Dexcom's Q2 2026 revenue rose 13% to $1.31B (12% organic), and operating margin jumped to 24.3% from 18.4% as the 15-day G7 and factory efficiency lifted gross margin to 63.4%, despite a $45.6M inventory write-down tied mostly to retiring the G6.
Revenue
$1.3B
+13.1% YoY
Net income
$249M
+38.5% YoY
Diluted EPS
$0.64
+42.2% YoY
Operating margin
24.3%
Overview
Dexcom makes continuous glucose monitors (CGMs): small wearable sensors that read blood sugar every few minutes and send it to a phone, replacing finger-prick tests for people with diabetes. The sensors are disposable, so most of Dexcom's revenue comes back every month from existing users.
In the second quarter of 2026 (April–June), revenue rose 13% to $1.308 billion, but profit rose much faster: operating income, what's left after running the business but before interest and tax, was up 50% to $318.3 million, and diluted earnings per share rose 42% to $0.64. The reason is gross margin, the share of each sales dollar left after the cost of making the product, which rose to 63.4% from 59.5%. The 10-Q credits more sensors sold, the longer-wear G7 15 Day sensor, and better factory efficiency. That margin gain came even though Dexcom took a much larger inventory write-down, mostly because it plans to stop making the older G6 sensor.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$1,308.4M
$1,157.1M
+13.1%
U.S. revenue
$933.4M
$841.0M
+11.0%
International revenue
$375.0M
$316.1M
+18.6%
Gross margin
63.4%
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Six months (Jan–Jun 2026): revenue $2,500.3M (+14.0% from $2,193.1M), gross margin 63.2% (vs 58.3%), operating income $573.6M (+65.6% from $346.3M; margin 22.9% vs 15.8%), net income $448.6M (+57.3% from $285.2M), diluted EPS $1.15 (vs $0.71). Operating cash flow was $794.8M for the half.
Where the growth came from
Mostly more customers. Per the 10-Q, growth was "primarily driven by increased sales volume of our disposable sensors due to the continued growth of our worldwide customer base". Dexcom says it added about 600,000–700,000 net customers in 2025, excluding Stelo, its over-the-counter sensor for people with type 2 diabetes or prediabetes who don't use insulin. Revenue per customer also helped, "primarily due to payor mix and utilization", meaning more users were covered by insurers that pay more and people used sensors more consistently. Part of that was offset by "channel and product mix and rebate eligibility". The 10-Q lists pharmacy rebates among its key accounting estimates. In general, selling through pharmacies, where rebates apply, earns Dexcom less per sensor than selling through medical-equipment (DME) suppliers. The 10-Q does not give pharmacy vs DME revenue, rebate amounts, or revenue by product (G7, G6, Stelo), so it's not possible to say how much each effect contributed.
International grew faster than the U.S. U.S. revenue rose 11.0% and international revenue rose 18.6%. Part of the international growth came from a weaker dollar: when the dollar falls, sales made in euros or pounds are worth more once converted. The earnings release (Exhibit 99.1 to the 8-K filed July 30, 2026) puts international organic growth, which strips out currency moves, at 16% and total organic growth at 12%. Organic revenue was $1.298 billion, after removing $9.9M of currency benefit and $0.2M of revenue from an acquired non-CGM business.
Revenue by channel ($M)
Q2 2026
Q2 2025
YoY
U.S. – distributor
893.5
800.0
+11.7%
U.S. – direct
39.9
41.0
−2.7%
International – distributor
208.9
177.8
+17.5%
International – direct
166.1
138.3
+20.1%
About 96% of U.S. revenue goes through distributors, which include both pharmacies and DME suppliers. So the channel split above doesn't show the pharmacy-vs-DME shift that affects pricing.
Margins: a large jump, even after a big write-down
Cost of sales rose only 2% ($468.3M → $478.4M) while revenue grew 13%, which lifted gross profit 20% to $830.0M. The 10-Q lists the drivers as higher volume, "G7 15 Day benefits", "improved manufacturing efficiencies, higher production volumes, and a more favorable manufacturing mix". Those let fixed factory costs be spread over more units. The 10-Q also links part of the margin increase to "the implementation of additional quality testing and material validation efforts relative to the prior year." The wording doesn't make the mechanism fully clear.
The drag was inventory. Dexcom recorded $45.6M of inventory reserve charges in Q2, up from $8.8M a year earlier ($84.2M vs $37.0M for the half). These are write-downs of stock it expects it can't sell at full value. The 10-Q links them to "ongoing evaluation of quality control data, the planned discontinuation of G6 manufacturing, forecasted demand" and product improvements. The Q2 charge equals about 3.5% of revenue, so gross margin before it would have been higher than the reported 63.4%. We would expect the G6-related part of those charges to fade once G6 production ends. The quarter-end inventory balance rose to $726.4M from $629.1M at December 31.
Product quality and legal exposure. The 10-Q does not mention an FDA warning letter or a product recall. Quality issues appear instead in its legal proceedings. Those include a securities class action alleging misleading statements about "the accuracy, reliability, and functionality of our G7 device" between July 2024 and September 2025, several related shareholder derivative suits, and six consumer class actions (now consolidated in federal court) claiming G6/G7 buyers overpaid for devices that were "adulterated or misbranded" or didn't perform as advertised. Dexcom says it cannot reasonably estimate the outcome and intends to defend itself.
Operating costs grew more slowly than revenue. Total operating expenses rose 7% to $511.7M. R&D was "relatively flat" ($153.0M, +3%) "due to the timing of project spend." SG&A, the cost of sales, marketing and administration, rose 9% to $358.7M, including $12.1M more in advertising and marketing, $6.7M more in compensation and $6.3M more in facilities costs. Because gross margin rose and spending grew slower than revenue, operating margin went from 18.4% to 24.3%.
Below the operating line
Net income grew 38.5%, less than operating income's 50%. Other income swung from +$28.5M to −$0.8M: $11.1M less interest income (lower cash balances and lower rates), $10.3M of foreign-currency losses and $9.6M of net losses on equity investments. A lower tax rate helped in the other direction: tax expense was about 21.5% of pre-tax income versus 25.4% a year earlier, which Dexcom attributes mainly to the start of a Malaysia tax holiday and higher pre-tax income. EPS grew faster than net income because diluted share count fell 4.4% (390.1M vs 408.2M). In Q2 Dexcom repurchased 8.6 million shares for $600.0M under a new $1.0 billion buyback program authorized in May 2026.
According to the earnings release, non-GAAP diluted EPS (which excludes $9.4M of intangible amortization, $10.0M of equity-investment losses and $0.6M of other items) was $0.70 versus $0.48, and non-GAAP operating margin was 25.1%.
Cash and balance sheet
Q2 operating cash flow was $269.2M, down 11% even though net income rose 39%. Six-month operating cash flow was $794.8M. Cash plus short-term securities fell to $1.95B from about $2.0B at year-end, after the $600M buyback. Dexcom holds $1.24B of convertible notes due May 2028, and its undrawn $200M credit line matures October 13, 2026. Management says it plans to put at least 50% of operating cash flow, after planned capital spending, into buybacks over its long-range plan.
Takeaway: Q2 profit grew much faster than sales because Dexcom now makes each sensor more cheaply, largely thanks to the 15-day G7. Gross margin rose almost 4 points even after a $45.6M inventory write-down tied mostly to retiring the G6. When those G6-related charges stop, margins could rise further without faster sales growth. Pricing is the main risk: the 10-Q says channel mix and rebates are still a drag, and it doesn't report how large that drag is.
Guidance and outlook
In the July 30 earnings release, Dexcom raised the midpoint of its 2026 revenue guidance to $5.18–$5.25 billion (about 11–13% growth). It also raised its targets to a non-GAAP gross margin of about 64%, a non-GAAP operating margin of about 23.5–24%, and an adjusted EBITDA margin of about 31.5–32%. First-half revenue was $2,500.3M, so the guidance implies about $2.68–$2.75B in the second half. That fits with the usual pattern of stronger sales later in the year, after U.S. insurance deductibles reset in Q1.
Our view: the second half depends mostly on price, not volume. Customer growth, international expansion (16% organic) and the CONNECT trial results in type 2 patients not using insulin, which the release highlights, support volume. But U.S. growth of 11% trails international, and the filing names channel mix and rebate eligibility as a drag on U.S. pricing without quantifying it. Things to watch in the Q3 10-Q: whether inventory reserve charges fall as G6 production winds down, whether U.S. revenue per customer holds up, and whether the G7 litigation leads to any recorded costs.
Source: Dexcom Form 10-Q for the quarter ended June 30, 2026 (filed July 30, 2026). Organic growth, non-GAAP figures and guidance come from the earnings release furnished as Exhibit 99.1 to Dexcom's 8-K of July 30, 2026.