What They Do
DexCom develops and manufactures continuous glucose monitoring (CGM) systems that help people with diabetes track their blood sugar levels in real-time without finger pricks. Their flagship G7 and G6 devices provide glucose readings every minute to smartphones and other devices, serving over 2 million users globally. They generate revenue primarily through device sales and recurring sensor subscriptions, creating a razor-and-blade business model.
Investment Thesis
**Expanding addressable market** — Moving beyond Type 1 diabetes (400k US patients) into Type 2 insulin users (6+ million) and eventually non-insulin dependent diabetics**Strong recurring revenue model** — Sensors must be replaced every 10-14 days, generating predictable subscription-like income streams**Technology leadership** — G7 system offers best-in-class accuracy and smallest form factor, maintaining competitive moat in fast-growing CGM marketKey Risks
**Intensifying competition** — Abbott's FreeStyle Libre and emerging players like Medtronic are pressuring market share and pricing**Reimbursement uncertainty** — Medicare and insurance coverage changes could significantly impact patient access and company marginsGrowth Story
DexCom has delivered 20%+ annual revenue growth driven by geographic expansion internationally and penetration into the much larger Type 2 diabetes market. The global CGM market is projected to grow at 8-12% annually through 2030, with DexCom positioned to capture outsized share through its premium technology platform. Key growth catalyst is the ongoing shift from traditional blood glucose monitoring to continuous monitoring across all diabetes types.
Profitability Profile
The company maintains strong gross margins around 65-70% due to its premium positioning and proprietary sensor technology. Operating leverage is improving as the business scales, with expanding international operations and growing sensor volumes driving margin expansion. DexCom generates strong free cash flow and has achieved consistent GAAP profitability, reinvesting heavily in R&D and international expansion.
Competitive Position
DexCom holds the #2 position globally behind Abbott's FreeStyle Libre but leads in the premium/high-accuracy segment. Their integrated ecosystem approach, superior mobile app experience, and clinical-grade accuracy differentiate them from lower-cost alternatives. The company maintains strong relationships with endocrinologists and diabetes educators, creating switching costs and brand loyalty.
Recent Momentum
Without access to recent quarterly results, DexCom has historically shown consistent beat-and-raise patterns driven by better-than-expected user growth and international expansion. The company typically sees seasonal strength in Q4 due to insurance deductible resets and new patient additions. Market sentiment generally tracks user growth metrics and international revenue progression.
What Wall Street Thinks
Analysts typically maintain bullish long-term views on DexCom given the large addressable market and recurring revenue model, though debate centers on competitive positioning versus Abbott and pace of Type 2 diabetes market penetration. Consensus expectations usually focus on user growth rates, international expansion progress, and margin expansion trajectory.
The Bottom Line
DexCom is the premium player in the fast-growing continuous glucose monitoring market with a razor-blade business model, positioned to benefit from the massive shift away from traditional finger-stick testing across all diabetes types.
