DXCM 10-K & 10-Q changes, risk factors and insider trading

Our short and long-term success is subject to numerous risks and uncertainties, many of which involve factors that are difficult to predict or beyond our control. Before making a decision to invest in, hold or sell our common stock, stockholders and potential stockholders should carefully consider the risks and uncertainties described below, in addition to the other information contained in or incorporated by reference into this Annual Report on Form 10-K, as well as the other information we file with the SEC, including our subsequent reports on Forms 10-Q and 8-K. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that case, the value of our common stock could decline and stockholders may lose all or part of their investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business, financial condition or results of operations. Refer to our disclaimer regarding forward-looking statements at the beginning of Part I, Item 1 of this Annual Report on Form 10-K.

We have experienced, and anticipate that we will continue to experience, decreasing prices for our products due to future reimbursement changes under Medicare and pricing pressure from managed care organizations and other third-party payors.

As a medical device company, reimbursement from government and/or commercial third-party healthcare payors, including Medicare and Medicaid, is an important element of our success. The Centers for Medicare & Medicaid Services, or CMS,CMS provides coverage for “Therapeutic Continuous Glucose Monitors” as durable medical equipment eligible for coverage under Medicare Part B. Coverage criteria for therapeutic CGMs is determined by CMS under national coverage determinations as well as by local Medicare Administrative Contractors under local coverage determinations. Therefore, Medicare reimbursement for our CGM devices is subject to various coverage conditions and often requires a patient-specific coverage analysis. Medicare does not cover any items or services that are not “reasonable and necessary.” Medicare covers the CGM system, which includes supplies necessary for the use of the device, under the Durable Medical Equipment, or DME, benefit category. In order to be covered under thisthe DME benefit, one component of the CGM system must meet the criteria for a durable medical device. To date, the receiver satisfied thisthese criteria. To the extent that a receiver is not used by a Medicare beneficiary or CMS otherwise determines that the items and supplies ordered are not medically necessary, Medicare may not cover that CGM system or any associated supplies.

In addition, 2025the willchange bring a newin presidential administration,administration whichin 2025 has caused and may shiftcontinue to cause shifts in health policy priorities, including potential impacts on Medicare coverage and reimbursement. As discussed above, the Bill included significant changes to federal Medicaid funding and ACA enrollment requirements, all of which are expected to result in decreased Medicaid reimbursement and loss of coverage for individuals under Medicaid and ACA plans. We are unable to predict what effect the current or any future healthcare reform will have on our business, or the effect these matters will have on our customers. Our dependence on the commercial success of our current CGM systems makes us particularly susceptible to any cost containment or reduction efforts. Accordingly, unless government and other third-party payors provide adequate coverage and reimbursement for our current CGM systems or any future products we may develop, people without coverage who have diabetes may not use our products. Furthermore, payors are increasingly basing reimbursement rates on factors such as prior approvals and the effectiveness of the product, clinical outcomes associated with the product, and any factors that negatively impact the effectiveness or clinical outcomes (or cause a perception of any such negative impact), such as the results of a clinical trial, a product defect, or a product recall, which could negatively impact the reimbursement rate. Also, the trends toward managed healthcare in the United States, which we expect to continue in 2025 and beyond,continue, and legislative efforts intended to reduce the cost of government insurance programs could significantly influence the purchase of healthcare services and products and may result in lower prices for our products or the exclusion of our products from reimbursement programs.

In the ordinary course of our businessbusiness, we enter into collaborative arrangements with third parties to expand into new markets, including with insulin device manufacturers to integrate our CGM technology into the third parties’ insulin delivery systems. We have also entered into collaborations with several organizations that are currently using, or are developing, programs for the treatment of Type 2 diabetes that utilize our current CGM systems. As a result of these relationships, our operating results depend, to some extent, on the ability of our partners to successfully commercialize their insulin delivery systems or monitoring products. Any factors that may limit our partners’ ability to achieve widespread adoption of their systems, including competitive pressures, technological breakthroughs for the treatment or prevention of diabetes, adverse regulatory or legal actions relating to insulin pump products, or changes in reimbursement rates or policies of third-party payors relating to insulin pumps or similar products, could have an adverse impact on our operating results.

•our G6 and G7 systems prompt the user to replace the sensor no later than the tenth day, and our G7 15 Day prompts the user to replace the sensor no later than the fifteenth day, which might make it expensive for users;

In addition to the risks outlined above, our G6, G7, Dexcom One, and Stelo systemsCGMs are more invasive than many other self-monitored glucose testing systems, including single-point finger stick devices, and people with diabetes and those seeking to optimize metabolic health may be unwilling to insert a sensor in their body, especially for those with diabetes if their current diabetes management involves no more than two finger sticks per day. Moreover, people with diabetes and those seeking to optimize metabolic health may not perceive the benefits of CGM and people with diabetes may be unwilling to change their current treatment regimens. Health care professionals may not recommend or prescribe our products unless and until (i) there is more long-term clinical evidence to convince them to alter their existing treatment methods, (ii) there are additional recommendations from prominent physicians that our products are effective in monitoring glucose levels, (iii) reimbursement or insurance coverage is more widely available, and (iv) patient out of pocket cost decreases. In addition, market acceptance of our products internationally by health care professionals and people with diabetes and those seeking to optimize metabolic health will largely depend on our ability to demonstrate their relative safety, effectiveness, reliability, cost-effectiveness and ease of use. If we are unable to do so, we may not be able to generate product revenue from our international sales efforts. We cannot predict when, if ever, healthcare professionals, including physicians, and people with diabetes and those seeking to optimize metabolic health may adopt more widespread use of CGM systems, including our systems. We are also aware of the increasing use of GLP-1 products for the treatment of obesity and Type 2 diabetes. While we believe that GLP-1s are a companion product and used in conjunction with our CGM systems, these treatments could potentially compete with our CGM systems and reduce sales of our products. If our CGM systems do not achieve and maintain an adequate level of acceptance by people with diabetes, those seeking to optimize metabolic health, healthcare professionals, including physicians, and third party payors, our future revenue may be reduced and our business may be harmed.

We have recently experienced manufacturing and inventory challenges for G7 in the past that have resulted, and may continue to result from time to time,resulted in disruptions in our ability to supply certain markets, including in the U.S. and other countries. While we are currently working to remedy such challenges, we cannot predict when such manufacturing and inventory challenges will be remedied. If we fail to produce a sufficient amount of our products, our ability to supply our markets will be compromised and health care providers and people with diabetes’ decisions to use our products may be negatively impacted. This could lead to loss of sales of and revenues from our products, could potentially decrease our market share, and/or our business, financial condition, results of operations and growth prospects could be materially adversely affected.

Moreover, we may not adequately predict the market demand for our products, which may lead us to produce our products in the quantities we anticipate will be necessary to meet actual market demand. We will need to adequately predict the market demand for our products, remedy our recent manufacturing challenges,products and increase our manufacturing capacity by a significant factor over the current level to meet or exceed the anticipated market demand by product. In addition, we may have to modify our manufacturing design, reliability and process for next-generation products that may hereafter be approved, cleared or otherwise authorized by the applicable regulatory body and commercialized.

In 2023, we completed the initial phase of construction of our new facility in Malaysia and commenced commercial manufacturing. We are also commenced construction ofbuilding a new facility in Ireland to scale up manufacturing capacity. There are technical challenges to increasing manufacturing capacity, including equipment design, automation, validation and installation, contractor issues and delays, licensing and permitting delays or rejections, materials procurement, manufacturing site expansion, problems with production yields and quality control and assurance. Continuing to develop commercial-scale manufacturing facilities will require the investment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control and technical personnel who have the necessary manufacturing experience. Delays in the launch of next-generation products may result in unanticipated continuing increases in demand for current-generation products (to substitute for the unavailability of the next-generation products) which, if not adequately prepared for, may result in deficits in our ability to produce adequate amounts of the prior-generation products to meet demand at appropriate prices.

Our products require multiple manufacturing processes and steps. Problems with these manufacturing processes, which may not be detectable by us in a timely manner, could lead to product defects or manufacturing failures, resulting in lot failures, product recalls, product liability claims and/or insufficient inventory, any of which could negatively impact our sales. As further described in the risk factor above, we have recently experienced manufacturing and inventory challenges that have resulted, and may continue to result from time to time, in disruptions in our ability to supply certain markets, including in the U.S. and other countries.

Additionally, the majority of our manufacturing operations are conducted at facilities located in San Diego, California, Mesa, Arizona, and Malaysia.Malaysia and limited manufacturing operations in San Diego, California. We take precautions to safeguard our facilities, which include manufacturing protocols, insurance, health and safety protocols, and off-site storage of data. However, a natural or man-made disaster, such as fire, flood, earthquake, act of terrorism, cyber-attack or other disruptive event, such as a public health emergency, could cause substantial delays in our operations, damage, destroy or limit our manufacturing equipment, inventory, or records and cause us to incur additional expenses. Earthquakes are of particular significance since our headquarters and limited manufacturing facilities in California are located in an earthquake-prone area. Wildfires are also increasingly common in southern California and present risk to our headquarters and limited manufacturing operations.operations in San Diego, California. Our Arizona facility may confront water supply issues resulting from the ongoing drought in the Western United States and our Malaysia facility may confront issues related to its construction on a reclaimed wetland and the political stability of the Malaysia government. In the event our existing manufacturing facilities or equipment are affected by man-made or natural disasters, we may be unable to manufacture products for sale or meet customer demands or sales projections. If our manufacturing operations were curtailed or ceased, it would seriously harm our business. The insurance we maintain against fires, floods, earthquakes and other natural disasters and similar events may not be adequate to cover our losses in any particular case.

If we experience manufacturing difficulties or disruptions, or if we fail to remedy our recent manufacturing and inventory challenges, it could result in insufficient inventory, increased costs, immediate shortages in product or component supply, and decreased sales, any of which may harm our business.

We also require the suppliers, service providers and business partners of components or services for our products and related services to comply with law and certain of our policies regarding sourcing practices, but we do not control them or their practices. If any supplier, service provider or business partner violates laws or implements unethical practices, there could be disruptions to our supply chain, cancellation of our orders, or a termination of the relationship with the partner or damage to our reputation, and the FDA or other regulators could seek to hold us responsible for such violations.

In selling our G6, G7, G7 15 Day, Dexcom One and Dexcom One,ONE+, we compete directly with the Diabetes Care division of Abbott Laboratories; Medtronic plc’s Diabetes Group(MiniMed); Roche Diabetes Care, a division of Roche Diagnostics; privately-held LifeScan, Inc.; and Ascensia Diabetes Care,Care; and other smaller market entrants, each of which manufactures and markets products for the single-point finger stick device market. In selling Stelo, we compete directly with the Diabetes Care division of Abbott Laboratories. Collectively with us, these companies currently account for the majority of the worldwide sales of self-monitored glucose testing systems. We are also aware of emerging competitors primarily located in China.

Several companies are developing and/or commercializing products for continuous or periodic monitoring of glucose levels in the interstitial fluid under the skin that compete directly with our products. We have competed with Abbott for several years and their Libre family of CGM products. Medtronic (MiniMed) markets and sells one or morea standalone glucose monitoring productsproduct called Guardian Connect, both internationally and in the United States.States, and a disposable CGM system called Simplera in the U.S. and international markets.

Medtronic (MiniMed) and other third parties have developed or are developing insulin pumps integrated with CGM systems that provide, among other things, the ability to suspend insulin administration while the user’s glucose levels are low and to automate basal and bolus insulin dosing. Likewise, Abbott Diabetes Care has received FDA clearance to integrate certain versions of their Libre sensors into automated insulin delivery systems and is pursuing such integrations with third-party insulin delivery devices.

We are also aware of companies outside the traditional medical device sector that are attempting to develop competitive products and services, including for general health and wellness, or population health. Such competitors may benefit from guidance issued on January 6, 2026 by the FDA’s Center for Devices and Radiological Health that effectively broadens the range of products that may be considered “general wellness devices,” including wearables that provide readings around bodily functions and vital signs such as heart rate, blood pressure, and blood glucose. We are also aware of the increasing use of GLP-1 products for the treatment of obesity and Type 2 diabetes. While we believe that GLP-1s are a companion product and used in conjunction with our CGM systems, these treatments could potentially compete with our CGM systems and reduce sales of our products.

Moreover, the tax laws in which we and our subsidiaries do business could change on a prospective or retroactive basis, and any such changes could adversely affect our business and financial condition. We have a significant presence in the European Union,EU, as well as significant sales in the European Union,EU, such that any changes in tax laws in the European UnionEU could impact our business. The overall impact of such legislation in European UnionEU member states is uncertain, and our business and financial condition could be adversely affected by any laws impacting our tax rate.

Following a 2016 referendum of voters in the United Kingdom, or the U.K,U.K., to exit from the European Union,EU, or the E.U., the U.K. left the E.U. on January 31, 2020, which began a transition period that ended on December 31, 2020. In December 2020, the U.K. and E.U. agreed on a trade and cooperation agreement that was ratified by the parties in May 2021. The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of the trade and cooperation agreement or otherwise, could prevent us from marketing our CGM systems in the U.K. and/or the E.U.EU and restrict our ability to generate revenue and achieve and sustain profitability. Under the trade and cooperation agreement, U.K. service suppliers no longer benefit from automatic access to the entire E.U.EU single market, U.K. goods no longer benefit from the free movement of goods and there is no longer the free movement of people between the U.K. and the E.U.EU Depending on the application of the terms of the trade and cooperation agreement, we could face new regulatory costs and challenges which could have a material adverse effect on our business, results of operations, or financial condition.

We are subject to a number of international, federal and state laws and regulations protecting the use, disclosure, and confidentiality of certain patient and consumer health and personal information, including patient records, and restricting the use and disclosure of that protected information, including state breach notification laws. Some of these laws include the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, the European Union’sEU’s General Data Protection Regulation, or GDPR, the UK Data Protection Act and the UK GDPR, the California Consumer Privacy Act as amended, or CCPA, and the Washington My Health My Data Act, among others. Various U.S. state laws and regulations may also require us to notify affected individuals and state regulators in the event of a data breach involving personal information. Penalties for failure to adequately protect personal information, notify as required, or provide timely notice vary by jurisdiction. In the U.S.,United States, most state data breach notification laws consider violations to be unfair or deceptive trade practices and give the relevant state attorneys general (“AGs”) the authority to levy fines or bring enforcement actions. Such AG investigations—which are often time consuming,time-consuming, expensive, and burdensome—could lead to a resolution agreement, whereby certain obligations are performed and reports are made to the AG for a period of time, and/or civil penalties. Class action lawsuits against companies which experience a data breach involving personal information are also common. Additionally, the SEC and many jurisdictions have enacted or may enact laws and regulations requiring companies to disclose or otherwise provide notifications regarding data security breaches. For example, the SEC has adopted cybersecurity risk management and disclosure rules, which require the disclosure of information pertaining to cybersecurity incidents and cybersecurity risk management, strategy, and governance.

Additional data protection laws exist at the state level as well. California enacted the CCPA, which came into effect January 1, 2020, was amended and expanded by the California Privacy Rights Act (the “CPRA”), which came into effect January 1, 2023. The CCPA, among other things, creates data privacy obligations for covered companies and provide privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA also creates a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. In addition, other states have,have enacted, or may,may enactenact, similar legislation. It remains unclear what, if any, additional modifications will be made to this legislation or how it will be interpreted. The effects of the CCPA and other state privacy laws are significant and have required us to modify our data processing practices, and may cause us to incur substantial costs and expenses to comply, particularly given our base of operations in California. There are also a number of other legislative proposals worldwide, including in the United States at both the federal and state level, that could impose additional and potentially conflicting obligations in areas affecting our business. We expect to incur additional costs to ensure that our data privacy and security policies, procedures, and activities comply with applicable and evolving legal requirements.

For instance, in the European Union,EU, increasingly stringent data protection and privacy rules that have and will continue to have substantial impact on the use of patient data across the healthcare industry became effective in May 2018. The GDPR applies across the EU and European UnionEconomic Area and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance. TheFines under GDPR fine framework can be up to 20 million euros, or up to 4% of the company’s total global turnover of the preceding fiscal year, whichever is higher. The GDPR also requires companies processing personal data of individuals residing in the EU and European UnionEconomic Area to comply with EU privacy and data protection rules,rules in certain circumstances, even if the company itself does not have a physical presence in the European Union.EU. Noncompliance could result in the imposition of fines, penalties, or orders to stop noncompliant activities. Due to the strong consumer protection aspects of the GDPR, companies subject to its purview are allocating substantial legal costs to the development and maintenance of necessary policies and procedures and overall compliance efforts. Data transfer risk remains a potential issue as certain Data Protection Authorities continue to raise concerns about the transfer of data to the United States. Though a new framework to permit cross-border transfers - the EU-US Data Privacy Framework - came into effect in 2023, it may be challenged as well. We expect continued costs associated with maintaining compliance with GDPR into the future, and these provisions as interpreted by EU agencies and authorities could negatively impact our business, financial condition and results of operations.

As part of our commitment to technological advancement, we have incorporated and will continue to explore and implement AI-enabled functions into our products and services. We continue to explore how best to leverage and harness the efficiency and innovation of AI-enabled and AI-empowered technology. In our deployment of AI, we strive to continually assess its performance and continue to make improvements. AI laws and regulations have proliferated in the U.S. and globally in recent years, including in 2024. In 2024, there were 60 AI-related regulations at the U.S. federal and state levels, up from just one in 2016. In 2024 alone, the total number of AI-related regulations in the U.S. grew by 140%. On January 10, 2025, HHS released its AI Strategic Plan which largely focuses on promoting trustworthy AI through the FAVES framework (Fair, Appropriate, Valid, Effective, Safe). Additionally,Among other adopted requirements, the EU AI Act went into effect on August 1, 2024, which sets requirements for developers (providers) and deployers of AI systems based on a risk approach and extends its reach to those developers of AI outside of the EU where the AI product or output is used in the EU. AI regulation is continually evolving at the federal, state and international level and will continue to require financial and resource investment by us to ensure that AI tools are safe and effective, operate in a non-discriminatory manner, and comply with applicable legal and regulatory requirements.

In March 2018, via the de novo process, the FDA classified the G6 and substantially equivalent devices of this generic type (i.e., “integrated continuous glucose monitoring systems” or “iCGMs”) into Class II, meaning that going forward products of this generic type may utilize the 510(k) pathway. Since then we have received 510(k) clearances for modifications to the G6 and approval for G7.G7 and G7 15 Day. In 2024, the FDA cleared Stelo as an over-the-counter biosensor designed for adults with prediabetes and Type 2 diabetes who do not use insulin.

During the period in which we directly billed Medicare, our financial relationships with referring physicians and their immediate family members were required to comply with the federal Physician Self-Referral law, commonly referred to as the Stark Law, by meeting an applicable exception. Unlike the Anti-Kickback Statute, failure to meet an exception under the Stark Law results in a violation of the Stark Law, even if such violation is unintentional. Violations of the Stark Law create overpayment liability under the federal civil False Claims Act and can also trigger separate penalties under the Civil Monetary Penalties Law. Knowing violations of the Stark Law carry increased civil monetary penalties and would likely be classified as the knowing submission of a false claim or knowingly making a false statement to the government, triggering liability under the federal civil False Claims Act. Certain Stark Law violations can also trigger exclusion from participation in federal healthcare programs. Historical violations of the Stark Law, if any, could continue to give rise to liability during the six year statute of limitations period.

ComprehensiveThe healthcare legislation, signed into law in the United States in March 2010, titled the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, collectively, the ACA,ACA imposes certain stringent compliance, recordkeeping, and reporting requirements on companies in various sectors of the life sciences industry, and enhanced penalties for non-compliance. Despite the ACA going into effect over a decade ago, there have been numerous legal and Congressional challenges to the law’s provisions and the effect of certain provisions have made compliance costly. With the presidential administration and as otherwise described in these Risk Factors, we expect material changes in health policy, enforcement initiatives, and coverage and reimbursement for health care items and services. As such, our costs to monitor these changes and respond to new requirements will increase.

Third parties have asserted in the past, and may assert in the future, infringement or misappropriation claims against us with respect to our current or future products. We are aware of numerous patents issued to third parties that may relate to aspects of our business, including the design and manufacture of CGM sensors and membranes, as well as methods for continuous glucose monitoring. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. Therefore, we cannot be certain that we have not infringed the intellectual property rights of such third parties or others. Our competitors may assert that our CGM systems or the methods we employ in the use of our systems are covered by U.S. or international patents held by them. We have in the past settled some such allegations and may need to do so again in the future. This risk is exacerbated by the fact that there are numerous issued patents and pending patent applications relating to self-monitored glucose testing systems in the medical technology field. Because patent applications may take years to issue, there may be applications now pending of which we are unaware that may later result in issued patents that our products infringe. There could also be existing patents of which we are unaware that one or more components of our system may inadvertently infringe. As the number of competitors in the market for CGM systems grows, the possibility of patent infringement by us or a patent infringement claim against us increases. If we are unable to successfully defend any such claims as they may arise or enter into or extend settlement and license agreements on acceptable terms or at all, our business operations may be harmed. We have been involved in various patent infringement actions in the past. For example, we and certain Abbott entities previously served complaints for patent infringement, validity, and other patent-related actions against each other in multiple jurisdictions, inside and outside the United States. In December 2024, we entered into a Settlement and License Agreement with Abbott to settle all pending patent infringement legal proceedings brought by Abbott against us. See “Legal Proceedings” in Part I, Item 3 below for more information.

Despite our efforts to safeguard our unpatented and unregistered intellectual property rights, we may not succeed in doing so or the steps taken by us in this regard may not be adequate to detect or deter misappropriation of our technology or to prevent an unauthorized third partythird-party from copying or otherwise obtaining and using our products, technology or other information that we regard as proprietary. In addition, third parties may be able to design around our patents. Furthermore, the laws of international countries may not protect our proprietary rights to the same extent as the laws of the United States.

Our business exposes us to the risk of product liability claims that is inherent in the testing, manufacturing and marketing of medical devices, including those which may arise from the misuse (including system hacking or other unauthorized access by third parties to our systems) or malfunction of, or design flaws in, our products. This liability may vary based on the FDA classification associated with our devices. Notably, the classification of our G6G6, G7 and G7 15 Day systems as Class II medical devices is likely to weaken our ability to rely on federal preemption of state law claims that assert liability against us for harms arising from use of those systems. We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury. Claims may be made by customers, healthcare providers or others selling our products. The risk of product liability claims may increase given that G6G6, G7 and G7 15 Day do not require confirmatory finger sticks when making treatment decisions or finger stick tests each day for calibration, although it does require finger stick tests when symptoms do not match readings and when readings are unavailable. The risk of claims may also increase if our products are subject to a product recall or seizure. AnAs an example of the difficulty of complying with the regulatory requirements associated with the manufacture of our products, we issued notifications to our customers regarding the audible alarms and alerts associated with our receivers.

We are not actively promoting our G6G6, G7 or G7 15 Day systems for inpatient use, but if we supply them to such facilities in the future, this supply could present an increased risk of product liability claims and associated damages should an adverse event occur. Given that the G6G6, G7 and G7 15 Day systems have not yet been fully evaluated or tested (by us or by the FDA) to the extent that would be required in standard circumstances for product development and marketing authorization, there could be unknown or unanticipated risks presented by use in this environment.

We estimate pharmacy rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends, and channel inventory data. Estimates associated with pharmacyPharmacy rebates are the most significant component of our variable consideration estimates included in the calculation of the transaction price and most at risk for material adjustment because of the time delay between the recording of the pharmacy rebate and its ultimate settlement, an interval that generally ranges from 30 to 90 days, but can last up to one year. Due to this time lag, in any given period, our adjustments to reflect actual amounts can incorporate changes of estimates related to prior periods.

We assess the value of our inventory on a quarterly basis and write down those inventories based on quality control testing data, obsolescence, or in excess of our forecasted demand to the lower of their cost or net realizable value. Our estimates of forecasted demand are based upon our analysis and assumptions including, but not limited to, expected product lifecycles, product development plans and historical usage by product. If actual market conditions are less favorable than our forecasts, or actual demand from our customers is lower than our estimates, we may be required to record additional inventory write-downs. IfSimilarly, if remediation outcomes differ from our assumptions, additional adjustments may be necessary. Conversely, if actual market conditions are more favorable than anticipated, inventory previously written down may be sold, resulting in lower cost of sales and higher income from operations than expected in that period. At December 31, 2025, a 1% change in the inventory reserve expense recognized during the year would not have resulted in a material change in inventory and cost of goods sold.

We are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. We review the status of each significant matter quarterly and assess our potential financial exposure. Significant judgment is required in the determination of the expected outcome (i.e., whether a potential loss is probable, reasonably possible, or remote), as well as in the determination of whether a potential exposure is reasonably estimable. We evaluate the nature of the claim, the stage of the proceedings, prior case outcomes, and input from legal counsel. We base our judgments on the best information available at the time.time Asand additional information becomes available, weregularly reassess theas potentialnew liabilityfacts related to our pending claims and litigation and may revise our estimates. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results.emerge.

Other income (expense),income, net

Other income (expense),income, net consists primarily of interest and dividend income on our cash, cash equivalents and short-term marketable securities portfolio, foreign currency transaction gains and losses dueresulting tofrom the effects of foreign currency fluctuations, realized and unrealized gains and losses on marketable and non-marketable equity investments, including changes in fair value, and interest expense related to our senior convertible notes.

A substantial portion of our operations are located in the United States, and the majority of our sales since inception have been made in U.S. dollars. WeAs we continue to expand our manufacturing sites in Ireland and Malaysia, we will be exposedsubject to additional foreign exchange currency exchange risk related to our international operations as we expand our manufacturing internationally and as our business continues to increase in international markets.risk. See “Foreign Currency Exchange Risk” in Part II, Item 7A of this Annual Report on Form 10-K for more information.

For the twelve months ended December 31, 2024,2025, we had positive cash flows of $989.5$1.44 millionbillion from operating activities. We anticipate that we will continue to generate positive cash flows from operations for the foreseeable future.

We received net proceeds of $1.19 billion in May 2020 from the 2025 Notes offering, and net proceeds of $1.23 billion in May 2023 from the 2028 Notes offering. We used $282.6 million of the net proceeds from the offering of the 2025 Notes to repurchase a portion of our senior convertible notes due in 2022. We used $289.9 million of the net proceeds from the offering of the 2028 Notes to purchase capped call transactions and repurchase shares of our common stock in May 2023. We intend to use the remainder of the net proceeds from the 2025 Notes offering and 2028 Notes offering for general corporate purposes and capital expenditures, including working capital needs. We may also use the net proceeds to expand our current business through in-licensing or acquisitions of, or investments in, other businesses, products or technologies; however, we do not have any significant commitments with respect to any such acquisitions or investments at this time.

OurAs of December 31, 2025, our short-term liquidity requirements primarily consist of regular operating costs, interest payments related to our senior2028 convertible notes,Notes, capital expenditures for the development of our manufacturing facilities and office spaces, and short-term material cash requirements as described below. As of December 31, 2024,2025, we had a working capital ratio of 1.471.88 and a quick ratio of 1.22,1.50, which indicates that our current assets are more than enoughsufficient to cover our short-term liabilities. We expect to incur significant capital expenditures for the next year as we continue to invest in equipment and our manufacturing facilities.

We believe that our cash, cash equivalents, and marketable securities balances, projected cash contributions from our commercial operations, and borrowings under our Credit Facility will be sufficient to meet our anticipated seasonal working capital needs, all capital expenditure requirements, material cash requirements as described below,herein, and meet other liquidity requirements associated with our operations for at least the next 12 months. We may continue to use cash to repurchase shares of our common stockstock, including pursuant to the 2025 Share Repurchase Program, or for other strategic initiatives that strengthen our foundation for long-term growth.

Our long-term liquidity requirements primarily consist of interest and principal payments related to our senior2028 convertible notes,Notes, capital expenditures for the development of our manufacturing facilities and office spaces, and long-term material cash requirements as described below. As of December 31, 2024,2025, we had a debt-to-assets ratio of 0.38,0.20, which indicates that our total assets are more than enoughsufficient to cover our short-term and long-term debts. As demand grows for our products, we will continue to expand global operations to meet demand through investments in manufacturing and operations. We expect to meet our long-term liquidity requirements from our main sources of liquidity as described above to support our future operations, capital expenditures, acquisitions, and other liquidity requirements associated with our operations beyond the next 12 months.

Our obligations under the 2025 Notes and 2028 Notes include both principal and interest payments. AlthoughPrior to the 2025maturity Notesof andthe 2028 Notes mature in November 2025 and May 2028, respectively, they may be converted into cash and/or shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity may result in repayment of the principal amounts due under the Notes sooner than the scheduled repayment.

As market conditions warrant, we may, from time to time, repurchase our outstanding debt securities or shares of our common stock, including pursuant to the 2025 Share Repurchase Program, in the open market, in privately negotiated transactions, by exchange transaction or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity and other factors and may be commenced or suspended at any time. The amounts involved and total consideration paid may be material. See Note 98 “Stockholder’sEmployee Benefit Plans and Stockholders’ Equity—Share Repurchase Program and Treasury Shares” to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about our 20242025 Share Repurchase Program.

We are party to various leasing arrangements, primarily for office, manufacturing and warehouse space that expire at various times through December2040, 2030, excludingincluding any renewal options.options that we are reasonably certain to exercise. We also have land leases in Penang, Malaysia that expire in 2082 and Athenry, Ireland that expire in 3023 related to our international manufacturing facilities. We anticipate incurring significant expenditures related to the build-out of our manufacturing facilities and investment in equipment. See Note 65 “Leases and Other Commitments—Leases” to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about our leases.

As of December 31, 2024,2025, we had $2.58$2.00 billion in cash, cash equivalents and short-term marketable securities, which is a decrease of $144.7$580.7 million compared to $2.72$2.58 billion as of December 31, 2023.2024. The decrease in cash, cash equivalents and short-term marketable securities was primarily due to the repayment of our unsecured senior convertible notes due 2025, or 2025 Notes, upon maturity in November 2025.

The primaryfollowing tables set forth a summary of our cash flows duringand the twelveprimary monthschanges endedin Decembercash 31,flows 2024for andthe 2023periods are described below.shown. See the consolidated financial statements in Part II, Item 8 of this Annual Report for the complete consolidated statements of cash flows for these periods.periods:

ThereThe werefollowing norisk materialfactor changessupplements and, to the extent inconsistent, supersedes, the risk factors previously disclosed andin includedPart I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 20252025, filed with the SEC on February 12, 2026. Our short and long-term success is subject to numerous risks and uncertainties, many of which involve factors that are difficult to predict or beyond our control. Before making a decision to invest in, hold or sell our common stock, in addition to the information and risk factors set forth in this Quarterly Report on Form 10-Q, stockholders and potential stockholders should carefully consider the risks and uncertainties described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which could materially and adversely affect our business, financial condition, results of operations and prospects. In that case, the value of our common stock could decline and stockholders may lose all or part of their investment.

We believe that the estimates, assumptions and judgments involved in the accounting policies described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. There were no material changes to our critical accounting estimates during the threesix months ended MarchJune 31,30, 2026.

We ended the firstsecond quarter of 2026 with cash, cash equivalents and short-term marketable securities totaling $2.42$1.95 billion.

We generate our revenue from the sale of disposable sensors and our reusable transmittertransmitters and receiver, collectively referred to as Reusable Hardware.receivers. We expect that the revenue we generate from the sales of our products will fluctuate from quarter to quarter. We typically experience seasonality, with lower sales in the first quarter of each year compared to the immediately preceding fourth quarter. This seasonal sales pattern relates to U.S. annual insurance deductible resets and unfunded flexible spending accounts.

Other income,income (expense), net

Other income,income (expense), net consists primarily of interest and dividend income on our cash, cash equivalents and short-term marketable securities portfolio, foreign currency transaction gains and losses resulting from the effects of foreign currency fluctuations, realized and unrealized gains and losses on marketable and non-marketable equity investments, including changes in fair value, and interest expense related to our senior convertible notes.

Our cash, cash equivalents and short-term marketable securities totaled $2.42$1.95 billion as of MarchJune 31,30, 2026. None of those funds were restricted and $2.10$1.56 billion (approximately 87%80%) of those funds were located in the United States.

For the threesix months ended MarchJune 31,30, 2026, we had positive cash flows of $525.6$794.8 million from operating activities. We anticipate that we will continue to generate positive cash flows from operations for the foreseeable future.

As of MarchJune 31,30, 2026, we had no outstanding borrowings, $8.8$8.7 million in outstanding letters of credit, and a total available balance of $191.2$191.3 million under the Amended Credit Agreement. We monitor counterparty risk associated with the institutional lenders that are providing the Credit Facility. We currently believe that the Credit Facility will be available to us should we choose to borrow under it. Revolving loans will be available for general corporate purposes, including working capital and capital expenditures. The Amended Credit Agreement will mature on October 13, 2026. See Note 4 “Debt” to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on the Amended Credit Agreement.

As of MarchJune 31,30, 2026, our short-term liquidity requirements primarily consist of regular operating costs, interest payments related to our 2028 Notes, capital expenditures for the development of our manufacturing facilities and office spaces, and short-term material cash requirements as described below. As of MarchJune 31,30, 2026, we had a working capital ratio of 1.951.73 and a quick ratio of 1.58,1.36, which indicates that our current assets are sufficient to cover our short-term liabilities. We expect to incur significant capital expenditures for the next year as we continue to invest in equipment and our manufacturing facilities.

We believe that our cash, cash equivalents, and marketable securities balances, projected cash contributions from our commercial operations, and borrowings under our Credit Facility will be sufficient to meet our anticipated seasonal working capital needs, all capital expenditure requirements, material cash requirements as described herein, and meet other liquidity requirements associated with our operations for at least the next 12 months. We maycurrently intend to continue to use cash to repurchase shares of our common stock, including pursuant to the 20252026 Share Repurchase Program, or for other strategic initiatives that strengthen our foundation for long-term growth.

Our long-term liquidity requirements primarily consist of interest and principal payments related to our 2028 Notes, capital expenditures for the development of our manufacturing facilities and office spaces, and long-term material cash requirements as described below. As of MarchJune 31,30, 2026, we had a debt-to-assets ratio of 0.19, which indicates that our total assets are sufficient to cover our debts. As demand grows for our products, we will continue to expand global operations to meet demand through investments in manufacturing and operations. We expect to meet our long-term liquidity requirements from our main sources of liquidity as described above to support our future operations, capital expenditures, acquisitions, and other liquidity requirements associated with our operations beyond the next 12 months. Further, we expect to allocate at least 50% of cash generated from operations, net of planned capital expenditures, to share repurchases over the course of our long-range plan.

As of MarchJune 31,30, 2026, we have outstanding senior convertible notes classified as long-term that will mature in May 2028. However, the outstanding principal of our senior convertible notes could be converted into cash and/or shares of our common stock prior to maturity once certain conditions are met. See Note 4 “Debt—Senior Convertible Notes” to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information on conversion rights prior to maturity.

From time to time in the ordinary course of business, we enter into a variety of purchase arrangements including but not limited to, purchase arrangements related to capital expenditures, components used in manufacturing, and research and development activities. As of MarchJune 31,30, 2026, therewe werehad noapproximately material$1.42 changesbillion toof ouropen purchase orders and contractual obligations outsidein the ordinary course of business.business, the majority of which are due within one year.

We are party to various leasing arrangements, primarily for office, manufacturing and warehouse space that expire at various times through 2040, including any renewal options that we are reasonably certain to exercise. We also have land leases in Penang, Malaysia that expire in 2082 and Athenry, Ireland that expire in 3023 related to our international manufacturing facilities. We anticipate incurring significant expenditures related to the build-out of our manufacturing facilities and investment in equipment. See Note 5 “Leases and Other Commitments—Leases” to the consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 for more information about our leases. There were no material changes to our lease obligations during the threesix months ended MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, we had $2.42$1.95 billion in cash, cash equivalents and short-term marketable securities, which is ana increasedecrease of $416.5$51.7 million compared to $2.00 billion as of December 31, 2025.