DexCom Stock Falls Despite Q3 Earnings Beat, 2025 Revenue View Raised

Core Insights - DexCom, Inc. (DXCM) reported third-quarter 2025 adjusted earnings per share (EPS) of 61 cents, exceeding the Zacks Consensus Estimate of 57 cents by 7%, and up from 45 cents in the prior-year quarter [1] - Total revenues increased by 21.6% year-over-year to $1.21 billion, surpassing the Zacks Consensus Estimate by 2.7%, driven by strong demand and recent access wins, particularly in type 2 diabetes [2][7] - Despite positive results, DXCM shares fell nearly 12.8% in after-hours trading on October 30, with a year-to-date decline of 12.3% compared to a 1.6% decline in the industry [3] Revenue Details - Sensor and other revenues, which account for 97% of total revenues, rose by 23% year-over-year to $1.18 billion, while hardware revenues decreased by 19% to $34.2 million [4] - U.S. revenues, making up 70% of total revenues, increased by 21% year-over-year to $851.9 million, and international revenues improved by 22% to $316.1 million [5] Margin and Operating Income - Adjusted gross profit reached $741.3 million, a 23.2% increase from the prior-year quarter, with an adjusted gross margin of 61.3%, down 160 basis points year-over-year [8] - Total adjusted operating income was $272.9 million, up 28.7% from the previous year, with an adjusted operating margin of 22.6%, an increase of 130 basis points year-over-year [9] Financial Position - At the end of the third quarter, DexCom had cash, cash equivalents, and marketable securities totaling $3.32 billion, up from $2.93 billion in the second quarter of 2025, with total assets amounting to $7.5 billion [10] 2025 Guidance - DexCom raised its revenue guidance for 2025 to a range of $4.63-$4.65 billion, implying a 15% year-over-year growth, with an expected adjusted gross margin of approximately 61% and an adjusted operating margin of 20-21% [11] Market Position and Growth Drivers - The company is experiencing strong momentum in the U.S. market, particularly among the type 2 diabetes population, supported by broader primary-care reach and expanding commercial coverage [13] - International growth has accelerated, with notable performance in France and Canada due to recent reimbursement wins [13] - DexCom is preparing for the rollout of its 15-day G7 sensor and enhancing its software ecosystem, which includes a new Smart Basal titration module [14] Customer Experience and Market Expansion - The company is focusing on improving customer experience through the My DexCom Account portal and enhancing product features, which are expected to boost user satisfaction [17] - With broad pharmacy benefit manager (PBM) coverage extending to approximately six million non-insulin type-2 U.S. lives, DexCom aims to unlock a market of over 25 million Americans [18]