$DXCM · DEXCOM INC
DexCom filed its 10-Q for the quarter ended September 30, 2026. Q3 revenue rose 11% YoY to $1.345B, gross profit grew 18% to $864.4M, and operating income jumped 35% to $327.2M. Net income slipped 3% to $275.1M ($0.72 diluted EPS vs. $0.70) as other income plummeted from $109.8M to $7.5M due to the absence of prior-year equity investment gains. The company repurchased $1.009B in stock over nine months and ended the quarter with $1.82B in cash and marketable securities.
- Q3 revenue $1.345B, +11% YoY, driven by sensor volume growth and ~600K–700K net new customers added over nine months.
- Gross margin expanded to 64.3% from 60.5% a year ago; operating margin jumped to 24.3% from 20.0%.
- Operating income surged 35% YoY to $327.2M, but net income fell 3% to $275.1M as other income collapsed from $109.8M to $7.5M.
- Nine-month operating cash flow dropped 51% YoY to $325.6M, with inventory build consuming $146.8M.
- Treasury stock repurchases totaled $1.009B in the first nine months, reducing shares outstanding to 373.0M from 384.8M at year-end.
Extended-hours trading shows DXCM at $81.62, up 2.12% from the regular close of $79.93. The market appears to be rewarding the gross margin expansion and operating leverage while looking past the headline net income decline, which was driven by a non-recurring prior-year other income comparison.
The divergence between surging operating performance (+35% operating income) and declining net income (-3%) reveals how non-recurring investment gains masked prior-year results, making the underlying business appear weaker than it actually was.
DexCom's 64.3% gross margin and 24.3% operating margin reinforce its premium positioning in the CGM space versus peers like Abbott and Medtronic. The 11% revenue growth, while solid, trails the hyper-growth rates of earlier years as the base approaches $5B+ annualized.
Other income, net collapsed 93% YoY to $7.5M from $109.8M, driven by prior-year gains on equity investments that did not repeat — a reminder that non-operating income volatility can mask strong operating trends. Inventory rose to $770.7M from $629.1M at year-end, and operating cash flow halved to $325.6M.