What DexCom (DXCM) Said on Its Q3 Earnings Call

Key Points

• DexCom reported strong Q3 growth, with revenue rising 11% to $1.34 billion and U.S. revenue increasing 14%. Higher sales, manufacturing efficiencies and lower freight costs expanded gross and operating margins.
• The company raised its full-year revenue and profitability outlook, now targeting $5.20 billion–$5.25 billion in revenue, approximately 24% adjusted operating margin and 32% adjusted EBITDA margin. DexCom also authorized an additional $1 billion stock-repurchase program.
• Growth initiatives include broader Medicare coverage for non-insulin-using type 2 diabetes patients, continued rollout of the G7 15 Day system, international expansion and planned launches of Dexcom Direct and the next-generation G8 platform.

DexCom NASDAQ: DXCM reported third-quarter 2026 revenue of $1.34 billion, up 11% from a year earlier on both a reported and organic basis, as U.S. growth, market-share gains and manufacturing improvements supported higher profitability.

U.S. revenue rose 14% to $970 million, while international revenue increased 5% to $375 million. President and CEO Jake Leach said the company gained share during the quarter, with its largest increase coming from customers with type 2 diabetes, including people not using insulin.

“Our active base growth is in the upper teens,” Leach said, adding that the company is tracking toward a record year for new patient starts despite basing its original 2026 plan on no coverage expansions.

Guidance Raised as Margins Expand

Dexcom raised its full-year revenue outlook to a range of $5.20 billion to $5.25 billion, representing annual growth of 12% to 13%. At the midpoint, the outlook incorporates third-quarter revenue outperformance and about $5 million of incremental foreign-exchange headwinds since the prior forecast. The revised outlook implies midpoint fourth-quarter revenue growth of 10%.

The company maintained its full-year non-GAAP gross-margin outlook of about 64%, while raising its non-GAAP operating-margin outlook to approximately 24% and adjusted EBITDA-margin outlook to approximately 32%.

• Third-quarter gross profit was $875.3 million, or 65.1% of revenue, compared with 61.3% a year earlier.
• Operating income totaled $339.5 million, or 25.3% of revenue, versus $272.9 million, or 22.6% of revenue, in the prior-year period.
• Adjusted EBITDA rose to $435.2 million, or 32.4% of revenue, from $368.4 million, or 30.5% of revenue.
• Net income was $275 million, or $0.73 per share.

Chief Operating Officer and Chief Financial Officer Jereme Sylvain attributed the gross-margin improvement to manufacturing efficiencies, lower freight costs, progress in quality management and the continued U.S. ramp of the G7 15 Day system. Dexcom recently initiated commercial production at its Ireland facility, which management said expands capacity and strengthens its global supply network. The company expects the Ireland ramp to create some near-term margin pressure in the fourth quarter and into early 2027.

Dexcom ended the quarter with approximately $1.8 billion in cash and cash equivalents and generated more than $900 million in free cash flow through the first nine months of 2026. The company said it completed its goal of repurchasing $1 billion in stock during 2026 and authorized an additional $1 billion share-repurchase program.

Coverage Expansion and CONNECT Evidence

Management continues to expect the Centers for Medicare & Medicaid Services to announce a coverage decision this year for continuous glucose monitoring among people with type 2 diabetes who do not use insulin. Dexcom’s current expectation is for any expanded Medicare coverage to take effect in the middle of 2027.

Leach said the company’s CONNECT randomized controlled trial is central to its coverage efforts. Over six months, the Dexcom CGM group recorded a 1.6% improvement in A1C, representing a 0.9% difference compared with the control group. The study was published in the New England Journal of Medicine, and the company provided the publication update to medical directors reviewing the Medicare coverage submission.

Dexcom expects the results to influence upcoming American Diabetes Association Standards of Care updates. Leach said the trial provides level A evidence supporting CGM use in the non-insulin type 2 population and could help make CGM a standard of care across a broader spectrum of diabetes patients.

Product Rollouts and International Plans

The company said adoption of G7 15 Day increased during the quarter and remains on track to reach nearly 50% of Dexcom’s U.S. customer base by year-end. Management cited positive physician and customer feedback on the system’s longer wear time, sensor performance and updated patch design. As the adhesive update has entered the market, Dexcom said it has seen a four- to five-point improvement in 15 Day survivability.

Health Canada cleared G7 15 Day earlier this year, and Dexcom plans to launch the product in Canada in November. The company also received clearance in Japan during the third quarter and is targeting an early 2027 launch there.

Dexcom also launched a redesigned Stelo app during the quarter. The company said the app offers more personalized glucose insights, simplified meal logging and more nutritional information, particularly for users engaging with glucose data for the first time.

International growth was tempered by comparisons with reimbursement wins in the second half of 2025. Sylvain said the company expects this to be a short-term effect and anticipates international organic growth will return to higher levels at the start of 2027, supported by access wins, new product launches, Stelo, Dexcom Flex and direct-market opportunities.

The company also signed an agreement to acquire a business from a distribution partner that would allow Dexcom to operate directly in high-potential European markets. The transaction has not yet closed and will not affect third- or fourth-quarter 2026 results, according to management.

Payer Access and 2027 Investments

During the question-and-answer session, executives addressed a recent CVS-related formulary change. Sylvain said the affected PBM arrangement represents less than 4% of Dexcom’s U.S. revenue. While patients moving from preferred to non-preferred status may face higher pricing, management said it does not expect a significant impact on 2027 financial results.

Dexcom plans to introduce Dexcom Direct in early 2027, a service designed to help patients navigate pharmacy, durable medical equipment, prior-authorization and cash-pay options. Leach said the platform was initially developed in anticipation of expanded Medicare access.

Looking ahead, Dexcom said it will continue investing in its G8 platform, including clinical work ahead of a planned regulatory submission. The company continues to target a G8 launch at the end of 2027 or in early 2028, depending on regulatory review timing.

About DexCom (NASDAQ:DXCM)

DexCom, Inc develops and commercializes continuous glucose monitoring (CGM) systems for people with diabetes. Its devices use a small wearable sensor to measure glucose levels in real time and transmit readings to compatible smartphones, receivers, smartwatches, and other connected devices, helping users monitor glucose trends and make informed decisions about their health.

The company's product portfolio includes the Dexcom G7 and Dexcom G6 CGM systems, as well as Dexcom ONE and Dexcom ONE+ products offered in select markets.

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