All right. Good afternoon, everyone. Thanks for joining us at the William Blair Growth Stock Conference towards the end of the day. So appreciate everyone still being awake and here for this meeting. My name is Margaret Kaczor Andrew. I am the research analyst here at William Blair & Company that covers Dexcom. Before we begin, I am required to inform you that I personally own shares of Dexcom. Outside of that, you can obtain a complete list of research disclosures and conflicts of interest at williamblair.com. With that, we're pleased to introduce Jereme Sylvain, CFO of Dexcom, and I will hand it over to you.
Thank you. Appreciate that, and thanks everybody for spending some time with us this afternoon. We love to talk about the company, and so what we'll do is we'll take you through a little bit of our history, our current and our future, and some of the markets we're looking to address over time. So as we do that, you know, hopefully you're able to see the opportunities ahead of us. First, here's a safe harbor statement. I won't read it. You're more than welcome to, if you'd like to. But it's obviously the things we say today, obviously, are aligned with that. So let's just talk about diabetes, and let's just really re-ground everything in the global crisis here that we have today.
What you see in front of you is the cost of maintaining or caring for diabetes in our communities today. So some of you have seen this slide before, but it's always good to ground on the problem we are trying to solve. As you look at the costs of diabetes growing to $783 million per year, 783 million people, excuse me, that is a staggering number of people impacted by diabetes. The related cost of folks that are impacted there, it's about 2.6 higher. So you can think about the impact as folks migrate through that, and one in four U.S., healthcare dollars are spent on people with diabetes.
So there's an economic problem that we are trying to solve here today that certainly is not being met with the current standards of care. On top of it, there's a personal cost. Folks that are above the age of fifty, impacted by diabetes, generally have about 25% less of a remaining lifespan than those that don't. And so those are years that we're taking away from loved ones. And if you engage with your diabetes, the likelihood of reducing the impact of diabetes on your remaining life is significant. You can reduce 50% to all of it. And so not only is there an opportunity to address the economic concern, there's an opportunity to address the societal concern.
And as you're going through, you know, as you think about what is the life of a day of somebody impacted by diabetes, this is a typical person that has basal insulin, who might have finger sticked once per day, woke up in the morning, took their basal insulin, and took a finger stick and saw that they were in their glucose range, and went through the day. And they might not wonder why they're getting better, and that's actually, unfortunately, a case that's all too often heard. And you can see why, as you move to the next slide, this is actually what happened. Over the course of the day, they were out of range for 17 hours. That is very common. These are actual glucose traces, and if you look, there's actually about 6 hours in severe hyperglycemia.
This obviously leads to long-term complications, ultimately causing obvious things like amputation, obviously eye issues, nerve issues, and certainly cardiovascular and other issues that we can ultimately, hopefully address by keeping folks in those range. CGM has become the standard of care for all insulin users, but it has not necessarily become the standard of care even beyond that. We have an opportunity to get our arms around that, to continue to change the trajectory of healthcare, both in the U.S., and around the world. I think the point is with Dexcom, we can do more. There's a lot of opportunity ahead of us here, and so we're really excited about what Dexcom can do. So we're going to talk a little bit through what we can do to help it. But first, I want to just talk about our company. We've really pioneered the CGM industry.
When you think about all the firsts out there, we were the first to have a hypo alert to increase user safety. We were the first to have a Share and Follow app. We were the first to have single-digit MARDs. We were the first to send glucose directly to the phone, the first to eliminate finger sticks. A couple other firsts, but one that we also announced today, we were the first CGM to directly connect to Apple Watch, and that is now available in the U.S., starting as of today. And we were the first company approved for an over-the-counter glucose solution without a prescription in the United States. So all of those firsts come along with being on Dexcom's product platform, and I think it's really exciting as we continue to pioneer this industry. There's so much opportunity.
It gets back to our, our mission statement, which is empowering people to take control of their health. We changed that a couple of years ago. A couple of years ago, it was empowering people to take control of their diabetes. But as, as we've started to see, there are so many things that sensing technologies can do, and specifically glucose, but other sensing opportunities can do, that you can empower folks to improve their overall health condition by informing folks what is going on in the body. It's a wonderful opportunity, and we look forward to taking advantage of it. But I want to talk a little bit about the performance now, right? We are an investor conference, so I want to make sure we talk about our 2023 performance. Last year, we had $3.62 billion in revenue.
That was a 24% growth. That's organic growth. And so as a company that's continued to do well, I've been to the company now 6 years, we've migrated from about $1 billion in annual revenue. Last year, it was $3.62 billion, and this year, we're guiding to the low $4 billion range. So certainly, it's been a wonderful story about growing this organization and meeting some of the unmet need, but there's a long way to go. And we grew our active base by 35%, up to 2.3 million users. So 2.3 million people across the world are using Dexcom today. There's an opportunity to serve quite, quite a bit more. We also expanded our margins. So if you look, we had 400 basis points of operating expense leverage over the course of the year.
We've made a commitment back to our investors that we would deliver that... We continue to put the levers in place in our business to deliver operating margin expansion, and that's gonna be part of what we do for the coming years. All the while, we've expanded access, and so we have significant improvements in access over the course of the year, led first and foremost by the Medicare basal coverage that took place earlier in 2023, and then through the course of the year, commercial coverage that followed. And we'll talk a little bit about more of that in a second. And we did all this while scaling capacity. We launched our Malaysian factory in 2023. We broke ground in 2024 on our Ireland factory, and which will come online here in the next 18 months or so.
And so we're really excited about the opportunity to continue to serve the population with the capacity we're building in place. And so we talk about 2024. So just to give you a little bit of an insight, growth of $4.2-$4.35 billion for the company, operating non-GAAP gross margins of 63%-64%. Non-GAAP operating margins of 20% and adjusted EBITDA margins of 29%. I think you start to think about that adjusted EBITDA margin. We're a company that now has exceeded $1 billion in EBITDA, and I think that's something that's really important as we move forward, to continue to keep an eye on that. Some of the things in our outlook, just to think about, we are transitioning our customer base from G6 to G7, a very exciting time for us.
We put a lot of effort into building G7 into the product it is today. We are launching. We're not launching, we're expanding our launches into basal and non-insulin hypo population. Dexcom ONE+ was launched into 8 new geographies in the first quarter, and we're launching into 5 or 6 more geographies here in the second quarter. Dexcom ONE+ is our foray into a G7 form factor for our international markets, so it's a, it's an opportunity to serve both tender markets as well as high-end markets. We're gonna launch the Stelo, and we have a little bit more to talk about that later today, but Stelo is our first over-the-counter product. It's our first 15-day product.
I think it provides a lot of opportunity to address all of those that are potentially impacted by diabetes and beyond, quite frankly, our label goes beyond diabetes, and we expect to continue to have operating expense leverage going forward. So with that all in mind, I'll talk a little bit about G7 here. For those that are obviously familiar with it, it's our trademark product, our flagship product, and it forms the form factor. That is the form factor across our Dexcom ONE and Stelo platforms. It's the most accurate sensor on the market. It's incredibly simple, and we've spent a lot of time and effort, really getting it covered.
We have the best coverage for this product, really, across the world, and that's intended, obviously, to allow folks to get onto therapy and to stay onto therapy. We've spent a lot of time and effort doing that. How we're going to expand it over time, and this, this becomes really a part of the opportunity to serve more people, is we are innovating on product design. So we are moving forward towards a 15-day product for our G series, and we talked about that really coming here sometime in 2025. So really important for us. We are investing in future device enhancements, and so we've talked about Direct-to-Watch today. We are connecting to other features.
We recently launched a medication logging module, allows you to track your GLP-1s, as well as ingesting data from Apple Health and Google Health, so that you can track activity and correlate that to glucose data. So certainly, wonderful integrations there. We are maximizing G7 pump and connected pen availability, so we are continuing to connect to pumps and pens across the world, which is very helpful for folks managing their insulin taking. And clearly, as we move Dexcom ONE on the G7 form factor, that is also a big win for folks there. You can see the boxing and the packaging. Looks very similar, acts very similar. There are differentiations, but I think the key part is the accuracy and simplicity remain. And we're simplifying our software structure.
You know, the hardware you can see on the prior slides, but I think what's really an opportunity for us is, as we move forward on our platforms, as we simplify these platforms, we can launch more software to help address issues, and you saw that earlier today with Direct-to-Watch. We'll continue to launch monthly updates, which continue to integrate new features. We like to think of it as an ecosystem of taking care of folks over time. Dexcom ONE is on that same software application. Similarly, Stelo is on a very similar code application, which allows us to put things out very quickly. We also have a global instance, so we can launch global into countries. That's easy to iterate. We talked a long time ago about Dexcom eventually becoming a software company.
I think you're starting to really see it play out in our apps and our ability to iterate in those apps over time. And by doing so, we talked a little bit about some of the things we're doing. We wanna provide a broader picture of health. A lot of times, people stop me and say, "Hey, I've got a glucose number. What do I do with it?" Well, one of the ways we're trying to correlate glucose data with outcomes is to, as we mentioned earlier, ingest medication data and ingest activity data. Really important as we figure out how we can deliver value back to those folks using it to ultimately improve health.
If you can understand the activities that took place over the course of the day, the glucose tracings that followed it, and the impacts then either to your A1C or time in range, those things are very meaningful, and they can ultimately help reverse the course of diabetes over time. So very important that we're providing that data to folks, and we also are the most connected solution. We, we believe that connectivity is a competitive advantage. We started the company really on an open architecture to try to do so, and you can see it continues over time. The pumps/partners we've connected to, you can see Tandem, Insulet, Lilly, Beta, Novo, our friends at Signos and Levels. We're connected to all of those, and we'll connect to many more beyond that, by the way. We also connect to loved ones.
Share and Follow is one of our most popular features. You could imagine you're a parent, knowing what's going on with your child, knowing whether they're going low in the course of the evening and being able to follow them. The peace of mind that comes there, that connectivity has been incredibly important. And then we are connecting to healthcare providers through Clarity, making Clarity, our internal software, easier for healthcare providers to access, having Clarity in the clinic, as well as through partners like Glooko, making sure that you can leverage these technology tracings into actionable outcomes. So it's a real great opportunity for us to continue to push technology to help serve what's, what you see here. This is the core U.S. market. This is our insulin-taking market, and that big spike you can see there is the basal coverage that took place in 2023.
The green bar represents those using CGMs today. You can see we're in a position better than we've ever been before, with more coverage and less people on therapy relative to that coverage than any point in our recent history. So we're really excited about the opportunities here ahead of us, and you can see the future is bright in terms of how much opportunity we absolutely have. This is in our core U.S. market, but we also have a lot of international markets that we're moving in as well. We'll start here in the U.S. We increased our prescriber base by 40% in 2023. That really led to the impetus of some of the work that we're doing here in 2024 around expanding our sales force. That's a significant amount.
We already have quite a few prescribers, but having that access to the PCP market the way we do is allowing us to bring in new patients at a clip that ultimately leads to records. We had a record Q1 in new patient adds. You can also see that scripts are written by primary care physicians. As we see more folks in the basal space and beyond, this is where folks are seeing, and this is why we've ultimately gone after reaching these primary care physicians, and we're happy to say that 70% of scripts are written by PCPs, which is a bit of a difference from our past, where it was a heavy endocrinologist-based population. So we're gaining momentum and very excited about it. Now, a shift to international growth. We've continued to take share in our international markets for some time. We continue to enter new geographies.
One of the things we do is once we enter into new geographies and we have a product portfolio approach, we do so in enabling governments to see the benefit of CGM and ultimately approve it. So once we entered into the BEL countries, shortly after entering into those countries with Dexcom ONE, the government ultimately passed coverage, and ultimately for Type 1, and we're working on expanding that coverage. Also, reducing administrative barriers, that's always one of the biggest challenges. Anybody that knows the healthcare landscape knows that barriers are often out there. If we can navigate those, it can be certainly helpful to getting access. We are expanding reimbursement. We talked a little bit about the BEL countries, but that continues. Yesterday, we announced that we received basal approval in France for our Dexcom ONE+ feature.
So, as that continues to take place, we're really, really excited about it. And then going direct in strategic markets is really important. Japan is a market that has over 1 million folks reimbursed for CGM, and currently one of the lowest penetration markets in the world. We went live direct in Japan on April first of this year, moving off of a distributor model, and that's because the opportunity there is significant. And so we'll continue to do these things as we expand, and we talked about Dexcom ONE moving. So we're really excited about the international market opportunities ahead of us, and we're doing so through a tiered process. So we have multiple different product offerings. I think it's really important. We've tailored how we go to market based on what that market requires.
So you can see where there's broad reimbursement, we do use the G series, where there's multiple different opportunities, we have a tiered approach, where there's tenders, and if there's limited reimbursement, we do use Dexcom ONE. It's an opportunity to come in with maybe a more modest-priced CGM and address that unmet need. So we're really excited about that portfolio approach. It's the right way, we believe, to go about it, and something that really differentiates us from our competitor. And we talked about Japan. You can see in the green bar that Japan represents the opportunity that's been expanded for us, a significant amount of expansion in that opportunity. All insulin is covered. That includes basal insulin, so over 1 million people.
It is one of the most under-penetrated major markets in the world, and so there's a lot of appetite for technology, and we expect to do really, really well there over the coming years. So something we're very excited about and certainly impacts 2024, but really, over the longer term, this should help us, impact 2025 and beyond. So what's next? Most folks know us as a company that builds CGMs to address, insulin, and so, you know, what's next for the company? Well, what's next is there's 25 million people in the United States with Type 2 that are at risk of hyperglycemia. But a lot of CGM in the industry was built around hypoglycemia and avoiding those lows, the dangerousness that comes with taking insulin.
But what we've realized over time is just as dangerous are the lows in the short term, they're just as dangerous are the highs for the long term and the complications that come with it. And so we have a product now that we really want to address it, but let me reframe what's possible with Dexcom CGM. This is an actual patient in a clinic. One of the... Our partner doctors ultimately does this, and he's a big fan of CGM and a big fan, of course, of medication as well. But really, what his primary goal is to allow people to have the tools to start medication for its intended use and then eventually to wean off it over time.
So this is a patient that started, came in, was 50% in range, 34% of the time was high, and 16% was very high. Put him on a CGM and realized that the average glucose was 187 milligrams per deciliter, A1C was 8.2, and the weight was 220 pounds. And what you saw one year later, they were put on GLP-1s, an SGLT2, and a Dexcom CGM, and so it was Jardiance, Ozempic, and then Dexcom. And after one year, went from 50% in range to 88% in range. Average glucose down almost over 50 points, over 60 points, sorry. A1C moved from 8.2 down to 6.3, so certainly a nice move. And then you look at the weight, there was about a 28-pound weight loss.
That's after 1 year. That's incredible progress.... So what did the doctor do? They discontinued Jardiance and said, "Let's keep you going for the next, till the next visit on CGM and Ozempic." At the 2-year visit, moved to 90% in range, a little bit better than before. Average glucose, though, down another 8 points, and getting really down into a very nice area, an A1C of 6.1, and continued weight loss over the course of year 2, down to 175 pounds. And did something maybe some consider radical, some consider what you'd expect to do, is discontinued use of the GLP-1, discontinued Ozempic, and kept them on a CGM. 6 months later, 100% in range, continued reduction of average glucose, continued weight loss, and this person has progressed so far on their A1Cs, they're actually technically no longer considered diabetic.
They've moved back into prediabetes. This is what can happen when you have line of sight of what's going on into your body, and this is what CGM can provide. This is a wonderful tool. What tool would be great for this? Well, first off, let's talk about GLP-1s and the combination of CGM and GLP-1s. We, we often get in front of folks, and they say, "Well, what about GLP-1s, and how does that work?" GLP-1s work as an incredible therapy, but they do require a lifestyle modification. The CGM effectively provides that lifestyle modification by understanding the choices that you make and how it impacts your body. You can see here, if you have a GLP-1 only, you can see the reduction in your A1C levels of almost a point in this, in this particular group, and this is from a major payer.
You can see when you combine a GLP-1 and a CGM, the numbers are much more significant. And you can also see over time that CGM use continues to do very, very well in this, in the GLP-1 therapy bucket for this exact reason. So we see ourself as incredibly complementary to advancement of drugs as part of the diagnosis and lifestyle change that's required for those drugs to be effective. So we can do more, and I wanna talk about what we can do, where we can use more. Let's talk about Stelo. And for the first time, we're actually announcing when we're gonna launch Stelo. We're gonna launch it in late August of 2024, and this is right in line with what our expectations are. So it's coming here in the next couple of months, and we're really excited.
So Stelo is the first product targeted for people with diabetes not on insulin. It is an over-the-counter product, it's customized software, it's a cash pay option. It's a 15-day wear period, certainly something that's very important as we think about delivering on the cost, and we're really excited that we're gonna be putting it out on our e-commerce site. Talked about launching it in late August of 2024. That should be an unconstrained launch on our e-commerce website, and so we're really excited about building up the capabilities to service the population and the demand for this product. A really wonderful opportunity for us to get ahead of it, and we think this product will certainly form the basis for a lot of impetus to get on CGM and ultimately address this unmet need that we continue to see in our population today.
So we're really excited about Stelo. So just to recap, you know, where we're going and what Dexcom can offer over time is where we are. We're in Type 1, Type 2, intensive, and basal only, and problematic hypo, and that's covered by CMS. But where we're going over time is Type 2, non-insulin, prediabetes, gestational, patient monitoring, health and wellness. Make Stelo as our start, and you can see what it does. When you look at that patient journey over the course of time, you can see what a CGM and that capability really does to help you understand where we're going and where your body can go over time. We're very excited about the journey. Thank you, guys, for spending a little bit of time with us.
I know we have a few questions we'll answer here, but, hopefully, you guys are about as excited about the opportunity as we are. Thank you very much.
Well, number one, I was trying to convince you to actually launch the Stelo at this conference. Was unsuccessful. I was also trying to say everyone in this audience should get a free Stelo. Similarly unsuccessful, but you're working on margins, so I understand why. Now, all of that said, obviously, the timing was new news for us, so I do appreciate that. I think most people in the audience know how bullish we are, at least about this as an opportunity. And frankly, the more research we do, you know, as bullish as I am, it feels like the market's trying to push us into something more bullish. I know you appreciate that, me raising expectations, you're welcome.
But, you know, maybe ground us a little bit in terms of the non-insulin use that we've seen today. Is that a population that's similar to the Stelo population, or will you continue to expand beyond usage?
Yeah, so I think, you know, the population today, we know there's hundreds of thousands, really, you know, 60,000-800,000 people right now today in the U.S., that are non-insulin users, that are using a CGM. And they're using a CGM that's really designed to avoid hypoglycemia. So alerts and alarms, things that prevent you, that alarm you if you're going low, some things that can be relatively inconvenient if you're using it. I think we've used cases where someone's giving a presentation, you know, a kind of closing argument in a legal case, and the sensor goes off. That's not a wonderful experience. But these folks aren't at risk in most cases of being hypoglycemic concerns. In fact, the reason they're wearing it is to avoid hyperglycemia.
So we're taking a product today that was designed for something and using it for something else. Well, Stelo was actually designed exactly for that individual, the individual that has challenges with hyperglycemia, and then actually needs to know what to do once we identify it. And so we haven't talked a lot about the features, but the features will be designed for that user, not only to understand where they're going, but what they should do about it. And so that market today is significant, but it's not an ideal product being modified. What is a relatively large population? Our expectation is to go much further into that population than the adoption today, which again, is less than 5% of that population, as well as to go beyond it. Quite frankly, we understand that this is an over-the-counter product, so...
It's indicated for everyone not on insulin, which means you do not have to have diabetes. You can be pre-diabetic, you can use it for health and wellness. It can be used by anybody, and so I think that's where we expect to go over time. Feature set designed for that Type 2 user out of the gate, but I think you saw from our software slide, software iteration is something we're getting quite good at, and I think you'll be modifying our software over time to help address larger use needs.
And so, you know, there will be some shorter questions as well that I've certainly been asked to ask you, but I can't help but keep going on this topic. And so, as we kind of think about the initial Stelo launch, you did talk about it being unconstrained. Which frankly, normally you guys do a limited market release, and even in this scenario, that's probably what I would have expected, because you do want to understand how people react to the software that you will put out. So maybe walk us through why your confidence around that as a point.
Yeah. So, you know, this is years of market research. You know, I, I've been, as I mentioned, I've been at the company six years, and we've been working on it for most of the time that I've been there, as we prepared for this date, in terms of how to position it, how to make sure the product made sense in this group. So lots of market research would indicate that, you know, we do believe there's going to be a lot of demand for this product. We've built up the inventory. It's an unconstrained opportunity. It's over the counter, so you really can launch it unconstrained.
The reason why we are selling it, we're gonna sell it through our website, so you, you know, if you want more information, you go to Stelo.com or go to our website and put your... We'll send you information as the date comes sooner. The reason we're selling it through our website is to control the user experience, but with an unconstrained. So to your point, one of the ways we're looking to make sure that the user experience is special is to run it through our website and make sure that the, the user has that wonderful experience. At the same time, there's no limitation on how much we can sell.
One of the things that's been interesting to me, and I keep pointing out to folks, is you don't get to 60-800,000 non-insulin users overnight. There's actually quite a bit of experience within this market-
Mm-hmm.
You know, whether yourselves or your competitor. And so, you know, maybe one of the pushbacks is churn is gonna be too high. This is gonna be a fad. You referenced software that theoretically should even improve that churn, but can you speak anything to that?
Sure, yeah. You know, at the end of the day, it's about being able to deliver the insights that deliver outcomes. And there's a reason, when I say this amount of people are on it, it's not that this amount of people have tried it. This amount of people are on it full time, and they wear it year-round because of what it provides. So our expectation is, through the software, through the right design of the product, and through really the unmet need, there's gonna be quite a few folks that are going to wear it full time. That being said, there will be some folks who wear it intermittently. There will be some folks who wear it once a year. That's okay as well. At the end of the day, there's a massive unmet need of folks not understanding what is taking place in their body.
If we can provide that line of sight, whether it's before your annual physical, whether it's for training for a marathon, whether it's for a quarter a year, whether it's for checking in on your weight, whether it's for managing your diabetes and making sure you don't progress to taking insulin, I think those use cases all fit into this category. But you're right, this is a category where there's quite a bit of people with experience in this Type 2 space, which gives us the confidence that this will be a well-received product.
So maybe let's fast-forward to today, second quarter, and you guys have referenced this since the beginning of the year. You're doing a big sales force hire. You're trying to integrate that in. Now, my perspective is, if you're gonna have a big launch, you kinda need to have a commercial structure that supports that. But you know, the other flip side would be, you know, there's something else going on. So maybe walk us through why now, from a commercial sales structure change, and what's the, you know, what are the recent comments have you had on that?
Yeah, so you know, the expansion of the sales force was really about being bullish about our future. It's not... And by the way, it's one about Stelo and preparing for Stelo, but I think, you know, we showed you that graph in the US. We have more covered lives that are not on therapy today, even in the insulin-using population, than we've ever had before. And we realized to reach everybody where we want to reach them, we needed to expand the sales force. So from our point of view, this is a bullish opportunity, as we expand that sales force. And you know, we're gonna call on new folks where we know that there's an unmet need.
Maternal health is a big one for us, where gestational diabetes is a massive unmet need, and we can use the sales force to call on that hospital. Certainly, folks are discharged and have a need for a CGM at the hospital. We're certainly going to use that as well. And clearly, we needed more coverage on PCPs, and that's where, you know, a lot of the battle is won. So the expansion of the sales force was done with that in mind. We've contemplated it now for quite a bit of time, hired everybody in the first quarter, and we're launching it here in Q2. We're really excited about it. I, you know, I think we've mentioned it in our first quarter call.
I kinda reiterated that's what we're gonna do in our first quarter call, at you know, some prior meetings, and I think that's what we're still excited about, is we're pushing forward with the sales force expansion.
So, you know, maybe just to wrap all of that up, as we think about your guidance, both for the second quarter, you did have some comments, maybe you're not specific as much, for guidance for Q2. But walk us through what you said on Q2 full year, and what was contemplated in that. And then, you know, third piece, how does that compare to the Street estimates and whether you're comfortable with it?
Sure, yeah. I think last time we spoke, the question was how do you think about the estimates in Q2? We don't guide the quarters. So we said, you know, things are reasonable, and I think it's a reasonable outcome. And in terms of the full year, you know, as of the last quarter, when we issued our earnings, we raised our guidance. And so that should give you. We obviously beat the Street expectations in the first quarter, raised guidance, and continued to do well. So I think from that point of view, you know, I think we're happy with where we are. We're happy with our full-year guidance. We don't guide to the quarters, but we were very comfortable with where folks were sitting for the quarter.
Perfect. With that, we'll wrap it up here, and then we'll have the breakout up in there. Thank you.