This has been crucial in driving adoption and making CGM more accessible to patients who can benefit from it. Looking ahead, we continue to work to expand coverage and access to Dexcom CGM for patients across all payer types. In 2024, we launched our next-generation G7 CGM system in the U.S. We received FDA clearance in September and successfully transitioned our first customers onto the new system in the fourth quarter. We remain on track to fully commercialize G7 in the U.S. in 2025. The feedback we’ve received so far has been overwhelmingly positive, and we believe G7 will be a game-changer for patients and healthcare providers with its smaller, more discreet design and enhanced performance. Beyond our product innovation, we’re also focused on expanding our international presence. In Europe, we continue to make progress with our direct-to-consumer strategy in Germany, and we’re seeing strong demand for Dexcom CGM in other key markets like the U.K. and France. Additionally, we’re working closely with regulators in Japan and Korea to bring our products to those markets in the near future. Overall, we see significant growth opportunities internationally as we leverage our existing infrastructure and partnerships to expand our reach. In summary, 2024 was a year of strategic investment and growth for Dexcom. As we move into 2025, we are well positioned to capitalize on our momentum and continue to drive adoption of Dexcom CGM globally. We remain focused on delivering innovative products, expanding access to CGM, and improving outcomes for patients living with diabetes. Thank you to our customers, healthcare providers, partners, and employees for their continued support and dedication. Now, I’ll turn it over to Jereme for a financial review and outlook. Jereme Sylvain — Chief Financial Officer Thank you, Kevin, and good afternoon, everyone. Today, I will review our fourth quarter and full-year 2024 financial results and provide our outlook for 2025. For the fourth quarter, our total revenue was $2.2 billion, an increase of 10% compared to the fourth quarter of 2023. This growth was driven by a combination of higher sensor volumes and increased average selling prices. Our sensor volumes increased by 7% year over year, reflecting strong demand for Dexcom CGM across all geographies. Additionally, our average selling price increased by 3% as we continued to see a favorable mix shift towards our newer products. For the full year, our total revenue was $8.1 billion, an increase of 12% compared to 2023. This growth was driven by our expanding customer base and improved commercial execution. Moving to profitability, our non-GAAP gross margin for the fourth quarter was 65.2%, a slight increase compared to the fourth quarter of 2023. This improvement was primarily driven by manufacturing efficiencies and favorable pricing. For the full year, our non-GAAP gross margin was 64.8%, in line with our guidance. We continue to focus on driving operational efficiencies and optimizing our supply chain to support our growth. Our non-GAAP operating margin for the fourth quarter was 35.5%, an increase compared to the fourth quarter of 2023. This improvement was driven by our revenue growth and disciplined cost management. For the full year, our non-GAAP operating margin was 33.2%, reflecting our investments in sales and marketing, research and development, and international expansion. Looking ahead to 2025, we expect our revenue to be in the range of $9.2 billion to $9.4 billion, representing a growth rate of 15% to 17%. This outlook reflects our strong market position, ongoing investments in innovation and commercial expansion, and the continued adoption of Dexcom CGM. In closing, we are pleased with our performance in 2024 and excited about the opportunities ahead. We remain focused on driving long-term sustainable growth and creating value for our stakeholders. Thank you for your continued support, and we look forward to a successful 2025. With that, we will now open the call up for your questions. The journey towards improving outcomes for people with diabetes has been a long and challenging one. One key milestone in this journey was the publication of a mobile randomized controlled trial that demonstrated significantly improved outcomes beyond intensive insulin use. This data led to updates in clinical standards of care and widespread reimbursement for anyone on basal insulin. Now, similar evidence is building around the benefits of Continuous Glucose Monitoring (CGM) for people with diabetes, regardless of whether they are on insulin or not.
Recent data has shown even greater health outcomes for non-insulin users when they have real-time feedback from CGM on their lifestyle decisions. There is also a growing economic argument for incorporating CGM earlier into care plans, as it has been shown to reduce hospitalizations, specialty visits, and overall healthcare resource utilization.
As this comprehensive body of evidence continues to grow, payers have started to take notice. Two of the three largest Pharmacy Benefit Managers (PBMs) now cover Dexcom CGM for anyone with diabetes as of January 2025. This coverage will extend to more than 5 million people with type 2 diabetes who are not on insulin in the U.S. This represents a significant step forward in expanding access to CGM technology.
To further strengthen the case for CGM coverage, a randomized controlled trial for people with type 2 diabetes who are not on insulin is currently underway. The goal is to complete enrollment soon and use the data to advocate for broader coverage in the U.S. Additionally, the launch of the over-the-counter product, Stelo, has significantly broadened access to Dexcom technology, with over 140,000 people using it in the first four months of its launch.
Stelo is being enhanced with Dexcom’s proprietary generative AI technology to provide personalized content and drive greater engagement across the platform. Partnerships with companies like Oura are also helping to consolidate multiple biomarkers into the platform, providing a more comprehensive picture of health for users.
Internationally, Dexcom has seen success in expanding coverage for its products, particularly in markets like France where basal coverage for the Dexcom ONE Plus system has been finalized. This serves as a testament to the company’s ability to adapt its product portfolio to match the needs of different markets and reimbursement systems.
Looking ahead to 2025, Dexcom is positioned to lead growth in the CGM category and continue to pioneer advancements in diabetes care. With a strong financial performance in the fourth quarter of 2024, the company is well-positioned to capitalize on the growing demand for CGM technology and expand access to more people with diabetes around the world. Our international business has also shown significant growth in the fourth quarter of 2024, with revenue increasing by 17% to a total of $311 million. The organic revenue growth for our international segment was even higher at 19%, indicating a strong demand for our products in key markets. This growth was driven by new access wins and the expanded availability of our G7 and Dexcom ONE Plus products in various markets.
One notable success story comes from New Zealand, where we were able to unlock broader coverage for type 1 diabetes and saw a significant increase in demand as a result. These wins highlight the unique nature of each market and the importance of adapting our strategies to meet the specific needs of each region.
Despite these successes, our gross profit margin for the fourth quarter was negatively impacted by a $21 million noncash charge. This charge was primarily related to inventory mishandling by one of our shipping partners and new build configurations that lowered our production yield. As a result, we are currently managing our channel inventory tightly and expect to have levels back to normal by the end of the first quarter.
Our operating expenses for the fourth quarter were $451.7 million, compared to $421.1 million in the same period last year. Operating income was $209.5 million, representing 18.8% of revenue, compared to $242.7 million or 23.5% of revenue in the fourth quarter of 2023. Adjusted EBITDA for the fourth quarter was $300.1 million or 27% of revenue, down from $321.5 million or 31.1% of revenue in the same period last year.
Looking ahead to 2025, we anticipate total revenue to reach $4.6 billion, representing a growth of 14% for the year. This growth will be driven by strong category growth, new access wins internationally, broader distribution for our Stelo product, and advancements across our platform. We also expect to see U.S. revenue and volume growth converging as the year progresses.
From a margin perspective, we expect our non-GAAP gross profit margin to be in the range of 64% to 65%, with non-GAAP operating profit margin at approximately 21% and adjusted EBITDA at around 30%. We anticipate gross margins to improve by at least 200 basis points in 2025 as we convert more of our installed base to G7 and drive greater scale at our manufacturing facilities.
In conclusion, we remain in a strong financial position with approximately $2.6 billion in cash and cash equivalents, providing us with the flexibility to support our organic growth opportunities and explore strategic uses of capital. We are confident in our ability to continue driving growth and innovation in the diabetes management space and look forward to a successful 2025. As the conversation continues between analysts and executives, it becomes clear that the company is on a positive trajectory. Jereme Sylvain, the Executive Vice President and Chief Financial Officer, discusses the narrowing gap between volume and revenue in the U.S. market. He acknowledges that in the past, this gap has been significant, but as they move into the new year, they expect to see a convergence.
Sylvain explains that as they lap the rebate dynamic in the first quarter and compare year-over-year channels, they anticipate the volume versus revenue gap to start closing. With a growing patient base and strong growth numbers, they are confident that the gap will continue to decrease throughout the year.
When asked about the cadence of growth throughout the year, Sylvain provides insights into how they expect the numbers to trend. He mentions that historically, the first quarter typically sees a sequential decline, but they anticipate it to be slightly better this year. As they progress through the year, they expect a stable cadence of improvement, with the back half of the year having easier comps.
In terms of gross margin, Sylvain explains that there may be a step back from Q4 to Q1, but if adjusted for one-time charges, Q1 could actually be ahead of Q4. He highlights the importance of working through yield improvements and other dynamics in the first quarter to set the stage for continued growth throughout the year.
Overall, the company seems optimistic about their prospects for the upcoming year. With a focus on closing the volume versus revenue gap, improving gross margins, and maintaining a steady cadence of growth, they are positioning themselves for success in the market. Investors and analysts are encouraged by the company’s strategic approach and look forward to seeing how these initiatives unfold in the coming months. As we look ahead to the rest of the year, the outlook for our company is extremely positive. The volumes moving through our Malaysia facility and all of our facilities are on track to continue improving, which will have a significant impact on our margins. We have a clear line of sight to our standard costs, and as we exit the year, our margins are looking very strong. This year is all about benefiting from scale and seeing the impact that has on our bottom line.
Even without the 15-day product, which we expect to see a benefit from in the back half of the year, the scale and volume running through our facilities will drive our margins higher. This is a year where we will really see the benefits of our growth and expansion efforts reflected in our financial results.
One area of focus for us has been the coverage of non-insulin using type 2 patients. Two of the three largest PBMs are now covering for this patient population, and we are seeing a positive impact on our revenue growth. While there may be some differences in patient utilization and retention rates between type 1 and type 2 patients, the unit economics of each purchase remain similar.
As we await the approval of our G7 15-day product, we are confident in a second half launch. We have had a great interactive review with the FDA and expect an approval shortly. Once we have approval, our focus will be on securing coverage and ensuring a smooth rollout of the product. We are also excited to present the 15-day clinical data at the upcoming ATTD conference.
Overall, we are optimistic about the future and the potential for continued growth and success. Our focus on scale, volume, and product innovation is paying off, and we are well-positioned for a strong finish to the year. But I wanted to ask about the potential impact of the recent advancements in continuous glucose monitoring technology on the broader diabetes management landscape. How do you see these innovations shaping the future of diabetes care and management? Thank you.
Kevin Ronald Sayer — Chairman, President, and Chief Executive Officer
I’ll take that one. Thank you for the question, Matthew. The advancements in continuous glucose monitoring technology have truly revolutionized diabetes management. The ability to continuously monitor glucose levels in real-time has provided patients with valuable insights into their blood sugar fluctuations, allowing for more proactive and personalized management of their condition.
With the integration of advanced sensors and wearable devices, individuals with diabetes now have access to a wealth of data that can help them make more informed decisions about their diet, exercise, and medication regimens. This level of precision and control has the potential to significantly improve outcomes and quality of life for those living with diabetes.
Furthermore, the integration of CGM technology with insulin pumps and other diabetes management tools has further streamlined the process of monitoring and managing blood sugar levels. This integration allows for more seamless and automated delivery of insulin, reducing the burden on patients and potentially decreasing the risk of complications associated with poorly controlled blood sugar levels.
In the future, we anticipate that continuous glucose monitoring technology will continue to evolve, becoming even more accurate, user-friendly, and accessible. This ongoing innovation will further empower individuals with diabetes to take control of their health and improve their overall well-being.
Overall, the advancements in CGM technology are shaping the future of diabetes care by providing patients with the tools they need to effectively manage their condition and live healthier, more fulfilling lives. We are excited to be at the forefront of this innovation and look forward to the continued progress in this field. Thank you for the question. As we move into 2025, Dexcom executives are optimistic about the potential for growth in new patient numbers. Executive Vice President and Chief Financial Officer Jereme M. Sylvain shared his insights on the expected record patient-year and the composition of where those patients will be coming from.
Sylvain highlighted the continued penetration across the insulin-intensive segment, including both Type 1 and Type 2 patients. This segment is expected to play a significant role in driving new patient starts. Additionally, there is a focus on consistent penetration in the basal segment, with steady adoption expected throughout the year. Basal, which has shown strong growth in 2024, is anticipated to continue its upward trajectory in 2025.
One of the key areas of growth identified for 2025 is in the Type 2 non-insulin segment. Sylvain mentioned that coverage wins in this area are expected to contribute to a larger portion of new patients than in the past. With the addition of Type 2 coverage, Dexcom sees an opportunity to reach more individuals who can benefit from their technology.
Chairman, President, and CEO Kevin Ronald Sayer added that international markets, including France, Germany, Canada, Australia, and Japan, are also expected to contribute to growth in new patient numbers. With wins in these markets and an expanding field force, Dexcom is well-positioned to capitalize on the global demand for their products.
While the focus is on insulin-intensive and basal segments, Dexcom is also looking to leverage their over-the-counter product, Stelo, for additional growth opportunities. Sylvain emphasized that the projections for new patient numbers do not include Stelo, indicating that there is even more potential for growth beyond Type 2 and prediabetes markets.
In response to a question about Stelo, Sylvain confirmed that the expectation for Stelo’s contribution to sales remains at 2% to 3%. He also provided insights into the timing of drivers for Stelo, including the recent launch of a new capability allowing users to access historic data within the app. Additionally, Dexcom is working on integrating with Oura for deeper data integration, with plans to roll out these integrations in the first half of the year.
Overall, Dexcom executives are confident in their ability to achieve record new patient numbers in 2025, driven by continued penetration in insulin-intensive and basal segments, as well as growth in the Type 2 non-insulin market and international markets. With a focus on innovation and expanding access to their technology, Dexcom is poised for continued success in the year ahead. As the year progresses, it is clear that the team at this company has been hard at work developing new products and functionalities that will continue to excite customers. The Executive Vice President, Chief Financial Officer, Jereme M. Sylvain, expressed his excitement about the upcoming releases and developments that are expected throughout the year. He mentioned that there have been multiple releases that build on the existing functionality, indicating a commitment to innovation and improvement.
During a recent discussion with analysts, Sylvain also mentioned that the company is seeing success in various channels, with DME channels and partners already selling the products. He further revealed that Amazon is expected to start selling the products in the first quarter of the year, urging customers to keep an eye out for the launch.
When questioned about the company’s growth rate for 2025, Sylvain provided insights into the assumptions behind the projected 14% growth rate. He mentioned that the growth is expected to be driven by various factors, including the performance of the core G- and D-Series business, international market growth, and stable DME share. He also highlighted potential tailwinds, such as access wins outside the U.S. and coverage wins in the U.S., which could further boost growth.
Additionally, Sylvain addressed the launch of a new product, the 15-day sensor, in the second half of the year. He emphasized that while the product is expected to provide a tailwind for growth, there is a time frame for getting coverage from payers, approval from CMS for Medicare, and integration with partners. He stressed the importance of managing expectations and being realistic about the timeline for the launch of the new product.
In response to questions about the Stelo consumer product, Sylvain mentioned that the company saw an acceleration in subscription activity during the holiday season and New Year’s resolution season. He expressed confidence in the company’s ability to keep users engaged after their initial experience with the product, highlighting the role of AI in enhancing user engagement.
Overall, the company’s leadership team seems optimistic about the future, with a focus on innovation, growth, and customer engagement. With a strong lineup of new products and functionalities in the pipeline, it will be exciting to see how the company continues to evolve and expand its market presence throughout the year. We are constantly in discussions with payers about the value proposition of our sensor technology, including the potential for premium pricing for sensors with advanced capabilities such as multi-analyte sensing. The ability to provide users with more comprehensive health data through a single sensor is a key focus for us, and we believe that payers will see the added value in these features.
In terms of accuracy improvements, we are always looking to push the boundaries of what is possible with our sensors. The G8 sensor will build upon the success of the G7 sensor, which is already known for its accuracy and reliability. With the G8, we are aiming to further reduce the Mean Absolute Relative Difference (MARD) in glucose monitoring, ensuring that users can trust the data they receive from our sensors.
Our goal is to provide users with the most accurate and reliable data possible, so they can make informed decisions about their health. By constantly iterating on our sensor technology and working closely with payers to demonstrate the value of our products, we are confident that we can continue to lead the way in the wearable health technology space.
Overall, we are excited about the future of Stelo and our sensor technology. With a strong focus on accuracy, reliability, and user experience, we are confident that we can continue to meet the needs of our users and provide them with the tools they need to take control of their health. As we continue to build on different hardware platforms, the intention is to improve the accuracy of the system. The development of multi-analyte testing is a key focus, with various analytes in different stages of development. This includes exploring use cases and applications that can amplify the value of continuous glucose monitoring (CGM) technology.
One area of consideration for expanding the use of multi-analyte testing is in chronic diseases like diabetes. By adding additional analytes and broadening the scope of use cases, there is potential to enhance the management and treatment of diabetes. While discussions around premium pricing have not yet taken place, the goal is to advance the technology further to provide more comprehensive solutions for patients.
In terms of financial guidance, the decision to provide a single point estimate rather than a range was based on the desire to offer a clear perspective on the company’s outlook for the year. After a challenging year in 2024, management wanted to provide a definitive projection for 2025 to align everyone on the same page. Updates will be provided as the year progresses, with a focus on moving forward together.
When it comes to profitability, the company is focused on building levers within the business to drive operating efficiency. This includes managing operating expenses, investing in R&D and sales, and marketing to capitalize on growth opportunities. Leveraging gross margin improvement, such as targeting a 65% margin, and cost optimization strategies will be key factors in driving bottom-line results over time.
Overall, the company remains committed to balancing reinvestment in the business for long-term growth with delivering returns to shareholders. By strategically managing expenses, driving operational efficiencies, and optimizing gross margins, the company aims to enhance profitability and drive sustainable growth in the future. We are seeing a lot of exciting developments in the world of continuous glucose monitoring (CGM) technology, particularly with our Stelo sensor. Our Stelo wearers have been very satisfied with the 15-day wear time, which is the preferred use case for this patient population and their caregivers. In fact, the number of patients reaching the full 15-day wear time with Stelo has been very strong so far.
There may be some subsets of patients, such as children, who may want to change their sensor more frequently for various reasons, such as sensitivity to adhesive or sensor cleanliness. However, our generous and efficient service model ensures that patients have the sensors they need if the sensor fails or falls off before the 15-day mark.
As we continue to expand internationally, our primary goal is to focus on large markets where CGM technology is already approved and growing. We are also working on expanding access to CGM technology in countries where it is not yet widely covered, particularly for type 2 intensive insulin use. Additionally, we are working on building the case for basal insulin in markets where it is not yet fully approved.
In terms of market share, we have seen strong performance across all segments of the diabetes population, particularly in areas where we have historically had lower coverage. As we continue to expand our sales force and innovate our products, such as with the introduction of Stelo, we expect to see continued growth and success in the market.
Overall, we are excited about the future of CGM technology and the opportunities for growth and expansion both domestically and internationally. With our focus on providing high-quality products and excellent service to our customers, we are confident in our ability to continue to lead the way in the CGM market. In a recent conference call with investors, Dexcom’s CEO, Kevin Sayer, highlighted the company’s excitement for the non-insulin space in 2025. Sayer noted that the performance in Q4 of 2024 was a precursor to what they expect to be a strong year in 2025. One area of focus for Dexcom is expanding their reach into the non-insulin market, particularly in the lower acuity patients.
Sayer emphasized that while there may be a perception among investors that the economic value of patients in the non-insulin space is lower, the reality is quite different. He explained that the utilization rates among these patient groups may vary slightly, but the overall value per patient remains strong. As Dexcom expands into these new markets, they anticipate that utilization patterns may shift, but the value of each patient will remain stable.
Furthermore, Dexcom’s CFO, Jereme Sylvain, clarified that while the utilization rates may change, the economics per transaction remain consistent. The gross margin and operating margins for Dexcom’s products in the non-insulin space are expected to remain steady, regardless of the type of patient being served.
Looking ahead to 2025, Dexcom is focused on continued growth and innovation in the non-insulin space. With a strong foundation built on record new patient numbers in Q4 of 2024, Dexcom is poised for success in the coming year. The company is confident in their ability to navigate the changing landscape of diabetes treatment and provide valuable solutions for patients across the spectrum of care.
In conclusion, Dexcom’s leadership team is optimistic about the opportunities that lie ahead in the non-insulin market. With a solid performance in Q4 and a clear strategy for growth in 2025, Dexcom is well-positioned to continue making a positive impact in the diabetes management space. Investors can look forward to seeing how Dexcom’s focus on innovation and expansion in the non-insulin market will drive their success in the coming year.
