Welcome to the 47th annual Raymond James Institutional Investors Conference. My name is Jayson Bedford. I cover the med tech sector here at RayJ. It's really my privilege to introduce Dexcom. We have the company's CFO, Jereme Gloeckler. Dexcom has been a loyal participant at this conference for many years. Jereme, thank you for your participation, and thank you all for coming. With that, I'll pass it over to Jereme.
All right. Thank you, thank you everyone for being here. It's always exciting to talk about Dexcom on a Monday afternoon now. Happy to go through this. Let me first start with the safe harbor statement. I'm sure you guys can all read this. What it says is we will talk about some forward-looking statements. If you want to read it in detail, you're more than welcome to. It's on our website. Let me first start with just, you know, just maybe an introduction to Dexcom, who we are, what we do, and really a little bit about our history. I think it's helpful as we talk about our future, we talk about our history and what we've been rooted in. Dexcom, we make biosensing industry, really continuous glucose monitors.
As you look at the organization over time, there's a litany of firsts that come here. What you can see is the first to use alerts or the first to create the ICGM standards, the first to have a share follow, the first to, you know, connecting clear without a prescription for those that have used Stelo. We've been the first to integrate gen AI into our product. All of these firsts, they all really come out of a knowledge and a depth and a breadth in this industry that really we helped create. I think it's one of those things that it sometimes gets lost as...
We need to remind folks that as one of the two major CGM players, and I know there's more than that, but as two that really lead the industry, we are the one that drives the firsts in the industry. When you think about the advancement of technology, our hope is that you can associate that with Dexcom. Going forward, we expect to do just that. As we start to think about it, what I'd really like to do is step back and say, okay, now we know we're a continuous glucose monitoring company, what are we trying to solve here? I think this is really the area that remains near and dear to all of our hearts. This is a crisis that continues to grow.
For those that know us over time, you've seen reference to this reference to this slide. If you look at it, the crisis is mounting globally. Right now, there's almost 600 million people with a diabetes diagnosis. The IDF expects that to be 853 million by the year of 2050, that takes into account all of the technology and therapies that are out there. We know that when you have diabetes, it's about a 2.6x cost to the system. We also know that a quarter of our dollars in the U.S. certainly go there. The big question then is saying, "Well, how is it progressing over time?" Well, unfortunately, approximately 40% of the U.S. population has prediabetes, which is obviously the feeder into this.
There's a massive unmet need. What's interesting at the core of all of this is there's an underlying thought process that CGM has penetrated. The reality is only about 2% of this population has access or uses CGM at this point. There's a massive market to unfold. There's a massive opportunity to help bend this curve, and we intend to be at the beginning of it. Now, for those that you know, that know, we recently had Kevin Sayer ultimately retire. He's gonna be our Executive Chairman, and Jake Leach. Jake's been with the company for 21 years, stepping into the CEO role. You wouldn't know it by looking at him, but he's been with Dexcom for 21 years. Prior to that, he was at MiniMed, and ultimately the organization sold to Medtronic over time.
You know, Jake has been part of the team that ultimately has helped build these sensors, as he steps into the CEO seat, I think there's three key areas that we're gonna be focusing on as we drive this business forward. One is being the premier glucose sensing solution for all. You know, Jake comes from technology. Our organization was based in technology. We listed the firsts for our organization. The expectation is we continue to lead in technology. When you look at the ability of what glucose can do for the body, in addition with other data, you can really. If you can be the premier glucose sensing solution for all, you can ultimately drive massive improvements, both in folks using it and folks that haven't yet used it. We also want to set the standard for customer experience.
I think it's really important to understand as this product gets into more and more hands, you would put up with maybe challenges in customer experience because of what the product did. Over time, it's gonna be really important to make sure we make it easier. Easier to get access to help, easier to request replacements, easier for you to navigate through the reimbursement landscape, and easier for you to use the product in a way that it was intended for. So we're gonna be looking at a bunch of different solutions that make the customer experience a differentiator. Lastly, we are under-indexed outside the United States. We didn't start.
We started heavily in the United States. To this point, while we're the number two player globally, we're the number two by a relatively large margin relative to our competitor there. There's a massive opportunity to take our product outside the United States. We'll talk a little bit more about the product portfolio strategy. Those are the three foundations. All of it is built on a scalable foundation. Really important. Pretty soon, we'll make as many sensors as Apple makes iPhones. We have to be able to do that in a scalable way for it to make sense for everybody. It becomes real important. Lastly, as we go through this mission remains personal. You know, our company has many folks who are ultimately on our product in all different phases.
At the end of this presentation, we'll have some of the pictures. The moments that matter in people's lives, they're depicted here. Ultimately, the solution that we offer provides it, whether it's meeting with your physician, whether it's, you know, working through a pregnancy, whether it's, you know, going to your daughter's recital, allowing yourself to sleep at night. All of these areas become very, very personal. Those who have been exposed to the technology understand it. It's personal for everybody here at the company. Let me take a step back before we take a step forward. I'll recap 2025. If anybody wants to see it in more detail, we filed it and there's a bunch online to see.
Essentially, we grew revenues about 15% organically in 2025, and we grew the active base by a little bit north of 20%. Really exciting for us. We've got about 3.5 million customers globally, and that excludes those who use our Stelo product on our product. All in all, it was a year of some significant advancement, but a lot of learnings, and we'll be the first to acknowledge there were a lot of learnings over the course of the year. Let's talk about some strategic updates, and then I'll turn the page on what the learnings lead to longer term. We did secure coverage. All of the largest PBMs in the United States now cover our product for Type 2. Think about that.
That's Type 1, Type 2 intensive, that's multiple shots for the day, Type 2 basal, that's 1 shot a day. For those that are not on insulin shots, we also received clearance for SmartBasal. Now, for those that don't know what SmartBasal is, SmartBasal is an opportunity to titrate your insulin remotely from your physician's office with your physician in the loop. This is a first of its kind experience that's going to be available on our CGM here in the relatively near future. We're already rolling it out in select clinics across the United States. We did launch our Dexcom G7 15 Day system. Really important advancement over time. It's an opportunity for us to ultimately drive adoption. There's a differentiator here in terms of SmartBasal.
Dexcom Smart Basal will be on this 15-day platform in addition to the elimination of the amount of day ones. Obviously from an investor point of view, it's more efficient from a margin perspective. We did progress our Ireland manufacturing. We'll launch that in 2026. I mentioned there were a lot of learnings. Over the course of the year, we had to deal with scale. When we talk about building this organization on a scalable foundation, we have been able to navigate through a lot of those, which leads us to a good position as we think about 2026. We've guided to revenue of 11%-13%. This assumes no significant incremental new coverage.
I think this is an opportunity for us to really demonstrate the core growth, and obviously, our team is highly incentivized to continue to unlock coverage, something we've done over the course of our history. We've guided to the margins. You can see 63%-64% gross, 22%-23% operating, and 30%-31% EBITDA. At the end, we'll talk about it, but it's over $1 billion in free cash flow. I kinda rewind back to I was thinking about the days of, you know, call it 7 or 8 years ago. We were a negative free cash flow company breaking even. I think this is a demonstration of what scale can do and how we've built and leaned into scale over time.
I think some of the lessons we learned over 2025 will help us scale even further. We do expect, with the gross margin expansion, for there to be improved freight and manufacturing efficiencies. For those that have followed the story, as we had some supply challenges and as we brought in some new suppliers, we've had to navigate through a few of those challenges. Those are predominantly behind us at this point. For us, it's really full steam ahead. We do expect operating margin expansion that was partially masked by our Ireland investments. We talked about launching our Ireland facility. Certainly, some of that will be in there, in our run rate as well. Really excited about being able to maintain operating margins while launching a very large facility. We're really excited about that.
This provides a really scalable opportunity, and I think all the things we're gonna talk about, you'll start to see how the scale plays through in things like 15-day or operating margin expansions even as we move out of 2026 and into future years. It's a very exciting opportunity for us. As we acclimate where we're going, this is always helpful to size the market. This is the market today. What's interesting is there's more people who have coverage today that are not on CGM than ever before. This provides a massive runway for us. As you see down the side, the Type 1 is that market size approaches $2 million. At this point, you can see the penetration there is still 60%-65%. The opportunity there, of course, is to get to 80.
Similar in Type 2 IIT, the opportunity there is to get to 80% as well. We are what we call full coverage at this point. For the most part, you have coverage if you're in these spaces, all the way down through Medicaid. We have Type 2 basal, which is only 20%-25% penetrated. We expect it to get to 60 over time. This is a massive opportunity for us. We've crossed 25% as we moved into this year, and I think this also is at full coverage. The big one, non-insulin Type 2. We've only got about a quarter of coverage at this point. It's only about 5% penetrated. There's a lot of opportunity for us ahead. We'll talk a little bit about that as we move forward.
The market is still out there, and it's massive, which is a very exciting opportunity for us. What are we doing in Type 2, and how are we going to unlock it? We've already got a Type 2 NIT registry out there, and this data is already in front of the regulatory authorities who we're looking to get coverage for, which has essentially shown what you would expect. If you're on a CGM sensor and it's giving you feedback into your glucose in real time, it's giving you feedback as you go and take a walk around the block and you see what happens to your glucose levels. We've seen significant reductions in A1C, weight, and BMI. All really important things to longevity of health, and it's all based on changes to diet and lifestyle. It's not a pharmaceutical intervention.
Its improvement has been sustained. These are lifestyle changes, really important if you wanna bend the curve. It's what's really interesting is the utilization rates remain high. This is important. This is real-world data, which means folks in the real world are using sensors, and they're using them often, which is really important as you think about progressing benefits over time. We want folks on sensors because it's like a mirror. You see in real time what you're doing and how it impacts you, and you yield the most benefit from that. Now, we also want to talk about how this is going to work from a durable growth opportunity. We talked about coverage being at the core of it. We talked about there being about 9 million folks with access to therapy.
We also expect CMS coverage for Type 2 NIT over time. That opportunity for coverage would essentially be about 12 million lives unlocked. We talked about 9 million available. There's 12 million more with that coverage. What are we doing around it? Well, we've obviously built the pathway through clinical evidence that's unlocked CMS coverage historically. Our DIAMOND Control Trial was ultimately the reason for CMS coverage for Type 1 and Type 2 intensive. Fast-forward, our MOBILE RCT ultimately was the baseline for basal coverage, and we are gonna have a readout here in the first half of 2026. We've talked about it being either at our investor day or at ADA around our non-insulin RCT. Very exciting about this opportunity.
Clearly, I think, we know it's going to demonstrate really solid feedback given what we've seen in the real world. We continue to be the leader in clinical trials. I think that's really important because we're also going to be using this as we think about international access. International access is a big opportunity for us. Like I said, we're under-indexed relative to competition there. You can see over time the work we've done to help expand access. We've certainly done it in Japan, and Japan now covers everybody using insulin, which includes basal. In 2024, we had France expansion of coverage, and France is one of our fastest-growing markets outside the United States. In 2025, we expanded further in Canada.
The opportunities outside the US to expand, outside the US, it's well behind the US in terms of access to coverage. The opportunity is massive. You see the flags of the various countries there. Our largest countries in the world still don't have basal coverage. Yet these are folks that have dangerous exposure to hypo events, given the use of insulin and basal insulin over the course of time. We'd expect through all the work that we're doing to unlock coverage here, over time and looking really forward to driving that expansion. How we're gonna do that in terms of how we slot things in. Outside the US, we have a tiered product portfolio. We use G-Series as our, call it, high-risk product.
We have Dexcom ONE and Dexcom ONE+, which effectively is our product that slots into tenders that maybe don't require high risk or AID type work. Where there's limited reimbursement, we certainly step in with Dexcom ONE+, and we're excited to know that in 2026 we'll launch another product targeted in this portfolio, which is really designed to make sure we're meeting all of the various needs based on where folks are clinically through the process. We're really excited about this opportunity combined with expanded coverage to grow that international market. As I mentioned before, Jake is highly focused, and we'll be making a significant amount of investment in this area. We're also leaning into technology, and we've led the way on automated insulin delivery over the years. You can see our partners down below with AID connectivity.
Most importantly, we have 2.5 million patient years currently right now under AID product. That becomes really important as you think about all the little things that you have to think about as you have connectivity in this space. All of these folks' algorithms were tuned based on a Dexcom algorithm, and that becomes really important when you think about the effectiveness of the studies and the work and all that takes place in going into managing someone's day-to-day diabetes. It's an exciting opportunity for us to remind folks here, to remind folks of the technology in our product, how it enables this, as well it enables the ecosystem around it. To that, we've launched Dexcom G7 15 Day. One of the big questions was always asked is, "Well, how do you move out for longer wear?
What's the opportunity here given that a competitor was already in this space?" We've launched that. We launched it in the DME channel, the Durable Medical Equipment channel, in December, and we launched it in the retail channel here in January. We're happy to say that so far the feedback has been excellent. We have an updated algorithm. The algorithm drives our already leading accuracy even lower. It's like I said, a longer wear time. It's 15 days, but we have a good feature, which is a 12-hour warm up or warm down process. The great news is when you start your new sensor, you can start it during that window, and it warms up independent of the other one. A real opportunity there, and it's easy to use.
I've also mentioned that Dexcom, the transforming the customer experience, and I'll get to Smart Basal in a second. My Dexcom account, when we say lead with customer support, while this seems, it seems common to have support online based and being able to pull in your account data, it is something that in medical device we've collectively struggled on given the regulatory nature of our product. What we have now is a digital experience that's streamlined, and ultimately, we expect this to be, from a patient perspective, a much better journey as you're navigating through whatever it might be. Where is my sensor? Has it shipped? Have you sent a tech support? What is my timing?
We're gonna have all of your account data available, linked into our systems, and also start leaning into technologies to make it easier, whether it's RPA, AI, to make your experience with Dexcom more consistent over time. We expect to have quite a few more updates here to come over the course of 2026, but that journey on improving the patient experience has started here and continues. We talked a little bit about Dexcom Smart Basal as an advancement. Here's a great example of what we're trying to do in meeting an unmet need. You know, the basal population and those folks that are navigating through it typically struggle to ever reach the optimal dose of basal. What happens is you'll go in and you'll see your physician, you'll get a recommended dose.
Over time, that doesn't change until you see your physician again, and you're never able to really titrate it down. You find that folks never actually reach the time and range that they've been targeting. What we have here now is in real time with a doctor in loop, we have a faster solution to walk through it. The way it works is you ultimately navigate through Dexcom Clarity Clinic. You're able to navigate through that into what your dose is. Your doctor's able to provide parameters around it. Every day, we can update your dosing based on what your CGM tracings are to help titrate you over time. It's the first of its kind algorithm of this sort. We did it in conjunction with our TypeZero group that's now been in-house for years now. This should help our HCPs.
As you show up at, in the physician's office, they'll be able to see: Did you log your dosage? How much did you take? What did you say you were going to do? Ultimately, the goal here is giving physicians more ability to help and giving our patients more opportunity to reach their goals. This is exciting. This is out in clinics right now. We'll see it rolling out even further as we move forward through the year. This kind of technology advancement's really exciting for us. We talked about making things easier, direct to EHR integration. We've been at this for years now. We actually navigate predominantly through Epic, but we are working across multiple EHRs. Again, the goal here is how to make things easy, make it easy for your prescriber to ultimately help you on your journey.
It's one of the biggest challenges you find is the CGM is incredibly helpful data. It's very rich data, but if your physician doesn't have it in hand and can't reference your history, sometimes it's difficult to make those decisions. We're looking to do that, there's 160 health systems that are either live or onboarding into this. We believe this can be a differentiator across the board. Stelo. If we talked about our the first over-the-counter product, we launched Stelo in 2024, in the back half of 2024, and we're happy to say that over the course of 2025, we had $130 million of revenue. Over 500,000 people have downloaded and used it since launch.
When you think about medical devices and over-the-counter medical devices, certainly this is one of the most successful launches in the history of the space. What we're really excited about is where we can go over time. We've got a very engaged user base. We've got a lot of folks that wanna use it, and I think what's interesting is always the what's next, because this is a population that we can help bend the curve on. We have to make it easy for those folks to use. We have to give them data to do something with it. This is what the new next step on our journey is. We've got essentially a new interface with more insights and logging.
These are screenshots of what you should see launching here in the relative near future, which is the app which is gonna allow folks to engage, to see very clearly where your glucose is. It's also gonna have an AI coach in there. It's going to have meal logging. It's going to have all the things that you need to ultimately make real-time decisions about your health going forward. Obviously, this technology is applicable not only to Stelo over time, but also to our G-series over time. We're really excited about the opportunity here to really drive this further into the population and really help folks bend that curve. Now, one of the things we do wanna make sure is, as we talk about hundreds of millions of sensors being made, we do need to advance our scalability.
We talked about 2025 being a year of learning. We have enhanced our quality management system. For those folks that don't know, we did go through some challenges, both on a supply, we had an FDA warning letter. As going through that process, we have enhanced that system. We've done a lot of work around supply chain development. One of the things we've learned from scale in the past is through our four walls, we needed to build resiliency. Ultimately, it's beyond our four walls. As we get bigger and bigger, we also need to build resiliency, and so that's through our supply chain presence and development. We've also going to launch our facility in Ireland. One of the abilities to have global access to global suppliers is to avoid any sort of geopolitical issues that do come up over time.
Having that launch in Ireland here in the back half of 2026 is gonna be an exciting development for us. What's next? We talked about all the opportunities there, but we also wanna talk about our next major product, and we have Dexcom G8. We started it with Dex. You can see the history here with G6 and G7. Certainly, G6 had some amazing firsts in the industry, and you can see them with finger sticks and auto applicator. At that point, we moved it to 10-day wear. Now you see G7. G7 was a 60% smaller form factor. It wasn't a two-piece solution. It included the new software architecture, but G8 is going to be the most accurate sensor, and it's going to be a step change in glucose.
At our Investor Day, we're gonna share a little bit more about how we do that. It's very exciting. There are some new technologies that are available that I think what you're gonna find are going to really change the way people think about accuracy in this space. We also have the smallest sensor on the market. This is gonna be a significant reduction. While G7's already pretty small, and it's not necessarily a massive complaint, the reality is the smaller the sensor, the less chance you get caught on something and the less worry you have walking through the doorway, and you might clip it on a door. These are the kind of things that are really important we help navigate through. If you think about children, the smaller it is, the easier it is to stay on children and peds. We're very excited about that.
We are building with advanced sensing capabilities, so it will come with the chip set that ultimately allows it to sense dual analytes over time. I think we're really excited about the opportunity to build that through our product. G8's coming here. We expect to share more at our Investor Day. Our Investor Day is in Mesa, Arizona, in May, looking forward to sharing more about that. We also have a big opportunity here in future markets. Gestational diabetes, near and dear to my heart, having a wife that went through some challenges here and having to go back for multiple oral glucose tests. You know, there's an opportunity here. There's a 50% reduction in C-sections, NICU admissions, et cetera, by folks wearing our sensor.
It's an opportunity to really change the trajectory of mothers challenging, going through the gestational challenge. Another big challenge, of course, is it's highly likely if you're a mother with gestational diabetes, you develop Type 2 within five years. We can hopefully avoid that through this process. Obviously, in the hospital space, there's 14 million dysglycemic events. We are working towards that over time, and there's opportunities there and of course, in prediabetes. As we talked about it earlier, this is, the curve is not bending at this point, despite all the advancements we're seeing. The reason is we have incredible therapies. We're partners with Lilly and Novo, and there's incredible GLP-1s out there, but those need to be combined with lifestyle change, and CGM is the tool that helps you really drive lifestyle change. Really exciting opportunity there.
I promised Jayson would talk for a little bit here, but let me just summarize the investment case in 2026. I think it's always helpful at investment conferences to do that. We do expect, obviously, double-digit growth, and that's without expansion of coverage. We do expect over time, obviously, expansions of coverage. It's what we've built our organization on. As a base case, that's the case. We do expect over 200 basis points in gross margin expansion, and that's only gonna go up over time as 15-day penetrates our organization more and more. More than $1.5 billion in adjusted EBITDA, and certainly over $1 billion in free cash flow.
All of that off of what I'd say is a base case year and obviously a lot of opportunity for coverage expansion in the future. With that said, Jayson, I just close here and just I promised you I'd show you the employees of Dexcom. I'll come over there. These are all the folks that work at Dexcom that make this possible all in their various moments that matter. Really important. And you can see everybody going through many things, whether it's a wedding, having children, doing activities outdoor or indoors. On behalf of all them, this is our purpose. Thank you.
Thanks, Jereme. Maybe simple question, perhaps requires a complex answer, but you had a slide up there. 9 million people have coverage but are not using CGM. The simple question is why not? What's the top couple factors that you can control to increase adoption here?
Yeah. I think the biggest one, and this is where our sales force is out there spreading the word and our marketing team is awareness. There's a lot of folks that are aware of CGM, but are they aware that coverage exists for them? You know, historically, it was one that Type 1s traditionally struggled to get coverage, and we had to fight to win that battle. I think over time, what you're seeing now is. We saw the same thing happen when we expanded into basal. Physicians maybe didn't know, or how do I navigate through this complicated landscape? I think it's up to us to go through it with our sales force, with our tools, and we go into offices, and we're very able to quickly identify who does and who does not have coverage.
Make sure that our primary care physicians, the endocrinologists out there, really understand who does and who does not have coverage. In many cases, the copay for folks is very, very low. In a lot of cases, it's zero. It provides the opportunity, once folks have that awareness and know that this tool is out there and available, I think that'll be a very effective tool. It just, again, it takes time for that to soak in. It's taken time for us over the years. It's taken time, but the opportunity and the demand is there.
I felt like the business was playing a lot of defense in 25 with the warning letter, supply challenges. It feels like there's the potential to play a lot more offense in 26, new products, potentially new coverage. One, is that a fair way of assessing it? What would you point to as drivers, the key drivers of this potential momentum?
Yeah. You know, I think, you always, you always kind of reflect back on 2025, and we talked about it being a year of learnings. Part of those learnings were some of the work we had to do around the defensive side. To your point, there was a warning letter. We had challenges and disruptions in supply. As a result of some of that, we also had when we changed suppliers, we had some deployment challenges. I think as we've made those changes, the conversation as we get into physicians' offices, when we're on stage, when we're talking, you know, to clinicians across the world or even patients across the world, is less about how do we fix the current issues at hand, but more about let's get back to what this product can do for you.
Let's get back to the roadmap of all the improvements that we're going to be making over time. Let's talk about your coverage and the opportunities there. I think that's something I would say internally we're incredibly excited about, is having the conversations really about what this can do for you, what the future looks like. In really, we have no problem addressing the lessons learned. I think that's one of the other things, is we're happy to say, "Look, we learn these lessons. I think these lessons will help us scale." I think we are incredibly excited about those conversations as we move forward in 2026 and beyond, and taking advantage of, like you said, the coverage that's out there and the conversations about how we can maximize that.
Okay. We've got 20 seconds left. Multiple choice.
Okay.
15-day launch. Is it gone as expected, better than expected, or slower than expected?
I would say it's gone as expected with our high expectations. We had high expectations for this launch, and it's gone as expected. I'd say the anecdotal feedback continues to be excellent. We're really excited about it.
All right. We can carry this conversation on in Amarante One, the breakout downstairs. Thank you, Jereme.
Thank you. Appreciate it.