The paragraph introduces the DexCom First Quarter 2025 Earnings Release Conference Call. The operator, Louella, hands over to Sean Christensen, Vice President of Finance and Investor Relations, who outlines the structure of the call. Kevin Sayer, Dexcom's Chairman, President, and CEO, will discuss recent highlights and strategic initiatives, followed by a financial review from Jereme Sylvain, the CFO. Analysts are asked to limit questions to one each. Slides related to the performance are available on the Dexcom Investor Relations website. The call includes forward-looking statements that reflect management's expectations but are subject to risks and uncertainties, with actual results potentially differing from these expectations. The risks are detailed in DexCom's filings with the SEC.

The paragraph discusses the company's approach to managing forward-looking statements and non-GAAP financial measures, emphasizing that non-GAAP information should not replace GAAP results. It highlights that the company achieved a 14% organic revenue growth in the first quarter, marking the second consecutive quarter of revenue reacceleration. Strong category demand, recent access wins, and effective execution contributed to this growth. In the U.S., the company balanced demand while addressing supply challenges, ensuring minimal customer disruption through clear communication and dedicated logistical efforts. A public website was launched to provide updates and support, with manufacturing and logistics teams working diligently to meet customer needs.

The paragraph highlights the company's efforts to align supply timelines with customer demand through strong distribution partnerships. They experienced record demand from new customers in Q1, benefitting from expanded commercial reach. Significant prescriber base growth is expected as new Dexcom technology is introduced, including Stelo, the first over-the-counter CGM, alongside new software updates and expanded insurance coverage. Early success in securing access for diabetes patients at two of the three largest PBMs has led to increased prescriptions for type 2 non-insulin users. Starting this summer, the third major PBM will also provide coverage for Dexcom G7, marking significant progress in coverage for all diabetes patients. The company plans to capitalize on this momentum with awareness campaigns and advocacy for broader type 2 coverage.

The paragraph discusses the growing consensus on the health and economic benefits of incorporating continuous glucose monitoring (CGM) in diabetes care plans, particularly for type 2 diabetes patients not on insulin. Dexcom aims to cover 6 million such people in the U.S. by year-end, with expectations of further expansion as smaller plans follow larger PBMs. They emphasize the importance of evidence from trials like their new study for non-insulin users to drive broader access globally. Dexcom has also simplified access with the over-the-counter biosensor, Stelo, which is gaining traction among type 2 diabetes, prediabetes, and health and wellness communities. They are improving the Stelo experience through software updates and broader distribution, including a new 180-day data look-back feature.

The paragraph highlights several key developments and achievements for the Stelo app and its parent company, Dexcom. The app has been iteratively updated to enhance customer insights and personalization, launching on Amazon for greater accessibility. This has resulted in improved customer experience metrics and strong first-quarter results. Dexcom appointed Jon Coleman as the new Chief Commercial Officer to lead its commercial expansion, bringing decades of healthcare experience. Additionally, it addresses an FDA warning letter received in March due to 2024 inspections at their facilities, noting the company's commitment to implementing corrective actions and collaborating with the FDA.

The article paragraph discusses Dexcom's recent achievement of FDA clearance for their 15 Day Dexcom G7 System, highlighting its advancements in wear time and accuracy with a new industry standard MARD of 8.0%. The company plans to launch the system in the second half of the year, working to ensure coverage and compatibility with insulin delivery systems. The financial report for Q1 2025 shows a worldwide revenue increase to $1.036 billion, 12% higher than Q1 2024, with significant growth in the U.S. market, driven by new customer demand, especially among the type 2 non-insulin using population.

In the recent quarter, the company successfully leveraged its expanded sales force to capitalize on increased coverage, resulting in accelerated new patient growth. While U.S. volume and revenue growth discrepancies have lessened due to moderated channel mix and rebate impacts, international revenue grew by 7%, supported by strong performance in regions like Japan and France. The company anticipates further coverage expansions for type 2 treatments by 2025, aiming to align its international coverage with that of the U.S. The first quarter saw a gross profit of $596.2 million, albeit with a lower gross margin of 57.5% compared to 61.8% in the previous year, affected by seasonal trends and supply disruptions due to damaged sensor shipments. Despite additional costs, the company remained committed to customer care.

In the first quarter of 2025, the company improved its inventory levels through costly direct flights, leading to increased operating expenses of $453.1 million compared to $428.9 million in 2024. Despite higher costs, operating income rose to $143.1 million, and adjusted EBITDA reached $230.4 million, though both margins were slightly lower than in 2024. The company's net income was $127.7 million, with a strong cash position of $2.7 billion, enabling a $750 million share repurchase program. The firm reaffirmed its revenue guidance of $4.6 billion for 2025, despite lowering its gross profit margin guidance to 62%, and maintained its operating and adjusted EBITDA margin guidance at 21% and 30%, respectively.

The paragraph outlines the company's updated gross margin guidance due to first-quarter results and other factors. The guidance includes a 75 basis point impact from the first quarter, a 100 basis point impact from global freight costs for expedited shipping, and a 50 basis point impact from inflationary pressures related to tariffs. Additionally, fluctuations in the U.S. dollar are expected to have a 25 basis point impact on global manufacturing costs. Despite these pressures, the company aims to maintain its operating margin and adjusted EBITDA margin guidance by prioritizing investments and scaling efficiently. The paragraph ends by opening the floor for a Q&A session.

In the paragraph, Matt Taylor inquires about U.S. growth, specifically the impact of supply on revenue and the gap between dollar and volume growth. Jereme Sylvain responds, explaining that the supply levels normalized by the end of the quarter, thanks to the team's efforts. Despite earlier challenges, they achieved strong performance with a record number of new patients. While volume growth details by region aren't provided, Jereme notes that the company saw a 25% increase in patients last year, which is indicative of consistent volume growth this quarter.

In the paragraph, Jereme Sylvain addresses questions about the company's decision to maintain its full-year guidance despite achieving 14% organic growth in Q1. He explains the company's preference to wait and see how the rest of the year unfolds before making any adjustments, emphasizing that the first quarter is just the start of the year. They are pleased with the initial results and are optimistic about the business overall. Regarding the impact of the 15 Day product launch on gross margin guidance, Sylvain notes that initial forecasts included some expectations for the product, aligning with its launch in the second half of the year.

The paragraph discusses the positive growth and retention rates among type 2 diabetes patients, specifically non-intensive and basal insulin users. The speaker notes that while retention rates are slightly lower than those for type 1 patients, they are still strong, particularly as reimbursement expands. The company observes consistent utilization and mix over time, with many type 2 patients, including those using the Stelo product, regularly reordering and maintaining their subscription patterns. The speaker emphasizes that both insured and non-insured patients show good utilization and retention trends.

The paragraph discusses the retention and utilization of a service or product, noting strong performance in covered markets due to valuable information provided. Jereme Sylvain mentions that the utilization remains strong, particularly among a population with coverage, although it's slightly lower without coverage. There's also a strong uptake in the type 2 user population for a product called Stelo. During a Q&A session, Danielle Antalffy from UBS asks about the potential impact of a recession on the company. Sylvain responds, explaining that they've analyzed their exposure to economic fluctuations and coverage levels. The company has prioritized making continuous glucose monitoring (CGM) an essential part of care, saving costs for systems. While economic changes affect everyone, he believes their company would fare well.

In the paragraph, the management team and board feel confident about their company's strong positioning relative to competitors during a potential downturn. Kevin Sayer emphasizes that their medical products deliver significant information and cost savings, and past successes, such as obtaining Medicare coverage and Medicaid plans, support their continued value. Jeff Johnson from Baird asks Jereme about gross margin projections, suggesting they will be in the low 60% range or upper 50s for Q2, rising to mid-60s later in the year. He also mentions concerns from chat boards about possible manufacturing issues with sensors and asks for clarification on the situation.

The paragraph discusses the state of the manufacturing process, indicating that products coming off the production line are in good condition and there are no manufacturing issues to fix. The primary focus is on restoring inventory levels to normal. Jacob Leach mentions that they have robust warranty programs to handle sensor issues, and have made improvements from last year, with quality controls in place. The company is working on rebuilding internal inventories and ensuring product availability for current and new customers. The operator then introduces Jayson Bedford from Raymond James, who congratulates them on their progress.

In the paragraph, Jereme Sylvain responds to a question about international revenue, noting strengths in specific regions like France and Japan due to factors such as Dexcom ONE coverage and going direct in Japan. While acknowledging some fluctuations in the international business, he emphasizes strong underlying demand and unit volume growth. Coverage wins are affecting the timing of revenue, with some anticipated for the first quarter sliding forward. Despite this "choppiness," Sylvain remains optimistic about future wins and growth, expecting the international business to contribute significantly throughout the year.

Jereme Sylvain addresses a question about the estimated 50 basis points of inflation related to supply chain issues and tariffs. He explains that, due to significant manufacturing in the United States, their exposure to tariffs is reduced. While the industry has various exemptions, including the Nairobi exemption, they don't anticipate a significant impact from direct tariffs. However, there are pressures on raw materials and component prices, which might indirectly affect costs. They estimate a potential impact of around $20 million for the year, or 50 basis points, due to these factors. The company aims to mitigate these effects and notes that tariff reform could be beneficial.

The paragraph discusses the rollout of a newly approved 15 Day product, with Jake explaining their focus on ensuring compatibility with pump partners and securing coverage for the product. The team aims for compatibility at launch and is working to make the upgrade to the 15 Day option seamless, although it requires a new prescription. Jake also notes that the product is expected to positively impact gross margins, although the degree of impact is not specified.

In the paragraph, Jereme Sylvain and Jake discuss their company's approach to guidance and operational expenditure (OpEx) control. While they are not providing specific future figures, they emphasize a measured approach to transitioning customers to a new product, acknowledging it takes time due to factors like physician visits. They aim to move people swiftly and outperform expectations, but advise starting with a measured perspective in models. Regarding OpEx, despite impacts on gross margin, they maintain their operating and EBITDA guidance by focusing investments on crucial areas such as next-generation sensor development and commercial expansion, leveraging last year's expansion of their sales force for current growth strategies.

The paragraph discusses a company's strategic use of AI, robotics, and location strategies to enhance efficiency across its operations. Despite the heavy investment, over $100 million in OpEx, they are focusing on becoming more efficient, particularly in software development. Jacob Leach highlights the importance of leveraging new technologies for better output with existing resources, ensuring continued progress in R&D and next-generation technology. The company is also addressing an FDA warning letter but does not expect it to halt their advancements, such as the approval of a 15-day sensor or a hospital label. They are actively working on implementing process controls to address regulatory concerns.

The paragraph discusses the company's response to an FDA audit and a warning letter. Despite the letter, submissions, approvals, and distribution of new technologies and devices are not restricted. The company is actively addressing the FDA's concerns and updating them on progress but cannot predict when the issue will be resolved. They have dedicated resources to address the warning letter without impacting their innovation pipeline. Separately, there's mention of RFK Jr.'s positive comments on glucose monitors and a question about broadening Medicare coverage for non-insulin type 2 diabetes patients. The response highlights satisfaction with administrative support and notes the importance of a randomized controlled trial (RCT) for coverage expansion.

The paragraph discusses the ongoing efforts and developments related to Continuous Glucose Monitoring (CGM) systems. It highlights the positive feedback and learning experiences from users, including those without diabetes, about improving metabolic health. The paragraph mentions attempts to gain CMS approval for type 2 diabetic users not on insulin, noting that the process requires time and evidence. There is an aspiration for quick approval, aligning with the "Make America Healthy" agenda. Jacob Leach emphasizes the cost-reducing potential of CGM and cites growing recognition and support, including endorsements from RFK and a third PBM. The current randomized controlled trial (RCT) is progressing, with results anticipated by early next year, and positive real-world outcomes are observed with the G7 and Stelo devices. Further data is expected at the upcoming ADA meeting regarding outcomes in the non-insulin-treated population.

The paragraph discusses the increasing number of new customer starts for non-insulin using type 2 diabetes patients, noting that such starts are higher than ever. Jereme Sylvain explains that coverage by two out of three pharmacy benefit managers (PBMs) has facilitated this growth, making these new patient additions a significant part of overall new patient numbers. He expects further growth as more coverage opens up, particularly with the third PBM expected to provide coverage in the latter half of the year. While this quarter saw record new patient additions, the company is cautious in its guidance, indicating that the current pace may not necessarily continue unchanged. The focus is on maintaining sustainable growth over the full year rather than assuming every quarter will match or exceed this one.

In the paragraph, company executives address questions during an earnings call. They express optimism about their business outlook for the year but deem it too early to revise upward guidance. Kevin Sayer comments on their market share and patient growth in the type 1 diabetes sector, noting success and continued new patient additions both domestically and internationally. When asked by Colin Clark about the sales force, especially regarding basal adoption and penetration in the DME channel, Jereme Sylvain prepares to provide a response.

The article discusses the company's strong performance in a quarter marked by record new patient acquisitions, which were achieved by targeting type 2 non-insulin users, penetrating deeper into the basal insulin market, and maintaining success in the intensive insulin space. The company also acknowledges the effective collaboration with DME partners, which helped stabilize their market share. The sales force is noted for its continued improvement and increasing success each quarter. Overall, the company expresses satisfaction with their progress and partnerships, aiming for even better results as the year progresses.

The main focus of the paragraph is a discussion about DexCom's performance and strategies, particularly regarding their type 2 non-insulin using patients, the contribution of Stelo to their revenue growth, and the 15-Day reimbursement model. Kevin Sayer mentions that most type 2 non-insulin patients are new to DexCom's continuous glucose monitoring (CGM) system, especially after expanding coverage. Jereme Sylvain confirms that Stelo is contributing 2% to 3% growth for the full year, aligning with their expectations. Additionally, Bill Plovanic raises a question about the 15-Day reimbursement model's potential cost adjustments in contracts to remain competitive, but no detailed response is provided in the excerpt.

In the paragraph, Jacob Leach discusses the reimbursement model for CGM, which is expected to remain consistent with the launch of a 15-Day version, ensuring stable revenue over time. Chris Pasquale from Nephron asks about the current user base of Stelo since it exceeded 140,000 users in mid-January. Jereme Sylvain responds by indicating that Stelo has surpassed 200,000 downloads, reflecting continued growth and new users each quarter. Sylvain also mentions the ability to track usage through the app and hints at future updates on user retention. Finally, Sylvain responds to a question about the ongoing impact of increased freight costs.

The company is addressing low inventory levels by aiming to maintain 90 days of finished goods, with at least 60 days on the shelf, to ensure supply availability through distribution channels such as pharmacies. Despite challenges, expedited freight, including costly chartered flights, is being used to reach these inventory goals. This approach, while expensive, is necessary to navigate low inventory levels and will continue into the third quarter, impacting annual expenses.

In the paragraph, Kevin Sayer discusses Dexcom's strategy in promoting their products for non-insulin using patients, emphasizing a comprehensive approach that includes direct-to-consumer advertising and physician education. The goal is to increase awareness and facilitate easier access to Dexcom products for non-insulin users, highlighting improved prescription processes and cost benefits like a zero co-pay under many plans. He also addresses a question about the role of two of Dexcom's products, Stelo and Dexcom G7, explaining that while both are important, they have distinct roles and opportunities, particularly in the non-insulin segment.

The paragraph discusses the opportunities presented by Stelo for the sales force, highlighting that it provides a new option for physicians to offer patients, especially when coverage isn't available. It emphasizes the improved utilization and retention when there is reimbursement rather than paying out-of-pocket. It also mentions the potential integration of some Stelo features into the G7 app and ongoing innovations to enhance Stelo's capabilities for people with and without diabetes. Jacob Leach discusses Stelo's initial focus on people with type 2 diabetes without coverage and prediabetes, as well as expanding its use cases through integrations, such as with Oura. There is a question from Anthony Petrone regarding the utilization intensity among prediabetic versus nondiabetic patients and current distribution channels for Stelo.

The paragraph discusses Stelo's utilization patterns and its expansion through Amazon. Currently, Stelo users can opt into different tiers based on their diabetes status, with type 2 diabetes users showing the highest utilization. Initially launched as a type 2 diabetes product, Stelo is expanding to encompass broader health and wellness features. While stelo.com has been the primary sales channel, the recent introduction of Stelo on Amazon has seen positive uptake. The company is optimistic about Amazon's potential to broaden their product's reach due to its widespread accessibility.

The paragraph discusses the excitement about expanding distribution through Amazon, indicating that its role will grow over the year while updates on the shift from stelo.com to Amazon.com will be provided. Kevin Sayer gives closing remarks, highlighting the successful quarter for DexCom with strong patient and revenue growth, and thanks the team for their efforts. The conference call then concludes.

This summary was generated with AI and may contain some inaccuracies.