Ladies and gentlemen, good afternoon and welcome to the Dexcom fourth quarter and fiscal year 2025 earnings release conference call. My name is Abby and I will be your operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1 on your touchtone phone. As a reminder, the conference is being recorded. I will now turn the call over to Mr. Sean Christensen, Vice President of Finance and Investor Relations. Mr. Christensen, you may begin.

Thank you, Operator, and welcome to Dexcom's fourth quarter and fiscal year 2025 earnings call. Our agenda begins with Jake Leach, Dexcom's President and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy Sylvain, our Chief Financial Officer. Following our prepared remarks, we will open the call up for your questions. At that time, we ask analysts to limit themselves to one question each so we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our fourth quarter and fiscal year 2025 performance on the Dexcom Investor Relations website on the events and presentations page. With that, let's review our safe harbor statement. Some of the statements we will make on today's call may constitute forward-looking statements. These statements reflect management's intentions, beliefs, and expectations about future events, strategies, competition, products, operating plans, and performance. All forward-looking statements included on this call are made as of the date hereof based on information currently available to Dexcom, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements. The factors that could cause actual results to differ materially from those expressed or implied by any of these forward-looking statements are detailed in Dexcom's annual report on Form 10-K, most recent quarterly report on Form 10-Q, and other filings with the Securities and Exchange Commission. Except as required by law, we assume no obligation to update any such forward-looking statements after the date of this call or to conform these forward-looking statements to actual results. Additionally, during the call, we will discuss certain financial measures that have not been prepared in accordance with GAAP. Unless otherwise noted, all references to financial measures on this call are presented on a non-GAAP basis. This non-GAAP information should not be considered in isolation or as a substitute for results or superiors to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our fourth quarter and fiscal year 2025 earnings call for reconciliation of these measures to their most directly comparable GAAP financial measure. Now I will turn it over to Jake.

Thank you, Sean, and thank you everyone for joining us. It's an honor to join you today with my first earnings call since officially stepping into the role of CEO last month. As many of you know, in more than 20 years at Dexcom, I've had the privilege of helping build the CGM category and redefine diabetes care. But as I reflect on all the innovation and impact we've delivered, I believe we are still early in our journey. There remains a massive opportunity to help improve metabolic health for our customers globally and I'm excited to lead Dexcom into our next chapter I recently had the opportunity to share my initial vision as CEO and highlight three key areas of focus for our organization first we will be the premier glucose sensing solution for all glucose remains central to all stages of metabolic health management and we still see significant opportunity to improve the experience of glucose sensing. This will include greater sensor accuracy, improved reliability, stronger connectivity, and more. We'll always keep pushing to enhance this experience for our customers and further entrench our position as the market innovator. A great example of this can be seen today with the broad rollout of our Dexcom G7 15 days system. As of early January, this product is now available across all channels in the U.S., and while it's still early, the initial feedback has been excellent. Customers and physicians have been thrilled with the longer wear time, which reduces the number of sensor changes required each month, as well as the new algorithm, which offers our greatest accuracy to date. We're currently in the process of building greater awareness of this product's availability in the market, and we'll be working hard to get G7 15-day into the hands of as many people as possible. Our second strategic priority is that we will set the standard for customer experience. This includes raising the bar for all of our customers, not only the individuals that wear our sensors, but also prescribers, caregivers, distribution partners, payers, and more. We want Dexcom to consistently create experiences that delight our customers and make their lives easier we recently highlighted several new products and features that do just that this includes my Dexcom account our newly launched digital support system which is significantly streamlining the customer support experience and saving valuable time for our customers we also have additional offerings planned as we further integrate AI into this customer experience in the near future we are also excited to start the early access launch for Dexcom Smart Basel this month. We've always looked for ways to ease customer burden and improve outcomes, and Smart Basel has the potential to become the new standard for any person managing type 2 diabetes with basal insulin. We believe this personalized dosing module can lead to more accurate basal insulin titration, accelerate the time to reach optimal dose, significantly simplify workflows for the prescriber, and most importantly, improve outcomes for those using our products. Our Dexcom direct EHR integration, which is now live or onboarding at over 160 health systems, provides a quick and easy connection to customer CGM data across multiple EHR platforms. This is something that the prescribing community has been requesting for years, and we are happy to be the first to provide this in our industry. For Stello, we recently announced a comprehensive nutrition database that will be launched shortly in our smart food logging feature. Following this update, Spello can provide a detailed breakdown of macronutrient information for each meal, giving customers a better understanding of how food choices impact their glucose. We will also be following this up with a completely redesigned app experience later this year, which will offer a more consumer-friendly experience and enhanced customer insight. And just last week, we received clearance for a new patch technology that we believe will provide an even better experience for customers across our entire product portfolio. This technology has demonstrated in clinical trials the ability to strengthen sensor survival on our G7 system, including G7 15-day. This is the type of customer-focused innovation that we need to continuously deliver. We want to create meaningful, seamless experiences for our customers that drive greater satisfaction, engagement, and utilization. Ultimately, this can also increase customer lifetime value and serve as a growth driver for our business. Our third strategic priority is that we will expand international market share. The core pillars of our international playbook remain the same. We can drive growth and share through broader Dexcom awareness and by expanding CGM access for more people globally. In recent years, we've also broadened our market reach with the expansion of our CGM product portfolio which can be tailored to the needs of each market and reimbursement system we now have several examples of how this tiered offering has enabled us to win new coverage and greater share we also plan to add to our portfolio in 2026 with stelo and a new cgm system in our international markets to expand access to new segments of the market i couldn't be more excited about the significant opportunities across our international markets. In fact, as we look across the evolving market landscape internationally, there is a path for this opportunity to become even larger than our core U.S. markets. As you can tell, there is a lot to be energized about as I step into the role of CEO. I'm also very encouraged by the way we closed out 2025. In the fourth quarter, we delivered revenue growth of 13%, which brought our full-year revenue above the high end of our most recent guidance. This reflected continued strong new customer demand and encouraging sell-through trends as the quarter progressed. We'll now look to build on this momentum as we move into the new year. I also want to call out continued progress from our manufacturing and logistics teams, which left us exiting the year at an operational high note. Over the course of Q4, we built our inventory toward preferred levels of finished goods, re-established more efficient shipping routes through ocean freight and continued to strengthen performance throughout our supply chain as expected this helped us deliver nice sequential improvement gross margin and drove the expected reduction in the sensor deployment issues that we identified earlier last year our team was able to manage all of this while simultaneously preparing for our g7 15-day product launch we know that first impressions matter so we've been incredibly focused on product performance and ensuring a great initial experience. It's been rewarding to now see that effort be recognized in the market. In summary, we have a lot to be excited about in both 2026 and in the coming years. Along those lines, we're currently planning an investor day for May 2026, where we plan to provide additional details on our outlook. We hope to see you there. With that, I'll turn it over to Jeremy.

Thank you, Jake. As a reminder, unless As otherwise noted, the financial metrics presented today will be discussed on a non-GAAP basis. Reconciliations to GAAP can be found in today's earnings release as well as the slide deck on our IR website. For the fourth quarter of 2025, we reported worldwide revenue of $1.26 billion compared to $1.11 billion for the fourth quarter of 2024, representing growth of 13% on a reported basis and 12% on an organic basis. As a reminder, our definition of organic revenue excludes the impact of foreign exchange in addition to non-CGM revenue acquired or divested in the trailing 12 months. U.S. revenue totaled $892 million for the fourth quarter, compared to $803 million in the fourth quarter of 2024, representing an increase of 11%. As Jake mentioned, we saw sell-through trends build over the course of the fourth quarter, which we're now also seeing carry into the new year. This has correlated well with our broader G7 15-day product launch, which has already generated a lot of interest among customers and prescribers. International revenue grew 18%, totaling $368 million in the fourth quarter. International organic revenue growth was 15% for the fourth quarter. Our international business finished the year well, with particular strength in some of our largest markets, including Germany, the United Kingdom, and France. France ended the year as one of our fastest growing markets, as we benefited from significant type 2 access expansion at the end of last year. This is a great example of our ability to drive growth and market share as broader type 2 coverage forms across the globe. Our fourth quarter gross profit was $799.8 million, or 63.5% of revenue, compared to 59.4% of revenue in the fourth quarter of 2024. As expected, we drove more than 200 basis points of sequential gross margin improvement during the fourth quarter. This reflected continued progress in our freight expense as we were able to re-establish ocean shipping during the quarter, as well as continued improvement in our scrap rates as we strengthened supply chain performance throughout the quarter. Given some of the supply challenges we had in 2025, this demonstrates the dedication and incredible work by our team for our customers. Operating expenses were $468.3 million for Q4 of 2025, compared to $451.7 million in Q4 of 2024. Operating income was $331.5 million, or 26.3% of revenue in the fourth quarter of 2025, compared to $209.5 million, or 18.8% of revenue in the same quarter of 2024. Adjusted EBITDA was $422.2 million or 33.5% of revenue for the fourth quarter compared to $300.1 million or 27.0% of revenue for the fourth quarter of 2024. Net income in the fourth quarter was $265.1 million or 68 cents per share. We remain in a great financial position, closing the quarter with approximately $2 billion of cash and cash equivalents. Our strong cash position provides this with significant financial flexibility this was evident during the fourth quarter as we both settled our expiring 1.2 billion convertible notes in cash and repurchased another 300 million of stock in the open market even after this activity we remain in a great financial position this is also supported by our growing free cash flow profile in 2025 we've surpassed 1 billion of free cash flow for the first time turning to 2026 guidance as we stated last month we anticipate total revenue to be in a range of 5.16 to 5.25 billion representing growth of 11 to 13 percent for the year this guidance assumes continued strong category growth an incremental growth contribution from Stella and new product advancements across our platform it also assumes that the coverage landscape remains predominantly the same as it stands today, though we'll continue to push for additional CGM access globally. From a margin perspective, we expect full-year non-GAAP gross profit margin to be in a range of 63% to 64%, non-GAAP operating profit margin to be approximately 22% to 23%, and adjusted EBITDA margin of approximately 30% to 31%. Our guidance assumes gross margin will improve 200% to 300 basis points in 2026, as we benefit from lower freight expenses, additional manufacturing efficiencies, and the growing contribution from G7 15-day. We also expect that gross margin expansion to play through an operating margin expansion in 2026, even as we have incremental hiring and spending planned to support sales, innovation, and the launch of our Ireland manufacturing facility late in the year. These investments will better position us to capitalize on broader global coverage, including our expectation for Medicare coverage for the type 2 non-insulin population. With that, we can open up the call for Q&A.

Thank you, Jeremy. As a reminder, we ask our audience to limit themselves to only one question at this time and then re-enter the queue if necessary. Operator, please provide the Q&A instructions.

Thank you. And we'll now begin the question and answer session. If you have a question, please press star 1 on your telephone keypad. If you wish to be removed from the queue, press star 1 a second time. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Again, it is star one if you have a question. And our first question comes from the line of Matt Taylor with Jefferies. Your line is open.

Thanks for taking the question. So, Jake, I wanted to ask you on your first call as CEO to talk a little bit more about some big picture items. You mentioned in your comments that I feel like the company is early on the glucose journey, on the fencing journey, and I guess I imagine a lot of that has to do with the potential coverage to come here in the future. So I wanted to have you talk a little bit more about where the existing legacy and core markets could go in the coming years, but also with an eye to non-intensive type 2 coverage that we could see coming over the next 12 to 24 months.

Thanks, Matt. You know, I really do think we're in the early innings of a game here with when you think about the size of the problem out there with metabolic health and the growth of diabetes globally. And then you look at the solutions that we provide with our technology and the outcomes that we can drive. If you look across every segment of patients that we serve, whether it's type one, type two insulin users or type two non-insulin users, we drive significant outcomes, both health outcomes for the user and their prescribing physician, but also financial outcomes for the health systems. And so, the awareness of those outcomes continues to grow, and we've been generating evidence for years to help unlock the access for millions of users. And so, as you mentioned, you know, as we look at the landscape of coverage, we've started, you know, towards last year, seeing coverage unlocked commercially for type two non-insulin users and we are on the verge of expansion into the broader group of type 2 that are covered by Medicare and so when that expansion happens it's it's almost 12 million people that would then suddenly get access to CGM so that's why when I think about the road ahead and the durable years of growth we've got there's just this tremendous opportunity to have an impact on the lives of many people and you know if you think internationally to the opportunity there is pretty significant as I mentioned my comments it's it's we see this being larger than the US over time now internationally typically the coverage trails a bit from the US but with the evidence we continue to generate and the awareness we continue to generate we're confident that over time this access is going to continue to open and provide opportunity for us to impact more more lives and our next question comes from the line of Larry Beigelson with Wells Fargo.

Your line is open.

Good afternoon. Thanks for taking the question. I guess I'll follow up on type two non-insulin. Jake, based on your response there, it sounds like you think it's coming soon, the CMS, I'm asking about the CMS proposal, you know, your main competitor is saying first half 2026. Are you in agreement with that? And when should we expect to see the RCT data? And just maybe lastly, how do you want us to think about the kind of potential impact from CMS coverage of type 2 non-insulin, non-insulin? Thanks for taking the question.

Yeah. Thanks, Larry. You know, as we continue to work with CMS, you know, actually as we've been sitting here waiting for the coverage decision from them, we've actually had the ADA update their guidelines for type two non-insulin and really further moving towards recommending the product for that group and recommending that they have a choice and so I think that's clearly based on the real-world outcomes that we've been generating so we mentioned at J.B. Morgan around the registry that we've started for non-insulin users and that's basically people that have coverage today that are type two non-insulin users and looking at those outcomes we're seeing great sustained outcome in terms of health improvement and high sensor utilization. And so that gives us confidence that we know that we can make an impact in this population. And clearly the private pairs have seen that and have started moving the direction of coverage. And so we're gonna continue to do everything we can do to support a coverage decision here with Medicare, which one of the things you mentioned is our randomized control trial in type two non-insulin users. that that trial we're very excited to read that trial out here towards the middle of this year and you know it's a travel about 300 people got two arms you know those weren't using CGM and those using standard care methods and where you are fairly excited to share the results of that is it as we get towards the end of the study and our next question comes from the line of Travis Steed with Bank of America your line is open everybody wanted to ask about 15 day and

And, you know, both how we should think about the rollout of that, the impact on the margins, and also kind of the use of that to open up new markets. I heard you mention new products launching internationally and talking about international getting to be bigger than the U.S. That's only 30% of your company today. So a lot of international growth there. So just wanted to kind of touch on those two topics.

Yeah, sure, Travis. I mean, I can certainly start on the margin side, and then I can turn over to Jake in terms of, you know, talking about long-term opportunities outside the U.S. So, you know, as you think about the 15-day product, you know, clearly in the U.S. it's launched today, and we'd expect that to certainly start to contribute to margins over the course of this year. The reality is it starts to contribute to margins even more in future years, because this is a year about getting folks interested, making sure they understand the benefits, and really converting a base over time. We'll start with new patients, and we'll convert the base. So, the contributions, yes, there will be certainly some help this year, and you can see that in our gross margin guidance. The real opportunity starts as you get further out. Obviously, Stella is on a 15-day platform. G7 has moved to that platform. You can imagine most of our products move to that platform over time, and as we launch out new product platforms, that's obviously the focus. So, you can see where that becomes kind of the basis for launching, and that cost, ultimately, it becomes a bit of an advantage, right? In terms of going into new markets, it's really hard to get into this space. There's really a few companies that can really produce it at scale. And at scale is how you're able to build the product at a cost that as you move into say, some emerging markets where you can take advantage of those opportunities, both wear length and cost and ultimately delivering the highest quality product within those confines. So I do think it does provide us an opportunity, not only from a margin perspective, but also from the opportunity of expanding and driving new opportunities where there's a fit-for-need purpose for our product. You've already seen us move to fit-for-need as you start to see our product portfolio strategy outside the U.S. This just helps us continue to drive down that pathway. Jake, you want to give some just thought longer term on international and what we can do with that?

Sure, yeah, absolutely. The 15-day product wear time, we'll be extending that to the portfolio globally. So we've launched it on Stello. We've launched it in the G7 here in the U.S. as we're gonna extend it globally. And the feedback from users has been pretty incredible. One note that's important is that, you know, over the timeframe that we've had G7 in the market, we've made a lot of enhancements to the product and to the technology, to the processes, everything about how we build that sensor and provide it to users has been enhanced. And so the 15 day products got all of that from day one. So as we launched this new version of G7, we're seeing great feedback about both the longevity of the sensor, the reliability, but also the accuracy. This is the most accurate sensor we've ever produced, and users are noticing it. You can see it out there in the blogs. You can see it in customer feedback. They really are seeing that this algorithm enhancement we've made is playing through in their experience, which is important as we are striving to continue to be the premier glucose sensing solution for all. And so excited about the ability to continue to expand 15-day across the portfolio.

And our next question comes from the line of Robby Marcus with J.P. Morgan. Your line is open.

Thanks for taking the question. Jeremy, I wanted to ask on the OPEX guide, you have a 63% to 64% gross margin. And when I do the math, it looks like you're getting about 100 basis points of deleverage on OPEX to get to the range. So what are you spending it on after such a great year of expense control? Where are you kind of loosening the flow a little bit in 2026?

Yeah, it's a fair question, Robbie. And look, we had a really great year this year in terms of OPEX control. In fact, I think Q4, you know, you look at the spend profile sequentially from Q3 to Q4, our spend is essentially flat. And so, you know, really great job done by the team there. As you roll forward the math, I mean, if you kind of use it in round numbers, the goal isn't necessarily to de-lever. I think if you kind of, I know you've got to play within the ranges a bit to get there, but the goal isn't necessarily to de-lever. The point is the leverage in the P&L next year predominantly will flow through gross margin, and the goal is to keep the op margin or the op expenses as a percent flat. Now, what's running through that P&L is the launch of our Ireland manufacturing facility. So we have a facility in Ireland that you guys are all aware of it. We're going to be hiring and staffing up. We'll obviously be turning on depreciation. There'll be a lot of folks there in training. We'll be running, you know, validation samples across those lines. We expense those that happen. So there's a big investment in that manufacturing facility. We'll turn that on here likely in the fourth quarter of this year, at which point those costs will come out of OpEx and up into COGS. But as we ramp up those expenses over the course of the year, You'll see those playing through. That's what really soaks it up. So, obviously, that's a bit of a one-time thing when you're opening up a facility. Those will dissipate as we move, obviously, to turn that facility on into 2027. So, underneath all of that, Robbie, I think it's important to note that because you are still getting leverage. It's just there's an investment we're making into a facility. Though, obviously, that investment in leverage will obviously then play through in 2027 and beyond. So, we're still getting leverage there. We're still getting leverage, obviously, in gross margin. The work continues. It's just this year gross margin is going to do a little bit of the work while there's some outside temporal things running through OpEx.

And our next question comes from the line of Danielle Ampulfi with UBS. Your line is open.

Hey, good afternoon, guys. Thanks so much for taking the question. Jake or Jeremy, whichever one wants to take this, I had a question on how you guys are thinking about utilization. And, obviously, as basal ramps, I suspect utilization is coming down a bit. And as we do get coverage for non-insulin using type two, utilization will also look different there. And I'm just curious, as you guys are sort of thinking about not only 2026, but beyond, and obviously don't want to front run the analyst day, but even qualitatively, how to think about utilization based on what you know today. Thanks so much.

Yeah. You know, as we look at the spectrum of users with our, you know, the highest utilization we see in those AID users type one on automated and some delivery systems, you know, they're well north of 90% utilization, which makes sense because those AID systems don't operate without sensor connected to them and they are, you know, the ease of use and the outcomes that they drive are so powerful that that's what we see there. Type two IIT and non-AID type ones, It's very similar, it's kind of in that 90 to 85 percent range. And those utilization rates have remained fairly consistent over time, and so we're not seeing much change there. So your question around BASIL and also the NIT users. So BASIL, we've had a longer time frame with those users as coverage opened up a number of years ago, and so that group has about an 85 to 80 percent utilization rate. That's actually what we saw in our studies, you know, and we've seen it play out in in the real world, which is always great when you see the clinical trial actually reflect real world use. And so 80 to 85% in that type II basal. Some of the more recent learnings is from our registry where we always anticipated that type II non-insulin users might not have the same rate of utilization as those type II basal users, just because of the difference in the insulin. They're not taking a dose of insulin, there's not the risk of hypoglycemia, a number of those things, which kind of assume there might be slightly less utilization in that group. But in the registry, which is this new group of patients that have coverage for CGM that are type two, non-insulin users, that registry is about 12 months old. And we are seeing high utilization rates in that group, very similar to those basal users when you're in a reimbursed environment. I think that's a key, we see the best utilization when our patients have coverage. And so we're seeing good utilization there and we'll continue to track it. but so far those rates have remained pretty stable and it's an important aspect as we think about our expansion globally and as we continue to see more customers come on to to the products and it's important also because tech 2 is our largest opportunity as we think about the long term and so we'll keep those in mind but we're feeling good about what we're seeing you know as we look at user experience too there's really an opportunity to drive further utilization as we get more engagement with the product and so as we make the software updates we start adding more AI insights to the technology the idea is

can we drive utilization even higher so I think that's still a question to be to be out there but I'd like to see it improve even further getting the best way to take it Danielle is at least back to the models is to think about it as the utilization the trends have remained the same in fact the work we're doing obviously to make them better it's just really more about the mix and as you guys are modeling by cohort. Think about it that way versus utilization by cohort going down. Just make sure you have the mix right and that should help out.

And our next question comes from the line of David Roman with Goldman Sachs. Your line is open.

Thank you guys and everybody. I want to just maybe dig a little bit more into the 2026 revenue outlook and maybe specifically around just the new patient dynamic. I think sometimes we get wrapped around the axle on this record new patient dynamic that may or may not be significant as we look forward here. But can you maybe give us some broader perspective on what is assumed from sort of underlying volume growth at different ends of the guidance range and what are some of the factors operationally that need to play out that would put you at the 13 percent level and what would put you at the 11 percent level?

Yeah, thanks. It's a fair question. And at the end of the day, I know we do spend a lot of time talking about new patients. At the end of the day, what drives revenue is your patient base, and obviously a key component to that is how many new patients you add, but it's also what you do around retention, utilization, and then, of course, price. And so, you know, as you think about the puts and takes into next year, you know, think about it this way. We start at the X of the year, and I'll talk about this in the CORAL, say, G and D series business. We actually are talking about patient base growing at about 20% or more than 20%. And so that's your starting point for what you'd expect in terms of starting point for volumes as you move into the year. Over the course of the year, our expectation, you know, is we have a couple points of price and that's been consistent. The remainder and the delta between what I would say is any anticipations around unit volumes would be around mix. And the reason mix is still there, it's much smaller than it used to be. But we do still have a lot of new coverage coming on, specifically in the PBM space for type 2 non-insulin. And then outside the U.S., we are winning a lot of tenders in Dexcom 1+, and it comes at a different price point. So that mix is still there, but it will come down from 2025, that mix impact. So that puts your unit volume growth there just south of that 20%. It puts you in the mid to upper teens, and that gives you kind of presumptions around unit volume. You know, from there, in terms of that, if you're thinking about the inputs, we talked a little bit about this at JPMorgan, so we're happy to reiterate it. We don't necessarily need a record-new patients to hit the low end of our guidance. And you'd want to hit a record-new patient to certainly hit the top end of the range and beyond. And so that's the way we're going to run the business. Obviously, we had a record-new patient year in 2025. We'll obviously focus on setting high targets internally and achieving those targets internally. But that gives you some of the inputs and the puts and takes in the guidance. The other piece of the guidance, I think it's just important to note, this assumes coverage stays predominantly the same. And so obviously, if things change around coverage, that would change our new patient outlook, certainly. And then we'd have to kind of give you guys an update as that moves through the year. Hopefully that gives you some puts and takes. You're right, though, David, at the end of the day, these are all puts and takes around a user base and how that user base grows and moves over time. And that's why it's really important we always acclimate everybody with, well, how did our user base grow year over year? and you guys have the most recent update based on our last touch point. So over there using the puts and takes and any other questions, we'd be happy to follow up later.

And our next question comes from the line of Jeff Johnson with Baird. Your line is open.

Thank you. Good afternoon, guys. Jeremy or Jake, I think you pointed on your prepared remarks about strengthening U.S. sensor uptake trends in fourth quarter and said those continued into the first quarter. Maybe you could just flesh that out a little bit for us. You know, was that some of the recovery from the sensor deployment issues kind of mid-year? Was that continued strength in maybe T2 AID uptake? Anything you can point to there? And just talk about maybe, Jeremy, you also mentioned your installed base being an important driver of growth. Just how stable that T1 and IIT, T2 user base has been now as Libre3 is starting to launch in the U.S.

Yeah. Thanks, Jeff, for the question. You know, I think as you look at, you know, we look at what's called sell-through trends. And that's our way of looking at who's ultimately, you know, going to the pharmacy or going to the DME, picking up product. That becomes really important. You can look at other things. There's various other data points we use, but we certainly use those as well because that's people actually physically picking up and using the product. And we saw that improve over the course of the fourth quarter and continue. Now, there's a couple different reasons out there, and certainly, you know, part of it is going to be certainly some work we've done around, you know, certainly censor to Jake alluded to it earlier. We've done some really nice work around that. We've seen our warranty rates coming down and certainly our complaint rates coming down moving into the year. That's exciting to see. It also helps to have launched our 15-day product. We only launched it in the DME in the fourth quarter, so that's not necessarily a large piece of it, but certainly we expect having that new product out there to be a really good opportunity. And then, you know, naturally, as you would expect, as we get out in front of physicians one, two, three, four times, and they can see the coverage landscape changing for those non-insulin users, you know, that certainly starts to play out a little bit as well. So I think what you're seeing is a little bit of all that, I mean, all of these things are intertwined. At the end of the day, you know, providing a 15-day product and all the features and and the accuracy associated is great. Having less sensor deployment challenges is great. And then certainly having our Salesforce out calling on folks, all those things really coming together. So we're seeing that play through. In terms of stability of the user base retention utilization, you know, you're kind of alluding more to the retention side, it's been stable. I mean, we haven't seen many changes at all over that timeframe. Certainly there was a lot of, there was some noise over the course of the summer, but I think we've been very focused on making sure that we've gotten in front of those and that the experience that folks have when using the product is an excellent one. Jake alluded to it earlier, he spent a ton of time really focused on this, speaking to patients, speaking to physicians, speaking to advocacy groups over the course of time, and making sure we're listening, and to the extent that we do need to make changes, make those changes. All in all, at the end of the day, I think what it proves is Vexxon has built an incredible product, built on amazing accuracy. And I think people are passionate about, one, using the product and making sure they're getting all the benefit out of it. I think you're seeing that as we're getting out into the field. So we've seen that stable, and I would expect to see that stable moving forward, even with, you know, other even competitive product launches out there.

And our next question comes from the line of Marie Tybalt with BTIG. Your line is open.

Hi, good evening. Thank you for taking the questions. Jeremy, I want to do the discussion on pricing. You mentioned a couple points of pricing is one of the factors being some of the commercial unlock of the type 2 non-employment patient population, how would you have us thinking about any potential headwinds as we think about the Medicare unlock that could be coming here in the next 12 months or so? I know, of course, volume will be an offset, the amount of volume mix will make a difference, but how would you have us thinking about that in regards to the couple points that you referenced with the commercial?

Thanks. Sure. Yeah, you know, every year, you know, when we go through negotiations, it's interesting, you know, we're always asking for more coverage. And for good reason, right? There's a lot of folks who ultimately need it. And we know that we can deliver value really to all pathologies. But, you know, every year, there's the classic, you know, volume price conversations, and everybody goes through it. And it's been pretty stable for some time. As you're, so nothing new this year, but you know, in the context of how you're thinking about, you know, CMS and, you know, coverage and how that unlocks, you know, I think the way CMS at least has done work around this space is they've done the work around competitive it really that's where the rubber hits the road in terms of how they're thinking about it from that perspective. If you think about how the approvals work, you know, there's an LCD code, ultimately that is it's approved and that coding applies to where the coverage ultimately sits. That typically does the approval, pathology approval, it's the guidelines, the rules. Pricing is typically handled separately from that. And so I think what you've got is you've already got a natural mechanism in place for what is a fair value is through the competitive bidding process, which we'll obviously work through and we'd expect that to kick in really here more in 2028. So I think that's at least how we're thinking about it in terms of how that unlock would play out statutorily is maybe the best way to put it. Should something change, we'll certainly keep you posted. At least that's our read on kind of how that would play out. And we'll know a lot more, right? Obviously we're excited about CMS coverage. We talked about it. We're building for it as we speak. I mean, as we start to build capacity today, we're building to be ready for it as if it came tomorrow. So I mean, that's how bullish we are on it coming. And so we'll certainly give you more and more feedback as we go because we obviously expect it to be a key part of everything we do this year, including obviously an RCT readout, which, again, we'll have here in the first half. Jake's in the middle of the year, obviously, it's going to be in the first half. We committed to that, but as we kind of move here over the next few months.

And our next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is open.

Good afternoon. Thanks for taking the question. Jake and Jeremy, I would love to double-click on that commentary on international just saying that you know you're gonna you're gonna basically make up I think it's about a two billion dollar delta between your U.S. and your OUS business you know and I know it's going to take time but can you talk about you've got a big competitor out there they've got a huge international business how do you do that how do you close that two billion dollar delta and I'm assuming we're just talking revenues and not just volume how do you do that over what time frame is Is it 15 years, is it five years? And then Jeremy, what kind of impact does it have? Do we have any pockets of weakness on the margin side as you're scaling that business that it's becoming a bigger portion of the overall revenue base? Thanks so much.

Yeah, thanks, Matt. You know, when I look at the international opportunity, there's two big pieces, right? There's the opportunity to continue to expand within the markets we're already present in. You think about we've established pretty strong businesses throughout Europe, and we're just getting started in the Asia-Pacific region. And so you think about just going deeper in the patient populations, you know, coverage across the international markets, as I mentioned earlier, trails the U.S. So there's really a lot of coverage to still unlock when we think about the international patients. You know, type two basal is only starting to see coverage wins. We got a win in France. We've seen Japan move there. And, you know, we're looking towards Germany need to start we've got some coverage there for basal insulin users but that's just basal I mean there's still the opportunity for NIT around the globe if you just look at the sheer volume of patients and the impact that we know that our technology can make the opportunities there the key and the unlock is for us to generate the evidence make sure there's awareness of the evidence the advocacy from both the clinicians and the patients and basically drive that through each of these markets we've been very successful we've we've Basically, we've been the leader in driving evidence generation for the unlock for millions of lives. And so we're gonna keep doing that around the globe. It takes work, every healthcare system is slightly different. It's actually, reflection of that is in the fact that we have a pretty substantial product portfolio outside the US to really meet the needs of both different segments of users, but also the different tiered structures of pricing that we see outside the United States. And so we're gonna continue, as we mentioned, to add another product to that portfolio, which will help us expand to access to customers that we don't have today. And so we're going to be very focused on driving access and also making sure we have a product portfolio that takes advantage of that access when it comes, and we'll be ready. I think previously, with our focus in the United States, there was more opportunity outside of the United States that we didn't take advantage of, as you mentioned, that our competitor did. But we're going to be ready this time as more access opens. We're going to be there to be the one for taking the share there.

In terms of timeframe, it will take a little while. It's not going to be in the next five years. And the reason is, is we have a lot of bullish expectations still here in the U.S. And so that's why I think it's really important. We'll talk about, obviously, we're going to be talking about it until we see the coverage with CMS expansion, obviously, and we won't stop there. We'll be looking to try to expand into prediabetes and beyond. And so, you know, the U.S. has a long runway ahead of it. As you think about the international markets, though, you know, we're still not in. tons of markets around the world and so the Jake alluded to the markets were already in there's an opportunity to go deeper there's certainly an opportunity to work on taking share and we'll do that and you know I think we've done a really nice job over the years but boy there's a lot of markets we're going to need to go into over the years and we have plans to do that and we'll talk a little bit more about it in May at our investor day but a lot of opportunity that's not even in our P&L or in our revenue today that we can see ahead of us. And so, yes, it's a longer term vision, absolutely. But when you start to sit down and think about the countries we're not in today, and you think about how many folks around the world are impacted with diabetes and the coverage that's starting to kick up when we show up in countries, you can see the opportunity is immense. And it's really on us to get out there, make sure we get into those countries and we're in those countries, take share. So it's more than five years. It's a fair point. And we'll have a little bit more color as we get into May.

And our next question comes from the line of Jason Bedford with Rainin James. Your line is open.

Good afternoon. I had a question on Basel, which seems to be the segment of the market that's taken a little longer to evolve. What's been the hurdle to deeper adoption into this segment? And do you view SmartBasil as a tool to kind of reintroduce G7 to this population and drive better growth?

Yeah, thanks for the question. You know, to your point, we do feel like SmartBasil is a great opportunity for us to meet the needs of the patients. I think we've seen good growth in Basil given the population and the coverage. And as we continue to want to expand that across the globe, we're going to use this new tool. And it's really designed to improve the user experience both for the patient and the prescriber so that when they think about a patient who's going to go on to basal insulin therapy, this is the product they should get. They should get a G7 paired up with SmartBasal. In the system, we're very excited to start piloting that technology this month. So we've got a number of clinics across the United States already selected. They'll come on, and we tend to learn from the workflows and how this product fits in seamlessly to their workflow and drives the outcomes that both the patients and the physicians are after getting to the right dose faster so that they can really see the benefit of that insulin therapy. I think as we do more of that and we get the experiences around it, it's going to drive more and more share of that patient population. A little better, Jason.

And our next question comes from the line of Michael Pollack with Wolf Research. Your line is open.

Hey, good afternoon. I have a gross margin question, maybe two-parter. So in 2025, I think there were 325 basis points of one-timers called out, scrap rate and small receiver recall. If I look at the 26 guide, the midpoint calls for 270 bps of expansion. So not even getting all of that one-timer stuff back and also not considering credit for 15-day, which is starting. So the question is, why is this the right gross margin guide? And do you agree, or where are we on the scrap and freight kind of overhangs? And if I could sneak in one related item, just on hardware mix in the U.S., excluding cello in 25, what was G6 versus G7 10-day? And by the end of 26, what will G6 mix be versus G7 10-day, G7 15-day? Thank you.

Got it. So I'll answer the first one. You know, I think you have a little bit too much math in what I call the OCOGs associated with that. It's a little bit less than that. And so what you should see as you think about the year, if you were rolling it forward is you'll see improvements across those certainly OCOGs, a little bit of that will spill here into Q1 just because you cap and roll certain variances. And obviously freight and scrap stays in, but there's certain variances as you're getting up to speed. So you just have to be mindful of that. It doesn't go away immediately overnight, but you do roll those in. But it's a little bit less than the number you have, a little bit of roll into the year. You'll see the improvements play through. You'll also see 15-day, and so you'll see those numbers. And likely what you'll do is you'll pop out of the top end of our guidance range. But just remember, in the fourth quarter, we turn on Ireland. And so all of those fixed costs we talked earlier with Robby about that way down the P&L in the first three quarters in the op margin side or the OPEX side flipped to Cox. And so we'd actually expect a decline in our gross margin into the fourth quarter, as you have a full facility turning on all those costs, but the production levels will be much lower. And so there's a lot of fixed overhead that you won't pick up in cap and enroll that. So I think that at least helps understand, that's why there's some geography that might help there a little bit. And obviously the converse of that is you'd expect to see op expenses come down in the fourth quarter. It's all a moot point across the board when you look at op margin because it's all geography, but hopefully that helps you at least as you're kind of penciling out the year, and then you're thinking about the sequencing over the course of the year.

Just a little bit, too, about the customer base and the products they're using. So we've seen rapid, obviously, declines of G6 users as they've switched over to G7. And so the vast majority of our base here in the U.S. is on G7. And as we have launched the 15-day, actually in December, we started seeing quite a few upgrades from G6 to G7 15-day, and so we anticipate that that will continue. And our intent is towards the middle of this year is when G6 will really start phasing out, and so we'll start building in more capacity for G7.

And our next question comes from the line of Joanne Winch with Citi. Your line is open.

Good evening, and thank you for taking the question. Can you tease out what the STELO contribution was to the 2025 results and what is embedded in your 2026 guidance? And any color you can give on how that's going, that would be wonderful. Thank you so much.

Sure. Yeah, so we talked about $130 million of STELO revenue in 2025. And so, you know, kind of at the top end of our 2% to 3% number, so that's certainly we're happy to see that. and a lot of great progress over the course of the year channel-wise and you know really excited about the the new and we shared a little bit of some of the pictures uh at jp morgan on our presentation so you'll see it up on our website we've got some new uh new uh new app coming for stello uh here in the in the coming months so really excited about that in terms of 2026 you know we had talked about it contributing about a point um to growth in 2026 so you guys can do the math on that it obviously those are big round numbers just given how big the organization is but again we still expect it to be a nice contributor to

growth albeit the base will actually have a base this year versus obviously in 2025 you didn't have a base to compare it to and Joanne it's just when you think about the how it's going with fellow you know as Jeremy mentioned we're really excited about the new innovation that we're bringing we have a whole new redesigned app we're launching a new smart basically enhancing the smart food logging that we already had that now will capture macronutrients and things but what we're seeing is you know a whole spectrum of different types of users start using Stella and particularly one of the groups that we've got our eye on is this type 2 non insulin users these are the folks that that don't have coverage for CGM and so they're using the Stella product over the counter but over time what we're seeing is there's a there's a real opportunity for those folks for us to transition them from Stella over to G7 as coverage emerges and so if Stella becomes a very important part of our portfolio not just for you know pre diabetes and health and wellness but also to get type 2s access to the technology early and then transition them to a covered product as coverage continues to unlock and our next question comes from the line of Brandon Vasquez with William Blair your line is open.

Hey everyone thanks for taking the question. I wanted to focus you know a little bit on the innovation pipeline but I know there's a lot to be done on the hardware still we're talking about a G8 and things like that but there's a lot of software you guys are coming out with like Smart Bazel we're just talking about Stello's meal tracking things like that. Maybe just spend a minute talk to us a little bit about what is left in the pipeline and the software side like what What else can you do here? What else can you leverage the software side for? And then maybe the kind of follow up to that is, do you think at some point you need to start to validate these features in clinical trials for them to make more meaningful impacts and drive kind of large scale adoption?

Yeah, thanks. Thanks, Brandon. Fantastic question. No, we are nowhere near done. There's so much more we can do on both as you mentioned the hardware, but also on the You know, our goal is to be the premier glucose sensing solution for all people, which what that really means is that it takes into account all the different journeys that a patient has from becoming aware of our product to a physician prescribing it to the patient onboarding to them using it and driving the outcomes that are so important. and then of course service. In all of those aspects, if you think about that whole journey, there's many things that we can continue to enhance digitally through software, whether it's for the physician or for the patient themselves, to help them onboard faster. So really, our goal is to remove friction, to remove any kind of speed bumps so that they get the experience that is the highest caliber. And so we're trying to develop the best solution plus the best experience. And we do feel like over time, that's gonna be the winning formula because you've got folks that are not only seeing the outcomes, but they're also sticky and staying and retained and having a wonderful experience for many years to come, basically increasing the lifetime value. You know, driving those outcomes, as you mentioned, is very important for us to run clinicals and or generate real-world evidence that shows the outcome of how those new features do actually drive outcomes. And we've done that, you know, basically through all the different patient segments. We've done some recent work with real world evidence type two, but even things like our delayed high alert, which is an innovative feature that is built into the product that basically delays the high alert and it has clinical outcomes associated with it. And so that's something that as our sales force gets out there and talks to physicians, they can talk about the difference that the competitive difference that we provide in the outcomes that we drive. And just one thing I wanted to mention is our sales force is so fired up right now based on the 15 day and all the enhancements we've made and all the enhancements we have coming we're really looking forward to spend some time with them with the national sales meeting in a couple of weeks but there's so much more we can do and I can't wait to show you guys over time all the innovation that we're going to bring and to your question the whole clinical you know validation of features you know I think the you know for example I mean most of these that's exactly what you do right and you think about Dex basil that that goes through obviously a 510 clearance, US, OUS.

So just think about all these features. They're all going through the appropriate clinical pathways where appropriate, where meaningful. So expect us to continue to do that, but also expect us to look at new and novel ways to navigate technical features into the hands of users over time and work with the administration on how we do that. And then there's obviously a lot of guidance coming out now about how to bring innovation quicker. And Jake's team is teed up to do just that, The RD team has teased up just to do that, is to bring innovation quicker and quicker and put it in the hands of users.

And our next question comes from the line of Josh Jennings with TD Cowan. Your line is open.

Thanks for taking the questions. I wanted to ask a two-parter on G7 15 days. It sounds like the early patient experience has been strong, great durability with sensors lasting out to 15 days. I just wanted to see if there's any more color on any or any data you have just on that durability of wear, and does the patch that you just got approved, the new use of technology, maybe improve the percentage of sensors that get out to 15 days out into the 90% range? And then I guess it's a three-parter, but just any rebate dynamics that we should be thinking about in 2026 as G7 15-day enters the pharmacy channel. Thanks for taking on the questions.

Yeah, thanks, Josh. Yeah, sensor survival longevity, as we call it, is a super important part of the CGM portfolio and as we extend sensorware, it's obviously something we look closely at. And it's actually our goal is to ensure a good user experience. So we don't unlock that extended life until we're confident in its performance. And so in the field, what we're seeing is very consistent across the patient spectrum with what we saw in our clinical studies. Now, we recognize that from the very early days of CGM, when our first CGM only lasted three days, not all sensors last. And often it's, as you mentioned, related to adhesive. And so we have been driving adhesive innovation for several decades. And with the new version of the patch for G7, we are excited that it does drive a pretty meaningful improvement in survival. and we will put it across the whole portfolio of Dexcom One Plus and Stelo so that all of our patients get the benefit. So it'll continue to drive that performance. For any sensor that doesn't last a period of time, we have a very robust program that we continue to enhance around how to ensure patients always have the sensors they need because we know how important this technology is to all of our users and the benefits they get from it.

So that goes back to that, the idea of setting the bar for service and being the gold star there we are making investments there we're continuing to enhance the way that we handle those types of situations to ensure our users get the best experience yeah then it's your question on rebates you know there's two ways to think about rebates one is what is the rebate rate and what is the net price and then the second piece is is how many folks select you know that the t the essentially the rebate rate in those plans the rebate rates in terms of the pricing slotted right into the G7 10-day. So effectively G7 15-day, G7 10-day are effectively the same price. So that for a month supply, I think that's important. So effectively same revenue per month. On the flip side, in terms of utilization, our expectation of selection or inclusion into that rebate catalog, our expectation is 100% of all those sensors. So, you know, sometimes you start at 96, 97, 98, now you move up those areas, some folks, you know, some say not preferred or not covered. 15-day essentially is slotting in right where G7 is. So we're at 100%, 100%. We shouldn't see any changes essentially in rebate trends as a result of moving over to 15.

And our next question comes from the line of Richard Newhater with Truist Securities. Your line is open.

Hi, thanks for taking the question. Just a simple one for me. I'm just wondering if you can comment on revenue cadence at all, specifically the 1Q, but anything else throughout the year. I think the street said about a 6% sequentially lower 1Q versus 4Q. Is that a reasonable place in the way to think about it, or anything else you'd call out?

Yeah, good question, fair question. I think cadence-wise for the full year, you know, our expectation is continuing to see a little less in the Q4 and a little more into Q1. And it's a slow evolution over time, but as more and more goes through the pharmacy and less and less goes through the DME commercial part of the business in terms of at least a total patient, still both good businesses, you don't have that stocking dynamic you typically see in houses in the fourth quarter where someone tries to maximize benefits. You still have that, you still have a decent sized business, but it's just less of a percentage of the business. So the expectation is obviously Q1 is a little bit higher than typically in Q4. I would say last year we talked about, you know, Q1 being, you know, a 7% to 8% decline and we came in closer to 7% in that range. I would say this year we've been talking about, we talked about this at JPMorgan on stage, we think it's a 6% to 7% decline. So I think the street's a little bit within the range or probably at the higher end of that range, but not far out of it. it's a pretty it's a pretty safe place to be so six to seven percent sequential is about what we would think and this is a little bit less seasonality this year um than than last year and our final question comes from the line of bill plavonic with canaccord genuity your line is open hey guys it's zachary on for bill thank you for taking the question um so i guess back to the um g7 uh non-intensive type 2 so in the past you say you know right now we have six million covered lives and we can get to 25 million, you said Medicare would be 12 million.

So just where do we stand today and then, you know, and just, I guess, explain what, I guess, the cadence of covered lives could look like.

Sure, yeah. So you're really thinking about the commercial side of the house. Obviously, the Medicare side of the house will start with fee-for-service and then you move into MediAdvantage. So you know, it'll go Part B then into Part C and we can talk about that as it comes. But that should happen pretty quickly. On the commercial side, kind of the side I think you're more alluding to in progress we've made, you know, we talked about six million lives. It was the three big PBMs, and we talked about knocking down, you know, some additional plans, I think the expectation is we've knocked down, you know, another five-ish percent of that market over the course of renewals this year. That will continue to take place. We keep working that. It doesn't have to happen just annually. It's something that we'll continue to do over the course. So that would be, you know, individual plans, kind of smaller PBMs, PBMs on custom formularies. So we've got another good chunk of it, I think, but, you know, we'll keep chipping away at that. So it puts you at maybe 6.5 million of the 12 and a half, maybe a little bit higher than that even. But we'll keep chipping away at it, but that's at least the updates. We have a few more in there that continue and, you know, I would expect to give you updates over the course of the year as we keep chipping away and try to get that to full coverage over time.

And that concludes our question and answer session. I will now turn the call back over to Mr. Jake Leach for closing remarks.

Thank you, operator. And I'd actually like to take this moment to thank our employees around the world. This past quarter and, frankly, this past year demanded focus, resilience, teamwork, and our people really delivered. What makes Dexcom special, it isn't just our technology, it's the people behind it. Our team's commitment shows up in our execution and in the trust that millions of people place in Dexcom. So on behalf of the leadership team and our board, thank you to our employees for everything you do. And thank you all for joining us today. We look forward to updating you next quarter.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.