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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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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Title of Each Class
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Trading Symbol(s)
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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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DXCM
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The Nasdaq Stock Market LLC
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(Nasdaq Global Select Market)
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Class
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Outstanding at February 7, 2020
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Common stock, $0.001 par value per share
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91,594,142
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DexCom, Inc.
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Table of Contents
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Page
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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 Accountant 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 16.
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Form 10-K Summary
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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Item 1 - BUSINESS
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Overview
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Continuous glucose readings. Automatically sends glucose readings to a DexCom receiver or compatible mobile device every five minutes.
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Mobile app and sharing. Compatibility with mobile device applications allows for sharing glucose information with other people for added support and care coordination.
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Customizable alarms and alerts. Personalized alert schedule immediately warns the user of pending dangerous high and low blood sugars.
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Finger stick elimination. No finger sticks are needed for calibration or diabetes treatment decisions, consistent with the instructions for use.
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Easy sensor application. Complete redesign of the sensor applicator allows for one-touch, simple self-insertion.
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Discreet and low profile. A redesigned transmitter with a 28% lower profile than the previous generation DexCom CGM system makes the device comfortable and easy to wear under clothing.
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Medication blocking. New feature allows for more accurate glucose readings without interference from common medications taken at typical indication doses, such as acetaminophen.
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Predictive low alert. New alert feature intended to predict hypoglycemia before it hits to help avoid dangerous low blood sugar events.
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Extended 10-day sensor. Up to 10-day sensor use allows for 43% longer wear than previous generation DexCom CGM systems.
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On December 28, 2018, we made an initial payment of $250.0 million in shares of our common stock, calculated under the Restated Collaboration Agreement to be 1,840,943 shares of our common stock, allocated between Verily and Onduo, LLC, subject to certain transfer restrictions.
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During 2019, we paid $3.2 million for the completion of certain development obligations before the agreed-upon deadline.
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Additional milestone payments of up to $275.0 million may become due and payable by us upon the achievement of future product regulatory approval and revenue milestones. At our election, we may make these milestone payments in shares of our common stock, also allocated between Verily and Onduo, LLC, with the number of shares being calculated based on the same share value that was used for purposes of the initial payment, adjusted for stock splits, dividends, and the like, subject to customary closing conditions, including any required antitrust approvals applicable to the issuance of such shares. Alternatively, at our election, we may make any of these milestone payments in cash. Any such cash
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Market Opportunity
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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.
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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. 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. Data published in a peer-reviewed article based on the pivotal trial for our first-generation system demonstrated that patients using the system showed statistically significant improvements in glucose levels within the target range when compared to patients relying solely on single-point finger stick measurements. Additional peer-reviewed 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. Finally, peer reviewed data published from the DIaMonD study demonstrated that DexCom CGM system users on multiple daily injection insulin regimen achieved a one percent average reduction in hemoglobin A1c levels, a measure of the average amount of glucose in the blood over the prior three months, after 24 weeks of regular use, compared to their baseline. Study participants also increased time spent in their target A1c range and spent less time in hypoglycemia and hyperglycemia when they used a DexCom CGM system compared to those who used only a standard blood glucose meter to monitor their glucose.
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Access to Real-Time Values, Trend Information and Alerts. At their fingertips, people with diabetes can view their current glucose value, along with a graphical display of the historical 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, G5 Mobile and G6 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 G5 Mobile and G6 receiver are compact with 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 compatible mobile devices. These devices can serve as substitutes for our receivers or alternate display units in certain geographies.
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Convenience and Comfort. Our G4 PLATINUM, G5 Mobile and G6 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 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, attached to 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 smart phone and can be carried discreetly in a pocket or purse. We believe that convenience is an important factor in achieving widespread adoption of a CGM system.
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Connectivity to Wearables and Others. Patients can monitor their glucose levels and trends on compatible wearable devices, such as Apple Watch and Wear OS by Google devices, when used with a compatible mobile device. Also, our Share remote monitoring systems enable users of our G4 PLATINUM with Share, G5 Mobile and G6 systems to have their sensor glucose information remotely monitored by their family, friends or designated recipient, or follower, by wirelessly transmitting data from the user’s smart phone to the cloud and then to the follower’s mobile device. Several followers can remotely monitor a patient’s glucose information and receive secondary alert notifications from almost anywhere with an Internet connection via each follower’s mobile device.
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Establishing and maintaining our technology platform as the leading approach to CGM and leveraging our development expertise to rapidly bring products to market, including for expanded indications.
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Driving the adoption of our ambulatory products through a direct sales and marketing effort, as well as key distribution arrangements.
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Driving additional adoption through technology integration partnerships such as our current partnerships with Eli Lilly, Insulet, Novo Nordisk, Tandem Diabetes and others.
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Seeking broad coverage policies and reimbursement for our products from private third-party payors and national health systems.
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Driving 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 and other individuals involved in their diabetes management and care.
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Expanding the use of our products to other patient care settings and patient demographics, including use in the hospital setting, people with Type 2 diabetes and people who are pregnant.
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Providing a high level of customer support, service and education.
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Pursuing 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 to educate endocrinologists, physicians, diabetes educators and patients about our products;
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manage geographically disbursed operations; and
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effectively train our sales personnel on the applicable fraud and abuse laws that govern interactions with healthcare practitioners as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance.
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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 of products;
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effective sales, marketing and distribution networks;
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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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mitigate the constraints we anticipated in our headquarters facilities continuing in 2020;
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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 effectiveness; and
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the FDA concludes that the results from our trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.
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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 - RISK FACTORS
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Risks Related to Our Business and Operations
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we may experience a reduction or interruption in supply, and may not be able to obtain adequate supply in a timely manner or on commercially reasonable terms from additional or replacement sources;
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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 quality, effectiveness 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 new applications such as a PMA or 510(k) supplement or possibly a separate PMA or 510(k), 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 and/or other hardships unrelated to our demand for components, including those related to changes in global economic conditions and/or disease outbreaks, which could inhibit their ability to fulfill our orders and meet our requirements.
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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, G5 Mobile and G6 systems; and
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expansion of our workforce.
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recruit and retain adequate numbers of effective and experienced sales and marketing personnel;
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effectively train our sales and marketing personnel in the benefits and risks of our products;
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establish and maintain successful sales, marketing, training and education programs that educate health care professionals, including endocrinologists, physicians and diabetes educators, so they can appropriately inform their patients about our products;
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manage geographically dispersed sales and marketing operations; and
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effectively train our sales and marketing personnel on the applicable fraud and abuse laws that govern interactions with healthcare practitioners as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance.
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with the relatively recent FDA authorizations to market our G6 system in the United States in March 2018 and the G6 Pro in the United States in October 2019, we have relatively limited experience selling our G6 and G6 Pro systems;
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our G6 system prompts the user to replace the sensor no later than the tenth day, which might make it expensive for users;
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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, effectiveness, 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 reviews and/or 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 commensurate with demand or at an acceptable cost;
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people with Type 2 diabetes do not generally receive broad reimbursement from third-party payors for their purchase of CGM products in the United States, since many payors require that a policy holder meet specific medical criteria to qualify for reimbursement, which may reduce widespread access to or use of our products;
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the uncertainties associated with establishing and qualifying new manufacturing facilities;
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people with diabetes may need to incur the costs of single-point finger stick devices, in addition to our systems;
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the relative immaturity of the CGM market internationally, and limited international reimbursement of CGM systems 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, which may have a lower cost or price, allow for a convenience improvement and allow for improved accuracy and reliability;
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our inability to obtain sufficient quantities of supplies at appropriate quality levels from our single- or sole-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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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 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 CGM systems; and
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greater financial and human resources for product development, manufacturing, sales and marketing, and patent litigation.
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the system may not be deemed by the FDA to be substantially equivalent to appropriate predicate devices under the 510(k) pathway;
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the system may not satisfy the FDA’s safety or effectiveness requirements;
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the data from pre-clinical studies and clinical trials may be insufficient to support approval, clearance and/or marketing authorization;
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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 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 institutional review board requirements;
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DexCom or third-party organizations do not perform data collection, monitoring and/or 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 the results from our trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.
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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;
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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 business, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
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Risks Related to Healthcare Industry Shifts and Changing Regulations
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Risks Related to Non-Compliance with Laws, Regulations and Contractual Requirements
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authorizations necessary for the investigation and commercial marketing of products;
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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 products and services;
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the obligation to report and return identified overpayments;
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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 adverse event reporting;
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prohibitions on kickbacks, including the Anti-Kickback Statute and related laws and/or regulations;
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any scheme to defraud any healthcare benefit program;
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physician and other healthcare professional payment disclosure requirements;
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use and disclosure of personal health information;
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privacy of health information and personal information;
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data protection and data localization;
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mobile communications;
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patient access and non-discrimination;
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patient consent;
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false claims; and
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professional licensure.
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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 CGM 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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Risks Related to the Privacy and Security
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harm to customers;
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business interruptions and delays;
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the loss, misappropriation, corruption or unauthorized access of data;
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litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or other applicable laws;
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reputational damage;
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increase to insurance premiums; and
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foreign, federal and state governmental inquiries, any of which could have a material, adverse effect on our financial position and results of operations and harm our business reputation.
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additional government oversight of our operations;
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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;
|
•
|
disputes with customers, physicians, and other health care professionals;
|
•
|
increases in operating expenses, incurrence of expenses, including remediation costs;
|
•
|
loss of revenues (including through loss of coverage or reimbursement);
|
•
|
product development delays;
|
•
|
disruption of key business operations; and
|
•
|
diversion of attention of management and key information technology resources.
|
Risks Related to our International Operations
|
•
|
local product preferences and product requirements;
|
•
|
longer-term receivables than are typical in the United States;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
less intellectual property protection in some countries outside the United States than exists in the United States;
|
•
|
trade protection measures and import and export licensing requirements;
|
•
|
workforce instability;
|
•
|
fluctuations in trade policy and tariff regulations;
|
•
|
political and economic instability; and
|
•
|
the potential payment of U.S. income taxes on certain earnings of our subsidiaries outside the United States upon repatriation.
|
Risks Related to Intellectual Property Protection and Use
|
Litigation Risks
|
Risks Relating to Our Public Company Status, Tax Laws and Growth Through Acquisition
|
Risks Related to Our Common Stock
|
•
|
securities analyst coverage or lack of coverage of our common stock or changes in their estimates of our financial performance;
|
•
|
variations in quarterly operating results;
|
•
|
future sales of our common stock by our stockholders;
|
•
|
investor perception of us and our industry;
|
•
|
announcements by us or our competitors of significant agreements, acquisitions, or capital commitments or product launches or discontinuations;
|
•
|
changes in market valuation or earnings of our competitors;
|
•
|
negative business or financial announcements regarding our partners;
|
•
|
general economic conditions;
|
•
|
regulatory actions;
|
•
|
legislation and political conditions; and
|
•
|
terrorist acts.
|
•
|
our inability to manufacture an adequate supply of product at appropriate quality levels and acceptable costs;
|
•
|
possible delays in our research and development programs or in the completion of any clinical trials;
|
•
|
a lack of acceptance of our products in the marketplace by physicians and people with diabetes;
|
•
|
the inability of customers to receive reimbursements from third-party payors;
|
•
|
failures to comply with regulatory requirements, which could lead to withdrawal of products from the market;
|
•
|
our failure to continue the commercialization of any of our CGM systems;
|
•
|
competition;
|
•
|
inadequate financial and other resources; and
|
•
|
global and political economic conditions, political instability and military hostilities.
|
•
|
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;
|
•
|
the possible lack of availability of additional credit;
|
•
|
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, our Chief Executive Officer, our President or our Lead Independent Director;
|
•
|
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.
|
Risks Related to Our Debt
|
•
|
our vulnerability to adverse general economic conditions and competitive pressures will be heightened;
|
•
|
we will be required to dedicate a larger portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes;
|
•
|
our flexibility in planning for, or reacting to, changes in our business and industry may be more limited; and
|
•
|
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired.
|
ITEM 1B - UNRESOLVED STAFF COMMENTS
|
ITEM 2 - PROPERTIES
|
Location
|
|
Approximate
Square Feet
|
|
Purpose
|
|
Lease Expiration Dates
|
San Diego, CA
|
|
503,400
|
|
Laboratory, Manufacturing, Research and Development, Warehouse, General and Administrative, Sales and Marketing
|
|
2026 (1)
|
Mesa, AZ
|
|
148,800
|
|
General and Administrative, Laboratory, Manufacturing, Warehouse
|
|
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
|
|
|
December 31, 2014
|
|
December 31, 2015
|
|
December 31, 2016
|
|
December 31, 2017
|
|
December 31, 2018
|
|
December 31, 2019
|
||||||||||||
DexCom, Inc.
|
|
$
|
100.00
|
|
|
$
|
148.77
|
|
|
$
|
108.45
|
|
|
$
|
104.25
|
|
|
$
|
217.62
|
|
|
$
|
397.35
|
|
Nasdaq Composite
|
|
$
|
100.00
|
|
|
$
|
106.96
|
|
|
$
|
116.45
|
|
|
$
|
150.96
|
|
|
$
|
146.67
|
|
|
$
|
200.49
|
|
Nasdaq Medical Equipment
|
|
$
|
100.00
|
|
|
$
|
111.06
|
|
|
$
|
116.87
|
|
|
$
|
166.41
|
|
|
$
|
187.88
|
|
|
$
|
227.84
|
|
ITEM 6 - SELECTED FINANCIAL DATA
|
|
|
Twelve Months Ended
December 31, |
||||||||||||||||||
(In millions, except per share data)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product revenue
|
|
$
|
1,476.0
|
|
|
$
|
1,031.6
|
|
|
$
|
718.5
|
|
|
$
|
573.3
|
|
|
$
|
400.7
|
|
Development grant and other revenue
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|||||
Total revenue
|
|
1,476.0
|
|
|
1,031.6
|
|
|
718.5
|
|
|
573.3
|
|
|
402.0
|
|
|||||
Cost of sales
|
|
544.5
|
|
|
367.7
|
|
|
226.4
|
|
|
194.9
|
|
|
123.6
|
|
|||||
Gross profit
|
|
931.5
|
|
|
663.9
|
|
|
492.1
|
|
|
378.4
|
|
|
278.4
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
|
273.5
|
|
|
199.7
|
|
|
185.4
|
|
|
156.1
|
|
|
101.0
|
|
|||||
Collaborative research and development fees(1)
|
|
—
|
|
|
217.7
|
|
|
—
|
|
|
—
|
|
|
36.5
|
|
|||||
Selling, general and administrative
|
|
515.7
|
|
|
432.8
|
|
|
349.2
|
|
|
286.2
|
|
|
198.0
|
|
|||||
Total operating expenses
|
|
789.2
|
|
|
850.2
|
|
|
534.6
|
|
|
442.3
|
|
|
335.5
|
|
|||||
Operating income (loss)
|
|
142.3
|
|
|
(186.3
|
)
|
|
(42.5
|
)
|
|
(63.9
|
)
|
|
(57.1
|
)
|
|||||
Interest expense
|
|
(60.3
|
)
|
|
(22.7
|
)
|
|
(12.8
|
)
|
|
(0.7
|
)
|
|
(0.4
|
)
|
|||||
Income (loss) from equity investments
|
|
(4.2
|
)
|
|
80.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest and other income (expense), net
|
|
26.4
|
|
|
2.4
|
|
|
6.7
|
|
|
(0.3
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
|
104.2
|
|
|
(126.5
|
)
|
|
(48.6
|
)
|
|
(64.9
|
)
|
|
(57.5
|
)
|
|||||
Income tax expense
|
|
3.1
|
|
|
0.6
|
|
|
1.6
|
|
|
0.7
|
|
|
0.1
|
|
|||||
Net income (loss)
|
|
$
|
101.1
|
|
|
$
|
(127.1
|
)
|
|
$
|
(50.2
|
)
|
|
$
|
(65.6
|
)
|
|
$
|
(57.6
|
)
|
Basic net income (loss) per share(2)
|
|
$
|
1.11
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(0.72
|
)
|
Shares used to compute basic net income (loss) per share(2)
|
|
91.1
|
|
|
88.2
|
|
|
86.3
|
|
|
83.6
|
|
|
79.8
|
|
|||||
Diluted net income (loss) per share(2)
|
|
$
|
1.10
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(0.72
|
)
|
Shares used to compute diluted net income (loss) per share(2)
|
|
92.3
|
|
|
88.2
|
|
|
86.3
|
|
|
83.6
|
|
|
79.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31,
|
||||||||||||||||||
(In millions)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, and short-term marketable securities
|
|
$
|
1,533.3
|
|
|
$
|
1,385.6
|
|
|
$
|
548.6
|
|
|
$
|
123.7
|
|
|
$
|
115.2
|
|
Working capital
|
|
1,609.2
|
|
|
1,477.1
|
|
|
605.8
|
|
|
177.6
|
|
|
164.4
|
|
|||||
Total assets
|
|
2,395.0
|
|
|
1,916.0
|
|
|
904.1
|
|
|
402.8
|
|
|
292.0
|
|
|||||
Long-term liabilities
|
|
1,152.2
|
|
|
1,030.3
|
|
|
345.8
|
|
|
16.6
|
|
|
3.9
|
|
|||||
Total stockholders’ equity
|
|
$
|
882.6
|
|
|
$
|
663.3
|
|
|
$
|
419.4
|
|
|
$
|
283.8
|
|
|
$
|
221.2
|
|
(1)
|
See Note 2 to the consolidated financial statements in Part II, Item 8 of this Annual Report for a description of our Restated Collaboration Agreement with Verily Life Sciences LLC and Verily Ireland Limited.
|
(2)
|
See Note 1 to the consolidated financial statements in Part II, Item 8 of this Annual Report for a description of the method used to compute basic and diluted net loss per share attributable to common stockholders.
|
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Overview
|
Critical Accounting Policies and Estimates
|
Results of Operations
|
Financial Overview
|
|
Twelve Months Ended December 31,
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Total revenue
|
$
|
1,476.0
|
|
|
$
|
1,031.6
|
|
|
$
|
718.5
|
|
|
$
|
444.4
|
|
|
43
|
%
|
|
$
|
313.1
|
|
|
44
|
%
|
Gross profit
|
931.5
|
|
|
663.9
|
|
|
492.1
|
|
|
267.6
|
|
|
40
|
%
|
|
171.8
|
|
|
35
|
%
|
|||||
Operating income (loss)
|
142.3
|
|
|
(186.3
|
)
|
|
(42.5
|
)
|
|
328.6
|
|
|
*
|
|
|
(143.8
|
)
|
|
*
|
|
|||||
Net income (loss)
|
101.1
|
|
|
(127.1
|
)
|
|
(50.2
|
)
|
|
228.2
|
|
|
*
|
|
|
(76.9
|
)
|
|
*
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic net income (loss) per share
|
1.11
|
|
|
(1.44
|
)
|
|
(0.58
|
)
|
|
2.55
|
|
|
*
|
|
|
(0.86
|
)
|
|
*
|
|
|||||
Diluted net income (loss) per share
|
$
|
1.10
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
2.54
|
|
|
*
|
|
|
$
|
(0.86
|
)
|
|
*
|
|
Revenue, Cost of Sales and Gross Profit
|
|
Twelve Months Ended December 31,
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Total revenue
|
$
|
1,476.0
|
|
|
$
|
1,031.6
|
|
|
$
|
718.5
|
|
|
$
|
444.4
|
|
|
43
|
%
|
|
$
|
313.1
|
|
|
44
|
%
|
Cost of sales
|
544.5
|
|
|
367.7
|
|
|
226.4
|
|
|
176.8
|
|
|
48
|
%
|
|
141.3
|
|
|
62
|
%
|
|||||
Gross profit
|
$
|
931.5
|
|
|
$
|
663.9
|
|
|
$
|
492.1
|
|
|
$
|
267.6
|
|
|
40
|
%
|
|
$
|
171.8
|
|
|
35
|
%
|
Gross profit as a percent of total revenue
|
63
|
%
|
|
64
|
%
|
|
68
|
%
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
Twelve Months Ended December 31,
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
$ Change
|
|
% Change
|
||||||||||||
Research and development
|
$
|
273.5
|
|
|
$
|
199.7
|
|
|
$
|
185.4
|
|
|
$
|
73.8
|
|
|
37
|
%
|
|
$
|
14.3
|
|
|
8
|
%
|
as a % of total revenue
|
19
|
%
|
|
19
|
%
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Collaborative research and development fee
|
—
|
|
|
217.7
|
|
|
—
|
|
|
(217.7
|
)
|
|
*
|
|
|
217.7
|
|
|
*
|
|
|||||
as a % of total revenue
|
—
|
%
|
|
21
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative
|
515.7
|
|
|
432.8
|
|
|
349.2
|
|
|
82.9
|
|
|
19
|
%
|
|
83.6
|
|
|
24
|
%
|
|||||
as a % of total revenue
|
35
|
%
|
|
42
|
%
|
|
48
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
$
|
789.2
|
|
|
$
|
850.2
|
|
|
$
|
534.6
|
|
|
$
|
(61.0
|
)
|
|
(7
|
)%
|
|
$
|
315.6
|
|
|
59
|
%
|
as a % of total revenue
|
53
|
%
|
|
82
|
%
|
|
74
|
%
|
|
|
|
|
|
|
|
|
Non-Operating Income and Expenses
|
Liquidity and Capital Resources
|
Overview, Capital Resources, and Capital Requirements
|
•
|
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 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;
|
•
|
the acquisition of businesses, products and technologies and our ability to integrate and manage any acquired businesses, products and technologies; and
|
•
|
the evolution of the international expansion of our business.
|
Issuance Date
|
Coupon
|
Aggregate Principal (in millions)
|
Maturity Date
|
Initial Conversion rate per share of common stock
|
Conversion Price per Share of Common Stock
|
||
June 2017
|
0.75%
|
$
|
400.0
|
|
May 15, 2022
|
10.0918
|
$99.09
|
November 2018
|
0.75%
|
850.0
|
|
December 1, 2023
|
6.0869
|
$164.29
|
|
Total
|
|
$
|
1,250.0
|
|
|
|
|
Cash Flows
|
|
Twelve Months Ended
December 31, |
|
Change
|
||||||||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||
Net cash provided by operating activities
|
$
|
314.5
|
|
|
$
|
123.2
|
|
|
$
|
92.0
|
|
|
$
|
191.3
|
|
|
$
|
31.2
|
|
Net cash used in investing activities
|
(1,015.2
|
)
|
|
(139.8
|
)
|
|
(144.4
|
)
|
|
(875.4
|
)
|
|
4.6
|
|
|||||
Net cash provided by financing activities
|
10.7
|
|
|
710.4
|
|
|
399.1
|
|
|
(699.7
|
)
|
|
311.3
|
|
|||||
Effect of exchange rates on cash, cash equivalents, and restricted cash
|
(0.7
|
)
|
|
1.8
|
|
|
0.3
|
|
|
(2.5
|
)
|
|
1.5
|
|
|||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
(690.7
|
)
|
|
$
|
695.6
|
|
|
$
|
347.0
|
|
|
$
|
(1,386.3
|
)
|
|
$
|
348.6
|
|
Contractual Obligations
|
(In millions)
|
|
Total(3)
|
|
Less
than
1 Year(3)
|
|
1-3
Years(1)
|
|
3-5
Years(1)
|
|
More
than
5 Years
|
||||||||||
Senior convertible notes (1)
|
|
$
|
1,283.0
|
|
|
$
|
9.4
|
|
|
$
|
417.2
|
|
|
$
|
856.4
|
|
|
$
|
—
|
|
Lease obligations (2)
|
|
120.9
|
|
|
18.7
|
|
|
34.7
|
|
|
29.7
|
|
|
37.8
|
|
|||||
Total
|
|
$
|
1,403.9
|
|
|
$
|
28.1
|
|
|
$
|
451.9
|
|
|
$
|
886.1
|
|
|
$
|
37.8
|
|
(1)
|
We issued senior convertible notes in May and June 2017 that are due in May 2022 and we issued senior convertible notes in November 2018 that are due in December 2023. The obligations presented above include both principal and interest for these notes. Although these notes mature in 2022 and 2023, they may be converted into cash and shares of
|
(2)
|
Includes a finance lease obligation related to our Mesa, Arizona facility. See Note 6 to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information.
|
Off-Balance Sheet Arrangements
|
Recent Accounting Guidance
|
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 ACCOUNTANT 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 |
|
|||||||
|
|
|
S-1/A
|
|
333-122454
|
|
March 3, 2005
|
|
3.03
|
|
|
|
||
|
|
|
DEF 14 A
|
|
000-51222
|
|
April 20, 2017
|
|
Appendix B
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
November 25, 2014
|
|
3.01
|
|
|
|
||
|
|
|
S-1/A
|
|
333-122454
|
|
March 24, 2005
|
|
4.01
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
May 12, 2017
|
|
4.1
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
December 3, 2018
|
|
4.1
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
S-1
|
|
333-122454
|
|
February 1, 2005
|
|
10.01
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
April 7, 2006
|
|
99.01
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
April 13, 2006
|
|
99.01
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
March 5, 2009
|
|
10.20
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 3, 2009
|
|
10.23
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
March 9, 2010
|
|
10.25
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
November 4, 2010
|
|
10.27
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
|
|||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
|
|||||||
|
|
|
10-Q/A
|
|
000-51222
|
|
July 1, 2011
|
|
10.26
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 3, 2011
|
|
10.28
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
May 1, 2013
|
|
10.27
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 20, 2014
|
|
10.28
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 20, 2014
|
|
10.29
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 6, 2014
|
|
10.31
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 6, 2014
|
|
10.32
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 25, 2015
|
|
10.32
|
|
|
|
||
|
|
|
DEF 14A
|
|
000-51222
|
|
April 13, 2015
|
|
Appendix A
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
June 2, 2015
|
|
10.2
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
April 27, 2016
|
|
10.36
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
April 27, 2016
|
|
10.37
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.39
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.40
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 2, 2016
|
|
10.41
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 28, 2017
|
|
10.42
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
June 6, 2017
|
|
10.20
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
|
|||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
|
|||||||
|
|
|
8-K
|
|
000-51222
|
|
June 6, 2017
|
|
10.30
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 1, 2017
|
|
10.46
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 1, 2017
|
|
10.47
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
August 1, 2017
|
|
10.10
|
|
|
|
||
|
|
|
10-Q
|
|
000-51222
|
|
August 1, 2017
|
|
10.43
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 27, 2018
|
|
10.51
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 27, 2018
|
|
10.52
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 21, 2019
|
|
10.60
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 21, 2019
|
|
10.61
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
June 4, 2019
|
|
10.01
|
|
|
|
||
|
|
|
8-K
|
|
000-51222
|
|
June 4, 2019
|
|
10.02
|
|
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.36
|
|
X
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.37
|
|
X
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.38
|
|
X
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.39
|
|
X
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.40
|
|
X
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.41
|
|
X
|
|
||
|
|
|
10-K
|
|
000-51222
|
|
February 13, 2020
|
|
10.42
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
24.01
|
|
|
Power of Attorney (see signature page of this Form 10-K)
|
|
|
|
|
|
|
|
|
|
X
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Provided
Herewith
|
|
|||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
Exhibit
Number |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
|
X
|
|
||
101.INS
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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.
|
****
|
Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
|
ITEM 16 - FORM 10-K SUMMARY
|
|
|
|
|
DEXCOM, INC.
(Registrant)
|
||
|
|
|
|
|||
Dated: February 13, 2020
|
|
|
|
By:
|
|
/S/ QUENTIN S. BLACKFORD
|
|
|
|
|
|
|
Quentin S. Blackford,
Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer) |
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/S/ KEVIN R. SAYER
|
|
Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)
|
|
February 13, 2020
|
Kevin R. Sayer
|
|
|
|
|
|
|
|
||
/S/ QUENTIN S. BLACKFORD
|
|
Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
February 13, 2020
|
Quentin S. Blackford
|
|
|
|
|
|
|
|
||
/S/ MARK FOLETTA
|
|
Lead Independent Director
|
|
February 13, 2020
|
Mark Foletta
|
|
|
|
|
|
|
|
||
/S/ STEVE ALTMAN
|
|
Director
|
|
February 13, 2020
|
Steve Altman
|
|
|
|
|
|
|
|
||
/S/ NICHOLAS AUGUSTINOS
|
|
Director
|
|
February 13, 2020
|
Nicholas Augustinos
|
|
|
|
|
|
|
|
||
/S/ RICHARD COLLINS
|
|
Director
|
|
February 13, 2020
|
Richard Collins
|
|
|
|
|
|
|
|
|
|
/S/ BRIDGETTE HELLER
|
|
Director
|
|
February 13, 2020
|
Bridgette Heller
|
|
|
|
|
|
|
|
|
|
/S/ BARBARA KAHN
|
|
Director
|
|
February 13, 2020
|
Barbara Kahn
|
|
|
|
|
|
|
|
|
|
/S/ JAY SKYLER
|
|
Director
|
|
February 13, 2020
|
Jay Skyler, M.D.
|
|
|
|
|
|
|
|
|
|
/S/ ERIC TOPOL
|
|
Director
|
|
February 13, 2020
|
Eric Topol, M.D.
|
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets
|
F-3
|
Consolidated Statements of Operations
|
F-4
|
Consolidated Statements of Comprehensive Income (Loss)
|
F-5
|
Consolidated Statements of Stockholders’ Equity
|
F-6
|
Consolidated Statements of Cash Flows
|
F-7
|
Notes to Consolidated Financial Statements
|
F-9
|
|
|
Estimation of transaction price and variable consideration for revenue recognition
|
|
|
|
Description of the Matter
|
|
As discussed in Note 1 of the consolidated financial statements, the Company recognizes revenue from contracted insurance payors and distributors based on a transaction price which reflects the net consideration to which the Company expects to be entitled. The transaction price is typically based on the contracted rates less an estimate of claim denials and historical reimbursement experience by payor, which include current and future expectations regarding reimbursement rates and payor mix. The Company estimates reductions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data.
|
|
|
|
|
|
Auditing management’s determination of transaction price including variable consideration involved a high degree of subjectivity in evaluating management’s estimates. In determining transaction price, management develops estimates based on actual historical reimbursement experience by payor. In estimating variable consideration related to rebates, management applies contracted rates to estimates of products sold subject to rebate, known events or trends and channel inventory data.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s processes to determine transaction price and variable consideration, including the underlying assumptions.
|
|
|
|
|
|
Our audit procedures also included, among others, evaluating the significant assumptions and the accuracy and completeness of the underlying data used in management’s calculations. For transaction price, this included testing management’s estimate of the claim denials and historical reimbursement experience through a combination of underlying data validation by inspection of source documents and independent recalculation of management’s analysis. For rebates, this included testing contractual rates, management’s estimates of products sold subject to rebate, and inventory held by distributors at the end of the period, through a combination of underlying data validation by inspection of source documents, agreement to underlying contracts, review for consistency against historical data, and trending of inventory held at distributors versus inventory sold into the channel. In addition, we inspected the results of the Company’s retrospective review analysis of rebates claimed, evaluated the estimates made based on historical experience and performed sensitivity analyses over the Company's significant assumptions.
|
DexCom, Inc.
|
||||
Consolidated Balance Sheets
|
|
December 31,
|
||||||
(In millions—except par value data)
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
446.2
|
|
|
$
|
1,137.0
|
|
Short-term marketable securities
|
1,087.1
|
|
|
248.6
|
|
||
Accounts receivable, net
|
286.3
|
|
|
226.7
|
|
||
Inventory
|
119.8
|
|
|
70.7
|
|
||
Prepaid and other current assets
|
30.0
|
|
|
16.5
|
|
||
Total current assets
|
1,969.4
|
|
|
1,699.5
|
|
||
Property and equipment, net
|
321.3
|
|
|
183.1
|
|
||
Operating lease right-of-use assets
|
71.5
|
|
|
—
|
|
||
Goodwill
|
18.6
|
|
|
18.7
|
|
||
Other assets
|
14.2
|
|
|
14.7
|
|
||
Total assets
|
$
|
2,395.0
|
|
|
$
|
1,916.0
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
256.4
|
|
|
$
|
147.1
|
|
Accrued payroll and related expenses
|
88.5
|
|
|
72.4
|
|
||
Operating lease liabilities, current portion
|
13.6
|
|
|
—
|
|
||
Deferred revenue
|
1.7
|
|
|
2.9
|
|
||
Total current liabilities
|
360.2
|
|
|
222.4
|
|
||
|
|
|
|
||||
Long-term senior convertible notes
|
1,059.7
|
|
|
1,010.3
|
|
||
Operating lease liabilities, net of current portion
|
72.4
|
|
|
—
|
|
||
Other long-term liabilities
|
20.1
|
|
|
20.0
|
|
||
Total liabilities
|
1,512.4
|
|
|
1,252.7
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, 5.0 million shares authorized; no shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 200.0 million shares authorized; 92.4 million and 91.6 million shares issued and outstanding, respectively, at December 31, 2019; 91.1 million and 90.0 million shares issued and outstanding, respectively, at December 31, 2018
|
0.1
|
|
|
0.1
|
|
||
Additional paid-in capital
|
1,675.9
|
|
|
1,560.6
|
|
||
Accumulated other comprehensive income
|
2.3
|
|
|
1.5
|
|
||
Accumulated deficit
|
(695.7
|
)
|
|
(798.9
|
)
|
||
Treasury stock at cost; 0.8 million shares at December 31, 2019
|
(100.0
|
)
|
|
(100.0
|
)
|
||
Total stockholders’ equity
|
882.6
|
|
|
663.3
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,395.0
|
|
|
$
|
1,916.0
|
|
DexCom, Inc.
|
||||
Consolidated Statements of Operations
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions—except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
1,476.0
|
|
|
$
|
1,031.6
|
|
|
$
|
718.5
|
|
Cost of sales
|
544.5
|
|
|
367.7
|
|
|
226.4
|
|
|||
Gross profit
|
931.5
|
|
|
663.9
|
|
|
492.1
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
|
273.5
|
|
|
199.7
|
|
|
185.4
|
|
|||
Collaborative research and development fee
|
—
|
|
|
217.7
|
|
|
—
|
|
|||
Selling, general and administrative
|
515.7
|
|
|
432.8
|
|
|
349.2
|
|
|||
Total operating expenses
|
789.2
|
|
|
850.2
|
|
|
534.6
|
|
|||
Operating income (loss)
|
142.3
|
|
|
(186.3
|
)
|
|
(42.5
|
)
|
|||
Interest expense
|
(60.3
|
)
|
|
(22.7
|
)
|
|
(12.8
|
)
|
|||
Income (loss) from equity investments
|
(4.2
|
)
|
|
80.1
|
|
|
—
|
|
|||
Interest and other income, net
|
26.4
|
|
|
2.4
|
|
|
6.7
|
|
|||
Income (loss) before income taxes
|
104.2
|
|
|
(126.5
|
)
|
|
(48.6
|
)
|
|||
Income tax expense
|
3.1
|
|
|
0.6
|
|
|
1.6
|
|
|||
Net income (loss)
|
$
|
101.1
|
|
|
$
|
(127.1
|
)
|
|
$
|
(50.2
|
)
|
|
|
|
|
|
|
||||||
Basic net income (loss) per share
|
$
|
1.11
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
Shares used to compute basic net income (loss) per share
|
91.1
|
|
|
88.2
|
|
|
86.3
|
|
|||
Diluted net income (loss) per share
|
$
|
1.10
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
Shares used to compute diluted net income (loss) per share
|
92.3
|
|
|
88.2
|
|
|
86.3
|
|
DexCom, Inc.
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss)
|
|
$
|
101.1
|
|
|
$
|
(127.1
|
)
|
|
$
|
(50.2
|
)
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
|
|
|
||||||
Foreign currency translation gain (loss)
|
|
0.4
|
|
|
4.0
|
|
|
(1.4
|
)
|
|||
Unrealized gain (loss) on marketable debt securities
|
|
0.4
|
|
|
0.1
|
|
|
(0.2
|
)
|
|||
Total other comprehensive income (loss), net
|
|
0.8
|
|
|
4.1
|
|
|
(1.6
|
)
|
|||
Comprehensive income (loss)
|
|
$
|
101.9
|
|
|
$
|
(123.0
|
)
|
|
$
|
(51.8
|
)
|
DexCom, Inc.
|
||||
Consolidated Statements of Stockholders’ Equity
|
(In millions)
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Treasury Stock
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
Shares
|
|
Amount
|
|
||||||||||||||||||||||||
Balance at December 31, 2016
|
|
84.6
|
|
|
$
|
0.1
|
|
|
$
|
905.7
|
|
|
$
|
(1.0
|
)
|
|
$
|
(621.0
|
)
|
|
$
|
—
|
|
|
$
|
283.8
|
|
Issuance of common stock under equity incentive plans
|
|
2.3
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
||||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.1
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
||||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
106.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106.7
|
|
||||||
Equity component of convertible 2022 Note issuance, net of issuance costs
|
|
—
|
|
|
—
|
|
|
70.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70.6
|
|
||||||
Adoption of ASU 2016-09
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.2
|
)
|
|
—
|
|
|
(50.2
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
||||||
Balance at December 31, 2017
|
|
87.0
|
|
|
0.1
|
|
|
1,093.7
|
|
|
(2.6
|
)
|
|
(671.8
|
)
|
|
—
|
|
|
419.4
|
|
||||||
Issuance of common stock under equity incentive plans
|
|
1.8
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
||||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.2
|
|
|
—
|
|
|
8.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.9
|
|
||||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
101.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101.9
|
|
||||||
Issuance of common stock for collaborative research and development fee
|
|
1.8
|
|
|
—
|
|
|
217.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
217.7
|
|
||||||
Equity component of convertible 2023 Note issuance, net of issuance costs
|
|
—
|
|
|
—
|
|
|
171.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
171.6
|
|
||||||
Sale of warrants
|
|
—
|
|
|
—
|
|
|
183.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183.8
|
|
||||||
Convertible note hedge
|
|
—
|
|
|
—
|
|
|
(218.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(218.9
|
)
|
||||||
Purchases of treasury stock
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100.0
|
)
|
|
(100.0
|
)
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127.1
|
)
|
|
—
|
|
|
(127.1
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
||||||
Balance at December 31, 2018
|
|
90.0
|
|
|
0.1
|
|
|
1,560.6
|
|
|
1.5
|
|
|
(798.9
|
)
|
|
(100.0
|
)
|
|
663.3
|
|
||||||
Cumulative-effect adjustment from adoption of new lease accounting standard (Note 6)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
||||||
Issuance of common stock under equity incentive plans
|
|
1.4
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.2
|
|
|
—
|
|
|
11.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.6
|
|
||||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
102.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102.7
|
|
||||||
Realization of tax benefit related to 2023 Note Hedge
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101.1
|
|
|
—
|
|
|
101.1
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||||
Balance at December 31, 2019
|
|
91.6
|
|
|
$
|
0.1
|
|
|
$
|
1,675.9
|
|
|
$
|
2.3
|
|
|
$
|
(695.7
|
)
|
|
$
|
(100.0
|
)
|
|
$
|
882.6
|
|
DexCom, Inc.
|
||||
Consolidated Statements of Cash Flows
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
101.1
|
|
|
$
|
(127.1
|
)
|
|
$
|
(50.2
|
)
|
Adjustments to reconcile net income (loss) to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
48.7
|
|
|
29.1
|
|
|
16.1
|
|
|||
Share-based compensation
|
102.7
|
|
|
101.9
|
|
|
106.2
|
|
|||
Non-cash interest expense
|
49.6
|
|
|
17.9
|
|
|
9.4
|
|
|||
Non-cash collaborative research and development fee through issuance of common stock
|
—
|
|
|
217.7
|
|
|
—
|
|
|||
Unrealized gain on equity investment
|
—
|
|
|
(36.0
|
)
|
|
—
|
|
|||
Realized (gain) loss on equity investment
|
4.2
|
|
|
(44.1
|
)
|
|
—
|
|
|||
Other non-cash income and expenses
|
2.1
|
|
|
4.7
|
|
|
7.9
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(60.0
|
)
|
|
(93.2
|
)
|
|
(31.8
|
)
|
|||
Inventory
|
(49.1
|
)
|
|
(25.5
|
)
|
|
0.4
|
|
|||
Prepaid and other assets
|
(7.2
|
)
|
|
(3.0
|
)
|
|
(6.7
|
)
|
|||
Operating lease right-of-use assets and liabilities, net
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
|||
Accounts payable and accrued liabilities
|
109.0
|
|
|
56.2
|
|
|
21.1
|
|
|||
Accrued payroll and related expenses
|
16.0
|
|
|
23.8
|
|
|
14.8
|
|
|||
Deferred revenue, deferred rent and other liabilities
|
(0.2
|
)
|
|
0.8
|
|
|
4.8
|
|
|||
Net cash provided by operating activities
|
314.5
|
|
|
123.2
|
|
|
92.0
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchase of marketable securities
|
(2,030.4
|
)
|
|
(452.5
|
)
|
|
(171.8
|
)
|
|||
Proceeds from sale and maturity of marketable securities
|
1,196.4
|
|
|
392.1
|
|
|
93.4
|
|
|||
Purchase of other equity investments
|
(1.2
|
)
|
|
(1.0
|
)
|
|
—
|
|
|||
Purchase of property and equipment
|
(180.0
|
)
|
|
(67.1
|
)
|
|
(66.0
|
)
|
|||
Acquisitions, net of cash acquired
|
—
|
|
|
(11.3
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(1,015.2
|
)
|
|
(139.8
|
)
|
|
(144.4
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net proceeds from issuance of common stock
|
11.9
|
|
|
10.8
|
|
|
10.1
|
|
|||
Purchases of treasury stock
|
—
|
|
|
(100.0
|
)
|
|
—
|
|
|||
Proceeds from issuance of convertible debt, net of issuance costs
|
—
|
|
|
836.6
|
|
|
389.0
|
|
|||
Proceeds from sale of warrants
|
—
|
|
|
183.8
|
|
|
—
|
|
|||
Purchase of convertible note hedge
|
—
|
|
|
(218.9
|
)
|
|
—
|
|
|||
Proceeds from short-term borrowings
|
—
|
|
|
—
|
|
|
75.0
|
|
|||
Repayment of short-term borrowings
|
—
|
|
|
—
|
|
|
(75.0
|
)
|
|||
Other financing activities
|
(1.2
|
)
|
|
(1.9
|
)
|
|
—
|
|
|||
Net cash provided by financing activities
|
10.7
|
|
|
710.4
|
|
|
399.1
|
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(0.7
|
)
|
|
1.8
|
|
|
0.3
|
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(690.7
|
)
|
|
695.6
|
|
|
347.0
|
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
1,137.1
|
|
|
441.5
|
|
|
94.5
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
446.4
|
|
|
$
|
1,137.1
|
|
|
$
|
441.5
|
|
|
|
|
|
|
|
||||||
Reconciliation of cash, cash equivalents and restricted cash, end of period:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
446.2
|
|
|
$
|
1,137.0
|
|
|
$
|
441.5
|
|
Restricted cash
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|||
Total cash, cash equivalents and restricted cash
|
$
|
446.4
|
|
|
$
|
1,137.1
|
|
|
$
|
441.5
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of non-cash investing and financing transactions:
|
|
|
|
|
|
||||||
Acquisition of property and equipment included in accounts payable and accrued liabilities
|
$
|
14.2
|
|
|
$
|
10.8
|
|
|
$
|
6.3
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for interest
|
$
|
10.4
|
|
|
$
|
3.6
|
|
|
$
|
2.4
|
|
Cash paid during the year for income taxes
|
$
|
4.8
|
|
|
$
|
2.3
|
|
|
$
|
1.4
|
|
1. Organization and Significant Accounting Policies
|
Organization and Business
|
Basis of Presentation and Principles of Consolidation
|
Use of Estimates
|
Fair Value Measurements
|
Cash and Cash Equivalents
|
Marketable Securities
|
Accounts Receivable and Allowance for Doubtful Accounts
|
Concentration of Credit Risk and Significant Customers
|
|
Revenue
|
|
Gross Accounts Receivable
|
|||||||||||
|
Twelve Months Ended
December 31, |
|
As of December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|||||
Distributor A
|
17
|
%
|
|
15
|
%
|
|
16
|
%
|
|
21
|
%
|
|
19
|
%
|
Distributor B
|
12
|
%
|
|
12
|
%
|
|
14
|
%
|
|
*
|
|
|
15
|
%
|
Distributor C
|
10
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
Inventory
|
Property and Equipment
|
Goodwill
|
Intangible Assets and Other Long-Lived Assets
|
Income Taxes
|
Warranty Accrual
|
Loss Contingencies
|
Comprehensive Income (Loss)
|
Revenue Recognition
|
•
|
We report revenue net of taxes collected from customers, which are subsequently remitted to governmental authorities;
|
•
|
We account for shipping and handling activities that are performed after a customer has obtained control of a good as fulfillment costs rather than as separate performance obligations;
|
•
|
We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer; and
|
•
|
If we expect, at contract inception, that the period between the transfer of control and corresponding payment from the customer will be one year or less, we do not adjust the amount of consideration for the effects of a significant financing component.
|
|
Twelve Months Ended
December 31, |
||||||
(In millions)
|
2019
|
|
2018
|
||||
Revenue recognized in the period from:
|
|
|
|
||||
Amounts included in contract liabilities at the beginning of the period
|
$
|
2.6
|
|
|
$
|
1.9
|
|
Product Shipment Costs
|
Research and Development
|
Advertising Costs
|
Leases
|
Share-Based Compensation
|
Net Income (Loss) Per Share
|
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss)
|
|
$
|
101.1
|
|
|
$
|
(127.1
|
)
|
|
$
|
(50.2
|
)
|
|
|
|
|
|
|
|
||||||
Net income (loss) per common share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
1.11
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
Diluted
|
|
$
|
1.10
|
|
|
$
|
(1.44
|
)
|
|
$
|
(0.58
|
)
|
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
|
91.1
|
|
|
88.2
|
|
|
86.3
|
|
|||
Dilutive potential common stock outstanding:
|
|
|
|
|
|
|
||||||
Stock options and employee stock purchase plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Restricted stock units
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|||
2023 Warrants
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
2022 senior convertible notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
2023 senior convertible notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted weighted average shares outstanding
|
|
92.3
|
|
|
88.2
|
|
|
86.3
|
|
|
Twelve Months Ended
December 31, |
|||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
|||
Options outstanding to purchase common stock
|
—
|
|
|
0.1
|
|
|
0.4
|
|
Unvested restricted stock units
|
0.2
|
|
|
2.7
|
|
|
2.7
|
|
2023 Warrants
|
5.2
|
|
|
5.2
|
|
|
—
|
|
Senior convertible notes due 2022
|
4.0
|
|
|
4.0
|
|
|
4.0
|
|
Senior convertible notes due 2023
|
5.2
|
|
|
5.2
|
|
|
—
|
|
Total
|
14.6
|
|
|
17.2
|
|
|
7.1
|
|
Recent Accounting Guidance
|
2. Development and Other Agreements
|
Collaboration with Verily Life Sciences
|
3. Fair Value Measurements
|
|
Fair Value Measurements Using
|
||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
$
|
110.1
|
|
|
$
|
144.9
|
|
|
$
|
—
|
|
|
$
|
255.0
|
|
|
|
|
|
|
|
|
|
||||||||
Debt securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
—
|
|
|
676.0
|
|
|
—
|
|
|
676.0
|
|
||||
Commercial paper
|
—
|
|
|
248.2
|
|
|
—
|
|
|
248.2
|
|
||||
Corporate debt
|
—
|
|
|
162.9
|
|
|
—
|
|
|
162.9
|
|
||||
Total debt securities, available for sale
|
—
|
|
|
1,087.1
|
|
|
—
|
|
|
1,087.1
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other assets (1)
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total assets measured at fair value on a recurring basis
|
$
|
110.8
|
|
|
$
|
1,232.0
|
|
|
$
|
—
|
|
|
$
|
1,342.8
|
|
|
Fair Value Measurements Using
|
||||||||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
$
|
199.3
|
|
|
$
|
66.7
|
|
|
$
|
—
|
|
|
$
|
266.0
|
|
|
|
|
|
|
|
|
|
||||||||
Equity investment in Tandem Diabetes Care, Inc.
|
38.0
|
|
|
—
|
|
|
—
|
|
|
38.0
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Debt securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
—
|
|
|
173.1
|
|
|
—
|
|
|
173.1
|
|
||||
Commercial paper
|
—
|
|
|
36.2
|
|
|
—
|
|
|
36.2
|
|
||||
Corporate debt
|
—
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
||||
Total debt securities, available for sale
|
—
|
|
|
210.6
|
|
|
—
|
|
|
210.6
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total assets measured at fair value on a recurring basis
|
$
|
237.3
|
|
|
$
|
277.3
|
|
|
$
|
—
|
|
|
$
|
514.6
|
|
|
Fair Value Measurements Using Level 1
|
||||||
(In millions)
|
December 31, 2019
|
|
December 31, 2018
|
||||
0.75% Senior Convertible Notes due 2022
|
$
|
890.8
|
|
|
$
|
540.2
|
|
0.75% Senior Convertible Notes due 2023
|
1,260.0
|
|
|
859.6
|
|
||
Total fair value of outstanding senior convertible notes
|
$
|
2,150.8
|
|
|
$
|
1,399.8
|
|
4. Balance Sheet Details
|
Short-Term Marketable Securities
|
|
December 31, 2019
|
||||||||||||||
(In millions)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Market
Value
|
||||||||
Debt securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
$
|
675.6
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
676.0
|
|
Commercial paper
|
248.1
|
|
|
0.1
|
|
|
—
|
|
|
248.2
|
|
||||
Corporate debt
|
163.0
|
|
|
—
|
|
|
(0.1
|
)
|
|
162.9
|
|
||||
Total debt securities, available for sale
|
$
|
1,086.7
|
|
|
$
|
0.5
|
|
|
$
|
(0.1
|
)
|
|
$
|
1,087.1
|
|
|
December 31, 2018
|
||||||||||||||
(In millions)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Market
Value
|
||||||||
Equity investment in Tandem Diabetes Care, Inc
|
$
|
2.0
|
|
|
$
|
36.0
|
|
|
$
|
—
|
|
|
$
|
38.0
|
|
|
|
|
|
|
|
|
|
||||||||
Debt securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
$
|
173.2
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
173.1
|
|
Commercial paper
|
36.2
|
|
|
—
|
|
|
—
|
|
|
36.2
|
|
||||
Corporate debt
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
||||
Total debt securities, available for sale
|
$
|
210.7
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
210.6
|
|
|
|
|
|
|
|
|
|
||||||||
Total marketable securities
|
$
|
212.7
|
|
|
$
|
36.0
|
|
|
$
|
(0.1
|
)
|
|
$
|
248.6
|
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net gains and losses recognized during the period on equity securities
|
$
|
(4.2
|
)
|
|
$
|
80.1
|
|
|
$
|
—
|
|
Less: Net gains and losses recognized during the period on equity securities sold during the period
|
4.2
|
|
|
(44.1
|
)
|
|
—
|
|
|||
Unrealized gains recognized during the reporting period on equity securities still held at the reporting date
|
$
|
—
|
|
|
$
|
36.0
|
|
|
$
|
—
|
|
Accounts Receivable
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Accounts receivable
|
$
|
292.1
|
|
|
$
|
233.9
|
|
Less allowance for doubtful accounts
|
(5.8
|
)
|
|
(7.2
|
)
|
||
Total accounts receivable, net
|
$
|
286.3
|
|
|
$
|
226.7
|
|
Inventory
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Raw materials
|
$
|
64.9
|
|
|
$
|
30.8
|
|
Work-in-process
|
11.1
|
|
|
11.2
|
|
||
Finished goods
|
43.8
|
|
|
28.7
|
|
||
Total inventory
|
$
|
119.8
|
|
|
$
|
70.7
|
|
Property and Equipment
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Building and land
|
$
|
15.5
|
|
|
$
|
6.0
|
|
Furniture and fixtures
|
12.8
|
|
|
9.0
|
|
||
Computer software and hardware
|
32.7
|
|
|
29.2
|
|
||
Machinery and equipment
|
130.2
|
|
|
80.7
|
|
||
Leasehold improvements
|
102.5
|
|
|
80.7
|
|
||
Construction in progress
|
132.6
|
|
|
57.3
|
|
||
Total cost
|
426.3
|
|
|
262.9
|
|
||
Less accumulated depreciation and amortization
|
(105.0
|
)
|
|
(79.8
|
)
|
||
Total property and equipment, net
|
$
|
321.3
|
|
|
$
|
183.1
|
|
Accounts Payable and Accrued Liabilities
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Accounts payable trade
|
$
|
102.3
|
|
|
$
|
75.5
|
|
Accrued tax, audit, and legal fees
|
14.0
|
|
|
11.7
|
|
||
Accrued rebates
|
93.3
|
|
|
36.1
|
|
||
Accrued warranty
|
7.4
|
|
|
6.8
|
|
||
Other accrued liabilities
|
39.4
|
|
|
17.0
|
|
||
Total accounts payable and accrued liabilities
|
$
|
256.4
|
|
|
$
|
147.1
|
|
Accrued Warranty
|
|
Twelve Months Ended
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Beginning balance
|
$
|
6.8
|
|
|
$
|
8.8
|
|
Charges to costs and expenses
|
32.7
|
|
|
17.4
|
|
||
Costs incurred
|
(32.1
|
)
|
|
(19.4
|
)
|
||
Ending balance
|
$
|
7.4
|
|
|
$
|
6.8
|
|
Other Long-Term Liabilities
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Finance lease obligations
|
$
|
14.4
|
|
|
$
|
7.3
|
|
Deferred rent
|
—
|
|
|
9.4
|
|
||
Other liabilities
|
5.7
|
|
|
3.3
|
|
||
Total other liabilities
|
$
|
20.1
|
|
|
$
|
20.0
|
|
5. Debt
|
Senior Convertible Notes
|
|
December 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
0.75% Senior Convertible Notes due 2022:
|
|
|
|
||||
Principal amount
|
$
|
400.0
|
|
|
$
|
400.0
|
|
Unamortized debt discount
|
(37.2
|
)
|
|
(51.1
|
)
|
||
Unamortized debt issuance costs
|
(4.6
|
)
|
|
(6.3
|
)
|
||
Net carrying amount of Senior Convertible Notes due 2022
|
358.2
|
|
|
342.6
|
|
||
|
|
|
|
||||
0.75% Senior Convertible Notes due 2023:
|
|
|
|
||||
Principal amount
|
850.0
|
|
|
850.0
|
|
||
Unamortized debt discount
|
(140.0
|
)
|
|
(171.8
|
)
|
||
Unamortized debt issuance costs
|
(8.5
|
)
|
|
(10.5
|
)
|
||
Net carrying amount of Senior Convertible Notes due 2023
|
701.5
|
|
|
667.7
|
|
||
|
|
|
|
||||
Total net carrying amount of senior convertible notes
|
$
|
1,059.7
|
|
|
$
|
1,010.3
|
|
|
|
|
|
||||
Carrying value of equity component of convertible senior notes, net of debt issuance costs
|
|
|
|
||||
Senior Convertible Notes due 2022
|
$
|
70.6
|
|
|
$
|
70.6
|
|
Senior Convertible Notes due 2023
|
$
|
171.6
|
|
|
$
|
171.6
|
|
|
|
|
|
||||
Remaining amortization period of debt discount on the liability component
|
|
|
|
||||
Senior Convertible Notes due 2022
|
2.5 years
|
|
|
3.5 years
|
|
||
Senior Convertible Notes due 2023
|
4.0 years
|
|
|
5.0 years
|
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Senior Convertible Notes due 2022
|
$
|
486.2
|
|
|
$
|
125.4
|
|
Senior Convertible Notes due 2023
|
372.4
|
|
|
—
|
|
||
Total by which the notes’ if-converted value exceeds their principal amount
|
$
|
858.6
|
|
|
$
|
125.4
|
|
(Dollars in millions)
|
Twelve Months Ended
December 31, |
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense recognized:
|
|
|
|
|
|
||||||
0.75% Senior Convertible Notes due 2022:
|
|
|
|
|
|
||||||
Contractual coupon interest
|
$
|
3.0
|
|
|
$
|
3.0
|
|
|
$
|
1.9
|
|
Accretion of debt discount (1)
|
13.9
|
|
|
13.4
|
|
|
8.2
|
|
|||
Amortization of debt issuance costs
|
1.7
|
|
|
1.6
|
|
|
1.0
|
|
|||
Interest expense recognized on 2022 Notes
|
18.6
|
|
|
18.0
|
|
|
11.1
|
|
|||
|
|
|
|
|
|
||||||
0.75% Senior Convertible Notes due 2023:
|
|
|
|
|
|
||||||
Contractual coupon interest
|
6.3
|
|
|
0.5
|
|
|
—
|
|
|||
Accretion of debt discount (2)
|
31.9
|
|
|
2.6
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
2.0
|
|
|
0.2
|
|
|
—
|
|
|||
Interest expense recognized on 2023 Notes
|
40.2
|
|
|
3.3
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Total interest expense recognized on senior notes
|
$
|
58.8
|
|
|
$
|
21.3
|
|
|
$
|
11.1
|
|
|
|
|
|
|
|
||||||
Effective interest rates:
|
|
|
|
|
|
||||||
0.75% Senior Convertible Notes due 2022
|
5.1
|
%
|
|
5.1
|
%
|
|
5.1
|
%
|
|||
0.75% Senior Convertible Notes due 2023
|
5.6
|
%
|
|
5.6
|
%
|
|
—
|
|
(1)
|
during any calendar quarter commencing after September 30, 2017 (and only during such calendar quarter), if the last reported sale price of common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the Notes on each such trading day;
|
(2)
|
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each day of that five day consecutive trading day period was less than 98% of the product of the last reported sale price of common stock and the applicable conversion rate of the Notes on such trading day;
|
(3)
|
if we call any or all of the Notes for redemption, at any time prior to the close on business on the scheduled trading day immediately preceding the redemption date; or
|
(4)
|
upon the occurrence of specified corporate transactions.
|
(1)
|
during any calendar quarter commencing after March 31, 2019 (and only during such calendar quarter), if the last reported sale price of common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2023 Notes on each such trading day;
|
(2)
|
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 2023 Notes for each day of that five-day consecutive trading day period was less than 98% of the product of the last reported sale price of common stock and the applicable conversion rate of the 2023 Notes on such trading day;
|
(3)
|
if we call any or all of the 2023 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
|
(4)
|
upon the occurrence of specified corporate transactions.
|
Revolving Credit Agreement
|
|
December 31,
|
||
(In millions)
|
2019
|
||
Available principal amount
|
$
|
200.0
|
|
Letters of credit sub-facility
|
10.0
|
|
|
Outstanding borrowings
|
—
|
|
|
Outstanding letters of credit
|
4.4
|
|
|
Total available balance
|
195.6
|
|
6. Leases And Other Commitments
|
Leases
|
(In millions)
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
$
|
17.4
|
|
|
$
|
1.3
|
|
2021
|
17.4
|
|
|
1.3
|
|
||
2022
|
14.6
|
|
|
1.4
|
|
||
2023
|
14.3
|
|
|
1.4
|
|
||
2024
|
12.5
|
|
|
1.5
|
|
||
Thereafter
|
23.9
|
|
|
13.9
|
|
||
Total future lease cost (1)
|
100.1
|
|
|
20.8
|
|
||
Less: Amount representing interest
|
(14.3
|
)
|
|
(5.8
|
)
|
||
Present value of future payments
|
85.8
|
|
|
15.0
|
|
||
Less: Short-term leases not recorded as a liability
|
0.2
|
|
|
—
|
|
||
Revised present value of future lease payments
|
86.0
|
|
|
15.0
|
|
||
Less: Current portion
|
(13.6
|
)
|
|
(0.6
|
)
|
||
Long-term portion
|
$
|
72.4
|
|
|
$
|
14.4
|
|
|
Twelve Months Ended
December 31, |
||
(In millions)
|
2019
|
||
Finance lease cost:
|
|
||
Amortization of right-of-use assets
|
$
|
1.1
|
|
Interest on lease liabilities
|
0.8
|
|
|
Operating lease cost
|
12.2
|
|
|
Short-term lease cost (1)
|
3.5
|
|
|
Variable lease cost (2)
|
3.9
|
|
|
Total lease cost
|
$
|
21.5
|
|
|
Twelve Months Ended
December 31, |
||
(Dollars in millions)
|
2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
14.3
|
|
Operating cash flows from finance leases
|
$
|
0.8
|
|
Financing cash flows from finance leases
|
$
|
0.5
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
||
Operating leases
|
$
|
80.6
|
|
Finance leases
|
$
|
15.5
|
|
Weighted average remaining lease term in years:
|
|
||
Operating leases
|
6.2
|
|
|
Finance leases
|
13.3
|
|
|
Weighted average discount rate:
|
|
||
Operating leases
|
5.0
|
%
|
|
Finance leases
|
5.0
|
%
|
Purchase Commitments
|
7. Contingencies
|
Litigation
|
8. Income Taxes
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
119.1
|
|
|
$
|
(28.3
|
)
|
|
$
|
12.4
|
|
Outside of the United States
|
(14.9
|
)
|
|
(98.2
|
)
|
|
(61.0
|
)
|
|||
Total
|
$
|
104.2
|
|
|
$
|
(126.5
|
)
|
|
$
|
(48.6
|
)
|
|
Twelve Months Ended
December 31, 2019 |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
1.0
|
|
|
2.7
|
|
|
0.1
|
|
|||
Foreign
|
1.9
|
|
|
0.1
|
|
|
1.5
|
|
|||
Total current income taxes
|
2.9
|
|
|
2.8
|
|
|
1.6
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
|||
State
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|||
Foreign
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
Total deferred income taxes
|
0.2
|
|
|
(2.2
|
)
|
|
—
|
|
|||
Total
|
$
|
3.1
|
|
|
$
|
0.6
|
|
|
$
|
1.6
|
|
|
December 31,
|
||||||
(In millions)
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
127.4
|
|
|
$
|
162.0
|
|
Capitalized research and development expenses
|
57.1
|
|
|
62.1
|
|
||
Tax credits
|
78.6
|
|
|
59.0
|
|
||
Share-based compensation
|
10.9
|
|
|
12.5
|
|
||
Fixed and intangible assets
|
14.0
|
|
|
16.0
|
|
||
Accrued liabilities and reserves
|
62.0
|
|
|
22.5
|
|
||
Convertible Debt
|
1.7
|
|
|
—
|
|
||
Total gross deferred tax assets
|
351.7
|
|
|
334.1
|
|
||
Less: valuation allowance
|
(332.2
|
)
|
|
(330.1
|
)
|
||
Total net deferred tax assets
|
19.5
|
|
|
4.0
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Fixed assets and acquired intangibles assets
|
(19.6
|
)
|
|
(3.8
|
)
|
||
Convertible debt discount
|
—
|
|
|
(0.1
|
)
|
||
Total deferred tax liabilities
|
(19.6
|
)
|
|
(3.9
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
(0.1
|
)
|
|
$
|
0.1
|
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Income taxes at statutory rates
|
$
|
21.9
|
|
|
$
|
(26.6
|
)
|
|
$
|
(17.0
|
)
|
State income tax, net of federal benefit
|
(2.3
|
)
|
|
(5.5
|
)
|
|
(0.7
|
)
|
|||
Permanent items
|
1.0
|
|
|
1.3
|
|
|
0.7
|
|
|||
Research and development credits
|
(10.8
|
)
|
|
(11.7
|
)
|
|
(13.3
|
)
|
|||
Foreign rate differential
|
5.6
|
|
|
3.7
|
|
|
5.4
|
|
|||
Stock and officers compensation
|
(14.7
|
)
|
|
(5.1
|
)
|
|
(10.4
|
)
|
|||
Rate change
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Unrecognized tax benefits
|
—
|
|
|
—
|
|
|
(15.4
|
)
|
|||
Impact of adoption of ASU 2016-16
|
—
|
|
|
(13.3
|
)
|
|
—
|
|
|||
Impact of Tax Cuts and Jobs Act of 2017
|
—
|
|
|
(0.4
|
)
|
|
105.7
|
|
|||
Other
|
(1.0
|
)
|
|
1.3
|
|
|
(2.2
|
)
|
|||
Change in valuation allowance
|
3.4
|
|
|
56.9
|
|
|
(51.1
|
)
|
|||
Income taxes at effective rates
|
$
|
3.1
|
|
|
$
|
0.6
|
|
|
$
|
1.6
|
|
9. Employee Benefit Plans and Stockholders’ Equity
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Intrinsic value of options exercised
|
$
|
7.4
|
|
|
$
|
30.0
|
|
|
$
|
21.6
|
|
(In millions except weighted average grant date fair value)
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic Value
|
|||||
Nonvested at December 31, 2016
|
3.7
|
|
|
$
|
62.51
|
|
|
|
||
Granted
|
1.3
|
|
|
75.78
|
|
|
|
|||
Vested
|
(1.9
|
)
|
|
58.92
|
|
|
|
|||
Forfeited
|
(0.4
|
)
|
|
67.97
|
|
|
|
|||
Nonvested at December 31, 2017
|
2.7
|
|
|
70.68
|
|
|
$
|
154.5
|
|
|
Granted
|
1.7
|
|
|
66.07
|
|
|
|
|||
Vested
|
(1.4
|
)
|
|
68.44
|
|
|
|
|||
Forfeited
|
(0.3
|
)
|
|
68.56
|
|
|
|
|||
Nonvested at December 31, 2018
|
2.7
|
|
|
69.19
|
|
|
319.0
|
|
||
Granted
|
0.7
|
|
|
144.37
|
|
|
|
|||
Vested
|
(1.4
|
)
|
|
69.45
|
|
|
|
|||
Forfeited
|
(0.2
|
)
|
|
83.45
|
|
|
|
|||
Nonvested at December 31, 2019
|
1.8
|
|
|
$
|
96.63
|
|
|
$
|
392.0
|
|
|
December 31,
|
||||
(In millions)
|
2019
|
|
2018
|
||
Stock options and awards under our plans:
|
|
|
|
||
Stock options granted and outstanding
|
—
|
|
|
0.1
|
|
Unvested restricted stock units
|
1.8
|
|
|
2.7
|
|
Reserved for future grant
|
4.9
|
|
|
3.2
|
|
Employee Stock Purchase Plan
|
0.9
|
|
|
1.1
|
|
Total
|
7.6
|
|
|
7.1
|
|
|
Twelve Months Ended
December 31, |
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of sales
|
$
|
9.0
|
|
|
$
|
9.2
|
|
|
$
|
9.6
|
|
Research and development
|
33.5
|
|
|
33.0
|
|
|
37.5
|
|
|||
Selling, general and administrative
|
60.2
|
|
|
59.7
|
|
|
59.1
|
|
|||
Total share-based compensation expense included in net loss
|
$
|
102.7
|
|
|
$
|
101.9
|
|
|
$
|
106.2
|
|
|
Twelve Months Ended
December 31, |
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Risk free interest rate
|
1.72 - 2.55
|
|
|
1.55 – 2.25
|
|
|
0.75 – 1.12
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected volatility of DexCom common stock
|
0.40 - 0.51
|
|
|
0.50 – 0.67
|
|
|
0.33 – 0.56
|
|
Expected life (in years)
|
1
|
|
|
1
|
|
|
1
|
|
10. Business Segment and Geographic Information
|
|
Twelve Months Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(Dollars in millions)
|
Amount
|
|
%
of Total |
|
Amount
|
|
%
of Total |
|
Amount
|
|
%
of Total |
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
United States
|
$
|
1,161.5
|
|
|
79
|
%
|
|
$
|
818.4
|
|
|
79
|
%
|
|
$
|
596.2
|
|
|
83
|
%
|
Outside of the United States
|
314.5
|
|
|
21
|
%
|
|
213.2
|
|
|
21
|
%
|
|
122.3
|
|
|
17
|
%
|
|||
Total
|
$
|
1,476.0
|
|
|
100
|
%
|
|
$
|
1,031.6
|
|
|
100
|
%
|
|
$
|
718.5
|
|
|
100
|
%
|
|
Twelve Months Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(Dollars in millions)
|
Amount
|
|
%
of Total |
|
Amount
|
|
%
of Total |
|
Amount
|
|
%
of Total |
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Distributor
|
$
|
1,011.6
|
|
|
69
|
%
|
|
$
|
652.9
|
|
|
63
|
%
|
|
$
|
538.0
|
|
|
75
|
%
|
Direct
|
464.4
|
|
|
31
|
%
|
|
378.7
|
|
|
37
|
%
|
|
180.5
|
|
|
25
|
%
|
|||
Total
|
$
|
1,476.0
|
|
|
100
|
%
|
|
$
|
1,031.6
|
|
|
100
|
%
|
|
$
|
718.5
|
|
|
100
|
%
|
11. Quarterly Financial Information (Unaudited)
|
|
|
For the Three Months Ended
|
||||||||||||||
(In millions except per share data)
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
462.8
|
|
|
$
|
396.3
|
|
|
$
|
336.4
|
|
|
$
|
280.5
|
|
Gross profit
|
|
309.3
|
|
|
246.9
|
|
|
206.5
|
|
|
168.8
|
|
||||
Total operating expenses
|
|
207.8
|
|
|
190.9
|
|
|
207.3
|
|
|
183.2
|
|
||||
Net income (loss)
|
|
92.7
|
|
|
45.8
|
|
|
(10.5
|
)
|
|
(26.9
|
)
|
||||
Basic net income (loss) per share (1)
|
|
$
|
1.01
|
|
|
$
|
0.50
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.30
|
)
|
Diluted net income (loss) per share (1)
|
|
$
|
1.00
|
|
|
$
|
0.50
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
338.0
|
|
|
$
|
266.7
|
|
|
$
|
242.5
|
|
|
$
|
184.4
|
|
Gross profit
|
|
222.8
|
|
|
168.6
|
|
|
153.6
|
|
|
118.9
|
|
||||
Total operating expenses
|
|
387.4
|
|
|
154.7
|
|
|
158.5
|
|
|
149.6
|
|
||||
Net income (loss)
|
|
(179.7
|
)
|
|
46.6
|
|
|
30.2
|
|
|
(24.2
|
)
|
||||
Basic net income (loss) per share (1)
|
|
$
|
(2.03
|
)
|
|
$
|
0.53
|
|
|
$
|
0.34
|
|
|
$
|
(0.28
|
)
|
Diluted net income (loss) per share (1)
|
|
$
|
(2.03
|
)
|
|
$
|
0.52
|
|
|
$
|
0.34
|
|
|
$
|
(0.28
|
)
|
DexCom, Inc.
|
||||
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
|
||||
(In millions)
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance at December 31, 2016
|
$
|
12.4
|
|
Provision for doubtful accounts
|
5.3
|
|
|
Write-offs and adjustments
|
(7.0
|
)
|
|
Recoveries
|
0.7
|
|
|
Balance at December 31, 2017
|
$
|
11.4
|
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance at December 31, 2017
|
$
|
11.4
|
|
Provision for doubtful accounts
|
3.6
|
|
|
Write-offs and adjustments
|
(8.3
|
)
|
|
Recoveries
|
0.5
|
|
|
Balance at December 31, 2018
|
$
|
7.2
|
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance at December 31, 2018
|
$
|
7.2
|
|
Provision for doubtful accounts
|
0.9
|
|
|
Write-offs and adjustments
|
(3.0
|
)
|
|
Recoveries
|
0.7
|
|
|
Balance at December 31, 2019
|
$
|
5.8
|
|
•
|
prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (i) shares owned by persons who are directors and also officers and (ii) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66.67% of the outstanding voting stock that is not owned by the interested stockholder. Generally, a business combination includes a merger, asset or stock sale, or other transaction or series of transactions together resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that DGCL Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
|
• Board of directors vacancies. Our restated certificate of incorporation, as amended, and restated bylaws authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors is permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management.
|
|
• Classified board. Our restated certificate of incorporation, as amended, and restated bylaws provide that our board of directors will be classified into three classes of directors, each with staggered three-year terms. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors.
|
|
• Stockholder action; special meetings of stockholders. Our restated certificate of incorporation, as amended, provides that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our restated bylaws or remove directors without holding a meeting of our stockholders called in accordance with our restated bylaws. Further, our restated bylaws and restated certificate of incorporation, as amended, provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our Chief Executive Officer, our President or our Lead Independent Director, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.
|
|
• Advance notice requirements for stockholder proposals and director nominations. Our restated bylaws provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our restated bylaws also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
|
|
• No cumulative voting. The DGCL provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our restated certificate of incorporation, as amended, does not provide for cumulative voting.
|
|
• Directors removed only for cause. Our restated certificate of incorporation, as amended, provides that stockholders may remove directors only for cause and only by the affirmative vote of the holders of at least two-thirds of our outstanding common stock.
|
|
• Issuance of undesignated preferred stock. Our board of directors has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other means.
|
|
Expiration Date:
|
The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date
|
Vesting Schedule:
|
Subject to the limitations set forth in this Notice, the Plan and the RSU Agreement, the RSUs will vest in accordance with the following schedule: in one annual installment (i.e., 100% of the RSUs subject to this Notice will vest upon the first anniversary of the Date of Grant).
|
Corporate Transaction:
|
If a Corporate Transaction occurs then the vesting and (if applicable) exercisability of the RSUs shall be accelerated in full and any reacquisition or repurchase rights held by the Company with respect to the shares of Common Stock subject to such acceleration shall lapse in full, as appropriate.
|
PARTICIPANT
|
|
DEXCOM, INC.
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Signature:
|
_______________________________
|
|
By:
|
_______________________________
|
|
|
|
|
|
|
|
Print Name:
|
_______________________________
|
|
Its:
|
_______________________________
|
|
Expiration Date:
|
The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date
|
Vesting Schedule:
|
Subject to the limitations set forth in this Notice, the Plan and the RSU Agreement, the RSUs will vest in accordance with the following schedule: in three annual installments (i.e., 33.3% of the RSUs subject to this Notice will vest upon the first anniversary of the Date of Grant; 33.3% of the RSUs subject to this Notice will vest upon the second anniversary of the Date of Grant; and 33.3% of the RSUs subject to this Notice will vest upon the third anniversary of the Date of Grant)
|
Corporate Transaction:
|
If a Corporate Transaction occurs then the vesting and (if applicable) exercisability of the RSUs shall be accelerated in full and any reacquisition or repurchase rights held by the Company with respect to the shares of Common Stock subject to such acceleration shall lapse in full, as appropriate.
|
PARTICIPANT
|
|
DEXCOM, INC.
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Signature:
|
_______________________________
|
|
By:
|
_______________________________
|
|
|
|
|
|
|
|
Print Name:
|
_______________________________
|
|
Its:
|
_______________________________
|
|
1.
|
APPOINTMENT OF SUPPLIER
|
a.
|
Engagement. ABC and Supplier agree to a nonexclusive arrangement where Supplier agrees to sell consumer products (“Products”) to ABC on the terms and conditions set forth in this Agreement and any amendments or addendum thereto so that ABC may distribute the Product to customers. Supplier hereby appoints ABC (and all of its distribution centers) as an authorized distributor of record for all of its Products. Furthermore, Supplier will comply with all federal and state laws, requiring Supplier to publicly identify all of its authorized distributors.
|
b.
|
Term. This Agreement is effective as of the date set forth above (the “Effective Date”) and will continue in effect for two (2) years. Thereafter, this Agreement will automatically renew for subsequent terms of one (1) additional year, unless otherwise terminated by a party as allowed herein.
|
c.
|
Breach and Termination. Either party may terminate this Agreement for cause, upon [***] written notice of a material default to the other party of the reason for termination, and failure of that party to cure the default within the [***] period. Either party may terminate this Agreement with or without cause upon [***] prior written notice.
|
2.
|
PRICE AND PAYMENT
|
a.
|
Prices. All prices and offers by Supplier will be available to ABC and all of its affiliates with similar classes of trade. The price for Products shall be [***].
|
b.
|
Terms of Payment. Unless otherwise agreed, ABC will pay all Supplier invoices for undisputed orders in accordance with the due dates specified below; provided, however, that such payment terms are not less favorable to ABC than the payment terms offered to any other wholesale customer of Supplier and in no instances shall be less than: [***].
|
c.
|
Debit Balance. Supplier shall immediately remit any monies due to ABC in the event of an ABC accounts payable debit balance situation with Supplier that persists for more than [***].
|
d.
|
Electronic Payments: Supplier will receive payments for invoices by cheek. Without AmerisourceBergen’s prior written consent, the Supplier shall not have the right to debit any AmerisourceBergen account electronically. If AmerisourceBergen and Supplier elect electronic payments, the parties agree to participate in an Automated Clearing House (“ACH”) trade payments program within the operating guidelines of the National Automated Clearing House Association (“NACHA”).
|
(i)
|
Remittance detail will accompany the actual funds transfer and be processed through the banking system in accordance with the provisions of NACHA’s ACH Rules, Corporate Trade Exchange Format (CTX).
|
(ii)
|
In addition to Supplier’s standard non-ACH trade terms of [***], for ACH transactions, Supplier agrees to provide appropriate float to reflect the measured value of external and internal float days on all payment terms to AmerisourceBergen. The new base terms for payment via ACH will be current terms plus float days.
|
(iii)
|
Supplier will include the additional appropriate float days referenced in the immediately preceding paragraph on all Supplier invoicing sent to AmerisourceBergen via EDI or hard copy. AmerisourceBergen will not be responsible for late ACII payments arising from any change to the transmission of float days unless AmerisourceBergen is provided with a [***] advance written notification of this change.
|
(iv)
|
AmerisourceBergen will exercise its best efforts to ensure that all ACH payments are made in accordance with the terms set forth in paragraph (ii) above.
|
(v)
|
Standard trade discounts are considered earned under the following circumstances:
|
e.
|
Primary Distribution Services Fee. Supplier shall pay a Primary Distribution Services Fee to ABC for primary distribution services, which consist of the [***] (collectively referred to as “Primary Distribution Services”). The amount of the Primary Distribution Services Fee is [***] Wholesale Acquisition Cost (“WAC”) and shall be invoiced monthly and payment shall be due within [***] of the date of the invoice. If the fees are not received within specified timeline, ABC reserves the right to deduct the amount due from payment to Supplier.
|
3.
|
ABC OBLIGATIONS
|
a.
|
Stock Product. ABC will make a good faith effort to maintain sufficient stock of Products to satisfactorily supply customer demand provided that such stock of products will not exceed [***] of inventory.
|
b.
|
Legal Compliance. ABC will comply with federal, state and local laws governing the purchase, storage, handling, sale, and distribution of Products.
|
c.
|
Drop Shipments. ABC will honor all invoices billed to ABC for drop shipments authorized by ABC, provided that the Product has been delivered and the invoice is not disputed by customer.
|
d.
|
Storage Conditions. ABC will use reasonable commercial efforts to maintain Products under proper conditions, both in storage and in transit to ABC customers.
|
e.
|
Short Dated Product. ABC will accept short dated Product (Product received with less than nine (9) months dating) in its sole discretion and on a case-by-case basis.
|
f.
|
Inventory and Sales Reports. ABC shall prepare and provide to Supplier, for the duration of this Agreement, Inventory Reports (“852”) and Sales Reports (“867”) as provided herein (together 852 and 867 are referred to as “Data”). All reports shall be transmitted in EDI format and shall be in the form, for the fee(s) and in accordance with other terms in this Agreement and Exhibits B and C. EDI 852 transmissions shall be sent weekly. They shall be provided by the end of the first business day following the end of the chosen reporting period. Records will only be created for those items which are actively stocked in an ABC division. This does not include any re-packaged inventory that may be purchased from American Health Packaging. ABC’s Puerto Rico Division activity Is typically included unless otherwise specified. EDI 867 transmissions shalt be sent weekly. They shall be provided by the end of the first business day following the end of the chosen reporting period. ABC may, solely due to contractual requirements, be required to block certain or all fields related to the data that discloses the identity of a particular shipping (DEA) location. ABC will not be required to share 867 data that allows the Supplier to determine the actual identity and physical address, including the full zip code, of the non-consumer end purchaser of the Product. Sales of any repackaged inventory that may be purchased from American Health Packaging will not be reported through this process.
|
g.
|
Grant of Limited License to Use Data. ABC hereby grants to Supplier a nonexclusive, assignable (in accordance with Section 12(b) of the Agreement) license to use the Data solely
|
h.
|
AmerisourceBergen Ownership of Data. All Data provided by ABC to Supplier under this Agreement is confidential information (as discussed in Section 8) owned by ABC. ABC has granted a license to Supplier to use the Data internally and In accordance with this Agreement. Except for the license granted contained herein, this Agreement does not grant Supplier any title or right of ownership to the Data.
|
i.
|
Limitations on Provision of Data. Notwithstanding any other provision of this Agreement, to the extent that, and only the extent that, ABC is prohibited from providing certain Data to Supplier by any agreement between (i) ABC or any of its affiliates and (ii) a third party, including a customer, then ABC shall provide all other Data but shall have no obligation to provide the Data that is so restricted,; provided, however, ABC shall use commercially reasonable efforts to provide the Data in a manner or file type that would not be in violation of the aforementioned agreements.
|
j.
|
EDI Implementation. Within [***] after the execution of this Agreement, the parties shall examine and test the capability of their respective EDI systems and implement a mutually agreeable system whereby transfers of information can be made effectively and on a consistent basis. In the event that critical internal support systems and electronic communication links, including EDI, are not available for [***], the parties will cooperate to promptly implement substitute procedures that may include excel files for 867 and 852 information. ABC reserves the right to change the frequency of 852 and 867 reports to monthly if sent in any format other than EDI. In the event that a disruption with the transmission occurs, ABC will have up to [***] following notification by Supplier to remedy the situation. ABC will exercise reasonable care to avoid material errors in gathering, processing and delivering data.
|
k.
|
Products. ABC acknowledges that each Product contain valuable trade secret information of Supplier. ABC shall not, and shall not permit or assist others to, reverse compile, reverse assemble or reverse engineer the Product or the software embedded therein. ABC shall not, and shall not permit or assist others to, remove or modify any copyright, patent or other proprietary labels or markings on the Product or the packaging provided by Supplier
|
4.
|
SUPPLIER OBLIGATIONS
|
a.
|
Purchase Orders. ABC shall submit purchase orders via EDI in the industry standard format. For the first [***]from the start of the contract, ABC shall submit purchase orders through email or via Fax. All purchase orders shall be subject to Supplier’s reasonable approval and acceptance. If ABC is requested to submit purchase orders other than via EDI in industry standard. Supplier agrees to accept purchase orders at the prices in effect on the day the order is transmitted. Supplier will notify ABC on the day the order is placed of any Product adjustments or purchase order delays. Purchase orders are valid for [***] and Product should not be shipped against a purchase order older than [***] without the ABC buyer’s written agreement.
|
b.
|
New Item Set-up. Supplier will provide ABC with completed New Item Set-up Sheets for all new items proposed to ABC for stocking through the Link item set-up process, and promotional fact sheets for all promotions.
|
c.
|
Minimum Order Amounts. Supplier and ABC will set mutually agreeable minimum purchase order amounts, if applicable. The net amount of the original purchase order will determine if that minimum is met.
|
d.
|
Delivery Times. Supplier will make commercially reasonable efforts to ship all ABC orders completely and to deliver them within a mutual agreeable schedule not to exceed four (4) business days of order placement. A complete order is defined as all products not currently designated as backordered, unavailable, or discontinued at time of delivery. A notification of all Products falling into one of these designated status groups must be provided to ABC, in writing, within twenty-four (24) hours of order placement. This notification shall include the reason for the delay and the expected availability date.
|
e.
|
Inbound Fill Rate: Supplier agrees to maintain no less than a [***]raw fill rate measured monthly. The fill rate is defined as total quantity delivered within [***]of the -expected arrival date divided by the total quantity ordered. If ABC attempts to purchase more than [***] of its prior ninety (90) day average or [***] of a forecast submitted at least thirty (30) days in advance, the Product(s), to the extent in excess of [***] of the prior average or forecast, will not be included in the applicable month’s measurement. Products that are discontinued or unavailable will not be included after [***] upon written notification of such status.
|
f.
|
Outbound Pill Rate. Supplier agrees to support a raw outbound fill rate of [***]. This fill rate is measured monthly and is defined as customer lines filled divided by customer lines ordered. Supplier shall not be obligated to meet outbound fill rate incurred from errors caused due to storage and handling by ABC.
|
g.
|
Shipping. Labels. Supplier agrees to place a label on the package that states “REPACK” (this alerts the DCs that it contains multiple sku’s and ensure the packing slip lists the items enclosed and either placed in the outside plastic sleeve on the outside of the box or enclosed within.
|
h.
|
Drip Ship Orders. In the event ABC or Supplier elects to drop ship Product(s) to an ABC customer, all other provisions of the Agreement, including returns, remain in effect. To the extent that Supplier receives an order directly from one of ABC’s retail customers, Supplier must verify in advance that customer is in good standing with the servicing ABC division.
|
i.
|
Invoicing. The Supplier will not invoice orders until the Product has been shipped to ABC. Invoices and credit memos will be transmitted electronically in the industry standard format.
|
j.
|
Shipment Champs, Title and. Risk of Loss. All orders are to be shipped by Supplier to ABC [***]. Supplier shall pay for [***]. Supplier is responsible for [***]. Title to and risk of loss of products sold hereunder will pass to ABC upon [***].
|
k.
|
Short Dated Product. Supplier agrees to ship Products with not less than [***] months shelf life remaining, unless Product is manufactured with a limited shelf life less than the above, in which case such Product will be shipped with ABC’s approval. At ABC’s discretion, short dated Product may be accepted on a case-by-case basis in individual purchase situations, and such shipment must be approved in writing by the ABC buyer.
|
l.
|
Notice of Promotional Activities/Buy-in Opportunities. Supplier agrees to provide ABC prior notice of marketing activities to ABC customers involving guaranteed sale provisions and/or other distribution and promotional activities.
|
m.
|
Accounts Receivable Statement. Supplier agrees to provide ABC with a monthly accounts receivable electronic statement for all open transactions when capable In the interim Supplier will supply ABC with an excel spreadsheet of accounts receivable open transactions.
|
n.
|
Date of Price. Supplier agrees to accept purchase orders at the prices in effect on the day of purchase. Supplier will notify ABC on the day the order is placed of any Product adjustments or other delays from held purchase order delays,
|
o.
|
Price Changes. Supplier agrees to electronically communicate all price changes to ABC no later than [***] prior to the effective date to: [***]. Supplier agrees to work with ABC to insure that adequate pre price increase inventory is available to ABC. In the event of a shortage, Supplier will back-order all inventory ordered on any dates prior to the effective date of the price increase. In some cases a mutually agreed to credit can be given in lieu of Product. If Supplier does not give notice in accordance with this section, Supplier agrees to compensate ABC for the dollar difference between the WAC in effect prior to the price change and the new WAC multiplied by the number of units sold between the effective date and the date and time ABC became aware of the price change and entered the pricing change into the system.
|
p.
|
Price Protection. Supplier agrees to provide price protection to ABC and to adjust on-hand and in-transit inventory in the event of a product price reduction.
|
q.
|
Credits. Supplier will pay ABC all compensation due (including without limitation, payments, credits, product allocations, and/or bill-back program amounts) within [***] of determination. Exceptions shall be resolved with ABC’s Accounts Payable Department. ABC reserves the right to make deductions. With respect to correspondence relating to invoices or claims due to shortages and/or damages (concealed or otherwise), returns, or pricing — Supplier will respond with POD or disposition by contacting the assigned Accounts Payable Vendor Services Representative via email at [***]. If Credits no longer hold value to ABC, Supplier will issue cash in lieu of credit.
|
r.
|
Product Recall Reimbursement. Supplier agrees to abide by all I-IDMA published guidelines for product recall reimbursement and will reimburse ABC in accordance with its standard rates. ABC will not be obligated to handle partial containers.
|
s.
|
JAW Compliance. Supplier will comply with all applicable federal, state and local laws, and applicable government contracting requirements/regulations including but not limited to those laws, requirements and regulations governing the manufacture, purchase, handling, sale, marketing and distribution of Products purchased under this Agreement.
|
t.
|
Supplier will work together with AmerisourceBergen to comply in all material respects with all applicable provisions of DSCSA, Title II of the Drug Quality and Security Act of 2013, as may be amended, with respect to the supply and distribution of the Products.
|
u.
|
Supporting information / Records. Each party shall provide any documentation, certification or instructions to the other party reasonably necessary for full compliance with federal, state and local laws with respect to the handling, storage, sale and distribution of the Products, including without limitation, any documentation, certification or instruction regarding the classification, handling and shipping of any hazardous materials and compliance with the TAA. Each party shall maintain federal, state and local registrations, licenses and permits necessary for the lawful handling or distribution of all Products and immediately notify the other party of any denial, revocation or suspension of any such registration or any changes in the Products subject to this Agreement. Supplier shall report any administrative, civil or criminal action currently pending or arising after the effective date of this Agreement by local, state or federal authorities against Supplier, its officers or employees, regarding alleged violations of the Controlled Substances Act of 1970, as amended, or other comparable legislation, and provide ABC with complete information concerning the disposition of such action. If Products include controlled substances, Supplier shall provide ABC with a copy of its DEA certificate.
|
v.
|
Allocation. Supplier agrees to work with ABC to ensure that any allocation program not related to Product availability does not cause an out-of-stock situation. If ABC validates to Supplier a potential out-of-stock condition, Supplier will use commercially reasonable efforts to adjust
|
w.
|
New Product Launches. Recognizing the uncertainty associated with new Product launches, the parties agree as follows: Prior to the delivery of the initial stocking order, ABC and Supplier will jointly determine the amount of the initial stocking order that will be sold to ABC.
|
x.
|
Chargebacks. Supplier shall comply with ABC’s Contracts and Chargeback Administration policy in effect from time to time.
|
5.
|
RETURNS
|
6.
|
DAMAGED PRODUCTS
|
7.
|
SHIPMENT ERRORS
|
8.
|
CONFIDENTIALITY
|
a.
|
In order to facilitate this Agreement, either party (“Disclosing Party”) may disclose to the other party (“Receiving Party”) certain confidential or proprietary information subject to this Agreement. All documents and other information provided to Receiving Party by Disclosing Party pursuant to this Agreement, including any information concerning prices, quantities purchased by any customer, data or other terms and conditions, shall be held by Receiving Party in strict confidence and not disclosed either directly or indirectly to any third party and shall only be used for purposes of Receiving Party fulfilling its obligations under this Agreement. Receiving Party acknowledges that money damages alone would not be a sufficient remedy for any violation by it of the terms of this Agreement addressing use or disclosure of other confidential information of Disclosing Party and that Disclosing Party will be entitled (in addition to any other remedies which may be available to it at law or in equity) to specific performance and injunctive relief as remedies for any such violation. Each party shall keep the terms and conditions of this Agreement and any amendments or addenda thereto confidential. The provisions of this Section shall survive termination,
|
b.
|
The obligations imposed by this Section 8 shall not apply to information which (i) at the time of disclosure is in the public domain; (ii) after disclosure becomes a part of the public domain by publication or otherwise, through no fault of the Receiving Party; (iii) at the time of disclosure is already in the Receiving Party’s possession, except through prior disclosure by either party or an affiliate of either of them, and such possession can be properly documented by the Receiving Party in its written records, and was not made available to the Receiving Party by anyone owing an obligation of confidentiality to the Disclosing Party; or (iv) is rightfully made available to the Receiving Party from sources independent of the Disclosing Party.
|
c.
|
To the extent that Confidential Information of the Disclosing Party is legally required to be disclosed in the course of the litigation or other legal or administrative proceedings or otherwise as required by law, the Receiving Party shall, to the extent permitted, (1) give the other party prompt notice of the pending disclosure and shall cooperate in such other party’s attempts, at such other party’s sole expense, to seek an order maintaining the confidentiality of such information, (2) only disclose the minimum Confidential Information necessary with respect to the applicable litigation, legal administration proceeding or as required by applicable law.
|
d.
|
The confidentiality provision of this Section 8 shall survive any termination or expiration of this Agreement.
|
9.
|
INSPECTION OF RECORDS
|
10.
|
RELATION OF PARTIES
|
a.
|
Except as otherwise specified, ABC is acting pursuant to this Agreement in the capacity of an independent contractor distributing the Products of Supplier as well as products of other manufacturers.
|
b.
|
ABC shall have no authority to bind Supplier unless otherwise agreed to between Supplier and ABC.
|
c.
|
Supplier shall not use ABC’s name, trademarks or commercial symbols without the prior written consent of ABC.
|
d.
|
Nothing contained in this Agreement shall be interpreted or construed so as to characterize the relationship between the parties as a joint venture, partnership, agency or franchise for any purposes whatsoever.
|
11.
|
WARRANTY/INDEMNITY
|
a.
|
Continuing Guaranty. As a condition precedent to ABC entering into this Agreement, Supplier shall execute the Continuing Guaranty and Indemnification Agreement set forth as Exhibit A.
|
b.
|
Representations and Warranties. Supplier represents and warrants to ABC that (I) [***].
|
12.
|
INDEMNIFICATION
|
a.
|
In addition to any indemnities or remedies specifically set forth elsewhere in this Agreement, each party (the “Indemnifying Party”) shall indemnify, defend and hold harmless the other, its agents, servants, employees, officers, directors, attorneys, subsidiaries, affiliates, parent and assigns from and against ail third party claims (including, but not limited to, product liability claims and claims relating to “class of trade” pricing), losses, damages, liabilities and expenses, including without limitation reasonable legal fees and court costs (collectively, “Indemnifiable Losses”), arising out of (i) the material breach by the Indemnifying Party of any obligation contained herein, or (ii) the fraud, intentional misconduct, negligent acts or omissions or wrongdoing of any kind alleged or actual on the part of the Indemnifying Party.
|
b.
|
In the event that any party to this Agreement shall incur any Indemnifiable Losses in respect of which indemnity may be sought by such party pursuant to this Section 11 or any other provision of this Agreement, the party Indemnified hereunder (the “Indemnified Party”) shall
|
c.
|
The indemnification provisions of this Section 11 shall survive any termination or expiration of this Agreement.
|
13.
|
MISCELLANEOUS
|
a.
|
Notice. Any notice required or permitted hereunder shall be in writing and shall be deemed given upon delivery, when delivered personally or by overnight courier, fax or email with confirmation of receipt, or forty-eight (48) hours after being deposited in the United States Mail, postage prepaid, registered or certified, return receipt requested, addressed to the receiving party at its address indicated on page 1 of this Agreement or to such other address as such party shall have indicated by written notice. A copy of any notice provided to ABC must also be sent to ABC’s General Counsel at the ABC address listed on page 1.
|
b.
|
Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party. Notwithstanding the foregoing, either party may assign its rights and obligations hereunder without the consent of the other party to a subsidiary or affiliate or to an entity which purchases all or substantially all of the party’s stock or assets or acquires control of the party, whether by merger, consolidation or any other means.
|
c.
|
Governing Law/Interpretation. The Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. The parties have jointly negotiated this Agreement and, thus, neither this Agreement nor any provision will be interpreted for or against any party on the basis that it or its attorney drafted the Agreement or the provision at issue. Headings of the various Sections are not part of the context of this Agreement, and are only labels to assist in locating those Sections, and will be ignored in construing this
|
d.
|
Legal Compliance. It is the Intent of the parties to this Agreement to comply now, and hereafter during the term of this Agreement, with all federal; state, professional and other laws, statutes, regulations, rules, policies and protocols applicable to the subject matter of the Agreement and the relationship of the patties, including, without limitation, any reporting obligations (such as Average Selling Price) under any state or federal law. In the event there is any change in law, regulation or interpretation thereof that has the effect of prohibiting any right or obligation of a party under this Agreement or materially affects such right or obligation, then such party may upon notice to the other party immediately terminate this Agreement in whole or in part.
|
e.
|
Force Majeure. Each party’s obligation under this Agreement will be excused to the extent any delay is caused by strikes or other labor disturbance, acts of God, war, terrorism, shortage of materials or transportation, or other conditions beyond the reasonable control of that party, but only during the duration of such condition and provided such party gives prompt written notice thereof to the other party.
|
f.
|
Benefits. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.
|
g.
|
Complete Agreement. Except for any Continuing Guaranty and Indemnification Agreement, this Agreement, together with the Exhibits hereto, contains the entire agreement between the parties and supersedes any prior agreement or understanding concerning the subject matter herein between the parties, including any and all return policy terms and conditions that may be presented to ABC.
|
h.
|
Modification. This Agreement may be modified, or rights hereunder waived, only in a writing signed by both parties that expressly references this Agreement.
|
i.
|
Publicity. Neither party shall have the right to issue a press release, statement or publication regarding the terms and conditions of or the existence of this Agreement.
|
j.
|
Most Favored Nations Clause. Supplier agrees not to offer payment terms that are less favorable to ABC than the payment terms offered to any other wholesale customer of Supplier.
|
k.
|
Survival. The representations and warranties under this Agreement which, by their terms and conditions, show the parties intended them to survive the termination of this Agreement for any reason, including provisions governing confidentiality, indemnification and liability, shall survive the expiration or earlier termination of this Agreement.
|
DEXCOM INC.
|
|
AMERISOURCEBERGEN DRUG CORPORATION
|
|
||
By:
|
s/ Jess Roper
|
|
By:
|
s/ Timothy J. Baker
|
|
Name:
|
Jess Roper
|
|
Name:
|
Timothy J. Baker
|
|
Title:
|
CFO
|
|
Title:
|
Vice President – Consumer Products
|
|
Date:
|
November 4, 2015
|
|
Date:
|
November 5, 2015
|
|
Element
|
Comments
|
Date
|
Reporting Date.
|
Division DUNS + 4
|
ABC Corporate DUNS number plus four digit division identifier.
|
Division DEA Number
|
ABC division registered DEA number.
|
NDC or UPC
|
Contains the Item’s NDC or UPC Identifier. Typically, the NDC number Is sent If a Material has both. In the event that an NDC or UPC Is not available, Manufacturer Product Code or other Identifier will be sent.
|
ABC Item Number
|
Represents ABC’s Internal SAP Material Number.
|
4P
|
On Order Quantity—The amount of Inventory on-order with the manufacturer.
|
QA
|
On Hand Quantity—The saleable on-hand quantity at the time of the reporting snapshot.
|
QS
|
Sales Out Quantity— Represents the total invoice units for regular sales. It may also include Intercompany sales, or pm-book dock-to-dock sales If manufacturer does not separately receive one or more of those sales types. It does not Include drop-ship sales and Is not net of any customer returns. Credit/re-bill invoices are not Included,
|
40
|
Omit Quantity— Filtered for customer order errors and corporately discontinued Items. Intercompany omits are always excluded,
|
Q1
|
Inbound Transfer Quantify— Represents Inbound stock transfer order quantity In the receiving division, Works in conjunction with QZ.
|
QZ
|
Outbound Transfer Quantity— Represents the outbound stock transfer order quantity in shipping division, Works in conjunction with QI.
|
QD
|
Forecaster/ Unit Demand— ABC’s 28-day unit forecast. A multiplying factor can be applied to represent data In a different time period upon request (i.e. 99 day forecast).
|
QR
|
Saleable Quantity Received— Purchase order quantities received from the manufacturer and from stock transfer orders. Pre-book purchase order quantities are Included.
|
QT
|
Inventory Adjustments (Positive)— Reports positive adjustments to saleable Inventory. Works In conjunction with QH.
|
QH
|
Inventory Adjustments (Negative)— Reports negative adjustments to saleable inventory. Works In conjunction with QT.
|
QU
|
Saleable Customer Return Quantity— Inventory units returned by the customer which Is deemed saleable and returned to stock.
|
Element
|
Comments
|
Date of Transmission
|
Date when EDI 867 transmission Is sent,
|
Date Range
|
Time period of events Included in the current transmission.
|
Division DEA Number
|
Contains the DEA number assigned to the division.
|
Division HIM Number
|
Contains the IIIN number assigned to the division.
|
Customer Name and DEA Number
|
Represents the customer’s name and the DEA number assigned to them,
|
Customer Street Address
|
Represents the street address for the customer.
|
Customer City, State, and P
|
Represents the city, state, and ZIP of the customer’s location.
|
Customer HIN Number
|
Contains the HIN number assigned to that customer.
|
NDC or UPC
|
Represents the NDC or UPC number assigned to the product Involved In the transaction. In the event that an NDC or UPC Is not available, Manufacturer Product Code or other Identifier will be sent.
|
Unit Cost
|
Represents the wholesale acquisition cost for the product.
|
Invoice/Credit Number and Invoice/Credit Date
|
Represents the Invoice/credit number and the time when the Invoice was issued.
|
380
|
Unit Quantity Sold or Returned.
|
782
|
Extended Wholesale Cost— Based upon the quantity sold/returned multiplied by the wholesale acquisition cost of the product.
|
SS
|
Regular sales Quantity— Includes regular trade sales.
|
BQ
|
Pre-took Dock-to-Dock Sales Quantity— Includes sales quantities reported from Invoices coded with pre-book special handling codes.
|
RV
|
Customer Quantity Retinal – Includes all quantity returned unless only saleable returns are specified.
|
1.
|
Definitions. Capitalized words used but not defined herein shall have the meanings ascribed thereto in the Agreement.
|
2.
|
Amendments.
|
3.
|
Miscellaneous. Except as specifically amended herein, all other terms and conditions of the Agreement will remain in full force and effect. This Amendment, together with the Agreement and any exhibits thereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof. In the event any provisions in this Amendment shall be inconsistent with the provisions of the Agreement, the provisions in this Amendment shall govern solely with respect to the subject matter herein. This Amendment may be executed in any number of counterparts, each of which is deemed an original but all of which constitute the same instrument.
|
AMERISOURCEBERGEN DRUG CORPORATION
|
|
DEXCOM INC.
|
|
||
By:
|
s/ Doug Trueman
|
|
By:
|
s/ Brice Bobzien
|
|
Name:
|
Doug Trueman
|
|
Name:
|
Brice Bobzien
|
|
Title:
|
Vice President – Consumer Products
|
|
Title:
|
VP, Finance
|
|
Date:
|
November 5, 2018
|
|
Date:
|
October 31, 2018
|
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
"LANDLORD":
JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.),
a wholly owned subsidiary of Manulife Financial Corporation,
a Michigan corporation
By: /s/ Ray Rothfelder
Its: Managing Director, Western U.S.
On: February 11, 2019
|
"TENANT":
DEXCOM, INC.,
a Delaware corporation
By: /s/ Quentin S. Blackford
Its: Chief Operating Officer and Chief Financial Officer
On: February 8, 2019
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
|
-8-
|
6340/6310/6290 SEQUENCE DRIVE
[Expansion and Extension Amendment]
[DexCom, Inc.]
|
|
|
|
|
2
|
|
Period
|
Annualized
Base Rent |
Monthly Installment of Base Rent
|
Approximate Monthly Rental Rate
per Rentable Square Foot |
03/01/22 – 02/28/23
|
$5,908,005.00
|
$492,333.75
|
$2.25
|
03/01/23 – 12/31/23
|
$6,083,932.20
|
$506,994.35
|
$2.317
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
"LANDLORD":
SEQUENCE TECH. CENTER CA LLC,
a Delaware limited liability company
By: /s/ Ray Rothfelder
Its: Managing Director, Western U.S.
Dated: October 4, 2019
|
"TENANT":
DEXCOM, INC.,
a Delaware corporation
By: /s/ Jereme Sylvain
Its: VP, Finance
By: /s/ Brice Bobzien
Its: VP, Finance
|
|
8
|
|
888452.03/SD
999903-14000/9-6-19/MLT/bp
|
EXHIBIT A
-1-
|
|
Non-Conforming Improvements
|
|
6290 Building
|
6310 Building
|
6340 Building
|
6350 Building
|
Tier One Non-Conforming Improvements
|
|||||
[***]
|
|
Not applicable
|
Not applicable
|
Applicable
|
Applicable
|
[***]
|
|
Applicable
|
Applicable
|
Applicable
|
Applicable
|
[***]
|
|
Not applicable
|
Not applicable
|
Applicable
|
Applicable
|
Remove security systems including card access and cameras
|
|
Applicable
|
Applicable
|
Applicable
|
Applicable
|
Tier Two Non-Conforming Improvements
|
|||||
Server/MDF/IDF and all associated equipment, including ladder racks, cabling and raised flooring.
|
|
Applicable
|
Applicable
|
Applicable
|
Applicable
|
Roof cable satellites
|
|
Applicable
|
Applicable
|
Applicable
|
Applicable
|
Storage sheds, storage racks and storage shelves.
|
|
Not applicable
|
Not applicable
|
Applicable
|
Not Applicable
|
Generators not part of original building shell.
|
|
Applicable
|
Not applicable
|
Applicable
|
Applicable
|
Parking lot signs, reserved spots etc.
|
|
Applicable
|
Applicable
|
Applicable
|
Applicable
|
Added trash compactors or bailers and associated equipment must be restored to original condition.
|
|
Not applicable
|
Not applicable
|
Applicable
|
Applicable
|
888452.03/SD
999903-14000/9-6-19/MLT/bp
|
REPLACEMENT SCHEDULE 2
-2-
|
|
3.
|
Section 4.2 of the Fifth Amendment is deleted in its entirety and the following is substituted therefor:
|
4.
|
Capitalized terms not defined herein shall have the same meaning as set forth in the Lease.
|
5.
|
Except as set forth in this Fifth Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.
|
|
|
|
"LANDLORD":
SEQUENCE TECH. CENTER CA LLC,
a Delaware limited liability company
By: /s/ Ray Rothfelder
Its: Managing Director, Western U.S.
Dated: October 29, 2019
|
"TENANT":
DEXCOM, INC.,
a Delaware corporation
By: /s/ Brice Bobzien
Its: VP, Finance
Dated: October 24, 2019
By: /s/ Jereme Sylvain
Its: VP, Finance
Dated: October 24, 2019
|
890641.01/SD
287956-00155/10-21-19/MLT/pah
|
2
|
|
|
|
SUBSIDIARY
(Name under which subsidiary does business)
|
JURISDICTION OF INCORPORATION
|
|
|
SweetSpot Diabetes Care, Inc.
|
Delaware
|
TypeZero Technologies, Inc.
|
Delaware
|
DexCapital, LLC
|
Delaware
|
The Glucose Program, LLC
|
Delaware
|
Nintamed Handels GmbH
|
Austria
|
DexCom Canada, Co.
|
Canada
|
DexCom (Canada) Inc.
|
Canada
|
DexCom Deutschland GmbH
|
Germany
|
DexCom Philippines, Inc.
|
Philippines
|
DexCom Asia Pacific Operations PTE Ltd.
|
Singapore
|
DexCom Kommanditbolag
|
Sweden
|
DexCom Suisse GmbH
|
Switzerland
|
DexCom (UK) Ltd.
|
United Kingdom
|
DexCom (UK) Intermediate Holdings Ltd.
|
United Kingdom
|
DexCom Operating Ltd.
|
United Kingdom
|
DexCom International Ltd.
|
United Kingdom
|
DexCom (UK) Distribution Ltd.
|
United Kingdom
|
(1)
|
Registration Statement (Form S-3 Nos. 333-206619, 333-211101 and 333-228495) of DexCom, Inc.,
|
(2)
|
Registration Statement (Form S-8 No. 333-124059) pertaining to the 1999 Stock Option Plan, 2005 Equity Incentive Plan and the 2005 Employee Stock Purchase Plan of DexCom, Inc.,
|
(3)
|
Registration Statement (Form S-8 Nos. 333-138174, 333-145159, 333-149734, 333-158993, 333-166552, 333-172604, 333-180421 and 333-188305) pertaining to the 2005 Equity Incentive Plan and the 2005 Employee Stock Purchase Plan of DexCom, Inc.,
|
(4)
|
Registration Statement (Form S-8 Nos. 333-195660 and 333-202375) pertaining to the 2005 Equity Incentive Plan of DexCom, Inc.,
|
(5)
|
Registration Statement (Form S-8 No. 333-204699) pertaining to the 2015 Equity Incentive Plan and the 2015 Employee Stock Purchase Plan of DexCom, Inc., and
|
(6)
|
Registration Statement (Form S-8 Nos. 333-218562 and 333-234682) pertaining to the Amended and Restated 2015 Equity Incentive Plan of DexCom, Inc.;
|
|
|
|
|
February 13, 2020
|
By:
|
|
/s/ Kevin R. Sayer
|
|
|
|
Kevin R. Sayer
|
|
|
|
Chairman of the Board of Directors, President and
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
February 13, 2020
|
By:
|
|
/s/ Quentin S. Blackford
|
|
|
|
Quentin S. Blackford
|
|
|
|
Chief Operating Officer and Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
/s/ Kevin R. Sayer
|
Kevin R. Sayer
|
Chairman of the Board of Directors, President and
|
Chief Executive Officer
|
(Principal Executive Officer)
|
|
/s/ Quentin S. Blackford
|
Quentin S. Blackford
|
Chief Operating Officer and Chief Financial Officer
|
(Principal Financial and Accounting Officer)
|