Dexcom (DXCM) Q2 FY26 earnings call: guidance and Q&A

What is the confidence in sustained double-digit US CGM growth given the 10% market line, and how do new products/coverage and Nutrisense contribute to guidance?

Dexcom sees robust growth potential in the US with 9 million covered individuals not yet using CGM. New patient starts were strong and broad-based. CMS expansion is targeted for mid-2027. Nutrisense acquisition is primarily for technology and insights, with immaterial incremental revenue as most of its revenue was already Stelo pass-through.

“today, there's approximately 9 million people in the United States that have coverage for CGM but aren't yet using it. So we do feel that there's robust growth still there before we talk about any expansion in coverage.”

asked by Travis Steed · answered by Jacob Leach

How has the CONNECT trial data been received by doctors post-ADA, and how will it stimulate adoption for type 2 non-intensive patients, especially with potential Medicare reimbursement?

The CONNECT trial results, showing significant A1c reduction and 97% utilization across diverse T2 users, have been very well received. The improved technology (G7) contributes to high engagement. This data, now submitted for publication and to CMS, is expected to drive reimbursement and shape clinical practice, similar to prior landmark studies for insulin users.

“The results from the CONNECT trial, both in terms of the A1c reduction across the broad spectrum of type 2 users on all kinds of different medication plans as well as the engagement with the technology. It's interesting, the engagement is very, very high in this population.”

asked by Robert Marcus · answered by Jacob Leach

Following the submission of CONNECT data to CMS, is the mid-2027 timeline for coverage still the base case, or could it be sooner?

The mid-2027 timeline for CMS coverage taking effect remains unchanged. Dexcom expects to hear back from CMS on the decision before the end of this year. The CONNECT data is considered a powerful dataset that strengthens the case for reimbursement.

“No change in our assumptions around the coverage decision. We do expect to hear back from CMS on that decision before the end of this year. And in our plans right now, we've got it taking effect in the middle of 2027.”

asked by Matthew Taylor · answered by Jacob Leach

Where does G7 15 Day conversion stand exiting Q2, and is its accretive margin impact in line with expectations, or are there other factors at play?

The G7 15 Day transition is in line with expectations, with a full launch in retail at the beginning of the year and recent integration with Tandem and Mobi pumps. It's expected to contribute more to margins in Q3 and Q4, with the biggest impact seen next year as the starting base for 2027 will be significantly higher. Customer feedback has been positive.

“The transition is occurring essentially in line with expectations. And so if you think about all the assumptions as we were going into the year, obviously, we really launched it in earnest in full starting in January.”

asked by Anna Runci · answered by Jereme Sylvain

Were Q2 new customer adds similar to Q1, and is the current level of OpEx leverage sustainable or due to timing dynamics?

Q2 global new customer starts were in line with Q1's record. US new patient starts sequentially increased from Q1. Operating expense leverage is ahead of plan and expected to continue over time due to technology and capability investments. However, Q3 will see increased investments in Ireland for factory ramp-up (hiring and depreciation), which will temporarily impact margins.

“Q2 is in line with Q1. Q1 was a record globally. So Q2 is in line with the record globally. We're still waiting for some final patient data to come in. We are also saying that U.S. is in line with a record globally.”

asked by Jayson Bedford · answered by Jereme Sylvain

Could CMS coverage for T2 non-insulin include A1c verification requirements, and what real-world utilization intensity is expected for this patient group?

Management does not expect A1c verification requirements for CMS coverage, as it would be inconsistent with past CMS actions and current broad commercial coverage. CGM benefits all users regardless of A1c. Real-world utilization for T2 non-insulin patients with commercial coverage is very high, well above 80%, though not quite the 97% seen in the CONNECT trial.

“To your question around A1c, that's not consistent at all with what we hear in our discussions. If you look at the way CGM benefits users, whether they have a low A1c or a high A1C, the benefits are for everybody, right?”

asked by Anthony Petrone · answered by Jacob Leach

Can you unpack the 'excellent product performance' mentioned, providing metrics like scrap, warranty rates, returns, or complaints, especially given past challenges?

Excellent product performance is reflected in Net Promoter Scores (NPS) increasing for three consecutive quarters. Past challenges with out-of-box failure rates have been addressed, leading to reduced complaint levels. The team focused on improving customer experience and product quality. The improvement is also visible in margin performance, reflecting reduced scrap and improved quality in manufacturing.

“one of the biggest measures there is NPS, which is why I mentioned that. The NPS that we're seeing on the G7 product has continued to increase the last 3 quarters in a row.”

asked by Michael Polark · answered by Jacob Leach

Is the 50 bps gross margin raise due to oil price assumptions or underlying efficiency, and what prevents further GM expansion from the 15 Day tailwind in H2?

The gross margin raise is primarily due to underlying performance improvements, throughputs, and efficiencies on manufacturing lines. Oil price impacts flow through with a delay, and prior guidance already accounted for some headwind. Further GM expansion from the 15 Day tailwind in H2 will be offset by the ramp-up of the Ireland factory, which involves hiring and initial depreciation costs, temporarily stepping down margins from a Q3 peak.

“The expectation was always a peak into Q3 in gross margin that would step down as you turned on Ireland, and that's exactly it.”

asked by Jonathan Block · answered by Jereme Sylvain