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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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33-0857544
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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6340 Sequence Drive
San Diego, California
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92121
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value Per Share
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The NASDAQ Stock Market LLC
(Nasdaq Global Select Market)
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Preferred Stock Purchase Rights, $0.001 Par Value Per Share
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The NASDAQ Stock Market LLC
(Nasdaq Global Select Market)
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Class
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Outstanding at February 24, 2017
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Common stock, $0.001 par value per share
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84,815,039 shares
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Page
Number
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PART I
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ITEM 1.
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Business
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ITEM 1A.
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Risk Factors
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ITEM 1B.
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Unresolved Staff Comments
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ITEM 2.
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Properties
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ITEM 3.
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Legal Proceedings
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ITEM 4.
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Mine Safety Disclosures
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PART II
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ITEM 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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ITEM 6.
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Selected Financial Data
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ITEM 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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ITEM 7A.
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Quantitative and Qualitative Disclosures about Market Risk
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ITEM 8.
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Consolidated Financial Statements and Supplementary Data
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ITEM 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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ITEM 9A.
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Controls and Procedures
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ITEM 9B.
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Other Information
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PART III
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ITEM 10.
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Directors, Executive Officers and Corporate Governance
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ITEM 11.
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Executive Compensation
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ITEM 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
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ITEM 13.
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Certain Relationships and Related Transactions, and Director Independence
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ITEM 14.
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Principal Accounting Fees and Services
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PART IV
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ITEM 15.
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Exhibits, Financial Statement Schedules
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ITEM 1.
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BUSINESS
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Limited Information.
Even if people with diabetes test several times each day, each measurement represents a single blood glucose value at a single point in time. Given the many factors that can affect blood glucose levels, excursions above and below the normal range often occur between these discrete measurement points in time. Without the ability to determine whether their blood glucose level is rising, falling or holding constant, and the rate at which their blood glucose level is changing, the individual’s ability to effectively manage and maintain blood glucose levels within normal ranges is severely limited. Further, people with diabetes cannot test themselves during sleep, when the risk of hypoglycemia is significantly increased. In addition, existing technology generally limits individuals’ ability to store their glucose data in servers or systems independent of the blood glucose meter.
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Inconvenience.
The process of measuring blood glucose levels with single-point finger stick devices can cause significant disruption in the daily activities of people with diabetes and their families. People with diabetes using single-point finger stick devices must stop whatever they are doing several times per day, self-inflict a painful prick and draw blood to measure blood glucose levels. To do so, people with diabetes must always carry a fully supplied kit that may include a spring-loaded needle, or lancet, disposable test strips, cleansing wipes, and the meter, and then safely dispose of the used supplies. This process is inconvenient and may cause uneasiness in social situations.
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Difficulty of Use.
To obtain a sample with single-point finger stick devices, people with diabetes generally prick one of their fingertips or, occasionally, a forearm with a lancet. They then squeeze the area to produce the blood sample and another prick may be required if a sufficient volume of blood is not obtained the first time. The blood sample is then placed on a disposable test strip that is inserted into a blood glucose meter. This task can be difficult for individuals with decreased tactile sensation and visual acuity, which are common complications of diabetes.
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Pain.
Although the fingertips are rich in blood flow and provide a good site to obtain a blood sample, they are also densely populated with highly sensitive nerve endings. This makes the lancing and subsequent manipulation of the finger to draw blood painful. The pain and discomfort are compounded by the fact that fingers offer limited surface area, so tests are often performed on areas that are sore from prior tests. People with diabetes may also suffer pain when the finger prick site is disturbed during regular activities.
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Improved Outcomes.
Data published in a peer-reviewed article based on our approval support trial for our first system demonstrated that patients using the system showed statistically significant improvements in maintaining their glucose levels within the target range when compared to patients relying solely on single-point finger stick measurements. Additional peer-review published data has demonstrated that patients with access to seven days of continuous glucose data statistically improved glucose control by further increasing their time spent with glucose levels in the target range, thereby reducing time spent in both hyperglycemic and hypoglycemic ranges. Peer-review published data from our repeated use trial demonstrated a statistically significant reduction in hemoglobin A1c levels, a measure of the average amount of glucose in the blood over the prior three months, in patients using our system compared to patients relying solely on single-point finger stick measurements. Finally, results of a major multicenter clinical trial funded by the
JDRF
demonstrated that patients with Type 1 diabetes who used continuous glucose monitoring devices to help manage their disease experienced significant improvements in glucose control.
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Access to Real-Time Values, Trend Information and Alerts.
At the push of a button, people with diabetes can view their current glucose value, along with a graphical display of one-, three-, six-, twelve- or twenty-four-hour trend information on our receiver or alternate display device. Without continuous monitoring, the individual is often unaware if his or her glucose is rising, declining or remaining constant. Access to continuous real-time glucose measurements provides people with diabetes information that may aid in attaining better glucose control. Additionally, our G4 PLATINUM and G5 Mobile systems alert people with diabetes when their glucose levels approach inappropriately high or low levels so that they may intervene.
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Intuitive User Interface.
We have developed a user interface that we believe is intuitive and easy to use. The G4 PLATINUM and G5 Mobile receiver’s compact designs includes user-friendly buttons, an easy-to-read color display, simple navigation tools, audible alerts and graphical display of trend information. Similar benefits are available via the interfaces we have made available on iOS devices and, in certain countries outside of the United States, on Android devices, which can serve as substitutes for our receivers in those geographies.
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Convenience and Comfort.
Our G4 PLATINUM and G5 Mobile systems provide people with diabetes with the benefits of continuous monitoring, without having to perform finger stick tests for every measurement. Additionally, the disposable sensor electrode that is inserted under the skin is a very thin wire, minimizing potential discomfort associated with inserting or wearing the disposable sensor. The external portion of the sensor, including the transmitter, is small, has a low profile and is designed to be easily worn under clothing. The wireless receiver is the size of a small digital music player and can be carried discreetly in a pocket or purse. We believe that convenience is an important factor in achieving widespread adoption of a continuous glucose monitoring system.
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Connectivity to Others.
Our Share remote monitoring systems enable users of our G4 PLATINUM and G5 Mobile systems to have their sensor glucose information remotely monitored by their family or friends by wirelessly transmitting data through an app on the patient’s smart phone. Up to five designated recipients, or “followers,” can remotely monitor a patient’s glucose information and receive secondary alert notifications from almost anywhere via each follower's smart phone.
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Establish and maintain our technology platform as the leading approach to continuous glucose monitoring and leverage our development expertise to rapidly bring products to market, including for expanded indications.
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Drive the adoption of our ambulatory products through a direct sales and marketing effort, as well as key distribution arrangements.
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Drive additional adoption through technology integration partnerships such as our current partnerships with Animas, Tandem, Insulet and others.
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Seek broad coverage policies and reimbursement for our products from private third party payors and national health systems such as Medicare.
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Drive increased utilization and adoption of our products through a cloud-based data repository platform that enables people with diabetes to aggregate and analyze data from numerous diabetes devices and share the data with their healthcare providers.
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Expand the use of our products to other patient care settings and patient demographics, including people with Type 2 diabetes.
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Provide a high level of customer support, service and education.
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Pursue the highest safety and quality levels for our products.
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creating awareness of the benefits of continuous glucose monitoring and the advantages of our technology with endocrinologists, physicians, diabetes educators and people with diabetes;
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providing strong and simple educational and training programs to healthcare providers and people with diabetes to ensure easy, safe and effective use of our systems; and
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maintaining a readily accessible telephone and web-based technical and customer support infrastructure, which includes clinicians, diabetes educators and reimbursement specialists, to help referring physicians, diabetes educators and people with diabetes as necessary.
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recruit and retain adequate numbers of effective sales personnel;
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effectively train our sales personnel in the benefits of our products;
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establish and maintain successful sales, marketing, training and education programs that encourage endocrinologists, physicians and diabetes educators to recommend our products to their patients; and
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manage geographically disbursed operations.
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safe, reliable and high quality performance of products;
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cost of products and eligibility for reimbursement;
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comfort and ease of use;
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effective sales, marketing and distribution;
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brand awareness and strong acceptance by healthcare professionals and people with diabetes;
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customer service and support and comprehensive education for people with diabetes and diabetes care providers;
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speed of product innovation and time to market;
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regulatory expertise; and
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technological leadership and superiority.
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avoid the constraints we anticipate in our current facilities commencing in 2018-2019;
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geographically diversify our manufacturing base to mitigate the risks of having all of our manufacturing located in earthquake and fire-prone California; and
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help manage certain of our operating expenses by taking advantage of Arizona’s lower costs and taxes relative to California.
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our systems may not be safe or effective to the
FDA
’s satisfaction;
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the data from our pre-clinical studies and clinical trials may be insufficient to support approval;
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the manufacturing process or facilities we use may not meet applicable requirements; and
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changes in
FDA
approval policies or adoption of new regulations may require additional data.
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the
FDA
or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;
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patients do not enroll in clinical trials at the rate we expect;
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patients do not comply with trial protocols;
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patient follow-up is not at the rate we expect;
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patients experience adverse side effects;
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patients die during a clinical trial, even though their death may not be related to our products;
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institutional review boards and third-party clinical investigators may delay or reject our trial protocol;
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third-party clinical investigators decline to participate in a trial or do not perform a trial on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices or other
FDA
requirements;
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DexCom or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans;
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third-party clinical investigators have significant financial interests related to DexCom or the study that the
FDA
deems to make the study results unreliable, or DexCom or investigators fail to disclose such interests;
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regulatory inspections of our clinical trials or manufacturing facilities, which may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials;
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changes in governmental regulations or administrative actions applicable to our trial protocols;
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the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and
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the
FDA
concludes that our trial design is inadequate to demonstrate safety and efficacy.
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establishment registration and device listing;
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QSR
, which requires manufacturers to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures;
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labeling regulations, which prohibit the promotion of products for unapproved or off-label uses or indications and impose other restrictions on labeling, advertising and promotion;
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medical device reporting regulations, which require that manufacturers report to the
FDA
if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur;
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voluntary and mandatory device recalls to address problems when a device is defective and/or could be a risk to health; and
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corrections and removal reporting regulations, which require that manufacturers report to the
FDA
field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the
FDCA
that may present a risk to health.
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warning letters or untitled letters that require corrective action;
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fines and civil penalties;
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unanticipated expenditures;
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delays in approving or refusal to approve our future continuous glucose monitoring systems or other products;
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FDA
refusal to issue certificates to foreign governments needed to export our products for sale in other countries;
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suspension or withdrawal of
FDA
approval;
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product recall or seizure;
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interruption of production;
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operating restrictions;
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injunctions; and
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criminal prosecution.
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ITEM 1A.
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RISK FACTORS
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research and development relating to our continuous glucose monitoring systems;
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sales and marketing and manufacturing expenses associated with the commercialization of our G4 PLATINUM and G5 Mobile systems; and
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expansion of our workforce.
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recruit and retain adequate numbers of effective and experienced sales personnel;
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effectively train our sales personnel in the benefits and risks of our products;
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establish and maintain successful sales, marketing and education programs that educate endocrinologists, physicians and diabetes educators so they can appropriately inform their patients about our products; and
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manage geographically disbursed sales and marketing operations.
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the revenue generated by sales of our products and other future products;
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the costs, timing and risks of delay of additional regulatory approvals;
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the expenses we incur in manufacturing, developing, selling and marketing our products;
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our ability to scale our manufacturing operations to meet demand for our current and any future products;
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the costs to produce our continuous glucose monitoring systems or future products;
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the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
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the rate of progress and cost of our clinical trials and other development activities;
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the success of our research and development efforts;
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the emergence of competing or complementary technologies;
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the terms and timing of any collaborative, licensing and other arrangements that we may establish;
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the cost of ongoing compliance with legal and regulatory requirements, and third party payors' policies;
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the cost of obtaining and maintaining regulatory or payor clearance or approval for our current or future products including those integrated with other companies' products; and
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the acquisition of businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
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the system may not be deemed by the FDA to be substantially equivalent to appropriate predicate devices;
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the system may not satisfy the FDA's safety or efficacy requirements;
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the data from pre-clinical studies and clinical trials may be insufficient to support approval;
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the manufacturing process or facilities used may not meet applicable requirements; and
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changes in FDA approval policies or adoption of new regulations may require additional data.
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the
FDA
or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;
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patients do not enroll in clinical trials at the rate we expect;
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patients do not comply with trial protocols;
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patient follow-up does not occur at the rate we expect;
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patients experience adverse side effects;
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patients die during a clinical trial, even though their death may not be related to our products;
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institutional review boards, or IRBs and third-party clinical investigators may delay or reject our trial protocol;
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third-party clinical investigators decline to participate in a trial or do not perform a trial on our anticipated schedule or consistent with the investigator agreements, clinical trial protocol, good clinical practices or other
FDA
or IRB requirements;
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DexCom or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans;
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third-party clinical investigators have significant financial interests related to DexCom or the study that the
FDA
deems to make the study results unreliable, or DexCom or investigators fail to disclose such interests;
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regulatory inspections of our clinical trials or manufacturing facilities may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials;
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changes in governmental regulations, policies or administrative actions applicable to our trial protocols;
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the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and
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the
FDA
concludes that our trial design is inadequate to demonstrate safety and efficacy.
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the pricing of our products and services;
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the distribution of our products and services;
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billing for services;
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financial relationships with physicians and other referral sources;
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inducements and courtesies given to physicians and other health care providers and patients;
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labeling products;
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the characteristics and quality of our products and services;
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confidentiality, maintenance and security issues associated with medical records and individually identifiable health and other personal information;
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medical device reporting;
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prohibitions on kickbacks, also referred to as anti-kickback laws or regulations;
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any scheme to defraud any healthcare benefit program;
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physician payment disclosure requirements;
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personal health information;
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privacy;
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data protection;
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mobile communications;
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false claims; and
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professional licensure.
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we may not be able to obtain adequate supply in a timely manner or on commercially reasonable terms;
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our products are technologically complex and it is difficult to develop alternative supply sources;
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we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers' needs higher priority than ours;
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our suppliers may make errors in manufacturing components that could negatively affect the efficacy or safety of our products or cause delays in shipment of our products;
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we may have difficulty locating and qualifying alternative suppliers for our single-source supplies;
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switching components may require product redesign and submission to the
FDA
of a
PMA
supplement or possibly a separate
PMA
, either of which could significantly delay production;
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our suppliers manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacture for others may affect their ability to deliver components to us in a timely manner;
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our suppliers may make obsolete components that are critical to our products; and
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our suppliers may encounter financial hardships unrelated to our demand for components, including those related to changes in global economic conditions, which could inhibit their ability to fulfill our orders and meet our requirements.
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warning letters or untitled letters that require corrective action;
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delays in approving or refusal to approve our continuous glucose monitoring systems;
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fines and civil or criminal penalties;
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unanticipated expenditures;
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FDA
refusal to issue certificates to foreign governments needed to export our products for sale in other countries;
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suspension or withdrawal of clearance or approval by the
FDA
or other regulatory bodies;
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product recall or seizure;
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administrative detention;
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interruption of production, partial suspension, or complete shutdown of production;
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interruption of the supply of components from our key component suppliers;
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operating restrictions;
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court consent decrees;
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FDA orders to repair, replace, or refund the cost of devices;
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injunctions; and
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criminal prosecution.
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significantly greater name recognition;
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established relations with healthcare professionals, customers and third-party payors;
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established distribution networks;
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additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;
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greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketing approved products;
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the ability to integrate multiple products to provide additional features beyond continuous glucose monitoring; and
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greater financial and human resources for product development, sales and marketing, and patent litigation.
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loss of existing customers;
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difficulty in attracting new customers;
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problems in determining product cost estimates and establishing appropriate pricing;
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difficulty in preventing, detecting, and controlling fraud;
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disputes with customers, physicians, and other health care professionals;
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increases in operating expenses, incurrence of expenses, including remediation costs;
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loss of revenues;
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product development delays;
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disruption of key business operations; and
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diversion of attention of management and key information technology resources.
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the FDA approval of our G5 Mobile system in the United States in August 2015 and the approval to sell our G5 Mobile system in the countries that recognize our CE Mark means that we have relatively limited experience selling our G5 Mobile system;
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the approval for a Pediatric Indication of our G5 Mobile system in the United States and the countries that recognize our CE Mark means that we have limited experience selling and marketing the G5 Mobile system to persons aged two to 17 years or their legal guardians;
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widespread market acceptance of our products by physicians and people with diabetes will largely depend on our ability to demonstrate their relative safety, efficacy, reliability, cost-effectiveness and ease of use;
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the limited size of our sales force;
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we may not have sufficient financial or other resources to adequately expand the commercialization efforts for our products;
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our FDA and other regulatory submissions may be delayed, or approved with limited product labeling;
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we may not be able to manufacture our products in commercial quantities or at an acceptable cost;
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people with diabetes do not generally receive broad reimbursement from third-party payors for their purchase of our products since many payors require that a policy holder meet specific medical criteria to qualify for reimbursement, which may reduce widespread use of our products;
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the uncertainties associated with establishing and qualifying new manufacturing facilities;
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except for the G5 Mobile, our systems are not labeled as a replacement for the information that is obtained from single-point finger stick devices (and even the G5 Mobile continues to require twice-daily finger sticks for calibration);
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people with diabetes will need to incur the costs of our systems in addition to single-point finger stick devices;
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the relative immaturity of the continuous glucose monitoring market internationally, and the general absence of international reimbursement of continuous glucose monitoring devices by third-party payors and government healthcare providers outside the United States;
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the introduction and market acceptance of competing products and technologies;
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our inability to obtain sufficient quantities of supplies at appropriate quality levels from our single-source and other key suppliers;
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our inability to manufacture products that perform in accordance with expectations of consumers; and
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rapid technological change may make our technology and our products obsolete.
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local product preferences and product requirements;
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longer-term receivables than are typical in the United States;
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fluctuations in foreign currency exchange rates;
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less intellectual property protection in some countries outside the United States than exists in the United States;
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trade protection measures and import and export licensing requirements;
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workforce instability;
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political and economic instability; and
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the potential payment of U.S. income taxes on certain earnings of our subsidiaries outside the United States upon repatriation.
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securities analyst coverage or lack of coverage of our common stock or changes in their estimates of our financial performance;
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variations in quarterly operating results;
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future sales of our common stock by our stockholders;
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investor perception of us and our industry;
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announcements by us or our competitors of significant agreements, acquisitions or capital commitments;
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changes in market valuation or earnings of our competitors;
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general economic conditions;
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regulatory actions;
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legislation and political conditions; and
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terrorist acts.
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our inability to manufacture an adequate supply of product at appropriate quality levels and acceptable costs;
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possible delays in our research and development programs or in the completion of any clinical trials;
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a lack of acceptance of our products in the marketplace by physicians and people with diabetes;
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the inability of customers to receive reimbursements from third-party payors;
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failures to comply with regulatory requirements, which could lead to withdrawal of products from the market;
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our failure to continue the commercialization of any of our continuous glucose monitoring systems;
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competition;
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inadequate financial and other resources; and
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global and political economic conditions, political instability and military hostilities.
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the terms on which credit may be available to us could be less attractive, both in the economic terms of the credit and the legal covenants;
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the possible lack of availability of additional credit;
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•
|
the potential for higher levels of interest expense to service or maintain our outstanding debt;
|
•
|
the possibility of additional borrowings in the future to repay our indebtedness when it comes due; and
|
•
|
the possible diversion of capital resources from other uses.
|
•
|
our Board of Directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;
|
•
|
our stockholders do not have cumulative voting rights and, therefore, each of our directors can only be elected by holders of a majority of our outstanding common stock;
|
•
|
a special meeting of stockholders may only be called by a majority of our Board of Directors, the Chairman of our Board of Directors, or our Chief Executive Officer;
|
•
|
our stockholders may not take action by written consent;
|
•
|
our Board of Directors is divided into three classes, only one of which is elected each year; and
|
•
|
we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
Location
|
Approximate Square Feet
|
Operation
|
Lease Expiration Dates
|
|
San Diego, CA
|
383,500
|
|
Laboratory, Manufacturing, Research and Development, Warehouse, General and Administrative, Sales and Marketing
|
2022
(1)
|
Edinburgh, Scotland
|
9,100
|
|
EMEA Headquarters, Clinical, Regulatory, Marketing, General and Administrative
|
2026
|
Mesa, AZ
|
78,000
|
|
Future Laboratory, Manufacturing, Warehouse
(3)
|
2028
(2)
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2016
|
|
|
|
|
||||
First Quarter
|
|
$
|
83.87
|
|
|
$
|
47.92
|
|
Second Quarter
|
|
$
|
81.23
|
|
|
$
|
60.07
|
|
Third Quarter
|
|
$
|
96.38
|
|
|
$
|
76.21
|
|
Fourth Quarter
|
|
$
|
87.81
|
|
|
$
|
59.36
|
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2015
|
|
|
|
|
||||
First Quarter
|
|
$
|
64.64
|
|
|
$
|
53.30
|
|
Second Quarter
|
|
$
|
80.57
|
|
|
$
|
60.80
|
|
Third Quarter
|
|
$
|
103.29
|
|
|
$
|
76.46
|
|
Fourth Quarter
|
|
$
|
89.44
|
|
|
$
|
70.29
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(in millions, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product revenue
|
|
$
|
573.3
|
|
|
$
|
400.7
|
|
|
$
|
257.1
|
|
|
$
|
157.1
|
|
|
$
|
93.0
|
|
Development grant and other revenue
|
|
—
|
|
|
1.3
|
|
|
2.1
|
|
|
2.9
|
|
|
6.9
|
|
|||||
Total revenue
|
|
573.3
|
|
|
402.0
|
|
|
259.2
|
|
|
160.0
|
|
|
99.9
|
|
|||||
Product cost of sales
|
|
194.9
|
|
|
123.6
|
|
|
82.3
|
|
|
58.1
|
|
|
48.3
|
|
|||||
Development and other cost of sales
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
1.8
|
|
|
5.0
|
|
|||||
Total cost of sales
|
|
194.9
|
|
|
123.6
|
|
|
82.9
|
|
|
59.9
|
|
|
53.3
|
|
|||||
Gross profit
|
|
378.4
|
|
|
278.4
|
|
|
176.3
|
|
|
100.1
|
|
|
46.6
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
|
156.1
|
|
|
137.5
|
|
|
69.4
|
|
|
44.8
|
|
|
38.3
|
|
|||||
Selling, general and administrative
|
|
286.2
|
|
|
198.0
|
|
|
128.4
|
|
|
84.2
|
|
|
64.0
|
|
|||||
Total operating expenses
|
|
442.3
|
|
|
335.5
|
|
|
197.8
|
|
|
129.0
|
|
|
102.3
|
|
|||||
Operating loss
|
|
(63.9
|
)
|
|
(57.1
|
)
|
|
(21.5
|
)
|
|
(28.9
|
)
|
|
(55.7
|
)
|
|||||
Other expense
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest income
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Interest expense
|
|
(0.7
|
)
|
|
(0.4
|
)
|
|
(0.8
|
)
|
|
(0.9
|
)
|
|
(0.2
|
)
|
|||||
Loss before income taxes
|
|
(64.9
|
)
|
|
(57.5
|
)
|
|
(22.3
|
)
|
|
(29.8
|
)
|
|
(55.8
|
)
|
|||||
Income tax expense (benefit)
|
|
0.7
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
(1.3
|
)
|
|||||
Net loss
|
|
$
|
(65.6
|
)
|
|
$
|
(57.6
|
)
|
|
$
|
(22.4
|
)
|
|
$
|
(29.8
|
)
|
|
$
|
(54.5
|
)
|
Basic and diluted net loss per share attributable to common stockholders
(1)
|
|
$
|
(0.78
|
)
|
|
$
|
(0.72
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
(0.79
|
)
|
Shares used to compute basic and diluted net loss per share attributable to common stockholders
(1)
|
|
83.6
|
|
|
79.8
|
|
|
75.2
|
|
|
71.1
|
|
|
68.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, and short-term marketable securities
|
|
$
|
123.7
|
|
|
$
|
115.2
|
|
|
$
|
83.6
|
|
|
$
|
54.6
|
|
|
$
|
48.7
|
|
Working capital
|
|
177.6
|
|
|
164.4
|
|
|
105.3
|
|
|
61.0
|
|
|
58.1
|
|
|||||
Total assets
|
|
402.8
|
|
|
292.0
|
|
|
184.6
|
|
|
122.5
|
|
|
106.0
|
|
|||||
Long term obligations
|
|
16.6
|
|
|
3.9
|
|
|
3.8
|
|
|
6.3
|
|
|
9.5
|
|
|||||
Total stockholders’ equity
|
|
$
|
283.8
|
|
|
$
|
221.2
|
|
|
$
|
140.2
|
|
|
$
|
84.1
|
|
|
$
|
77.0
|
|
(1)
|
See Note 2 of the notes to our consolidated financial statements for a description of the method used to compute basic and diluted net loss per share attributable to common stockholders.
|
|
Twelve Months Ended
December 31, |
|
Change
|
||||||||
|
2016
|
|
2015
|
|
|
||||||
Net cash provided by operating activities
|
$
|
56.2
|
|
|
$
|
49.0
|
|
|
$
|
7.2
|
|
Net cash used in investing activities
|
$
|
(55.9
|
)
|
|
$
|
(51.5
|
)
|
|
$
|
(4.4
|
)
|
Net cash provided by financing activities
|
$
|
8.1
|
|
|
$
|
16.8
|
|
|
$
|
(8.7
|
)
|
•
|
Net cash provided by operations of
$56.2 million
comprised of net loss of
$65.6 million
, offset by
$128.1 million
for non-cash items primarily related to share-based compensation, changes in working capital balances of
$6.3 million
, depreciation and amortization;
|
•
|
Proceeds from issuance of common stock of
$10.4 million
.
|
•
|
Cash
used
of
$0.5 million
as a result of net purchases of marketable securities;
|
•
|
Capital expenditures of
$55.7 million
primarily related to purchase of manufacturing equipment, facility related build-outs and office equipment;
|
•
|
Repayments of debt of
$2.3 million
.
|
•
|
the revenue generated by sales of our approved products and other future products;
|
•
|
the expenses we incur in manufacturing, developing, selling and marketing our products;
|
•
|
the quality levels of our products and services;
|
•
|
the third-party reimbursement of our products for our customers;
|
•
|
our ability to efficiently scale our manufacturing operations to meet demand for our current and any future products;
|
•
|
the costs, timing and risks of delays of additional regulatory approvals;
|
•
|
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
|
•
|
the rate of progress and cost of our clinical trials and other development activities;
|
•
|
the success of our research and development efforts;
|
•
|
the emergence of competing or complementary technological developments;
|
•
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish; and
|
•
|
the acquisition of businesses, products and technologies and our ability to integrate and manage any acquired businesses, products and technologies.
|
•
|
On February 1, 2016, we entered into a Sublease (the “Sublease”) with Entropic Communications, LLC with respect to the building at 6350 Sequence Drive in San Diego, California (the “6350 Building”). Under the Sublease, we have leased approximately
132,600
square feet of space in the 6350 Building. The lease term extends through January 2022. The total obligation for rent under the life of the lease is $14.5 million, excluding real estate taxes and operating costs.
|
•
|
On April 28, 2016, we entered into a certain Industrial Net Lease (the “Mesa Lease”) with PRA/LB, L.L.C. with respect to facilities in the building at 232 South Dobson Road in Mesa, Arizona (the “Mesa Building"). Under the
|
Contractual Obligations:
|
|
Total
|
|
Less
than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More
than
5 Years
(1)
|
||||||||||
Operating leases
|
|
$
|
63.8
|
|
|
$
|
7.5
|
|
|
$
|
20.7
|
|
|
$
|
22.7
|
|
|
$
|
12.9
|
|
Purchase commitments
|
|
39.0
|
|
|
39.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
102.8
|
|
|
$
|
46.5
|
|
|
$
|
20.7
|
|
|
$
|
22.7
|
|
|
$
|
12.9
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a)
|
The following documents are filed as part of this Annual Report:
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
||||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
||||||||
3.01
|
|
|
Registrant’s Restated Certificate of Incorporation.
|
|
S-1/A
|
|
333-122454
|
|
March 3, 2005
|
|
3.03
|
|
|
|
3.02
|
|
|
Registrant’s Amended and Restated Bylaws.
|
|
8-K
|
|
000-51222
|
|
November 25, 2014
|
|
3.01
|
|
|
|
4.01
|
|
|
Form of Specimen Certificate for Registrant’s common stock.
|
|
S-1/A
|
|
333-122454
|
|
March 24, 2005
|
|
4.01
|
|
|
|
10.01
|
|
|
Form of Indemnity Agreement between Registrant and each of its directors and executive officers.
|
|
S-1
|
|
333-122454
|
|
February 1, 2005
|
|
10.01
|
|
|
|
10.02
|
|
|
1999 Stock Option Plan and related agreements.*
|
|
S-1
|
|
333-122454
|
|
February 1, 2005
|
|
10.02
|
|
|
|
10.03
|
|
|
2005 Equity Incentive Plan and forms of stock option agreement and stock option exercise agreements.*
|
|
S-1/A
|
|
000-51222
|
|
March 24, 2005
|
|
10.03
|
|
|
|
10.04
|
|
|
2005 Employee Stock Purchase Plan and form of subscription agreement.*
|
|
S-1/A
|
|
000-51222
|
|
March 24, 2005
|
|
10.04
|
|
|
|
10.05
|
|
|
Offer letter between DexCom, Inc. and Jorge Valdes dated October 16, 2005.*
|
|
10-K
|
|
000-51222
|
|
February 27, 2006
|
|
10.14
|
|
|
|
10.06
|
|
|
Office Lease Agreement, dated March 31, 2006, between DexCom, Inc. and Kilroy Realty, L.P.
|
|
8-K
|
|
000-51222
|
|
April 7, 2006
|
|
99.01
|
|
|
|
10.07
|
|
|
Offer letter between DexCom, Inc. and Steven R. Pacelli dated April 10, 2006.*
|
|
8-K
|
|
000-51222
|
|
April 13, 2006
|
|
99.01
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
||||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
||||||||
10.09
|
|
|
Amended and Restated Joint Development Agreement, dated January 12, 2009, between DexCom, Inc. and Animas Corporation.**
|
|
8-K/A
|
|
000-51222
|
|
January 28, 2009
|
|
10.1
|
|
|
|
10.10
|
|
|
OUS Commercialization Agreement, dated January 12, 2009, between DexCom, Inc. and Animas Corporation.**
|
|
8-K/A
|
|
000-51222
|
|
January 28, 2009
|
|
10.2
|
|
|
|
10.11
|
|
|
Form of Amended and Restated Executive Change of Control & Severance Agreement.*
|
|
10-K
|
|
000-51222
|
|
March 5, 2009
|
|
10.20
|
|
|
|
10.12
|
|
|
Amended and Restated Offer Letter Agreement dated December 19, 2008 between DexCom, Inc. and Terrance H. Gregg.*
|
|
10-K
|
|
000-51222
|
|
March 5, 2009
|
|
10.21
|
|
|
|
10.14
|
|
|
Non-Exclusive Distribution Agreement, between RGH Enterprises, Inc. and DexCom, Inc., dated April 30, 2008.**
|
|
10-Q
|
|
000-51222
|
|
August 3, 2009
|
|
10.23
|
|
|
|
10.15
|
|
|
Letter of Amendment of the Amended and Restated Joint Development Agreement, between Animas Corporation and DexCom, Inc., dated July 30, 2009.**
|
|
10-Q
|
|
000-51222
|
|
November 4, 2009
|
|
10.24
|
|
|
|
10.16
|
|
|
Amendment No. 1 to the Commercialization Agreements, between Animas Corporation and DexCom, Inc., dated July 30, 2009.**
|
|
10-Q
|
|
000-51222
|
|
November 4, 2009
|
|
10.25
|
|
|
|
10.17
|
|
|
Amended and Restated Development, Manufacturing, Licensing and Supply Agreement, between DSM PTG, Inc. and DexCom, Inc., dated February 19, 2010.**
|
|
10-K
|
|
000-51222
|
|
March 9, 2010
|
|
10.25
|
|
|
|
10.18
|
|
|
Form of Restricted Stock Unit Award Agreement.
|
|
10-Q
|
|
000-51222
|
|
May 5, 2010
|
|
10.26
|
|
|
|
10.19
|
|
|
First Amendment to Office Lease between DexCom, Inc. and Kilroy Realty, L.P., dated August 18, 2010.
|
|
10-Q
|
|
000-51222
|
|
November 4, 2010
|
|
10.27
|
|
|
|
10.20
|
|
|
2005 Equity Incentive Plan, as amended.*
|
|
10-Q
|
|
000-51222
|
|
May 3, 2011
|
|
10.25
|
|
|
|
10.21
|
|
|
Amendment Number One to Non-Exclusive Distribution Agreement, between RGH Enterprises, Inc. and DexCom, Inc., dated March 29, 2011.**
|
|
10-Q/A
|
|
000-51222
|
|
July 1, 2011
|
|
10.26
|
|
|
|
10.22
|
|
|
Amendment No. 2 to the OUS Commercialization Agreement, between Animas Corporation and DexCom, Inc., dated June 7, 2011.**
|
|
10-Q
|
|
000-51222
|
|
August 3, 2011
|
|
10.27
|
|
|
|
10.23
|
|
|
Offer letter between DexCom, Inc. and Kevin Sayer dated May 3, 2011.*
|
|
10-Q
|
|
000-51222
|
|
August 3, 2011
|
|
10.28
|
|
|
|
10.24
|
|
|
Research and Development Agreement, between Roche Diagnostics Operations, Inc. and DexCom, Inc. dated November 1, 2011.**
|
|
10-K
|
|
000-51222
|
|
February 23, 2012
|
|
10.26
|
|
|
|
10.25
|
|
|
Loan and Security Agreement by and among Silicon Valley Bank, Oxford Finance LLC, DexCom, Inc. and SweetSpot Diabetes Care, Inc. dated November 1, 2012.
|
|
10-K
|
|
000-51222
|
|
February 21, 2013
|
|
10.26
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
||||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
||||||||
10.26
|
|
|
Amendment Number Two to Non-Exclusive Distribution Agreement between RGH Enterprises, Inc. and DexCom, Inc., dated March 28, 2013.**
|
|
10-Q
|
|
000-51222
|
|
May 1, 2013
|
|
10.27
|
|
|
|
10.27
|
|
|
Amendment Number Three to Non-Exclusive Distribution Agreement between RGH Enterprises, Inc. and DexCom, Inc., dated December 4, 2013.**
|
|
10-K
|
|
000-51222
|
|
February 20, 2014
|
|
10.28
|
|
|
|
10.28
|
|
|
Non-Exclusive Distribution Agreement between Dexcom, Inc. and Diabetes Specialty Center, LLC dated October 12, 2009, as amended on September 30, 2010, October 11, 2011, November 14, 2012 and November 1, 2013.**
|
|
10-K
|
|
000-51222
|
|
February 20, 2014
|
|
10.29
|
|
|
|
10.29
|
|
|
First Amendment to Loan and Security Agreement by and among Silicon Valley Bank, Oxford Finance LLC, DexCom, Inc. and SweetSpot Diabetes Care, Inc. dated August 6, 2013.
|
|
10-Q
|
|
000-51222
|
|
March 31, 2014
|
|
10.30
|
|
|
|
10.30
|
|
|
Settlement and License Agreement by and among Abbott Diabetes Care, Inc. and DexCom, Inc., dated July 2, 2014.
|
|
10-Q
|
|
000-51222
|
|
August 6, 2014
|
|
10.31
|
|
|
|
10.31
|
|
|
Amendment No. 5 to Non-Exclusive Distribution Agreement between DexCom, Inc. and Diabetes Specialty Center, LLC, dated March 14, 2014.
|
|
10-Q
|
|
000-51222
|
|
August 6, 2014
|
|
10.32
|
|
|
|
10.32
|
|
|
Second Amendment to Office Lease between DexCom, Inc. and Kilroy Realty, L.P., dated October 1, 2014.
|
|
10-K
|
|
000-51222
|
|
February 25, 2015
|
|
10.32
|
|
|
|
10.33
|
|
|
2015 Equity Incentive Plan
|
|
DEF 14A
|
|
000-51222
|
|
April 13, 2015
|
|
Appendix A
|
|
|
|
10.34
|
|
|
Form of Restricted Stock Unit Award Agreement
|
|
8-K
|
|
000-51222
|
|
June 2, 2015
|
|
10.2
|
|
|
|
10.33
|
|
|
2015 Employee Stock Purchase Plan
|
|
DEF 14A
|
|
000-51222
|
|
April 13, 2015
|
|
Appendix A
|
|
|
|
10.34
|
|
|
Form of Subscription Agreement under 2015 Employee Stock Purchase Plan
|
|
8-K
|
|
000-51222
|
|
June 2, 2015
|
|
10.2
|
|
|
|
10.35
|
|
|
Collaboration and License Agreement between DexCom Inc., and Google Life Sciences, LLC dated August 10, 2015**
|
|
10-Q
|
|
000-51222
|
|
November 4, 2015
|
|
10.32
|
|
|
|
10.36
|
|
|
Sublease between DexCom, Inc. and Entropic Communications, LLC dated February 1, 2016.
|
|
10-Q
|
|
000-51222
|
|
April 27, 2016
|
|
10.36
|
|
|
|
10.37
|
|
|
Amended and Restated Non-Exclusive Distribution Agreement with Byram Healthcare dated February 1, 2016.**
|
|
10-Q
|
|
000-51222
|
|
April 27, 2016
|
|
10.37
|
|
|
|
10.38
|
|
|
Credit Agreement dated June 17, 2016 by and among DexCom, Inc., the Lenders, and JPMorgan Chase Bank, as Administrative Agent.**
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.38
|
|
|
|
10.39
|
|
|
Industrial Net Lease, Broadway dated April 28, 2016, by and between PRA/LB, L.L.C. and DexCom, Inc.
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.39
|
|
|
|
10.40
|
|
|
Standard Form of Agreement dated May 2, 2016, by and between DexCom, Inc. and Skanska USA Building Inc
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.40
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
||||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
||||||||
10.41
|
|
|
Amendment to Non-Exclusive Distribution Agreement dated April 30, 2016 by and between RGH Enterprises, Inc. d/b/a Cardinal Health at Home and DexCom, Inc. **
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.41
|
|
|
|
10.42
|
|
|
Amendment No. 1 to Collaboration and License Agreement dated October 25, 2016 by and between Verily Life Sciences LLC (formerly Google Life Sciences LLC)
|
|
|
|
|
|
|
|
|
|
X
|
|
10.43
|
|
|
Form of Indemnity Agreement
|
|
|
|
|
|
|
|
|
|
X
|
|
21.01
|
|
|
List of Subsidiaries.
|
|
|
|
|
|
|
|
|
|
X
|
|
23.01
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
X
|
|
24.01
|
|
|
Power of Attorney. (See page 65 of this Form 10-K).
|
|
|
|
|
|
|
|
|
|
X
|
|
31.01
|
|
|
Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
|
31.02
|
|
|
Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
|
32.01
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).***
|
|
|
|
|
|
|
|
|
|
X
|
|
32.02
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).***
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
Represents a management contract or compensatory plan.
|
**
|
Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and were filed separately with the Securities and Exchange Commission.
|
***
|
This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that DexCom specifically incorporates it by reference.
|
|
|
|
|
DEXCOM, INC.
(Registrant)
|
||
|
|
|
|
|||
Dated: February 28, 2017
|
|
|
|
By:
|
|
/
S
/ J
ESS
R
OPER
|
|
|
|
|
|
|
Jess Roper,
Senior Vice President & Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/S/ KEVIN SAYER
|
|
President, Chief Executive Officer, and Director (Principal Executive Officer)
|
|
February 28, 2017
|
Kevin Sayer
|
|
|
|
|
|
|
|
||
/S/ JESS ROPER
|
|
Senior Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
February 28, 2017
|
Jess Roper
|
|
|
|
|
|
|
|
||
/S/ TERRANCE GREGG
|
|
Executive Chairman of the Board of Directors
|
|
February 28, 2017
|
Terrance Gregg
|
|
|
|
|
|
|
|
||
/S/ MARK FOLETTA
|
|
Lead Independent Director
|
|
February 28, 2017
|
Mark Foletta
|
|
|
|
|
|
|
|
||
/S/ STEVE ALTMAN
|
|
Director
|
|
February 28, 2017
|
Steve Altman
|
|
|
|
|
|
|
|
||
/S/ NICHOLAS AUGUSTINOS
|
|
Director
|
|
February 28, 2017
|
Nicholas Augustinos
|
|
|
|
|
|
|
|
||
/S/ BARBARA KAHN
|
|
Director
|
|
February 28, 2017
|
Barbara Kahn
|
|
|
|
|
|
|
|
|
|
/S/ JAY SKYLER
|
|
Director
|
|
February 28, 2017
|
Jay Skyler, M.D.
|
|
|
|
|
|
|
|
||
/S/ ERIC TOPOL
|
|
Director
|
|
February 28, 2017
|
Eric Topol, M.D.
|
|
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
F-2
|
|
Consolidated Balance Sheets
|
|
|
F-3
|
|
Consolidated Statements of Operations
|
|
|
F-4
|
|
Consolidated Statements of Comprehensive Loss
|
|
|
F-5
|
|
Consolidated Statements of Stockholders’ Equity
|
|
|
F-6
|
|
Consolidated Statements of Cash Flows
|
|
|
F-7
|
|
Notes to Consolidated Financial Statements
|
|
|
F-8
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
94.5
|
|
|
$
|
86.1
|
|
Short-term marketable securities, available-for-sale
|
29.2
|
|
|
29.1
|
|
||
Accounts receivable, net
|
101.7
|
|
|
74.1
|
|
||
Inventory
|
45.4
|
|
|
35.2
|
|
||
Prepaid and other current assets
|
9.2
|
|
|
6.8
|
|
||
Total current assets
|
280.0
|
|
|
231.3
|
|
||
Property and equipment, net
|
109.4
|
|
|
54.7
|
|
||
Intangible assets, net
|
0.2
|
|
|
2.2
|
|
||
Goodwill
|
11.3
|
|
|
3.7
|
|
||
Other assets
|
1.9
|
|
|
0.1
|
|
||
Total assets
|
$
|
402.8
|
|
|
$
|
292.0
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
68.1
|
|
|
$
|
38.9
|
|
Accrued payroll and related expenses
|
33.4
|
|
|
24.9
|
|
||
Current portion of long-term debt
|
—
|
|
|
2.3
|
|
||
Current portion of deferred revenue
|
0.9
|
|
|
0.8
|
|
||
Total current liabilities
|
102.4
|
|
|
66.9
|
|
||
Other liabilities
|
16.6
|
|
|
3.9
|
|
||
Total liabilities
|
119.0
|
|
|
70.8
|
|
||
Commitments and contingencies (Note 4)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, 5.0 shares authorized; no shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 100.0 authorized; 84.9 and 84.6 issued and outstanding, respectively, at December 31, 2016; and 82.0 and 81.7 shares issued and outstanding, respectively, at December 31, 2015
|
0.1
|
|
|
0.1
|
|
||
Additional paid-in capital
|
905.7
|
|
|
776.8
|
|
||
Accumulated other comprehensive loss
|
(1.0
|
)
|
|
(0.3
|
)
|
||
Accumulated deficit
|
(621.0
|
)
|
|
(555.4
|
)
|
||
Total stockholders’ equity
|
283.8
|
|
|
221.2
|
|
||
Total liabilities and stockholders’ equity
|
$
|
402.8
|
|
|
$
|
292.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Product revenue
|
$
|
573.3
|
|
|
$
|
400.7
|
|
|
$
|
257.1
|
|
Development grant and other revenue
|
—
|
|
|
1.3
|
|
|
2.1
|
|
|||
Total revenue
|
573.3
|
|
|
402.0
|
|
|
259.2
|
|
|||
Product cost of sales
|
194.9
|
|
|
123.6
|
|
|
82.3
|
|
|||
Development and other cost of sales
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
Total cost of sales
|
194.9
|
|
|
123.6
|
|
|
82.9
|
|
|||
Gross profit
|
378.4
|
|
|
278.4
|
|
|
176.3
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
|
156.1
|
|
|
137.5
|
|
|
69.4
|
|
|||
Selling, general and administrative
|
286.2
|
|
|
198.0
|
|
|
128.4
|
|
|||
Total operating expenses
|
442.3
|
|
|
335.5
|
|
|
197.8
|
|
|||
Operating loss
|
(63.9
|
)
|
|
(57.1
|
)
|
|
(21.5
|
)
|
|||
Other expense
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|||
Interest income
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
(0.7
|
)
|
|
(0.4
|
)
|
|
(0.8
|
)
|
|||
Loss before income taxes
|
(64.9
|
)
|
|
(57.5
|
)
|
|
(22.3
|
)
|
|||
Income tax expense
|
0.7
|
|
|
0.1
|
|
|
0.1
|
|
|||
Net loss
|
$
|
(65.6
|
)
|
|
$
|
(57.6
|
)
|
|
$
|
(22.4
|
)
|
Basic and diluted net loss per share
|
$
|
(0.78
|
)
|
|
$
|
(0.72
|
)
|
|
$
|
(0.30
|
)
|
Shares used to compute basic and diluted net loss per share
|
83.6
|
|
|
79.8
|
|
|
75.2
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
|
$
|
(65.6
|
)
|
|
$
|
(57.6
|
)
|
|
$
|
(22.4
|
)
|
Unrealized gain (loss) on short-term available-for-sale marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation gain (loss)
|
|
(0.7
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Comprehensive loss
|
|
$
|
(66.3
|
)
|
|
$
|
(57.8
|
)
|
|
$
|
(22.4
|
)
|
|
|
Common stock
|
|
Additional
paid-in
capital
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Accumulated
deficit
|
|
Total
stockholders’
equity
|
|||||||||||||
Shares
|
|
Amount
|
|
||||||||||||||||||||
Balance at December 31, 2013
|
|
72.5
|
|
|
$
|
0.1
|
|
|
$
|
559.5
|
|
|
$
|
(0.1
|
)
|
|
$
|
(475.4
|
)
|
|
$
|
84.1
|
|
Issuance of common stock under equity incentive plans
|
|
4.6
|
|
|
—
|
|
|
21.4
|
|
|
—
|
|
|
—
|
|
|
21.4
|
|
|||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.1
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||||
Issuance of common stock for contingent consideration settlement
|
|
0.1
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|||||
Share-based compensation for employee stock option and award grants
|
|
—
|
|
|
—
|
|
|
50.5
|
|
|
—
|
|
|
—
|
|
|
50.5
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.4
|
)
|
|
(22.4
|
)
|
|||||
Balance at December 31, 2014
|
|
77.3
|
|
|
0.1
|
|
|
638.0
|
|
|
(0.1
|
)
|
|
(497.8
|
)
|
|
140.2
|
|
|||||
Issuance of common stock under equity incentive plans
|
|
3.9
|
|
|
—
|
|
|
15.3
|
|
|
—
|
|
|
—
|
|
|
15.3
|
|
|||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.1
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|||||
Issuance of common stock related to Verily Collaboration Agreement
|
|
0.4
|
|
|
—
|
|
|
36.5
|
|
|
—
|
|
|
—
|
|
|
36.5
|
|
|||||
Share-based compensation for employee stock option and award grants
|
|
—
|
|
|
—
|
|
|
83.2
|
|
|
—
|
|
|
—
|
|
|
83.2
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.6
|
)
|
|
(57.6
|
)
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||||
Balance at December 31, 2015
|
|
81.7
|
|
|
0.1
|
|
|
776.8
|
|
|
(0.3
|
)
|
|
(555.4
|
)
|
|
221.2
|
|
|||||
Issuance of common stock under equity incentive plans
|
|
2.7
|
|
|
—
|
|
|
4.4
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.1
|
|
|
—
|
|
|
6.0
|
|
|
—
|
|
|
—
|
|
|
6.0
|
|
|||||
Issuance of common stock in connection with acquisition
|
|
0.1
|
|
|
—
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|||||
Share-based compensation for employee stock option and award grants
|
|
—
|
|
|
—
|
|
|
111.3
|
|
|
—
|
|
|
—
|
|
|
111.3
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65.6
|
)
|
|
(65.6
|
)
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|
(0.7
|
)
|
|||||
Balance at December 31, 2016
|
|
84.6
|
|
|
$
|
0.1
|
|
|
$
|
905.7
|
|
|
$
|
(1.0
|
)
|
|
$
|
(621.0
|
)
|
|
$
|
283.8
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(65.6
|
)
|
|
$
|
(57.6
|
)
|
|
$
|
(22.4
|
)
|
Adjustments to reconcile net loss to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
15.0
|
|
|
10.8
|
|
|
8.4
|
|
|||
Share-based compensation
|
110.8
|
|
|
82.7
|
|
|
50.0
|
|
|||
Non-cash research and development charge through issuance of common stock
|
—
|
|
|
36.5
|
|
|
—
|
|
|||
Impairment of intangible assets
|
1.3
|
|
|
—
|
|
|
0.2
|
|
|||
Other non-cash expenses
|
1.0
|
|
|
1.0
|
|
|
0.2
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(27.2
|
)
|
|
(31.7
|
)
|
|
(16.3
|
)
|
|||
Inventory
|
(9.8
|
)
|
|
(19.2
|
)
|
|
(7.0
|
)
|
|||
Prepaid and other assets
|
(3.9
|
)
|
|
(2.5
|
)
|
|
(0.4
|
)
|
|||
Restricted cash
|
—
|
|
|
1.0
|
|
|
—
|
|
|||
Accounts payable and accrued liabilities
|
21.1
|
|
|
17.8
|
|
|
8.3
|
|
|||
Accrued payroll and related expenses
|
8.5
|
|
|
7.7
|
|
|
2.2
|
|
|||
Deferred revenue
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|||
Deferred rent and other liabilities
|
4.9
|
|
|
2.4
|
|
|
0.4
|
|
|||
Net cash provided by operating activities
|
56.2
|
|
|
49.0
|
|
|
23.6
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchase of available-for-sale marketable securities
|
(39.2
|
)
|
|
(45.2
|
)
|
|
(13.8
|
)
|
|||
Proceeds from the maturity of available-for-sale marketable securities
|
38.7
|
|
|
27.5
|
|
|
13.2
|
|
|||
Purchase of property and equipment
|
(55.7
|
)
|
|
(33.3
|
)
|
|
(16.2
|
)
|
|||
Acquisitions, net of cash acquired
|
0.3
|
|
|
(0.5
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(55.9
|
)
|
|
(51.5
|
)
|
|
(16.8
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net proceeds from issuance of common stock
|
10.4
|
|
|
19.1
|
|
|
24.0
|
|
|||
Repayment of long-term debt
|
(2.3
|
)
|
|
(2.3
|
)
|
|
(2.2
|
)
|
|||
Net cash provided by financing activities
|
8.1
|
|
|
16.8
|
|
|
21.8
|
|
|||
Increase in cash and cash equivalents
|
8.4
|
|
|
14.3
|
|
|
28.6
|
|
|||
Cash and cash equivalents, beginning of period
|
86.1
|
|
|
71.8
|
|
|
43.2
|
|
|||
Cash and cash equivalents, ending of period
|
$
|
94.5
|
|
|
$
|
86.1
|
|
|
$
|
71.8
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||||||
Issuance of common stock in connection with acquisition
|
$
|
7.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Acquisition-related holdback liability
|
$
|
1.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assets acquired and financing obligation under build-to-suit leasing arrangement
|
$
|
6.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid during the year for interest
|
$
|
0.1
|
|
|
$
|
0.3
|
|
|
$
|
0.4
|
|
Cash paid during the year for taxes
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Issuance of common stock in connection with contingent consideration settlement
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.0
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Amount
|
|
%
of Total |
|
Amount
|
|
%
of Total |
|
Amount
|
|
%
of Total |
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
United States
|
$
|
497.5
|
|
|
87
|
%
|
|
$
|
347.4
|
|
|
86
|
%
|
|
$
|
224.2
|
|
|
86
|
%
|
Outside of the United States
|
75.8
|
|
|
13
|
%
|
|
54.6
|
|
|
14
|
%
|
|
35.0
|
|
|
14
|
%
|
|||
Total
|
$
|
573.3
|
|
|
100
|
%
|
|
$
|
402.0
|
|
|
100
|
%
|
|
$
|
259.2
|
|
|
100
|
%
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Options outstanding to purchase common stock
|
0.7
|
|
|
1.3
|
|
|
3.1
|
|
Unvested restricted stock units
|
3.7
|
|
|
4.1
|
|
|
4.2
|
|
Total
|
4.4
|
|
|
5.4
|
|
|
7.3
|
|
|
December 31, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Market
Value
|
||||||||
U.S. government agencies
|
$
|
22.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22.2
|
|
Corporate debt
|
3.8
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
||||
Commercial paper
|
3.2
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
||||
Total
|
$
|
29.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29.2
|
|
|
December 31, 2015
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Market
Value
|
||||||||
U.S. government agencies
|
$
|
22.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22.1
|
|
Corporate debt
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
||||
Commercial paper
|
2.1
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||
Total
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29.1
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accounts receivable
|
$
|
114.3
|
|
|
$
|
82.0
|
|
Less allowance for doubtful accounts, sales returns and discounts
|
(12.6
|
)
|
|
(7.9
|
)
|
||
Total
|
$
|
101.7
|
|
|
$
|
74.1
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Raw materials
|
$
|
20.1
|
|
|
$
|
16.0
|
|
Work-in-process
|
2.3
|
|
|
2.6
|
|
||
Finished goods
|
23.0
|
|
|
16.6
|
|
||
Total
|
$
|
45.4
|
|
|
$
|
35.2
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Building
(1)
|
$
|
6.0
|
|
|
$
|
—
|
|
Furniture and fixtures
(2)
|
5.8
|
|
|
3.7
|
|
||
Computer equipment
(2)
|
22.7
|
|
|
20.3
|
|
||
Machinery and equipment
(2)
|
31.4
|
|
|
25.6
|
|
||
Leasehold improvements
(2)
|
25.6
|
|
|
20.7
|
|
||
Construction in progress
(2) (3)
|
65.1
|
|
|
22.6
|
|
||
Total
|
156.6
|
|
|
92.9
|
|
||
Accumulated depreciation and amortization
|
(47.2
|
)
|
|
(38.2
|
)
|
||
Property and equipment, net
|
$
|
109.4
|
|
|
$
|
54.7
|
|
|
|
Weighted-Average
Amortization
Period
(in months)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible Assets, net
|
||||||
Intangible assets subject to amortization
|
|
|
|
|
|
|
|
|
||||||
In-process research and development
(1)
|
|
51
|
|
$
|
0.2
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.1
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
|
||||||
Trademarks and trade names
|
|
|
|
|
|
|
|
0.1
|
|
|||||
Goodwill
|
|
|
|
|
|
|
|
11.3
|
|
|||||
Total
|
|
|
|
|
|
|
|
$
|
11.4
|
|
|
|
Weighted-Average
Amortization
Period
(in months)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible Assets, net
|
||||||
Intangible assets subject to amortization
|
|
|
|
|
|
|
|
|
||||||
Developed technology
|
|
109
|
|
$
|
3.2
|
|
|
$
|
(1.5
|
)
|
|
$
|
1.7
|
|
Customer-related intangible
|
|
70
|
|
0.6
|
|
|
(0.4
|
)
|
|
0.2
|
|
|||
Covenants not-to-compete
|
|
70
|
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|||
In-process research and development
|
|
51
|
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|||
Total
|
|
|
|
$
|
4.2
|
|
|
$
|
(2.1
|
)
|
|
$
|
2.1
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
|
||||||
Trademarks and trade names
|
|
|
|
|
|
|
|
0.1
|
|
|||||
Goodwill
|
|
|
|
|
|
|
|
3.7
|
|
|||||
Total
|
|
|
|
|
|
|
|
$
|
3.8
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accounts payable trade
|
$
|
24.5
|
|
|
$
|
19.0
|
|
Accrued tax, audit, and legal fees
|
4.5
|
|
|
2.1
|
|
||
Clinical trials
|
1.1
|
|
|
0.7
|
|
||
Accrued rebates
|
8.2
|
|
|
4.0
|
|
||
Accrued warranty
|
9.8
|
|
|
3.3
|
|
||
Accrued other
|
20.0
|
|
|
9.8
|
|
||
Total
|
$
|
68.1
|
|
|
$
|
38.9
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accrued paid time off
|
$
|
6.4
|
|
|
$
|
4.4
|
|
Accrued wages, bonus and taxes
|
24.5
|
|
|
18.4
|
|
||
Other accrued employee benefits
|
2.5
|
|
|
2.1
|
|
||
Total
|
$
|
33.4
|
|
|
$
|
24.9
|
|
|
Years Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
3.3
|
|
|
$
|
1.3
|
|
Charges to costs and expenses
|
25.0
|
|
|
9.0
|
|
||
Costs incurred
|
(18.5
|
)
|
|
(7.0
|
)
|
||
Ending balance
|
$
|
9.8
|
|
|
$
|
3.3
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
$
|
—
|
|
|
$
|
32.3
|
|
|
$
|
—
|
|
|
$
|
32.3
|
|
Marketable securities, available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
—
|
|
|
22.2
|
|
|
—
|
|
|
22.2
|
|
||||
Corporate debt
|
—
|
|
|
3.8
|
|
|
—
|
|
|
3.8
|
|
||||
Commercial paper
|
—
|
|
|
3.2
|
|
|
—
|
|
|
3.2
|
|
||||
Total marketable securities, available for sale
|
$
|
—
|
|
|
$
|
29.2
|
|
|
$
|
—
|
|
|
$
|
29.2
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
$
|
—
|
|
|
$
|
32.1
|
|
|
$
|
—
|
|
|
$
|
32.1
|
|
Marketable securities, available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
—
|
|
|
22.1
|
|
|
—
|
|
|
22.1
|
|
||||
Corporate debt
|
—
|
|
|
4.9
|
|
|
—
|
|
|
4.9
|
|
||||
Commercial paper
|
—
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
||||
Total marketable securities, available for sale
|
$
|
—
|
|
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
29.1
|
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
(44.4
|
)
|
|
$
|
(57.8
|
)
|
|
$
|
(22.5
|
)
|
Outside of the United States
|
(20.5
|
)
|
|
0.3
|
|
|
0.2
|
|
|||
Total
|
$
|
(64.9
|
)
|
|
$
|
(57.5
|
)
|
|
$
|
(22.3
|
)
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||
Foreign
|
0.8
|
|
|
—
|
|
|
—
|
|
|||
Total current income taxes
|
0.9
|
|
|
0.1
|
|
|
0.1
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
Total deferred income taxes
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
0.7
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
101.9
|
|
|
$
|
127.6
|
|
Capitalized research and development expenses
|
14.3
|
|
|
17.0
|
|
||
Tax credits
|
30.7
|
|
|
19.1
|
|
||
Share-based compensation
|
24.9
|
|
|
20.8
|
|
||
Accrued liabilities and reserves
|
26.0
|
|
|
13.9
|
|
||
Total gross deferred tax assets
|
197.8
|
|
|
198.4
|
|
||
Less: valuation allowance
|
(193.4
|
)
|
|
(196.4
|
)
|
||
Deferred tax liability:
|
|
|
|
||||
Fixed assets and acquired intangibles assets
|
(4.3
|
)
|
|
(2.1
|
)
|
||
Net deferred tax asset (liability)
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Income taxes at statutory rates
|
$
|
(22.7
|
)
|
|
$
|
(20.1
|
)
|
|
$
|
(7.9
|
)
|
State income tax, net of federal benefit
|
1.2
|
|
|
(1.0
|
)
|
|
0.4
|
|
|||
Permanent items
|
0.8
|
|
|
0.3
|
|
|
0.2
|
|
|||
Research and development credits
|
(11.7
|
)
|
|
(10.0
|
)
|
|
(1.7
|
)
|
|||
Foreign rate differential
|
4.5
|
|
|
—
|
|
|
—
|
|
|||
Stock and officers compensation
|
4.0
|
|
|
3.1
|
|
|
3.6
|
|
|||
Rate change
|
(0.1
|
)
|
|
0.2
|
|
|
0.3
|
|
|||
Unrecognized tax benefits
|
27.7
|
|
|
—
|
|
|
—
|
|
|||
Other
|
—
|
|
|
0.2
|
|
|
0.9
|
|
|||
Change in valuation allowance
|
(3.0
|
)
|
|
27.4
|
|
|
4.3
|
|
|||
Income taxes at effective rates
|
$
|
0.7
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Balance at January 1, 2014
|
$
|
6.2
|
|
Increases related to current year tax positions
|
1.4
|
|
|
Balance at December 31, 2014
|
7.6
|
|
|
Increases related to prior year tax positions
|
2.6
|
|
|
Increases related to current year tax positions
|
5.4
|
|
|
Balance at December 31, 2015
|
15.6
|
|
|
Decreases related to prior year tax positions
|
(8.4
|
)
|
|
Increases related to current year tax positions
|
32.6
|
|
|
Balance at December 31, 2016
|
$
|
39.8
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
(years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at December 31, 2015
|
1.3
|
|
|
$
|
7.56
|
|
|
|
|
|
||
Exercised
|
(0.6
|
)
|
|
7.76
|
|
|
|
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at December 31, 2016
|
0.7
|
|
|
$
|
7.40
|
|
|
1.98
|
|
$
|
37.0
|
|
Exercisable at December 31, 2016
|
0.7
|
|
|
$
|
7.40
|
|
|
1.98
|
|
$
|
37.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Intrinsic value of options exercised
|
$
|
39.9
|
|
|
$
|
125.8
|
|
|
$
|
99.0
|
|
Fair value of options vested
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of sales
|
$
|
12.0
|
|
|
$
|
8.1
|
|
|
$
|
4.5
|
|
Research and development
|
39.8
|
|
|
28.5
|
|
|
17.0
|
|
|||
Selling, general and administrative
|
59.0
|
|
|
46.1
|
|
|
28.5
|
|
|||
Share-based compensation expense included in net loss
|
$
|
110.8
|
|
|
$
|
82.7
|
|
|
$
|
50.0
|
|
|
Years Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Risk free interest rate
|
0.46 – 0.57
|
|
|
0.15 – 0.25
|
|
|
0.10 – 0.12
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected volatility of the Company’s stock
|
0.33 – 0.57
|
|
|
0.30 – 0.44
|
|
|
0.41 – 0.50
|
|
Expected life (in years)
|
1
|
|
|
1
|
|
|
1
|
|
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic Value
|
|||||
Nonvested at December 31, 2015
|
4.1
|
|
|
$
|
50.60
|
|
|
|
||
Granted
|
1.9
|
|
|
68.16
|
|
|
|
|||
Vested
|
(2.1
|
)
|
|
44.95
|
|
|
|
|||
Forfeited
|
(0.2
|
)
|
|
56.37
|
|
|
|
|||
Nonvested at December 31, 2016
|
3.7
|
|
|
$
|
62.51
|
|
|
$
|
218.6
|
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||
Stock options and awards under our plans:
|
|
|
|
||
Stock options granted and outstanding
|
0.7
|
|
|
1.3
|
|
Unvested restricted stock units
|
3.7
|
|
|
4.1
|
|
Reserved for future grant
|
2.0
|
|
|
3.7
|
|
Employee Stock Purchase Plan
|
1.4
|
|
|
1.5
|
|
Total
|
7.8
|
|
|
10.6
|
|
|
|
For the Three Months Ended
|
||||||||||||||
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
171.2
|
|
|
$
|
148.6
|
|
|
$
|
137.3
|
|
|
$
|
116.2
|
|
Gross profit
|
|
116.7
|
|
|
101.1
|
|
|
85.5
|
|
|
75.1
|
|
||||
Total operating expenses
|
|
122.8
|
|
|
119.6
|
|
|
105.6
|
|
|
94.3
|
|
||||
Net loss
|
|
(7.4
|
)
|
|
(18.8
|
)
|
|
(20.2
|
)
|
|
(19.2
|
)
|
||||
Basic and diluted net loss per share
(a)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.23
|
)
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
130.8
|
|
|
$
|
105.2
|
|
|
$
|
93.2
|
|
|
$
|
72.8
|
|
Gross profit
|
|
91.2
|
|
|
74.7
|
|
|
66.0
|
|
|
46.5
|
|
||||
Total operating expenses
|
|
89.6
|
|
|
117.1
|
|
|
69.6
|
|
|
59.2
|
|
||||
Net income (loss)
|
|
1.5
|
|
|
(42.5
|
)
|
|
(3.7
|
)
|
|
(12.9
|
)
|
||||
Basic and diluted net income (loss) per share
(a)
|
|
$
|
0.02
|
|
|
$
|
(0.53
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.17
|
)
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance December 31, 2013
|
$
|
2.6
|
|
Provision for doubtful accounts
|
4.0
|
|
|
Write-off and adjustments
|
(2.6
|
)
|
|
Recoveries
|
0.3
|
|
|
Balance December 31, 2014
|
$
|
4.3
|
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance December 31, 2014
|
$
|
4.3
|
|
Provision for doubtful accounts
|
7.8
|
|
|
Write-off and adjustments
|
(4.5
|
)
|
|
Recoveries
|
0.2
|
|
|
Balance December 31, 2015
|
$
|
7.8
|
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance December 31, 2015
|
$
|
7.8
|
|
Provision for doubtful accounts
|
9.5
|
|
|
Write-off and adjustments
|
(5.6
|
)
|
|
Recoveries
|
0.7
|
|
|
Balance December 31, 2016
|
$
|
12.4
|
|
7.2.2
|
[intentionally omitted]”
|
VERILY LIFE SCIENCES LLC
|
|
DEXCOM, INC.
|
||
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Andrew Conrad
|
|
By:
|
/s/ Jess Roper
|
|
|
|
|
|
Name:
|
Andrew Conrad
|
|
Name:
|
Jess Roper
|
|
|
|
|
|
Title:
|
Authorized Signatory
|
|
Title:
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address:
|
DEXCOM, INC.
6340 Sequence Drive
San Diego, California 92121
|
|
|
By:
|
|
|
|
|
|
Its:
|
|
|
|
|
|
INDEMNITEE
|
|
Address:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBSIDIARY
(Name under which subsidiary does business)
|
JURISDICTION OF
INCORPORATION
|
SweetSpot Diabetes Care, Inc.
|
Delaware
|
DexCom (Canada) Inc.
|
Canada
|
DexCom (UK) Limited
|
United Kingdom
|
DexCom AB
|
Sweden
|
DexCom (UK) Intermediate Holdings Ltd
|
United Kingdom
|
DexCom Operating Ltd
|
United Kingdom
|
DexCom (UK) Distribution Limited
|
United Kingdom
|
Nintamed Verwaltungs GmbH
|
Germany
|
Nintamed GmbH & Co. KG
|
Germany
|
DexCom Deutschland GmbH
|
Germany
|
Nintamed Handels GmbH
|
Austria
|
DexCom Suisse GmbH
|
Switzerland
|
(1)
|
Registration Statements (Form S-3 Nos. 333-199994, 333-206619, and 333-211101) of DexCom, Inc., and
|
(2)
|
(Registration Statements (Form S-8 Nos. 333-124059, 333-138174, 333-145159, 333-149734, 333-158993, 333-166552, 333-172604, 333-180421, 333-188305, 333-195660, 333-202375, and 333-204699) pertaining to the 2005 Equity Incentive Plan, 2005 Employee Stock Purchase Plan, and 1999 Stock Option Plan, 2015 Equity Incentive Plan, 2015 Employee Stock Purchase Plan of DexCom, Inc.;
|
|
|
|
|
February 28, 2017
|
By:
|
|
/s/ Kevin R. Sayer
|
|
|
|
Kevin R. Sayer
|
|
|
|
President & Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
February 28, 2017
|
By:
|
|
/s/ Jess Roper
|
|
|
|
Jess Roper
|
|
|
|
Senior Vice President & Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
/s/ Kevin R. Sayer
|
Kevin R. Sayer
|
President & Chief Executive Officer
|
(Principal Executive Officer)
|
|
/s/ Jess Roper
|
Jess Roper
|
Senior Vice President & Chief Financial Officer
|
(Principal Financial and Accounting Officer)
|