amount at the 75th percentile of winning bids ³ rather than using the maximum winning bid. The company also faces significant risk from the FDA warning letter received in March 2025 following inspections of its facilities in San Diego, California, and Mesa, Arizona, which cited observed non-conformities in manufacturing processes and the quality management system ⁴. While the warning letter does not currently restrict the company's ability to produce or distribute products, failure to satisfy regulatory requirements could result in enforcement actions including suspension or withdrawal of FDA approval, product recall or seizure, or interruption of production ⁵. Additionally, the company relies on single sources for certain components including application-specific integrated circuits used in transmitters and certain polymers used to synthesize polymeric membranes for sensors ⁶, creating vulnerability to supply disruptions. The company also faces risks from the increasing use of GLP-1 products for the treatment of obesity and Type 2 diabetes, which could potentially compete with its CGM systems and reduce sales ⁷.

Management's message in the 10-K filing emphasizes DexCom's objective to remain a leading provider of glucose biosensors and related products to enable people with diabetes and those seeking to optimize metabolic health to more effectively and conveniently manage their glucose levels. The strategic priorities emphasized for the period ahead include: establishing and maintaining the company's technology platform as the leading approach to CGM and leveraging development expertise to rapidly bring products to market, including for expanded indications; supporting use of ambulatory products through a direct sales and marketing effort as well as key distribution arrangements; supporting innovation through technology integration partnerships; seeking broad coverage policies and reimbursement from private third-party payors and national health systems; providing a cloud-based data repository platform; pursuing expansion of use of products to other patient care settings and demographics; providing a high level of customer support, service and education; and pursuing the highest safety and quality levels for products. Management acknowledges the receipt of the FDA warning letter in March 2025 and states that the company takes the matters identified seriously and has submitted responses, but cautions that it may fail to satisfy regulatory requirements to the FDA's satisfaction.