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We came across a bullish thesis on DexCom, Inc. (DXCM) on Substack by Na’s Substack. In this article, we will summarize the bulls’ thesis on DXCM. DexCom, Inc. (DXCM)'s share was trading at $81.53 as of May 5th. DXCM’s trailing and forward P/E were 61.30 and 40.65 respectively according to Yahoo Finance.
A laboratory technician checking the results of a blood glucose monitoring system.
Dexcom, Inc. stands at the forefront of the continuous glucose monitoring (CGM) market, offering an integrated platform of sensors, transmitters, and mobile software that delivers real-time glucose readings and insights to millions of people with diabetes. Since launching its first commercial system, the company has consistently pushed the boundaries of biosensing innovation. Its core product evolution, from the G6 to the G7 and now to the recently FDA-cleared G7 15-day sensor, has emphasized convenience, accuracy, and user-centric design. Notably, the Stelo sensor—Dexcom’s first over-the-counter (OTC) offering—marks a strategic shift to reach adults with Type 2 diabetes who are not on insulin. The launch of Dexcom ONE+ in 19 international markets during 2024 further reinforces the company’s intent to democratize access to CGM, adapting its premium technology to a broader global audience through price-sensitive versions of its flagship hardware.
Dexcom operates a high-margin, recurring revenue model dominated by disposable sensor sales, which comprise approximately 90% of total revenue, with transmitters making up the rest. This revenue structure has scaled effectively, growing from $1.93 billion in 2020 to $4.03 billion in 2024. Though growth slowed to 11% in FY2024, quarterly momentum reaccelerated in Q1 2025, with 14% organic revenue growth. However, the company faces near-term margin pressures from supply chain dynamics and inventory costs, with gross margins contracting from ~69% in FY2021 to 60.5% in FY2024, and operating margins dipping to 13.8% in Q1 2025. Still, the company has maintained profitability and is reinvesting in innovation and market expansion.
Dexcom’s strategic emphasis on the underserved Type 2 diabetes market—particularly those on basal insulin or no insulin—has unlocked a significantly larger addressable market. Its user base grew approximately 25% year-over-year to 2.8–2.9 million in 2024, fueled by expanded reimbursement, new prescriber outreach (adding 50,000+ PCPs in 2024), and increased international adoption. Competitive differentiation is reinforced by strong ecosystem integration with insulin pumps and digital health tools, such as a new partnership with ŌURA. With a robust balance sheet ($2.6B in cash), a newly authorized $750 million share repurchase program, and a conservative leverage profile, Dexcom remains positioned for sustained long-term growth. A DCF-based valuation suggests a fair value of ~$85 per share, modestly above its current ~$80 price, offering a stable entry point. Continued execution, margin recovery, and broader Type 2 adoption could unlock significant upside from current levels, with compelling risk/reward dynamics supported by strong fundamentals and a growing global CGM market.