DexCom, Inc. (DXCM) Earnings Call Transcript & Summary

Okay. All right. Welcome back to day 2 of the 2026 Wells Fargo Healthcare Conference. I'm Larry Biegelsen, the medtech analyst. And it's my pleasure to host this fireside chat with the management from DexCom. With us, we have Jereme Sylvain, the CFO; and Joe Del Tokio from Investor Relations. So it's a fireside chat. Jereme, thanks so much for being here.

Thanks for having me. Good to be back.

So Jereme, let's start with everyone's favorite topic, type 2 non-insulin. You presented the CONNECT data at ADA, really good results. What's the status of the publication?

Yes. So -- and thanks for bringing up Connect. So obviously, there'll be multiple different things we will file over the course of time with Connect. Obviously, we're doing follow-up studies as well. As you mentioned, great results, really, really happy with it. We expect it to be published in a major journal. One of the things you cannot do is say the timing or the name of the journal, if you want it to be published in there. But we are actively working on it. And so we'd expect it to be published here in a relatively short period. Timing-wise, sometimes you have to kind of time it with the timing of the journal, so we are working closely there. But I would expect it to be in a major journal, and look forward to sharing even more of the results. I think once you go through -- we shared a bunch of the results earlier this year at ADA. You obviously see all of those in there, but there'll be some more additional numbers of the details that I think you'll find very compelling. And there's more to come over time with follow-up studies. So you'll continue to see more and more data coming out around this study, but really, really happy with what we saw so far.

It sounds like it's been at least accepted, a major...

Can't comment on it. But what I would say is we expect it to be published in a major journal, but I can't comment on timing or their process out of respect for their process. .

Okay. Any update on the CMS time? And do you still expect a proposal by year-end? Any like what's your visibility on that?

Yes. So we're still in that same window timing. There's a lot of back and forth that continues to go on, has and continues to go on. And still feel very confident in the timing that we released and still would expect it over that period. And as you know, in our LRP, we have it starting about 6 months after the end of this year. So kind of midpoint of next year is our assumption. Those are all still ring true and things that we're actively working to quite frankly, building our ore capability, capacity, sales force, et cetera, really all around those same time frames.

So why is there back to fourth. I mean, what at this point, what are the questions investors are asking about A1c threshold, step therapy, having to be on meds, for example. What's your view on that? And again, it does this process has been going on. It seems like for a long time. We remember your comments from this conference last year. Why the back and forth?

Yes. So submissions historically have taken 18 months on average. If you kind of look back, and this isn't specific to CGM, this is over multiples. And these are large expansions. And as we talked about last year, we filed early last year, not this year, last year, as did our competitor. And so it's been in front of CMS for some time. These typically take a lot of time. These are big decisions. This is a large population. Certainly, the information is really important. Certainly, you can probably imagine the amount of advocacy that takes place over these windows is also important. So some of that just takes time. These are big decisions that once those decisions are made, it's very difficult to reverse those. So we understand it's a really big decision for the administration. At the same time, I think we've shown them an incredible amount of compelling evidence even prior to the CONNECT trial. But having amending [Technical Difficulty]

I'll pull it out of my pocket just in case. Hopefully, everybody can hear back there. Good. Audio in the back.

For advocacy. When you look at the 2 submissions that have been made to date, and there's been a Freedom of Information Act filing out there. So you can see what they are. They are 2. There's certainly 1 by us, which is for all folks and 1 by our competitor. That's for all folks that are using any glucose lowering medication. Those are the 2 that are in front of CMS right. And so those are the 2 really conversations that are being had because those are the 2 proposals that are in front. The conversations about A1C thresholds, it's never been part of any of the conversations we have had. And it would be pretty inconsistent with the goal of prevention, which is where the administration is going. How do we reduce your A1Cs? And the answer is, well, once I reduce your A1Cs, do I take you off of it and let you go right back. Those things have never been part of any sort of approval in the past. They are not approvals that are in any sort of government and/or CGM approval today. And they haven't been part of the conversations even. And so hopefully, that gives you some context about the discussions we've had, why it tends to take long. It typically does take this long, especially with this large uncover request. That being said, we submitted it last year, early last year. And so we still believe that the evidence is compelling. The evidence sits in front of CMS. But clearly, they're making sure they cross their eyes and got their team.

T So the 2 submissions, 1 from you, 1 from your competitor. And 1 of them you said is for patients on glucose medication. Is that yours or the other one?

The other one.

And yours is just any type 2 .

The type 2, very similar to commercial coverage.

Got it. Okay. And I guess does type 2 -- so if you get Medicare coverage by mid '27, is next year more of a build year? Or could it actually contribute in '27/

Well, certainly, recurring revenue. So as you bring folks on, that's certainly helpful. And so it will help certainly build. That all being said, when you have these populations coming on, it's certainly helpful as well. I think -- and when you think about just in terms of recurring revenue, obviously, this year, we're also building recurring revenue with some of the type 2 commercial wins that we've had. And so all of this is really just your base continuing -- I think that's the most important thing is as we continue to act -- more and more folks provide access, access ultimately drives retention utilization. We know that when you have access, those numbers go up. And you're seeing it with our type 2 NIP commercial book of business. Obviously, if we were to get that for CMS, that would certainly be a helpful contributor as well.

Does type 2 -- wouldn't you get the Medicare coverage if and when you get it, does it accelerate your growth and the market growth above kind of the 10% we're seeing now? Or does it just sustain that?

I think that size of that population and we'll give a more specific guide to next year as we get there and beyond. But when you think about the size of that population and you think about what happens when you go in and see a physician today. When you go in and see a physician today, there's a 1 in 4 shot you have coverage, which is half the commercial book of business. So it's much better than it was. It was much more -- much closer to 0. Once you have CMS cover and CMS coverage ultimately plays through to Medicare Advantage, Part C over time. And usually, pretty quickly, all of a sudden, you now have 75% coverage. And the propensity to right goes up significantly. So our expectation is it's a rising tide lifts all boats, including the overall market opportunity and potential growth rate. So I think we would expect it to be helpful. I think one of the reasons we have in our LRP, 10% plus is making sure we go through the timing. And it's on us to make sure that when we have that coverage, every physician is aware, all the features in our product are really targeted to help that type 2 NIT population. And it's up to the industry to continue to move that forward. But we do believe if we do it right, it can be an absolutely an opportunity to grow faster.

That's helpful. I mean you touched upon it. People have asked about why you have 7 million type 2 non-insulin people covered today. And the perception is we haven't seen much of an impact. That's a lot of people, but you're -- if I read between the lines what you said you don't think you're a critical mass yet for PCPs to write it regularly.

Yes, they're still writing it -- they're still writing it quite often. But I think what happens is -- and for those folks that have been fortunate enough to be around the space for a while or if you're on ride along, you can see it in real time. You get 5 minutes with a primary care physician maybe. I was at my primary care physician. I timed it just because I like to do these things. I think I had 6 minutes with them. And so there's only so much time they can do to check your benefits, to check where you are. Now our sales force comes in all the time and tries to help. But there's this critical mass kind of mindset that typically happens around that 70% coverage level that I think once you get to the fear of writing and then getting a customer coming back saying, I couldn't access this really starts to dissipate. And so our expectation is that rising tide comment I made earlier does apply to commercial insurance as well because now what you've got is people are coming in, you don't need to say, okay, are you commercial? Okay, are you on the national formulary or not? Now you're saying, look, I can write it. And I know I've got a really solid chance of you having coverage. In the meantime, we're going to work on the background to improve commercial access. And so one of the other challenges, we have the big 3 PBMs. We just got the 4 PBM started this quarter. And so now you're starting to knock down these national formularies. But I think, help that propensity to ride. And so that's what we would expect to see more as a result.

That's helpful. So people are obviously excited about type 2 non-insulin but people are also focused on kind of the business between now and then. And so my question is, we've seen the category slow in recent quarters. Why has it slowed? And how are you thinking about the global CGM market growth before you had Medicare type 2 non-insulin coverage?

Yes. The way I think about it is -- the best way to start is when you look at total patient base and total patient base growth. And last year, we exited the year, we talked about our patient base growing around 20% globally this year, and we've talked about it pretty publicly. We expect our patient base to grow in the high teens. And so it's not much of a slowing in terms of our viewpoint. In fact, when you look at that in terms of total patients and total dollar value, it's not slowing. It's basically very similar to growth in terms of what it was last year. The base has gotten bigger, and so the percentages change a bit. And so it's not necessarily slowing to that extent. I realize that a competitor's revenue has changed over the same period. And so I can't necessarily comment on their book of business. But when we see the leads come in, when we see the ultimate total patient progression over time. We do still see a really steady patient progression. You're right. The new patients in total, like the total scripts, they're growing at a similar rate as last year in total in total scripts. So as a percentage of base, it's a little bit impacted. But I would say that there's a combination of a few things that we have to work on. And this is going to be helpful. Certainly, the coverage wins and as you start to see more and more coverage wins. And this is also getting back to letting folks know, for example, there's coverage available for folks in basal and in IT. Most folks know about IT, but basals still want to work on. We've got to develop the products and capabilities that allow folks to get benefit out of their product. And so when I think about that, I think about, for example, smart Basal coming out later this year, we're in pilots right now. We've built a CGM that's really been targeted for folks on AID devices and intensive insulin. It's been really focused there. And then we kind of jumped into how do we think about type 2. We haven't done a lot of benefit for folks with Basal. And so the smart Basal should help, okay, you know what, I can titrate my basal, get it in control, if I'm on a CGM. We believe that's going to help add people to the market in that space. And that's going to be a global rollout over time. The third one is the so what. And you're going to see us continue to come out with the so what. For anyone that's wanted CGM, especially as you move out of insulin dosing. So what do I do now that I know I have a 105, I don't know. And a lot of times, it's always been the question. You're starting to see it with Stelo. You'll see it with some of the other products we have come out over time. That's so what is going to be a big important part of our next phase of growth. And I think that's the thing as an industry we also have to do it so what? Well, here's what you do with it, and this is how this can benefit your life longer term, help new patients that will help retention to help utilization.

Okay. That's helpful. What -- the script trends suggest you're taking share from Abbott? Why is that?

So we'll talk about Q2 at least, because getting into Q3 and scripts. And I think you've seen enough inconsistency with some of the syndicated data. I don't want to comment. You can ask the providers of that one. But in terms of what you've seen, yes, we have been taking share. And I think one of the big features is we've always thought about coverage as a super important differentiator. And when you look at where our competitor has gone, they've gone down the cash pay route, and that's where they've started. And they've done really well. Hats office of the competitor in that space. We've done really well when it came to coverage and penetration within coverage, et cetera. And as we've won more coverage especially in the spaces which we were under-indexed, you've certainly seen us do well there. And so in the space that's growing the fastest, which would be the NIT space, where the newest coverage resides, we have incredible coverage there. And as a result, we're doing great in terms of share. I think what also has helped is as 15-day has come out as a product and so the new algorithm that's embedded in there and certainly the extended wear length, you're seeing that resonate and it's resonating quite well with folks. Also, the other features in the roadmap we've laid out, I think, is helpful. And we spend a lot of time thinking about maybe something that historically isn't native to medical devices, but about customer service. And I think what you're going to start to see more and more of is a focus on that customer experience. We've rolled out what's called my DexCom account. So it's really more individualized, really, it's getting to more consumer-grade customer service. We're still on a journey there. There's still some work to do. But I think you're going to continue to see us focus on service. And I think between having 1 coverage, having 15 day of the algorithm and really the quality that Dexcom is historically known for, plus elevating our service component. I think those are really important things and it's resonating with customers and doctors.

Back to your comment about the -- so what person with 105. What is the so what? What is it -- is this going to be like food choices? What are you going to -- what are the recommendations going to be?

Yes. So I think it starts with, and you're starting to see it in Stelo, and I think you're going to see it roll out the so what's going to be. So if you have Stelo. Stelo is an AI coach. And what I love, and I play with it all the time. What I loved about going through AI coach is if you log your food, it will compare your food to your glucose and make recommendations. Macros are going in. They're already in Stelo. They're going into the G Series over time. . Obviously, we're connected with Apple HealthKit, Google Healthkit, Aura, so activity, sleep trends, et cetera. We're now able to connect the dots between sleep, food, activity, glucose. As you connect those dots, you're able to then give feedback. One of my favorite feedback moments was I was going through the AI coach. And it started saying, "Hey, look, across the population, here is the average glucose people for folks that have identified as type 2, prediabetic and health and wellness. And that is incredibly helpful. Do you know if 105 is good or bad? I'll tell you, the average is 109. So you're better than the average person that with glycemic or without diabetes. And that kind of feedback is super helpful as you go through. I think those are the kind of things we're trying to provide so that you can do something with this data.

Okay. SP1 That's helpful. And 15-day looks like it's going well. Remind us of your targets.

Yes. So at 15 days, really good feedback, really happy with the performance in the field. And one of the great things about the performance in the field is every time we launch a product, we also continue to enhance it. And so there's a new patch. I think that was approved by the FDA, I don't know, call it, 6, 7 months ago. That is cutting in, that's also going out into the field as we speak. People have been thrilled with 15 days and really getting great feedback, very excited about continuing to see it roll out. Our goal is by the end of the year to have approaching 50% of our U.S. G-Series population moved over. As many of you may or may not know, G6 was officially phased out in terms of production, and we mentioned kind of wrapped up production here at the end of Q2 into early Q3. And so we'll be moving all of those G6 patients and actively moving them over to G7. The hope is that many of them move over 15 days straight to 15 day. Certainly, some will move to 10 day certainly in the feed space. But the expectation is close to 50% by the end of the year, and we're on track, which is great. One of the things that was always the question was how was the G6 kind of rundown going to work? And then how our umpteenth going to work out. And happy to say all of the major pump partners are now connected to G7 15 day. And I'd say the G6 rollout or roll down in to G7 has gone as well as could be expected.

So from the G6 roll down, was there any kind of leakage?

We haven't seen anything to date. We've been very happy with it. And I say the roll down has gone well. So certainly happy to have seen it. There's always the potential for 1Z, 2Z out there, but I wouldn't say this, what we've seen is nothing significant, which is great.

Is it complete?

It's not entirely complete. A lot of folks are still using G6. They have trunk storage and they're burning through what they get a 90-day prescription. And so some folks are still burning through what they have, but it is down to percentage of users onto hand at this point. So it's gotten pretty smooth. .

And Jereme, new starts are always an important topic for investors. Remind us of what your new start trends were in the first half of this year in the U.S. and globally, please?