What changed in this filing

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Item 1A. Risk Factors

2020-10-27 compared with 2020-07-28 · 94 added, 79 removed, 1123 unchanged (13% of the section changed)

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They have impacted our sales and marketing activity.

Furthermore, changes in hospital or physician policies, federal, state or local regulations, prioritization of hospital or

medical resources toward pandemic efforts may negatively affect the demand for our devices.

Furthermore, changes in hospital or physician policies, federal, state or local regulations, prioritization of hospital or medical resources toward pandemic efforts may negatively affect the demand for our devices.

The COVID-19 pandemic has, and may continue to, put pressure on global economic conditions and overall spending for medical device products, and may cause our customers to modify spending priorities or delay or abandon purchasing decisions.

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Furthermore, the COVID-19 pandemic and associated shelter-in-place orders has and may continue to limit or restrict our ability to initiate, conduct or continue our clinical trials.

Delays and disruption in our clinical trials has and may continue to result in delays for new or expanded marketing authorizations for our products, which could materially affect our development and commercialization plans for our products.

Delays and disruption in our clinical trials has and may continue to result in delays for new or expanded marketing authorizations for our products, which could materially affect our development

and commercialization plans for our products.

For example, we have experienced some delays in certain pivotal clinical trials for our next-generation CGM product.

Additionally, as a result of the impact of the COVID-19 pandemic, some customers have and others may lose access to their private health insurance plan if they lose their job.

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If either we or any third-parties in the supply chain for components, materials or services used in the production of our devices are adversely impacted by the disruptions caused by, or restrictions resulting from, the COVID-19 pandemic, our supply chain may be disrupted, which may impact and/or limit our ability to manufacture and distribute our devices.

For example, we have experienced some supply chain disruption due to the global restrictions resulting from the COVID-19 pandemic in the manufacture of our next-generation CGM product.

As a medical device manufacturer, we fall within a “critical essential infrastructure” sector, specifically the “Healthcare/Public Health” sector, and is considered exempt under various stay at home/shelter in place orders, including the California Executive Order N-33-20 (“Stay at Home Order”) dated March 19, 2020, as amended from time to time.

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however, we cannot guarantee that supply will not be constrained in the future.

In order to produce our products in the quantities we anticipate will be necessary to meet market demand, we will need to adequately predict the market demand for our products and increase our manufacturing capacity by a significant factor over the current level to meet or exceed the anticipated market demand.

produce our products in the quantities we anticipate will be necessary to meet market demand, we will need to adequately predict the market demand for our products and increase our manufacturing capacity by a significant factor over the current level to meet or exceed the anticipated market demand.

In addition, we will have to modify our manufacturing design, reliability and process if and when our next-generation continuous glucose monitoring, or CGM, technologies are approved, cleared or otherwise authorized by the applicable regulatory body and commercialized.

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• we may have difficulty locating and qualifying alternative suppliers for our single-source supplies;

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;

• 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;

• 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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Outsourcing of services to third parties could expose us to suboptimal quality of service delivery or deliverables and potentially result in repercussions such as missed deadlines or other timeliness issues, erroneous data, supply disruptions, non-compliance (including with applicable legal or regulatory requirements and industry standards) and/or reputational harm, with potential negative effects on our results.

Closure of non-essential businesses and shelter-in-place orders occurring in the U.S.

Closure of non-essential businesses

and shelter-in-place orders occurring in the U.S.

and globally as a result of the COVID-19 pandemic may also adversely impact our outsourced operations.

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If the prices for our products and services decrease and we are unable to reduce our expenses, including the cost of sourcing materials, logistics and the cost to manufacture our products, our business, results of operations, financial condition and cash flows will be adversely affected.

The global COVID-19 pandemic may result in increased costs for manufacturing and outsourced services while also causing additional pressure to reduce the prices for our products if a recession or depression

occurs and people are unable to afford our products.

We cannot predict the ultimate impact that the COVID-19 pandemic and its effects could have on our business operations, financial condition and cash flows.

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We have incurred significant operating losses in the past.

As of June 30, 2020 , we had an accumulated deficit of $629.5 million .

As of September 30, 2020, we had an accumulated deficit of $557.3 million.

We have financed our operations primarily through private and public offerings of equity securities and debt and the sales of our products.

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We have entered into distribution arrangements to leverage established distributors already engaged in the diabetes marketplace.

Our distribution agreements with Byram and affiliates, Cardinal Health and affiliates (including Edgepark Medical Supplies), AmerisourceBergen, and McKesson, our four most significant distributors, each generated 10% or more of our total revenue during the six months ended June 30, 2020 .

Our distribution agreements with Byram and affiliates, Cardinal Health and affiliates (including Edgepark Medical

Supplies), AmerisourceBergen, and McKesson, our four most significant distributors, each generated 10% or more of our total revenue during the nine months ended September 30, 2020.

We cannot guarantee that these relationships will continue or that we will be able to maintain this volume of sales from these relationships in the future.

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Medicare coverage as durable medical equipment is a determination that we had pursued with CMS for many years and which was made possible by the FDA’s decision in December 2016 to approve a non-adjunctive indication, or use, for our G5 Mobile system.

In March 2017, CMS Medicare Administrative Contractors under local coverage determinations.

Therefore, Medicare reimbursement for our CGM devices is subject to various coverage conditions and often requires a patient-specific coverage analysis issued interim instructions for individual claim adjudication providing instructions and billing codes for the reimbursement of individual claims for therapeutic CGM reimbursement that apply to our G6 and G5 Mobile systems, and in May 2017, CMS Medicare Administrative Contractors issued a revision to an existing joint Local Coverage Determination, which establishes the Medicare conditions of coverage for therapeutic CGM, including our G5 Mobile and G6 systems.

In March 2017, CMS Medicare Administrative Contractors issued interim instructions for individual claim adjudication, providing instructions and billing codes for the reimbursement of individual claims for therapeutic CGM reimbursement that apply to our G6 and G5 Mobile systems, and in May 2017, CMS Medicare Administrative Contractors issued a revision to an existing joint Local Coverage Determination, which establishes the Medicare conditions of coverage for therapeutic CGM, including our G5 Mobile and G6 systems.

Similarly, in September 2016, Germany’s Federal Joint Committee agreed to provide reimbursement for continuous glucose monitoring systems under certain conditions, which we believe are met by our G4 PLATINUM, G5 Mobile and G6 systems.

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If we are unable to successfully address these hurdles, reimbursement of our products may be limited to a smaller subset of people with diabetes covered by Medicare or to those people with diabetes covered by other third-party payors that have adopted policies for CGM devices allowing for coverage of these devices if certain conditions are met.

Adverse coverage or reimbursement decisions relating to our products by CMS, its Medicare Administrative Contractors, other state, federal or international payors, and/or third-party commercial

payors could significantly reduce reimbursement, which could have an impact on the acceptance of, and demand for, our products and the prices that our customers are willing to pay for them.

As of June 30, 2020 , the seven largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.

Adverse coverage or reimbursement decisions relating to our products by CMS, its Medicare Administrative Contractors, other state, federal or international payors, and/or third-party commercial payors could significantly reduce reimbursement, which could have an impact on the acceptance of, and demand for, our products and the prices that our customers are willing to pay for them.

As of September 30, 2020, the seven largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.

In addition, we have negotiated contracted rates with all seven of those third-party payors for the purchase of our G4 PLATINUM, G5 Mobile and G6 systems by their members.

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Abbott first received FDA approval for a professional-use version of this system in September 2016 for use in the United States for which readings are only made available to the patient through consultation with their healthcare provider.

Abbott first received FDA approval for the consumer version of this system in September 2017 for use in the United States, and the FDA cleared

Abbott’s FreeStyle Libre 2 iCGM system for children and adults ages 4 years and older in June 2020.

Abbott first received FDA approval for the consumer version of this system in September 2017 for use in the United States, and the FDA cleared Abbott’s FreeStyle Libre 2 iCGM system for children and adults ages 4 years and older in June 2020.

In September 2020, Abbott received CE Mark for both its next-generation CGM system, Freestyle Libre 3, and the Libre Sense Glucose Sport Biosensor, designed for the correlation of glucose and athletic performance.

Medtronic plc’s Diabetes Group markets and sells a standalone glucose monitoring product called Guardian Connect, which launched both internationally and in the United States after receiving FDA approval in 2018.

Medtronic and other third parties have developed or are developing insulin pumps integrated with CGM systems that provide, among other things, the ability to suspend insulin administration while the user’s glucose levels are low and to automate basal and bolus insulin dosing.

Medtronic launched its 670G insulin delivery system in 2017.

Medtronic launched its 670G insulin delivery system in 2017, received CE Mark for its 780G system in June 2020, and FDA approval for 770G in September 2020.

Some of the companies developing or marketing competing devices are large and well-known publicly traded companies, and these companies may possess competitive advantages over us, including:

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• greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketing approved products;

• Duration of sensor life;

• the ability to integrate multiple products to provide additional features beyond CGM systems;

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Although we believe we have taken and are taking appropriate action aimed at reducing and/or eliminating field failures, we anticipate that we will have other product failures in the future.

Product or component failures, manufacturing nonconformances, design defects, off-label use, or inadequate disclosure of product-related risks or product-related information with respect to our products, if they were to occur, could result in an unsafe

condition or injury to, or death of, a patient.

These problems could lead to recall of, or issuance of a safety alert relating to, our products, and could result in product liability claims and lawsuits.

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Weaknesses in process control or minute impurities in materials may cause a substantial percentage of defective products.

If we are not able to maintain stringent quality controls, or if contamination problems arise, our clinical development and commercialization efforts could be delayed, which would harm our business and our results of operations.

If we are not able to maintain stringent quality controls, or if

contamination problems arise, our clinical development and commercialization efforts could be delayed, which would harm our business and our results of operations.

If we fail to meet any applicable product quality standards and our products are the subject of recalls or safety alerts, our reputation could be damaged, we could lose customers, our reputation could be harmed and our revenue and results of operations could decline.

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To support current and any future additional PMA, 510(k), de novo applications or supplements, we together with our partners, must successfully complete pre-clinical studies, bench-testing, and in some cases clinical trials that will demonstrate that the product is safe and effective.

Product development, including pre-clinical studies and clinical trials, is a long, expensive and uncertain process and is subject to delays (including any potential delays due to the ongoing COVID-19 pandemic) and failure at any stage.

failure at any stage.

Furthermore, the data obtained from the studies and trials may be inadequate to support approval of an application and the FDA may request additional clinical data in support of those applications, which may result in significant additional clinical expenses and may delay product approvals.

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Delays and disruption in our clinical trials could results in delays for expanded FDA approvals of our products.

We are unable to predict the length of such delays or the scope of the impact of COVID-19 on our clinical trials at this time.

We are unable to predict the length of such delays or the scope of the impact of COVID-19 on our

clinical trials at this time.

We are continuing to monitor this situation and to explore remote delivery methods to permit continuation of clinical trial activity.

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We have received, and may continue to receive, numerous inquiries from hospitals around the country about the use of our CGM devices to remotely monitor COVID-19 patients admitted into the hospital.

Extension of CGM system use to hospitalized patients during the COVID-19 pandemic will allow hospital staff to monitor glucose remotely in patients and may reduce patient/provider interactions, which could help limit viral exposure by hospital staff and help preserve personal protective equipment (PPE.) In the context of the COVID-19 pandemic, the FDA has permitted for regulatory flexibility in a variety of specific circumstances, to expedite the development and availability of critical medical products that may be helpful in COVID-19-related efforts.

Extension of CGM system use to hospitalized patients during the COVID-19 pandemic allows hospital staff to monitor glucose remotely in patients and may reduce patient/provider interactions, which could help limit viral exposure for hospital staff and help conserve personal protective equipment (PPE).

In the context of the COVID-19 pandemic, the FDA has permitted for regulatory flexibility in a variety of specific circumstances, to expedite the development and availability of critical medical products that may be helpful in COVID-19-related efforts.

Following direct communication with the FDA regarding the potential use of our CGM devices in a hospital or other in-patient setting, the FDA notified us on April 1, 2020 that in an exercise of its enforcement discretion it will not object, in the context of the COVID-19 pandemic, to DexCom providing CGM devices and support to users to enable real-time remote patient monitoring in hospitals and other healthcare facilities, to support COVID-19 healthcare related efforts, so long as we provide certain FDA-specified information with respect to the unique challenges that CGM technologies can raise in the hospital environment.

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We are not actively promoting nor do we plan to actively promote our CGM devices (and related support) for inpatient use, but if we supply them to such facilities as currently permitted by the FDA, this supply could present an increased risk of product liability claims and associated damages should an adverse event occur.

Given that the our CGM devices have not yet been fully evaluated or tested (by DexCom or by the FDA) to the extent that would be required in standard circumstances for product development and marketing authorization, there could be unknown or unanticipated risks presented by use in this environment.

The FDA can also decide, at any time, to change its position regarding enforcement discretion for our devices, and require that we seek marketing authorization for this additional intended use by submitting a 510(k) premarket notification, or that we seek and obtain Emergency Use Authorization, or the FDA may determine this policy has expired if the impact of the COVID-19 pandemic subsides and there is no longer an urgent need to use our CGM systems for remote patient monitoring during the COVID-19 pandemic.

Given that our CGM devices have not yet been fully evaluated or tested by either DexCom or the FDA to the extent that would be required in standard circumstances for product development and marketing authorization, there could be unknown or unanticipated risks presented by use in this environment.

The FDA may determine this policy has expired if the impact of the COVID-19 pandemic subsides and there is no longer an urgent need to use our CGM systems for remote patient monitoring during the COVID-19 pandemic.

As we are unable to predict the duration or ultimate impact of the provision of our CGM systems to hospitals and other healthcare facilities for use during the COVID-19 pandemic at this time, we do not yet know the ultimate impact to our business or financial results.

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If these clinical investigators, clinical sites or other third parties do not carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated, or the clinical data may be rejected by the FDA, and we may be unable to obtain regulatory approval for, or successfully commercialize, our products.

As a result of the COVID-19 pandemic, many healthcare facilities are closed to non-emergent and elective services.

As a result of the COVID-19 pandemic, many healthcare facilities were or remain closed or available on a limited basis for non-emergent and elective services.

Accordingly, our clinical investigators may not have an opportunity to recruit and enroll patients in our clinical trials.

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Our Eli Lilly, Insulet, Novo Nordisk, Verily and The Ypsomed Group collaborations have not yet resulted in a commercial product.

In December 2019, Tandem received FDA approval for its second sensor-augmented insulin delivery system, the t:slim X2™ Insulin Pump with Control-IQ™ technology, which integrates with our G6 system.

In December 2019, Tandem received FDA approval for its second sensor-

augmented insulin delivery system, the t:slim X2™ Insulin Pump with Control-IQ™ technology, which integrates with our G6 system.

As a result of these development relationships, our operating results depend, to some extent, on the ability of our development partners to successfully commercialize their insulin delivery systems or monitoring products.

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We expect to continue to spend substantial amounts on commercialization of our products, including growth of our manufacturing capacity, and on research and development, including conducting clinical trials for our next-generation ambulatory CGM sensors and systems.

Although we raised $389.0 million in net proceeds through the private sale of our convertible notes or 2022 Notes in June 2017, $75.0 million of which was used to repay our Credit Facility, $836.6 million in net proceeds through the private sale of our 2023 Notes in November 2018, $100.0 million of which we used to purchase shares of our common stock, $1.19 billion in net proceeds through the private sale of our 2025 Notes in May 2020, $282.6 million of which we used to repurchase a portion of our 2022 Notes, and now have $194.6 million available to us under our Credit Facility (as reduced by our outstanding letters of credit), we could need funds to continue the commercialization of our current products and to develop and commercialize our next-generation sensors and systems or pursue other strategic initiatives.

Notes in November 2018, $100.0 million of which we used to purchase shares of our common stock, $1.19 billion in net proceeds through the private sale of our 2025 Notes in May 2020, $282.6 million of which we used to repurchase a portion of our 2022 Notes, and now have $194.6 million available to us under our Credit Facility (as reduced by our outstanding letters of credit), we could need funds to continue the commercialization of our current products and to develop and commercialize our next-generation sensors and systems or pursue other strategic initiatives.

Additional financing may not be available on a timely basis on terms acceptable to us, or at all.

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A number of our customers have adopted, or may adopt, procurement policies that include E&S provisions that their suppliers must comply with, or they may seek to include such provisions in their terms and conditions.

An increasing number of participants in the medical device

industry are also joining voluntary E&S initiatives, such as the Responsible Business Alliance.

An increasing number of participants in the medical device industry are also joining voluntary E&S initiatives, such as the Responsible Business Alliance.

These E&S provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with, given the complexity of our supply chain and the outsourced manufacturing of certain components of our products.

If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions, a customer may stop purchasing products from us, and may take legal action against us, which could harm our reputation, revenue and results of operations.

In addition, as part of their E&S programs, an increasing number of industry participants are seeking to source products that do not contain minerals sourced from areas where proceeds from the sale of such minerals are likely to be used to fund armed conflict, such as in the Democratic Republic of the Congo.

armed conflict, such as in the Democratic Republic of the Congo.

This could adversely affect the sourcing, availability and pricing of minerals used in the manufacture of medical device, including our products.

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The novel coronavirus has spread to many regions of the world, including the United States and Europe.

As noted above, this novel coronavirus has caused substantial disruption to our way of life and to the healthcare market, including closures of non-essential businesses and cancellation of well visits and elective procedures.

Vulnerable patients, including diabetic patients, may be at a higher risk of contracting COVID-19 and may experience more severe symptoms from the disease.

It is difficult to predict what impact COVID-19 will have on our business and resulting operations.

It is difficult to predict what impact the continued prevalence of COVID-19 will have on our business and resulting operations.

At the same time, the U.S.

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We are unable to predict the extent to which this pandemic will impact our business and operating results, including new information that may emerge concerning the virus and the actions to contain it or to treat COVID-19, among others.

Managed care trends and consolidation in the health care industry could have an adverse effect on our revenues and results

of operations.

Managed care trends and consolidation in the health care industry could have an adverse effect on our revenues and results of operations.

Private third-party payors and other managed care organizations, such as pharmacy benefit managers, continue to take action to manage the utilization and control cost.

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Private third-party payors, as well as governments, increasingly employ formularies to control costs by taking into account discounts in connection with decisions about formulary inclusion or favorable formulary placement.

Failure to obtain or maintain timely adequate pricing or favorable formulary placement for our products, or failure to obtain such formulary placement at favorable pricing, could adversely impact revenue.

Failure to obtain or maintain timely adequate pricing or favorable formulary placement for our products, or failure to obtain such formulary placement at favorable pricing, could adversely

impact revenue.

Private third-party payors, including self-insured employers, often implement formularies with copayment tiers to encourage utilization of certain products and have also been raising co-payments required from beneficiaries, particularly for higher cost products.

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Proposals range from establishing a single-payor, national health insurance system (e.g., Medicare for All Act of 2019 (H.R.

1384), to more limited buy-in options that would be available to individuals above a certain age (e.g., Medicare at 50 Act

1384), to more limited buy-in options that would be available to individuals above a certain age (e.g., Medicare at 50 Act (S.

There is also legislation that would authorize states to permit individuals to “buy-in” to their state Medicaid program (e.g., State Public Option Act (S.

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federal or state governments, foreign governments, or third-party payors.

Government and commercial payors may, in the future, consider healthcare policies and proposals intended to curb rising healthcare costs, including those that could significantly affect reimbursement for healthcare products such as our systems.

These policies have included, and may in the future include:

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Compliance obligations under these various laws are oftentimes detailed and onerous, further contributing to the risk that we could be found to be out of compliance with particular requirements.

The risk of being found in violation of these laws and regulations is further increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts,

particularly with respect to new and emerging technologies and remote delivery of services, and their provisions are open to a variety of interpretations.

The risk of being found in violation of these laws and regulations is further increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, particularly with respect to new and emerging technologies and remote delivery of services, and their provisions are open to a variety of interpretations.

The FDA, CMS, OIG, Department of Justice, states’ attorneys general and other governmental authorities actively enforce the laws and regulations discussed above.

In the United States, medical device manufacturers have been the target of numerous government prosecutions and investigations alleging violations of law, including claims asserting impermissible off-label promotion of medical devices, payments intended to influence the referral of federal or state healthcare business, and submission of false claims for government reimbursement.

While we make every effort to comply with applicable laws, we cannot rule out the possibility that the government or other third parties could interpret these laws differently and challenge our practices under one or more of these laws.

While we make every effort to comply with applicable laws, we cannot rule out the possibility that the government or other third parties could interpret these laws differently and challenge our

practices under one or more of these laws.

This likelihood of allegations of non-compliance is increased by the fact that under certain federal and state laws applicable to our business, individuals, known as relators, may bring an action on behalf of the government alleging violations of such laws, and potentially be awarded a share of any damages or penalties ultimately awarded to the applicable government body.

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Additionally, as a manufacturer of U.S.

FDA‑approved devices reimbursable by federal healthcare programs, we are subject to the federal Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to U.S.-licensed

physicians or U.S.

teaching hospitals.

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Reporting requirements will go into effect in 2022 for payments and transfers of value made to these additional practitioner-types in 2021.

We may be subject to these and other laws regulating the provision of, and reimbursement for, health care goods and services, both in our capacity as a medical device manufacturer and/or as a supplier of covered items and services to federal health care program beneficiaries, with respect to which items and services we submit claims for reimbursement from such programs.

health care program beneficiaries, with respect to which items and services we submit claims for reimbursement from such programs.

The laws and regulations of health care goods and services that apply to us, including those described above, are subject to evolving interpretations and enforcement discretion.

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• FDA orders to repair, replace, or refund the cost of devices;

• injunctions;

• criminal prosecution.

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Further, under the False Claims Act, private parties have the right to bring qui tam , or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government.

Some states have adopted similar state whistleblower and false claims provisions.

Some states have adopted similar state

whistleblower and false claims provisions.

Depending upon whether the underlying conduct alleged in such inquiries or investigations could be considered systemic, the resolution could have a material, adverse effect on our financial position and results of operations.

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Any such occurrence could compromise our networks and the information stored thereon could be accessed, publicly disclosed, lost or stolen.

Any such access, disclosure or

other loss of information could (i) result in legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, (ii) disrupt our operations and the services we provide to our clients or (iii) damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.

Any such access, disclosure or other loss of information could (i) result in legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, (ii) disrupt our operations and the services we provide to our clients or (iii) damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.

As we grow and expand our administrative, customer support or IT support services, we may also utilize the services of personnel and contractors located outside of the United States to perform certain functions.

While we make every effort to review our applicable contracts and other payor requirements, a local, state, or federal government agency or one of our customers may find the use of offshore resources to be a violation of a legal or contractual requirement, which could result in termination of the contractual relationship, penalties, or changes in our business operations that could adversely affect our business, financial condition, and results of operations.

While we make every effort to

review our applicable contracts and other payor requirements, a local, state, or federal government agency or one of our customers may find the use of offshore resources to be a violation of a legal or contractual requirement, which could result in termination of the contractual relationship, penalties, or changes in our business operations that could adversely affect our business, financial condition, and results of operations.

Additionally, while we have implemented industry standard security measures for offshore access to protected health information and other personal information, unauthorized access or disclosure of such information by offshore personnel could (i) result in legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, (ii) disrupt our operations and the services we provide to our clients, (iii) damage to our reputation or (iv) result in the termination of contractual relationships, penalties or the loss of coverage, any of which could adversely affect our profitability, revenue and competitive position.

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For instance, in the European Union, increasingly stringent data protection and privacy rules that have and will continue to have substantial impact on the use of patient data across the healthcare industry became effective in May 2018.

The EU General Data Protection Regulation, or GDPR, applies across the European Union and includes, among other things, a

requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.

The EU General Data Protection Regulation, or GDPR, applies across the European Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.

The GDPR fine framework can be up to 20 million euros, or up to 4 % of the company’s total global turnover of the preceding fiscal year, whichever is higher.

The GDPR also requires companies processing personal data of individuals residing in the European Union to comply with EU privacy and data protection rules, even if the company itself does not have a physical presence in the European Union.

Noncompliance could result in the imposition of fines, penalties, or orders to stop noncompliant activities.

Noncompliance could result in the imposition of fines,

penalties, or orders to stop noncompliant activities.

Due to the strong consumer protection aspects of the GDPR, companies subject to its purview are allocating substantial legal costs to the development of necessary policies and procedures and overall compliance efforts.

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As a result, cybersecurity, physical security and the continued development and enhancement of our controls, processes and practices designed to protect our enterprise, information systems and data from attack, damage or unauthorized access remain a priority for us.

As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our

protective measures or to investigate and remediate any cybersecurity vulnerabilities.

As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities.

The occurrence of any of these events could result in:

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Medical devices are increasingly connected to the internet, hospital networks, and other medical devices to provide features that improve healthcare and increase the ability of healthcare providers to treat patients and patients to manage their conditions.

For example, we are pursuing collaborations to enable the connectivity and interoperability of our current and next-generation sensors and transmitters with third-party patient monitoring products, which may in turn be connected with the internet, hospital networks and in some cases, other medical devices.

These same features may also increase cybersecurity risks and the risks of unauthorized access and use by third parties.

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We are subject to a variety of risks due to our international operations that could adversely affect our business, our operations or profitability and operating results.

Our operations in countries outside the United States, which accounted for approximately 23% of our revenues for the six months ended June 30, 2020 , are accompanied by certain financial and other risks.

Our operations in countries outside the United States, which accounted for approximately 22% of our revenues for the nine months ended September 30, 2020, are accompanied by certain financial and other risks.

In addition to opening offices in Austria, Canada, Germany, the Philippines, Switzerland and the United Kingdom, in connection with distributor acquisitions and otherwise, we intend to continue to pursue growth opportunities in sales outside the United States, especially in Asia (including Japan and Korea) and Europe, and we may increase our use of administrative and support functions from locations outside the United States, which could expose us to greater risks associated with our sales and operations.

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If we are unable to successfully defend any such claims as they may arise or enter into or extend settlement and license agreements on acceptable terms or at all, our business operations may be harmed.

We have been and continue to be involved in various patent infringement actions, including:

On March 28, 2016, AgaMatrix, Inc., or AgaMatrix, filed a patent infringement lawsuit against us in the U.S.

District Court for the District of Oregon, asserting that certain of our products infringe three patents held by AgaMatrix.

(After filing suit, AgaMatrix reorganized its business and the Court granted AgaMatrix’s motion to substitute the newly created entity WaveForm Technologies, Inc., as the plaintiff following AgaMatrix’s transfer of the three asserted patents to WaveForm.)

We also filed several lawsuits against AgaMatrix.

We filed a patent infringement lawsuit against AgaMatrix in the United States District Court for the Central District of California.

On September 15, 2017, we filed a patent infringement lawsuit against AgaMatrix in the United States District Court for the District of Delaware, asserting certain single-point blood glucose monitoring products of AgaMatrix infringe two patents held by us.

In addition, on September 18, 2017, we filed a Complaint against AgaMatrix in the International Trade Commission, referred to as the ITC, requesting that the ITC institute an investigation and issue an order excluding certain products of AgaMatrix from importation into or sale in the United States based on AgaMatrix’s infringement of the same two patents asserted in the Delaware litigation.

Effective March 9, 2020, we reached a confidential global settlement of all the foregoing litigation and proceedings between us and AgaMatrix and WaveForm, which included a one-time payment that has been made by Dexcom .

We received licenses to certain intellectual property.

All pending litigation and other proceedings between Dexcom and AgaMatrix and WaveForm have been dismissed.

As of June 30, 2020, we have accrued no amounts for contingent losses associated with these suits.

We have been involved in various patent infringement actions in the past.

For example, in March 2020, we settled certain patent infringement litigation and proceedings between us and AgaMatrix, Inc.

and WaveForm Technologies, Inc.

Any infringement or misappropriation claim could cause us to incur significant costs, place significant strain on our financial resources, divert management’s attention from our business and harm our reputation.

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Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary intellectual property licenses could prevent us from manufacturing and selling our products, which would have a significant adverse impact on our business.

If litigation were to be initiated by intellectual property owners, there could significant legal fees and costs incurred in defending litigation (which may include filing administrative actions to attack the intellectual property) as well as a potential monetary settlement payment to the owners, even if the matter is resolved before going to trial.

If litigation were to be initiated by

intellectual property owners, there could significant legal fees and costs incurred in defending litigation (which may include filing administrative actions to attack the intellectual property) as well as a potential monetary settlement payment to the owners, even if the matter is resolved before going to trial.

Moreover, the owners may take an overly aggressive approach and/or include multiple allegations in a single litigation.

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Historically, the market price of our common stock, like the securities of many other medical products companies, fluctuates and could continue to be volatile in the future.

From January 1, 2020 through July 21, 2020 , the closing price of our common stock on the Nasdaq Global Select Market was as high as $440.50 per share and as low as $191.16 per share.

From January 1, 2020 through October 20, 2020, the closing price of our common stock on the Nasdaq Global Select Market was as high as $451.79 per share and as low as $191.16 per share.

In addition, the trading prices for our common stock and other medical device companies have been highly volatile as a result of the COVID-19 pandemic.

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• our failure to continue the commercialization of any of our CGM systems;

• competition;

• inadequate financial and other resources;

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These agreements impose numerous financial and other restrictive covenants on our operations, including covenants relating to our general profitability and our liquidity.

As of June 30, 2020 , we were in compliance with the covenants imposed by the loan and security agreement.

As of September 30, 2020, we were in compliance with the covenants imposed by the loan and security agreement.

If we violate these or any other covenants, any outstanding amounts under these agreements could become due and payable prior to their stated maturity dates, each lender could proceed against any collateral in our operating accounts and our ability to borrow funds in the future may be restricted or eliminated.

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In December 2018, we entered into a five-year $200.0 million revolving credit agreement.

As of June 30, 2020 , we had no outstanding borrowings, $5.4 million in outstanding letters of credit, and a total available balance of $194.6 million under our multi-currency revolving credit facility.

As of September 30, 2020, we had no outstanding borrowings, $5.4 million in outstanding letters of credit, and a total available balance of $194.6 million under our multi-currency revolving credit facility.

Our leverage ratio may affect the availability to us of additional capital resources as well as our operations in several ways, including:

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The market price of our common stock could also decline if there is a perception that sales of our shares are likely to occur in the future.

This might also make it more difficult for us to sell equity securities in the future at a time and at a

price that we deem appropriate.

This might also make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Also, we may issue securities in connection with future financings and acquisitions, and those shares could dilute the holdings of other stockholders.

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• 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.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

In September 2020, we amended and restated our restated bylaws to provide that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or a Federal Forum Provision.

Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law.

While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

Neither the exclusive forum provision nor the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act.

Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.

Notwithstanding the foregoing, our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision.

The exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits with respect to such claims.

Alternatively, if a court were to find the choice of forum provisions contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.

Moreover, Section 203 of the Delaware General Corporation Law may discourage, delay, or prevent a change of control of our company.

Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.

Risks Related to Our Debt

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In May 2020, we completed an offering of approximately $1.21 billion aggregate principal amount of 0.25% convertible senior notes due 2025, or 2025 notes, which offering we refer to as the 2020 Notes Offering.

We refer to the 2017 Notes Offering, the 2018 Notes Offering and the 2020 Notes Offering, collectively, as the Notes Offerings, and we refer to the 2022 Notes,the 2023 Notes and the 2025 Notes, collectively, as the Notes.

As of the date hereof, there are no 2022 Notes outstanding.

We refer to the 2018 Notes Offering and the 2020 Notes Offering, collectively, as the Notes Offerings, and we refer to the the 2023 Notes and the 2025 Notes, collectively, as the Notes.

As a result of the Notes Offerings, we incurred $2.06 billion principal amount of indebtedness, the principal amount of which we may be required to pay at maturity.

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• our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired.

We cannot be sure that our leverage resulting from the level of increased debt after the completion of the Notes Offerings will not materially and adversely affect our ability to finance our operations or capital needs or to engage in other business

In addition, we cannot be sure that additional financing will be available when required or, if available, will be on terms satisfactory to us.

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The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock in secondary market transactions prior to the maturity of 2023 Notes (and are likely to do so during any observation period related to a conversion of 2023 Notes, or following any repurchase of Notes by us on any fundamental change repurchase date (as defined in the indenture for the 2023 Notes) or otherwise).

This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the 2023 Notes, which could affect note holders’ ability to convert the 2023 Notes and, to the extent the activity occurs during any observation period related to a conversion of the 2023 Notes, it could affect the amount and value of the consideration that note holders will receive upon conversion of the 2023 Notes.

This activity could also cause or avoid an increase or a decrease in the

market price of our common stock or the 2023 Notes, which could affect note holders’ ability to convert the 2023 Notes and, to the extent the activity occurs during any observation period related to a conversion of the 2023 Notes, it could affect the amount and value of the consideration that note holders will receive upon conversion of the 2023 Notes.

The potential effect, if any, of these transactions and activities on the market price of our common stock or the 2023 Notes will depend in part on market conditions and cannot be ascertained at this time.

Any of these activities could adversely affect the value of our common stock and the value of the 2023 Notes (and as a result, the value of the consideration, the amount of

cash and/or the number of shares, if any, that note holders would receive upon the conversion of the 2023 Notes) and, under certain circumstances, the ability of the note holders to convert the 2023 Notes.

Any of these activities could adversely affect the value of our common stock and the value of the 2023 Notes (and as a result, the value of the consideration, the amount of cash and/or the number of shares, if any, that note holders would receive upon the conversion of the 2023 Notes) and, under certain circumstances, the ability of the note holders to convert the 2023 Notes.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the 2023 Notes or our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors