Thanks, everyone. If you can take a seat, we can start the next session here. I'm Robbie Marcus, the med tech analyst at J.P. Morgan. Very happy to introduce Kevin Sayer, the CEO of Dexcom. Kevin's gonna do a presentation, and then me and Jereme will join him on stage for some Q&A after.
Thank you, Robbie. You know, those who work with me often say I start our meetings by asking a very simple question: What problem are we trying to solve today? Well, diabetes is a big problem. With the estimated global population of people with diabetes growing from 150 million in the year 2000, to more than 500 million in the year 2021, and approaching just under 800 million in the year 2045, this is a problem that's just not going away. Most of these people are still treated by finger sticks. It's not just the growth in the population that's staggering, it's the cost associated with their care. It costs the system nearly 2.5 times more to take care of somebody with diabetes than somebody without diabetes.
Our recent numbers from ADA would indicate that the annual cost of somebody with diabetes is approximately $20,000 per year. It's no wonder, with costs going like that, that nearly one quarter of all healthcare dollars in the United States are spent on diabetes care. For a long time, the standard of care for taking care of somebody with diabetes was finger sticks, and these finger sticks did not present a great picture of health. A few intermittent points a day, and you really didn't know what was going on. This slide truly depicts what we see going on in diabetes and what we see going on with CGM, particularly in those who use insulin. This is a basal insulin patient with Type 2 diabetes, and it's very typical of a day for one of these people. I don't know why this...
Is this echoing for all of you? 'Cause it's bugging me. Okay. Anyway, this person takes a finger stick a day when they wake up and sees they're in range and says to themselves, "You know what? I'm doing pretty well. I'm gonna go about my day as I usually do." But as we've learned with many of these Type 2 basal insulin patients that have got on our system, that finger stick paints a horrible picture for this individual. Spent 17 hours of their day above range, with 6 of those hours in severe hyperglycemia. These high glucose values are what leads to the horrible complications of, of diabetes. Quite candidly, something I lost my mother and my maternal grandfather to. Cardiovascular disease, kidney disease, amputations, blindness. It's pretty bad. It's not good at all.
It is only through CGM that people can make the decisions they need to make to treat this condition. First of all, I pretty much guarantee you, before this patient had a CGM, they had no idea that they had these highs. Then, after wearing a CGM, this individual can see, "Okay, I've made this decision. This is what has caused my glucose to go up. I can change my activity, I can change my meals, and I can figure out the effectiveness of my medications." There's been a large movement within the clinical community to introduce CGM earlier into the plan of care for people across all of diabetes, and we're very excited about this. We see CGM more and more, and it's a tool that really provides the information necessary for these people to make decisions.
The bottom line, while we have grown tremendously and done well, we can do so much more to treat this condition. You know, as you look at the CGM field, every major innovation that has advanced CGM has come from Dexcom. We are confident in our future because of our historical past of leading this category, and we have no intention of giving up that leadership. Time and time again, we have launched features and hit performance milestones that have made Dexcom CGM the first line of defense for those who manage insulin. And this innovation also includes product features that have greatly eased the burden of diabetes care, such as smartphone and smartwatch compatibility. But we're not gonna stop there.
We'll continue advancing and growing and developing our products and making it better, more and more solutions for individuals, and tailored to the needs of, of the marketplaces we're gonna serve. It's because of this, that we've adopted a much broader mission statement outside of diabetes management, this broad vision of innovation that we have as a company. We envision a day when continuous glucose monitoring by Dexcom becomes a core component of metabolic health, and we can begin to work on things such as preventing diabetes and addressing the problem of this epidemic that I spoke to earlier. Quite simply put, we're empowering people to manage health. You know, visions are great, but they don't mean anything unless you execute. We reported earlier today our 2023 performance, and it was a great year for us.
In 2019, I spoke here, and I announced our first billion-dollar year. Well, today I'm announcing our first billion-dollar quarter. Our revenue for the year are over $3.61 billion. That is 24% growth over the previous year, and that growth is driven all over the world. On top of that, with 25% revenue growth, we increased our patient base 35%. That doesn't just indicate growth in revenues, that indicates tremendous operational excellence, as we were able to manufacture enough product to serve all these new people. Add to that, it was a great year of access wins for us. We launched our G7 product in the U.S. In a matter of months, we had insurance coverage and access equal to that what we had with G6.
On top of that, the Medicare expansion, covering those on basal insulin and have hypoglycemia problems, gives us great runway in the future. We did this responsibly, picking up more than 200 basis points in operating margin. And on top of that, we opened a very, very large manufacturing facility in Malaysia that is now producing commercial product and gives us the capacity in the future to do all the things that we need to do. 2023 was a great year, and it fuels right into 2024. Also, as we announced earlier today, our guide for next year is revenue growth in the 16%-21% range, or $4.15 billion-$4.35 billion. This growth will come all over the world. I'll give you a little more color on that later.
We do expect big push internationally with our Dexcom ONE product launch over there as we move that to the G7 form factor. We're very excited to do that. We also expect to grow across all segments in the U.S. We're gonna grow across automated insulin delivery, those non-automated insulin delivery, and also, we're very excited about our growth opportunity on the basal side. Our gross margins for the year are expected to be in the 63%-64% range. We now have multiple product lines, something that we didn't have for a long time, but we are navigating now, switching from G6 to G7, launching our Dexcom ONE product, another product launch I'm gonna talk about later. That's very exciting. We will do so responsibly yet again, and we have every intention of increasing our operating margins.
But we will not sacrifice growth for huge margin operating margin expansion. We continue to invest in R&D, and we will continue to invest in commercial opportunities as they come before us, so we can continue to grow the business. You can't achieve results like this, though, without having a great platform, and that's what our G7 is. Our G7 is a culmination of a number of years of work, and there are some incredible features in it. You know, any medical technology that comes out, the first thing you have to have is great science. And for G7, that great science starts with its accuracy. This is the most accurate sensor on the market today and the most accurate sensor that's ever been produced by us. Often people say, "Well, those with Type 2, they're not gonna need something that accurate." Absolutely wrong.
These people haven't engaged with something like this before, and they need to try and to trust and rely on that data. It's incredibly simple, the startup procedure. The warm-up is only 30 minutes. It's fully disposable. The software platform is easy engagement. We've combined everything into one app rather than two. And this is the most covered sensor by insurance in the United States, with the lowest out-of-pocket cost for patients. We felt it was absolutely critical to make sure this product was available to those who wanted it. We will not stop our G7 innovation and rest on our laurels here. We have a number of programs going forward to enhance this product. The first of which, and the key priority, you can ask anybody that works with us, is to expand that life to 15 days for all of our user base.
We're also driving future product enhancements. We look at algorithm development. We have some sensor technology that's actually in clinical testing that will greatly enhance the performance and extend the life. We will have much more connectivity with insulin systems next year, both on the pen front and on the automated delivery front with insulin pump partners. And again, as I spoke earlier, we'll be switching the Dexcom ONE to the G7 form factor, and that's gonna happen just in the next couple of months. It's gonna happen very quickly. Having great science doesn't matter if people don't engage. We've invested a great deal of money, and I've talked a lot about this from the podium, about our investment in software. We have greatly simplified our software infrastructure.
From a technical perspective, our previous software with G6 literally was almost—it was a different app for every language. So if we did an upgrade, it took forever to get it out to everybody. We now have a single platform, and that platform is applicable to G7 and to our Dexcom ONE product. This enables us to iterate and make changes globally quite easily. Something you should note, and something very important about this product, we've had nine software upgrades since we launched that product, and each of those upgrades has included enhancements to our G7 technology to make it a better experience for our users. And we have a lot coming on that software front in the near term.
If you take a look at what's coming just in the next three months, one of the things right into the app will be display and visualization of insulin data for some of our, our partners, so they'll be able to see their CGM and their, their insulin experience right on the Dexcom app. Another thing we're bringing into the software is activity data. If you're wearing another tracking device, an Apple Watch, a Fitbit, a Whoop, an Oura Ring, numerous of these devices, that that data goes to, to Apple Health or, or the Google Health platform, will now be able to be visualized on the CGM app as well, giving patients a clearer picture of their health. The last software integration I want to talk about that is very important to our users, we have submitted our Direct-to-Watch submission to the FDA.
So very soon, Dexcom users, if they want to go for a run, don't have to take their phone anymore. They can just take their watch and see where they are. We're very excited about that. Connectivity has long been a competitive advantage for Dexcom. We were the first to connect to multiple products, and we will continue to use this to our advantage. One of the key features of the G7 platform and our current electronics configuration is the ability to connect to three devices at the same time. I don't know how many devices you guys have with Bluetooth, but it's pretty tough to find something that connects to three. If you're on an automated insulin delivery system, you can connect to your insulin delivery device, your Dexcom phone app, where you share data with others, and directly to your Apple Watch.
That is what connectivity is for us, giving people the information where they can use it. We don't limit that just to our devices and device experience, we connect to other software programs as well, and we'll continue with our software platform, this new software platform on the G-Series and Dexcom ONE to do that. We connect to physicians, giving them the ability to see data in their offices in a very meaningful way. We connect with the patients. I said earlier, we give patients a number of choices as to how they want to use their glucose data to best manage their health. I think most interestingly for me is that sharing of data with diabetes communities, as people watch others. I had a recent experience.
I was with an attorney friend of mine, his 13-year-old daughter, while she, she doesn't have diabetes, she came home talking about Dexcom. He goes: "Why are you talking about Dexcom?" Her best friend had just been diagnosed with Type 1 diabetes. And so her best friend, to manage her disease, has put all of her buddies on the Follow app. So there are 7 girls in middle school following this other girl to make sure she stays between the lines. That's connectivity, and that makes a difference. With respect to our growth in 2024, I stood here a, a year ago and said we have more covered lives in insurance than we've ever had, who have access to CGM, who don't have it. That number has grown monumentally this year with the recent Medicare decision to cover those who are on basal insulin and those who experience hypoglycemia.
Not only has Medicare done that, but payers have followed, so this is greatly expanding. We have twice as many people that have insurance and access to CGM, who don't have it, than we have ever had in our history. Our commercial strategy has also enabled us to execute on this front as well. In 2021, we made a very big decision. While the rest of the world was contracting after the pandemic, we saw the mobile data and knew that this would eventually come. We also knew we needed a bigger presence in PCP offices, so we greatly expanded the size of our U.S. sales force. This commercial strategy has worked wonderfully. As you can see, for 2023, we increased our prescriber base by 40% over what it was before, and 70% of our new scripts are now written by PCPs.
We will continue to invest in our commercial strategy in the U.S. to get broader and to get more places. But we haven't just had a great commercial strategy in the U.S. In the OUS markets, we've gained significant market share, particularly in 2023. One of the reasons we've been able to drive these market share gains is the clinical evidence that Dexcom provides. You know, we have got over 1 million years, 1 million patient years on AID systems. That's a lot of years and a lot of data. That's very accepted in the European community. And outcomes, in addition to science and engagement, are what drive broader acceptance of medical technology, and Dexcom has those outcomes, and they've been particularly useful for us in Europe.
The other thing we have done is, again, I talked about our Dexcom ONE product, and that has been very good for us in growing outside the US. We have a portfolio approach that we have adopted outside the US. We have our G-Series platform, which is literally our premium product, with all the bells and whistles and features and connectivity. In countries where that product is widely reimbursed, that is the product that we offer, and that's the products available on the market. There are other markets where there's no reimbursement and very little access and very little coverage. That's where we started with our Dexcom ONE product, and we have an e-commerce platform where we can sell in those markets.
Ironically, of the first seven countries where we launched that e-commerce platform, six of the governments now reimburse for CGM because it was so wildly accepted. Then we have other geographies, particularly in the EU, where it's a dual system. You have a low-risk population and a high-risk population. Our presence had always been in the high-risk population in those markets, and while we were growing rapidly, it wasn't fast enough. In these countries now, we offer a two-tiered system for the low-risk patients, those who aren't on automated insulin delivery, non-pediatric patients, usually those without high risks. We offer the Dexcom ONE product at a lower price point, and then we offer our G-Series for the high-risk population, and we're getting great wins in those dual markets.
Because of that portfolio strategy, by the way, over the past 2 years, we've expanded access in our U.S. markets by 4 million lives, and 1 million of those lives rest in Japan here, which recently approved CGM for all people on insulin. We said earlier, we're gonna go direct in this market. We announced that in Q3, we're gearing up to go direct in that market, in the second quarter of this year. We will launch G7 in Japan before the end of the year. We're in our early stages, but we believe this is a medical device market where we can have a great impact and where medical devices are strongly reimbursed, and there's a great population that we can go after. So with this great vision, this execution and this plan, what do you do next?
Well, there are 25 million people in the U.S. alone who have diabetes, who are not on insulin, who we believe can benefit tremendously from CGM. And we believe that this is an opportunity for us to go after in the next several years. What are these patients like? They see primary care doctors. They're more likely to make a decision on a CGM by their own. They're tired of just being told, "Exercise more and eat less and take your meds." They want insights to their health so they can empower -- we can empower themselves to control health. This is a population that we know we can engage and we can serve very well. Let me demonstrate that a bit with an example. This is an individual who was 5 years into their Type 2 diabetes journey, was on metformin.
Went to a primary care physician, who incorporates CGM first in his treatment of people with Type 2 Diabetes. The first thing that he did, and you can see her numbers up there, was take her off of metformin, and he put her on Ozempic, Jardiance, and Dexcom CGM. She went away for a year. Here's what we found in a year. We now have 88% Time in Range. We've had weight loss. We've had almost a 2-point reduction in A1C and a 30% reduction in average glucose over the course of 12 months. So the physician looked at that, he consulted with the patient, and he said, "You know what? This is great. Let's take you off Jardiance and keep you on Ozempic and CGM." So she came back in another year, and what do we see? Increased Time in Range, lowered A1C, and continued weight loss.
What a great win! So we consulted with the patient yet again. What do we do next? Let's take you off the GLP-1. She just had her six-month visit. 100% time in range, continued weight loss, continued reduction of A1C. Technically, if you look at this person, she doesn't have diabetes anymore. She's a pre-diabetic. This is what CGM, in combination with these new therapies, can do. We see it in the data. We see that physicians know this as they're prescribing more CGM with those patients that they put on GLP-1s than they had prescribed before. The A1C outcome for somebody on a GLP-1 with diabetes is better when a CGM is introduced into the equation. We firmly believe we're part of this solution. We are part of the solution for this market, and we will continue to be so.
Like I said, we can do more for these people. That's why today I'm introducing Stelo. Stelo is the first continuous glucose monitor designed specifically for people with Type 2 diabetes. It will be on the G7 platform. It will have the same performance and accuracy that our customers have come to expect, but it will be a 15-day product offering. It will have a custom software package geared more toward these individuals. They don't need the alerts and the alarms and all the connectivity that we offer with the G7 series, but it'll be geared toward what they are expecting. It will be launched as a cash pay product initially, as we obtain evidence and can find more and more and more stories like the one I just showed you. As patients engage with this technology, we know that's what we'll see.
We have filed this product with the FDA in Q4. We are on target to launch it this summer, and we are very excited to do it. It's early in our guidance, a minimal contribution to the top line next year. This is a year of learning, but we will learn a lot, and the future is very bright here. So take a look at Dexcom. When I started this journey, all we were about was Type 1. We've moved down that healthcare acuity curve from Type 1 to Type 2 intensive. Now we're with basal and those who have hypoglycemia problems. We will cross to the other side. Our next effort is Type 2 people that are not on insulin. We can make a huge difference here, and then we'll expand this technology to others. I say the future is bright at Dexcom.
It is brighter every year. Thank you.
Well, great. Maybe we can kick it off with some of the results you preannounced today. Fourth quarter came in $30 million or so above street numbers at $1.03 billion. Really strong growth year-over-year. Maybe you could just help us with some of the details, US versus OUS, and some of the underlying drivers for each of that.
Go ahead, Jereme. You can start.
All right. Yeah, so I think what you'll see in the U.S. is you saw 26% growth in the U.S., 27% outside the U.S. The U.S., again, continued strong underlying patient growth. We had talked about it in the past. We continue to see record new patient starts. Q4, we'd expect to follow that same trend over time. We'll get that over time, but this is the continued adoption, both in the Type 1, Type 2 intensive space, but it continues down that basal space and all the work that we've been doing around putting that product in front of folks and getting the appropriate coverage. Outside the U.S., in our markets that were direct, another strong performance outside the U.S.
I think what you'd say is in all the markets we've been direct, a really strong, performance, adoption, coverage, et cetera, continuation of what we've seen in prior quarters. The only caveat there is you do see us moving out of this non-CGM business, which we will move out of here in the coming weeks, as well as going direct in Japan. So that has a little bit of an impact, but still very strong growth outside the U.S. at 27%, leading to what we think is a very strong quarter.
So record new patients in fourth quarter, again. Any way to size how much was basal versus non-basal? Because our docs remain just so enthusiastic about CGM for these patients now with reimbursement. Any way to kinda compare the different groups?
Yeah. Go, go ahead again, Jereme.
Yeah.
You know these numbers better than me.
Yeah. So as we think about those patients, and we'll get the full final patients numbers in soon, we know it's trending that way. You're seeing... You're right. You're seeing a very strong adoption in the basal population. That unmet need is significant, and so you continue to see outperformance in basal, but you're also seeing a really strong performance continuing in the intensive markets, both Type 1 and Type 2. So I'd say really across all, all, you know, reimbursed pathways, we're really firing, and people are realizing the value of CGM. They really are, Dexcom CGM.
All right. Maybe if we spend a minute on the intensives-
Sure.
Both Type 1 and Type 2. You know, where do you think you are right now in penetration of Type 1, and where are you in penetration of Type 2? You know, I'm thinking more CGM as a category.
... Yeah. So, in Type 1, I think, and I'll start with the U.S., and then, you know, that's really where a lot of the data is. You know, in the U.S., it's about 60% adopted. And, and that's, you know, there's some updated numbers coming out of the CDC, so it's right in that area. Could be pro-- more or less based on that denominator, but about 60%. In the Type 2 intensive, market, we're tracking right around 50%. So it's moved from, I'll call it, starting last year into the 40, 45, into a 50% and surpassing that. And then in basal, it's really only around 15%, and then as you go beyond basal, it's really sub 5%. So a lot of room there as you go outside the U.S.
You know, most markets are generally less adoption, with the exception of a few of the more established international communities, Germany and the Nordics, where they are at in line with the US, if not maybe a little bit more. But the T2 intensive basal in all markets outside the US is lower than the US.
I know it's still only two and a half quarters since you've gotten Medicare and then started to roll in commercial reimbursement for basal in the U.S. here. But do you have data yet on whether Dexcom is winning more than your fair share in the basal category?
You know what? We are doing well in the basal category. My fair share is all of them. So, we'd like to win more. We do very well where we have coverage and penetration, and we know the physicians, and we know the community. And what we are working on is broader coverage and broader efforts to make sure we can win more places. When I said we're investing on the commercial side to get broader, that's one of the things I'm inferring, that we... And we're looking for creative, clever ways to do that. But where we have a presence, we win, very much.
All right, I want to shift the focus a little bit forward. You gave 2024 guidance today, 16%-21% sales growth year-over-year, 63%-64% gross margin, and about a 20% operating margin. So really healthy metrics down the P&L. Sales a little above at the upper end, where the Street is, operating margin above where the Street is. Maybe just talk about, one, what's incorporated at the low and the high end of the sales guidance range? What's in the gross margin? That came just a hair below where consensus was. Then operating margin, you're clearly getting good OpEx leverage. Again, what's in there?
Yeah, so I think when you think about guidance, there's a couple different things in there. So first and foremost, what is now excluded in that number, the raw top-line number, is our non-CGM business, with the expectation that that comes out of the business. So there is an assumption there. In terms of that growth, it does assume another year of record new patients, so I think global record new patients. I think you can presume that there. It does, when Kevin said, a modest contribution from our non-insulin product, our 15-day product. We assume about 1 point of revenue associated with that, so that gives you some context around that. And the rest is healthy growth, really across the board in basal and the intensive population globally.
As you move down the line, and you think about gross margin, if you rewind back to 2023, we really started 2023 with a 62%-63% gross margin, and we're gonna outpace that this year. Some of that is just due to the timing of transition from G6 to G7. So Kevin alluded to it earlier. The expectation is, as we move through that transition, there is a little bit of that. So some of that's embedded. It doesn't change our long-term plans. Ultimately, we are on track for the cost profile we would expect on G7, that $10 sensor. And I would expect us to continue to make progress. There is no 15-day intensive insulin or G-series product assumptions on gross margin in there. So hopefully, that's a little bit helpful.
Then the continuation of leverage through the P&L, I think you'd expect to continue to see us do that. We had a really strong year in 2022, 2023, in terms of driving leverage. That leverage continues as we move into 2024.
Maybe we could shift to that 15-day sensor, 'cause you unveiled... We knew, we knew it was coming. You unveiled the product a little more completely today. You said you filed it in the fourth quarter. You know, let's start with one within that 1% of sales, are we thinking that has reimbursement, no reimbursement? Is it all out of pocket? And just any kind of P&L metrics.
We're starting with cash pay.
Mm-hmm.
And our assumption right now is it'll be cash pay, primarily over the six months. We will eventually seek reimbursement for a product in this category. We think it'd be very useful. But the product does have different feature sets, and quite candidly, it meets a different need. Somebody on intensive insulin therapy, this is life and death. For these individuals, it is health. And so we're not sure where that pricing model works out over time. I can envision possibly a different reimbursement model, but we need to go gather the data.
You know, we produce studies, Robbie, with people in the Type 2 space, where we've demonstrated in numerous times with UnitedHealthcare, with Intermountain Health, with studies of our own, that the CGM saves the system $400-$500 a month in this Type 2 patient group. So what we wanna do is get this product out there, get it on people, and then start discovering what outcomes that we can. On the profitability side, in all fairness, this is a launch of a brand-new technology in a brand-new market and a brand-new product, and if somebody came to my office and said, "We're gonna make money," I'd fire them. We need to invest, and we need to spend, and we need to grow this thing, and that's exactly what we're gonna do, and that is baked in to the operating margin improvement.
That's what we plan on doing for this year.
I didn't see a launch price up there, but your competitor, cash pay, my understanding is around $800-$900 a year, plus or minus. Is that a good ballpark to be in?
We'll be competitive.
Okay.
We'll do what we need to do to be competitive.
... Now, guidance doesn't include a 15-day sensor for the G-Series . Maybe talk about why you can start with a non-intensive 15-day sensor first. What has to happen for a 15-day G-Series ? And-
Yeah.
You said it's not included in guidance. Is it possible in 2024 to see it?
No, we wouldn't launch a 15-day sensor in our core business in 2024. You know, we have very high standards with respect to patient reliability, and what we have learned, particularly in the intensive diabetes world in our studies, is the majority of our sensors make it to 15 days very acceptably. And as people have less glucose variability, such as those in this Type 2 world that we're dealing with, we're very confident that a 15-day product will deliver an appropriate patient experience at the reliability level that we expect. On the other hand, our current technology, for example, with children who bounce all over the place, that's not the experience that we want to offer, 'cause we don't want sensors stopping at 10 days or 11 days or whatever, and creating that experience.
With respect to our, our current and our core business, we have some technology changes, as I said earlier. They're in clinical testing that will enable this product to go reliably at the standards that we've set for ourselves out to 15 days, and quite candidly, beyond, but we have to figure out how that works on the commercial side. So stay tuned. We'll talk more about that over the course of the year and the progress that we make. But we do need to make a few fundamental changes, and we, we've identified those. We know what they are.
You talked about how the SG&A includes the launch of this 15-day sensor, and you're gonna continue to see gross margin improvement. When we get a 15-day G-Series , that's a substantial potential gross margin improvement. If I look 5, 10 years out, you know, where do you think operating margins can go on the pace you're on with the product set you're shooting for?
Yeah, well, we haven't necessarily provided a number. There's no reason we can't have world-class margins. Building products, again, cheaper, cheaper cost, but again, continued higher quality, leveraging the footprint we have in our manufacturing processes as well as 15-day. But then we're spending a lot of time ahead of when the need is there on structuring the organization and structuring the service models. And as you start to think about all the tools that are available, whether it's AI, RPA, all of the various efficiency tools that are now becoming easier to support a product line, there's no reason we can't get there over time. With one caveat, we will always invest in this market. It is something that is core to who we are, believing that there is a massive unmet need.
Investing in whatever that looks like is something we'll always do. We're gonna balance those two, but we have absolute opportunities to drive levers in our business.
So when we were here two years ago, I feel like nobody would have thought that you would have gotten such widespread and comprehensive reimbursement for basal patients in the U.S., as well as those with high risk of hypoglycemia, let alone Japan and France starting to open up basal reimbursement. Where else in the world do you think you could see improved reimbursement in 2024?
Well, we see several E.U. geographies following suit, and considering this greatly. I think while we have a very strong body of clinical evidence with the MOBILE study that we provided, we're in the process of gathering more, and we need to gather more evidence for some of these geographies. But you could certainly see Germany, you could see the U.K. Because people recognize, look, if we incorporate this technology at a reasonable cost, we're gonna save money. We're gonna be ahead of the equation, and the individuals we treat are gonna be healthier and happier. So we're pushing on these geographies. We literally break it down country by country, and we're working to do the same thing there that we did in the U.S.
Yeah, and I think one thing, just to add to that, is we're talking a lot about basal and coverage along those lines, but Kevin referenced it earlier. Seven of the countries that we went into with Dexcom ONE, all with no coverage to start, started covering Type 1 after that launch. And so I think going down the acuity curve, certainly in established markets, is what we're referencing, but there's also a real opportunity to go to places where CGM isn't covered or isn't prevalent, and to go into those markets and really help folks who need it.
Well, I think that also applies in the U.S. as well, right?
Yeah.
For most of Dexcom's history, you didn't participate in the cash pay market, and your competitor did and had a sizable portion of their sales cash pay. So there are people who are willing to pay for CGM therapy in the US, out of pocket, without reimbursement. You know, this year it's gonna be a partial year, but in the next, let's say, two, three years, how big a percentage of your business do you think cash pay can be in the US?
Jereme says I can only give guidance for one year at a time.
All right, so I'll take 24.
No, I... Very, very small piece in 2024. I think over time, Robbie, it will increase. I think with this Type 2 product, while we're starting with the cash pay option, it's our long-term goal to have this one reimbursed. But I think, again, as Jereme talked about, moving down the acuity curve, as we develop tools for pre-diabetes or diagnostic tools for gestational diabetes or other things of that nature, you can see cash pay businesses shifting to reimbursed, being replaced by different cash pay businesses over time, and that's how we look at this. So does it ever become, in my mind, more than 20% of our business? No, but if it did, it'd be wonderful, 'cause we're gonna continue to grow on the reimbursed side as well.
Do I think of the margins given you have the 15-day sensor here? Is this a, you know, dilutive margin, similar margin, accretive margin to the business?
... I'll start. I think gross margins will be fine to start, probably a little lower, but they'll be fine. They'll be better because it's 15 days, but volumes have got to catch up. I think operating margin wise, again, in the beginning, we're investing in 2024. I think those margins over time should eventually become equal to what we have now, if not, maybe if not even better, because there's more people, there's a bigger population. The volumes from this product and the volumes of this market could greatly exceed our intensive insulin market over time, and that would drive wonderful margins.
CGM and Dexcom, specifically, is one of the few companies in the world that has consumer-grade volume scale, but also at FDA regulatory-grade quality. You know, so just talking about all the potential volumes, where do you sit in terms of capacity as an organization? And are there any upcoming spending areas that we should be aware of?
We've had a very aggressive capital expenditure program over the last three years, over $1 billion on factories and equipment. As we build out our Malaysian facility, we have tremendous capacity to add more manufacturing lines there. We've also announced that we're going to start manufacturing a facility in Ireland to give ourselves more diverse manufacturing capability, more supply chain management. I think one of the best learnings about what we've done in Malaysia, we didn't just build the factory, we greatly enhanced and requalified new and quite candidly, in some cases, better suppliers than what we had before. So we have a very strong capacity plan. I would tell you the other thing, Robbie, that we're learning, just on the G7 front, the amount of plastics here has been reduced by half, if not more.
We'll continue to look at things like that for capacity in our efforts to save on materials. I think capacity-wise, we are geared to do whatever we can attempt, and our team is. I think that statistic of 35% patient growth and 24% revenue growth, we did that without skipping a beat on the capacity and manufacturing side, shows our ability to adapt to growth. We'll be there, we'll be ready.
I wouldn't necessarily expect any massive changes in what we've already outlaid. So Malaysia is up there, so we've spent the money on the facility. We'll continue to fill it with equipment, so that'll be CapEx there. We'll do the shell, of course, in Ireland. We'll eventually fill that with equipment, but nothing that you don't already know, that we've already publicly talked about.
All right, great. Well, we're just out of time. I want to say thank you for coming. Thank you for joining.
Thanks for having us.
Thanks for having us.
Thanks for your time.