Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Shares of DexCom, a prominent provider of diabetes management equipment, tumbled 17% on Friday, October 31, 2025, despite the company reporting strong third-quarter earnings that surpassed analyst expectations. The market reaction was primarily driven by a cautious outlook for 2026 growth and persistent manufacturing issues that are pressuring gross margins.
Third-Quarter Performance Exceeds Forecasts
For the third quarter, DexCom reported revenue of $1.21 billion, marking a 22% increase compared to the same period last year. U.S. revenue grew by 21%, while international revenue expanded by 22%. Adjusted net income reached $0.61 per share, up from $0.45 per share in the prior-year period, with both metrics exceeding analyst consensus.
The company’s Stelo wearable glucose biosensor also demonstrated strong initial performance, achieving $100 million in cumulative revenue within its first year of availability.
Mixed Guidance for Full Year 2025
While the third quarter was robust, DexCom presented a mixed financial outlook. The company raised its full-year revenue guidance to a range of $4.63 billion to $4.65 billion, anticipating approximately 15% growth. However, it slightly lowered its full-year gross margin outlook to 61%.
This adjustment to the gross margin forecast is attributed to manufacturing challenges, specifically issues with certain third-party components identified earlier in the year, which have led to an increased rate of discarded materials in the production process.
2026 Growth Projections Fall Short of Expectations
Looking ahead to 2026, DexCom’s management commentary during its earnings call suggested that growth is likely to fall short of current analyst expectations. President and COO Jacob Leach stated that while growth is still anticipated to be in the double-digit range, the top end of the company’s projected range for 2026 is “probably slightly below where the Street is today for our base case.”
Market Reaction and Valuation
The market’s focus on the more subdued 2026 growth prospects and ongoing margin pressures overshadowed the positive third-quarter results. DexCom’s shares closed Friday at $59.09, down 13.36% for the day, bringing the stock to levels last seen before the pandemic. With a forward price-to-earnings ratio of approximately 28, investors are advised to consider the valuation carefully.
