DEXCOM INC Q1 FY2025 earnings call

• Organic revenue growth of 14% in Q1 2025, second straight quarter of reaccelerating growth.
• Navigated U.S. short-term supply dynamics while supporting customer demand, with record new customer starts, especially from type 2 non-insulin population.
• Secured coverage at 2 of 3 largest PBMs for diabetes regardless of insulin use, seeing uptick in type 2 non-insulin new customer starts.
• Launched Stelo as OTC CGM, updated software, expanded distribution, and saw growing use among physicians.
• Added Jon Coleman as Chief Commercial Officer.
• Addressed FDA warning letter with corrective actions, and received FDA clearance for 15 Day Dexcom G7 System, launching in H2 2025.

Worldwide revenue for the first quarter of 2025 was $1.036 billion, compared to $921 million in the first quarter of 2024, representing 12% reported growth and 14% organic growth. U.S. revenue totaled $751 million, up 15% from the first quarter of 2024. International revenue grew 7% to $286 million, with international organic revenue growth at 12%. First quarter gross profit was $596.2 million, or 57.5% of revenue.

• Reaffirmed revenue guidance of $4.6 billion (14% growth for the year).
• Reduced full-year non-GAAP gross profit margin guidance to ~62%, citing first quarter impact, freight costs, inflationary pressures, and dollar fluctuations.
• Reaffirmed full-year non-GAAP operating margin and adjusted EBITDA margin guidance at ~21% and 30% respectively.

• FDA warning letter and need for corrective actions.
• Supply chain issues including expedited freight costs and inflationary pressures from tariffs.
• Macroeconomic uncertainties and potential impact on coverage and utilization.

Q: Matt Taylor from Jefferies asked about U.S. growth improvement, supply impact on revenue growth, and volume growth.

A: Jereme Sylvain responded on supply dynamics normalizing, record new patient quarter, and volume growth aligning with prior patient increase numbers.

Q: Larry Biegelsen from Wells Fargo asked about full-year guidance and 15 Day launch impact.

A: Jereme Sylvain said guidance remains unchanged as they want to see year unfold, and 15 Day launch is factored in with small impact initially.

Q: Robbie Marcus with JPMorgan asked about type 2 patients' utilization, reorder rates.

A: Kevin Sayer and Jereme Sylvain discussed good retention rates, utilization, and published rates for covered populations.

Q: Danielle Antalffy with UBS asked about macroeconomic exposure.

A: Jereme Sylvain and Kevin Sayer stated DexCom is well-positioned to weather downturns due to value and cost savings.

Q: Jeff Johnson with Baird asked about gross margin cadence and manufacturing issues.

A: Jereme Sylvain and Jake Leach responded on gross margin cadence and comfort with manufacturing product quality.

Q: Jayson Bedford with Raymond James asked about international performance.

A: Jereme Sylvain discussed international pockets of strength in France and Japan but some choppiness due to coverage win timing.

Q: Travis Steed with Bank of America Merrill Lynch asked about inflation and tariffs.

A: Jereme Sylvain discussed lesser exposure to direct tariffs, but estimated ~$20M impact from indirect raw material pressures.

Q: Matt O'Brien with Piper Sandler asked about 15 Day rollout.

A: Jake Leach and Jereme Sylvain discussed 15 Day launch progress, compatibility with pumps, and measured impact on margins.

Q: Marie Thibault with BTIG asked about OpEx control.

A: Jereme Sylvain and Jake Leach talked about leveraging investments and efficiencies in software and R&D.

Q: Joanne Wuensch with Citibank asked about FDA warning letter impact.

A: Jake Leach said warning letter doesn't restrict submissions/approvals, and they're making progress with FDA.

Q: Michael Polark with Wolfe Research asked about Medicare coverage for type 2 non-insulin and RCT timing.

A: Kevin Sayer and Jake Leach discussed working with CMS, RCT enrollment finishing H1 2025, initial readout late 2025/early 2026.

Q: Margaret Andrew with William Blair asked about non-insulin type 2 new patient scale.

A: Jereme Sylvain said it's a material portion of new patient adds, but guidance remains unchanged to see year unfold.

Q: Mike Kratky with Leerink Partners asked about type 1 market.

A: Kevin Sayer said type 1 business saw nice growth, in line with expectations, with strong retention/utilization.

Q: Matthew Blackman from Stifel asked about sales force and basal adoption.

A: Jereme Sylvain discussed sales force ramp, record new patients, and stable share in DME channel.

Q: Issie Kirby with Redburn Atlantic asked about non-insulin type 2 patient origin and Stelo revenue.

A: Kevin Sayer said most are new to DexCom, and Stelo is on track for 2%-3% full-year growth.

Q: Bill Plovanic with Canaccord asked about 15 Day reimbursement.

A: Jake Leach said reimbursement per day remains same with 15 Day launch.

Q: Chris Pasquale with Nephron asked about Stelo installed base and freight impact.

A: Jereme Sylvain said Stelo has over 200,000 downloads, and freight impact due to low inventory and need for 90+ days of finished goods.

Q: Steve Lichtman with Oppenheimer & Co. asked about non-insulin awareness.

A: Kevin Sayer said it's across direct-to-consumer, PCP education, and expanded sales force efforts.

Q: Matt Miksic with Barclays asked about Stelo and G7 overlap.

A: Kevin Sayer and Jake Leach discussed Stelo's role for sales force, feature integration, and expanding use cases beyond diabetes.

Q: Anthony Petrone with Mizuho Group asked about Stelo utilization and channel access.

A: Jereme Sylvain discussed utilization by population type and Stelo predominantly available on stelo.com with Amazon expanding reach.