What changed in this filing

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Item 9A. Controls and Procedures

2023-02-09 compared with 2022-02-14 · 385 added, 302 removed, 1145 unchanged (38% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controls and procedures,” which are defined to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and timely communicated to management, including our Chief Executive Officer and Chief Financial Officer, recorded, processed,

summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Our management, including our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures.

2 unchanged sentences

There were no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

As a result of the COVID-19 pandemic, certain employees began working remotely in March 2020.

We have not identified any material changes in our internal control over financial reporting as a result of these changes to the working environment.

We are continually monitoring and assessing the COVID-19 situation to determine any potential impacts on the design and operating effectiveness of our internal controls over financial reporting.

Management’s Report on Internal Control over Financial Reporting

13 unchanged sentences

In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of these and other inherent limitations of control systems, we cannot guaranty that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Because of these and other inherent limitations of control systems, we cannot guarantee that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

69 unchanged sentences

10-K 000-51222 February 11, 2021 4.04

Office Lease Agreement, dated March 31, 2006, between DexCom, Inc.

and Kilroy Realty, L.P.

8-K 000-51222 April 7, 2006 99.01

First Amendment to Office Lease between DexCom, Inc.

and Kilroy Realty, L.P., dated August 18, 2010.

10-Q 000-51222 November 4, 2010 10.27

Amendment Number One to Non-Exclusive Distribution Agreement, between RGH Enterprises, Inc.

and DexCom, Inc., dated March 29, 2011.**

10-Q/A 000-51222 July 1, 2011 10.26

Offer letter between DexCom, Inc.

1 unchanged sentence

10-Q 000-51222 August 3, 2011 10.28

Amendment Number Two to Non-Exclusive Distribution Agreement between RGH Enterprises, Inc.

and DexCom, Inc., dated March 28, 2013.**

10-Q 000-51222 May 1, 2013 10.27

Amendment Number Three to Non-Exclusive Distribution Agreement between RGH Enterprises, Inc.

and DexCom, Inc., dated December 4, 2013.**

10-K 000-51222 February 20, 2014 10.28

Number Exhibit Description Incorporated by Reference Provided

Form File No.

First Filing Exhibit

Non-Exclusive Distribution Agreement between DexCom, Inc.

and Diabetes Specialty Center, LLC dated October 12, 2009, as amended on September 30, 2010, October 11, 2011, November 14, 2012 and November 1, 2013.**

10-K 000-51222 February 20, 2014 10.29

Amendment No.

5 to Non-Exclusive Distribution Agreement between DexCom, Inc.

and Diabetes Specialty Center, LLC, dated March 14, 2014.

10-Q 000-51222 August 6, 2014 10.32

Second Amendment to Office Lease between DexCom, Inc.

and Kilroy Realty, L.P., dated October 1, 2014.

10-K 000-51222 February 25, 2015 10.32

2015 Employee Stock Purchase Plan

DEF 14A 000-51222 April 13, 2015 Appendix B

Form of Subscription Agreement under 2015 Employee Stock Purchase Plan

000-51222 June 2, 2015 10.4

Sublease between DexCom, Inc.

1 unchanged sentence

10-Q 000-51222 April 27, 2016 10.36

Amended and Restated Non-Exclusive Distribution Agreement with Byram Healthcare dated February 1, 2016.**

10-Q 000-51222 April 27, 2016 10.37

Industrial Net Lease, Broadway dated April 28, 2016, by and between PRA/LB, L.L.C.

1 unchanged sentence

10-Q 000-51222 August 2, 2016 10.39

Standard Form of Agreement dated May 2, 2016, by and between DexCom, Inc.

and Skanska USA Building Inc.

10-Q 000-51222 August 2, 2016 10.40

Amendment to Non-Exclusive Distribution Agreement dated April 30, 2016 by and between RGH Enterprises, Inc.

d/b/a Cardinal Health at Home and DexCom, Inc.

10-Q 000-51222 August 2, 2016 10.41

Amendment No.

1 to Collaboration and License Agreement dated October 25, 2016 by and between DexCom, Inc.

and Verily Life Sciences LLC (formerly Google Life Sciences LLC).

10-K 000-51222 February 28, 2017 10.42

Severance and Change in Control Plan.

8-K 000-51222 June 6, 2017 10.2

Form of Participation Agreement to the Severance and Change in Control Plan.

8-K 000-51222 June 6, 2017 10.3

Standard Form of Agreement dated May 1, 2017, by and between DexCom, Inc.

and Skanska USA Building Inc.

10-Q 000-51222 August 1, 2017 10.47

Form of Indemnity Agreement

10-Q 000-51222 August 1, 2017 10.43

Form of RSU Grant Agreement 2015 Plan Global Double Trigger

10-K 000-51222 February 27, 2018 10.51

Form of RSU Grant Agreement 2015 Plan Global General

10-K 000-51222 February 27, 2018 10.52

Amended and Restated Collaboration and License Agreement dated November 20, 2018 by and between DexCom, Inc., Verily Life Sciences LLC (an Alphabet Company) and Verily Ireland Limited.**

10-K 000-51222 February 21, 2019 10.60

Number Exhibit Description Incorporated by Reference Provided

Form File No.

First Filing Exhibit

Amended and Restated Credit Agreement dated December 19, 2018 by and among DexCom, Inc., Bank of America, Silicon Valley Bank and Union Bank, and JPMorgan Chase Bank, as Administrative Agent.

10-K 000-51222 February 21, 2019 10.61

Amended and Restated 2015 Equity Incentive Plan

8-K 000-51222 June 4, 2019 10.01

Executive Deferred Compensation Plan.*

8-K 000-51222 June 4, 2019 10.02

Form of RSU Grant Agreement 2015 Plan (Board Members - Annual Grant)

10-K 000-51222 February 13, 2020 10.36

Form of RSU Grant Agreement 2015 Plan (Board Members - Incoming Grant)

10-K 000-51222 February 13, 2020 10.37

Distribution Services Agreement dated November 7, 2015 between DexCom, Inc.

and AmerisourceBergen Drug Corporation.****

10-K 000-51222 February 13, 2020 10.38

Amendment to the Distribution Services Agreement between DexCom Inc.

and AmerisourceBergen Drug Corporation.****

10-K 000-51222 February 13, 2020 10.39

Third Amendment to Office Lease between DexCom, Inc.

1 unchanged sentence

10-K 000-51222 February 13, 2020 10.40

Fourth Amendment to Office Lease between DexCom, Inc.

and Sequence Tech.

Center CA LLC, dated September 9, 2019.****

10-K 000-51222 February 13, 2020 10.41

Fifth Amendment to Office Lease between DexCom, Inc.

and Sequence Tech.

Center CA LLC, dated October 21, 2019.

10-K 000-51222 February 13, 2020 10.42

Form of Indemnity Agreement between Registrant and each of its directors and executive officers.*

10-K 000-51222 February 11, 2021 10.43

2015 Employee Stock Purchase Plan, amended on December 13, 2019

10-K 000-51222 February 11, 2021 10.44

Form of Subscription Agreement under 2015 Employee Stock Purchase Plan amended on December 13, 2019

10-K 000-51222 February 11, 2021 10.45

DexCom Incentive Bonus Plan.*

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Second Amended and Restated Credit Agreement dated October 13, 2021 by and among DexCom, Inc., Bank of America, Silicon Valley Bank and Union Bank, and JPMorgan Chase Bank, as Administrative Agent.

10-K 000-51222 February 14, 2022 X

Sixth Amendment to Office Lease between DexCom, Inc.

10-K 000-51222 February 14, 2022 10.39

Office Lease Agreement, dated March 31, 2006, between DexCom, Inc.

and Kilroy Realty, L.P., as amended on August 18, 2010 and October 1, 2014.

Amendment Number One to Non-Exclusive Distribution Agreement, between RGH Enterprises, Inc.

and DexCom, Inc., dated March 29, 2011, as amended on March 28, 2013, December 4, 2013, and April 30, 2016.**

Amended and Restated Non-Exclusive Distribution Agreement with Diabetes Management and Supplies, LLC, dated August 10, 2015, as amended on April 7, 2022.**

Distribution Services Agreement dated November 7, 2015 between DexCom, Inc.

and AmerisourceBergen Drug Corporation, as amended on November 1, 2018 and December 2, 2022.**

Amended and Restated Non-Exclusive Distribution Agreement with Byram Healthcare dated February 1, 2016.**

Standard Form of Agreement dated May 2, 2016, by and between DexCom, Inc.

and Skanska USA Building Inc.

and Standard Form of Agreement dated May 1, 2017, by and between DexCom, Inc.

and Skanska USA Building Inc.

Amendment No.

1 to Collaboration and License Agreement dated October 25, 2016 by and between DexCom, Inc.

and Verily Life Sciences LLC (formerly Google Life Sciences LLC), as amended on November 20, 2018.**

Severance and Change in Control Plan and form of participation agreement.*

Amended and Restated 2015 Equity Incentive Plan and forms of award agreements.*

Fourth Amendment to Office Lease between DexCom, Inc.

and Sequence Tech.

Center CA LLC, dated May 25, 2021

10-K 000-51222 February 14, 2022 X

Tenant Estoppel Certificate - Sequence

10-K 000-51222 February 14, 2022 X

Center CA LLC, dated September 9, 2019, as amended on October 21, 2019 and May 25, 2021, and December 23, 2022.**

2015 Employee Stock Purchase Plan, amended on December 13, 2019 and form of subscription agreement.*

Office Lease between DexCom, Inc.

and GC Pacific Court Center Owner, LLC, dated January 31, 2020

10-K 000-51222 February 14, 2022 X

First Amendment to Office Lease between DexCom, Inc.

and GC Pacific Court Center Owner, LLC, dated November 17, 2020

10-K 000-51222 February 14, 2022 X

Tenant Estoppel Certificate - Pacific Center

10-K 000-51222 February 14, 2022 X

Number Exhibit Description Incorporated by Reference Provided

Form File No.

First Filing Exhibit

Tenant’s Acceptance of Possession - Pacific Center

10-K 000-51222 February 14, 2022 X

and GC Pacific Court Center Owner, LLC, dated January 31, 2020, as amended on November 17, 2020, and forms of certificates.

List of Subsidiaries.

Consent of Independent Registered Public Accounting Firm.

24.01 Power of Attorney (see signature page of this Form 10-K) X

24.01 Power of Attorney (see signature page of this Form 10-K).

Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).

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— Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) 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.

* Represents a management contract or compensatory plan, contract or arrangement.

** Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

*** 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

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public A ccounting Firm

Consolidated Balance Sheets

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimation of variable consideration for revenue recognition

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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.

This included testing contractual rates, management’s estimates of products sold subject to rebate, and inventory held by third parties 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 third parties versus inventory sold into the channel.

In addition, we inspected the results of the Company’s retrospective review analysis of pharmacy rebates claimed, evaluated the estimates made based on historical experience and performed sensitivity analyses over the Company's significant assumptions.

This included testing contractual rates, management’s estimates of products sold subject to rebate, and inventory held by third parties 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 review of trending of inventory held at third parties versus inventory sold into the channel.

In addition, we inspected the results of the Company’s retrospective review analysis of pharmacy rebates claimed and evaluated the estimates made based on historical experience.

/s/ Ernst & Young LLP

3 unchanged sentences

Consolidated Balance Sheets

(In millions, except par value data) 2021 2020

(In millions, except par value data) (As Adjusted)*

Current assets:

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Goodwill 25.7 26.5

Intangibles, net 173.3 31.5

Deferred tax assets 341.2 290.5

Intangibles and other assets, net 42.0 21.4

Other assets 47.1 10.5

Total assets $ 5,391.7 $ 4,933.3

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Accrued payroll and related expenses 134.3 125.2

Current portion of long-term senior convertible notes 772.6 —

Short-term operating lease liabilities 20.5 20.5

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Additional paid-in capital 2,258.1 2,108.7

Accumulated other comprehensive income 0.5 3.2

Accumulated deficit ( 47.4 ) ( 202.1 )

Accumulated other comprehensive income (loss) ( 11.6 ) 0.5

Retained earnings 479.9 138.7

Treasury stock, at cost;

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Total liabilities and stockholders’ equity $ 5,391.7 $ 4,933.3

* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis.

All periods presented have also been adjusted to reflect the four -for-one stock split.

Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information.

See accompanying notes

1 unchanged sentence

Twelve Months Ended

(In millions, except per share data) 2021 2020 2019

2022 2021 2020

(In millions, except per share data) (As Adjusted)* (As Adjusted)*

Revenue $ 2,909.8 $ 2,448.5 $ 1,926.7

4 unchanged sentences

Collaborative research and development fee — 87.1 —

Amortization of intangible assets 7.5 3.7 2.5

Selling, general and administrative 1,000.2 806.8 618.2

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Loss on extinguishment of debt — ( 0.1 ) —

Income (loss) from equity investments 11.6 — ( 4.2 )

Income from equity investments 0.2 11.6 —

Interest and other income (expense), net 18.0 ( 1.7 ) 16.1

6 unchanged sentences

Shares used to compute diluted net income per share 427.5 428.8 420.4

* We adjusted our 2021 and 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis.

All periods presented have also been adjusted to reflect the four -for-one stock split.

Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information.

See accompanying notes

1 unchanged sentence

Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions) (As Adjusted)*

(As Adjusted)*

Net income $ 341.2 $ 216.9 $ 549.7

1 unchanged sentence

Translation adjustments and other ( 9.8 ) ( 1.0 ) 1.1

Unrealized gain (loss) on marketable debt securities ( 1.7 ) ( 0.2 ) 0.4

Unrealized loss on marketable debt securities ( 2.3 ) ( 1.7 ) ( 0.2 )

Total other comprehensive income (loss), net of tax ( 12.1 ) ( 2.7 ) 0.9

Comprehensive income $ 329.1 $ 214.2 $ 550.6

* We adjusted our 2021 and 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis.

Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information.

See accompanying notes

1 unchanged sentence

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Treasury Stock Total

Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Treasury Stock Total

Stockholders’

(In millions)

Shares Amount

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

(In millions) Shares Amount

Balance at December 31, 2019 (As Adjusted)* 366.4 $ 0.4 $ 1,675.6 $ 2.3 $ ( 695.7 ) $ ( 100.0 ) $ 882.6

ASU 2020-06 Convertible Debt Full Retrospective Adoption — — ( 242.3 ) — 67.8 — ( 174.5 )

Issuance of common stock under equity incentive plans 4.2 — 0.3 — — — 0.3

Issuance of common stock for Employee Stock Purchase Plan 0.3 — 15.0 — — — 15.0

Realization of tax benefit related to 2023 Note Hedge — — 0.7 — — — 0.7

Tax benefit related to Senior Convertible Notes — — 45.6 — — — 45.6

Repurchase and conversions of 2022 Notes 13.5 — 112.9 — — — 112.9

Share-based compensation expense — — 119.4 — — — 119.4

1 unchanged sentence

Other comprehensive income, net of tax — — — 0.9 — — 0.9

Balance at December 31, 2019 91.6 0.1 1,675.9 2.3 ( 695.7 ) ( 100.0 ) 882.6

Balance at December 31, 2020 (As Adjusted)* 384.4 0.4 1,726.5 3.2 ( 78.2 ) ( 100.0 ) 1,551.9

Issuance of common stock under equity incentive plans 2.9 — — — — — —

Issuance of common stock for Employee Stock Purchase Plan 0.3 — 20.3 — — — 20.3

Equity component of 2025 Notes issuance, net of issuance costs — — 289.4 — — — 289.4

Tax benefit related to Senior Convertible Notes — — ( 2.0 ) — — — ( 2.0 )

Repurchase and conversions of 2022 Notes 3.4 — 87.8 — — — 87.8

Conversions of 2023 Notes 1.4 — 32.6 — — 24.6 57.2

Benefit of note hedge upon conversions of 2023 Notes ( 1.0 ) — 130.8 — — ( 130.8 ) —

Share-based compensation expense — — 113.4 — — — 113.4

Collaborative research and development fee — — 87.1 — — — 87.1

Net income — — — — 216.9 — 216.9

Other comprehensive income, net of tax — — — 0.9 — — 0.9

Balance at December 31, 2020 96.1 0.1 2,125.3 3.2 ( 202.1 ) ( 100.0 ) 1,826.5

Other comprehensive loss, net of tax — — — ( 2.7 ) — — ( 2.7 )

Balance at December 31, 2021 (As Adjusted)* 388.0 0.4 2,108.7 0.5 138.7 ( 206.2 ) 2,042.1

Issuance of common stock under equity incentive plans 1.6 — — — — — —

Issuance of common stock for Employee Stock Purchase Plan 0.3 — 22.5 — — — 22.5

Issuance of common stock in connection with achievement of regulatory approval milestone, net of issuance costs 2.9 — ( 189.3 ) — — 189.2 ( 0.1 )

Purchases of treasury stock ( 6.6 ) — — — — ( 557.7 ) ( 557.7 )

Tax benefit related to Senior Convertible Notes — — ( 0.4 ) — — — ( 0.4 )

2 unchanged sentences

Share-based compensation expense — — 126.5 — — — 126.5

Collaborative research and development fee — — 87.1 — — — 87.1

Capitalization of sales-based milestones — — 152.4 — — — 152.4

Net income — — — — 341.2 — 341.2

1 unchanged sentence

Balance at December 31, 2022 386.3 $ 0.4 $ 2,258.1 $ ( 11.6 ) $ 479.9 $ ( 595.0 ) $ 2,131.8

* We adjusted our 2021 and 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis on January 1, 2020.

All periods presented have also been adjusted to reflect the four -for-one stock split.

Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information.

See accompanying notes

1 unchanged sentence

Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions) (As Adjusted)* (As Adjusted)*

Operating activities

27 unchanged sentences

Net proceeds from issuance of common stock 22.5 20.3 15.3

Purchases of treasury stock ( 557.7 ) — —

Proceeds from issuance of convertible notes, net of issuance costs — — 1,188.8

1 unchanged sentence

Other financing activities ( 17.3 ) ( 9.9 ) ( 9.4 )

Net cash provided by financing activities 10.4 912.1 10.7

Net cash provided by (used in) financing activities ( 552.5 ) 10.4 912.1

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 5.8 ) ( 1.4 ) 2.1

8 unchanged sentences

2022 2021 2020

(As Adjusted)*

Supplemental disclosure of non-cash investing and financing transactions:

5 unchanged sentences

Cash paid during the year for income taxes $ 114.2 $ 16.8 $ 3.6

* We adjusted our 2021 and 2020 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis.

Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information.

See accompanying notes

11 unchanged sentences

We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation.

Amortization expense related to intangible assets has been presented separately from selling, general and administrative expenses in our consolidated statement of operations.

We determine the functional currencies of our international subsidiaries by reviewing the environment where each subsidiary primarily generates and expends cash.

1 unchanged sentence

dollars using period-end exchange rates for assets and liabilities and average exchange rates for each period for revenue, costs and expenses.

We include translation-related adjustments in comprehensive income and in accumulated other comprehensive income in the equity section of our consolidated balance sheets.

We include translation-related adjustments in comprehensive income and in accumulated other comprehensive income (loss) in the equity section of our consolidated balance sheets.

We record gains and losses resulting from transactions with customers and vendors that are denominated in currencies other than the functional currency and from certain intercompany transactions in interest and other income (expense), net in our consolidated statements of operations.

On June 10, 2022, the Company effected a four -for-one forward stock split of its common stock to shareholders of record as of May 19, 2022.

The par value of the common stock remains $ 0.001 per share.

All share and per share information has been retroactively adjusted to reflect the stock split for all periods presented.

Use of Estimates

1 unchanged sentence

generally accepted accounting principles, or GAAP, requires us to make certain estimates and assumptions that affect the amounts reported in our consolidated financial statements and the disclosures made in the accompanying notes.

Areas requiring significant estimates include rebates, transaction price, the collectibility of accounts receivable, excess or obsolete inventories and the valuation of inventory, accruals for litigation contingencies, and the amount of our worldwide tax provision and the realizability of deferred tax assets.

Areas requiring significant estimates include rebates, excess or obsolete inventories and the valuation of inventory, accruals for litigation contingencies, and the amount of our worldwide tax provision and the realizability of deferred tax assets.

Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates.

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quoted prices for identical or similar assets or liabilities in markets that are not active;

and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.

and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in

the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.

Level 3—Uses unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value.

3 unchanged sentences

We carry our marketable securities at fair value.

We carry our other financial instruments, such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, at cost,

which approximates the related fair values due to the short-term maturities of these instruments.

See Note 3 “Fair Value Measurements” for more information.

We carry our other financial instruments, such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, at cost, which approximates the related fair values due to the short-term maturities of these instruments.

See Note 3 “Fair Value Measurements” to the consolidated financial statements for more information.

Cash and Cash Equivalents

5 unchanged sentences

We carry our marketable debt securities at fair value with unrealized gains and losses reported as a separate component of stockholders’ equity in our consolidated balance sheets and included in comprehensive income.

Realized gains and losses on marketable debt securities are included in interest and other income (expense), net in our consolidated statements of operations.

Interest income and realized gains and losses on marketable debt securities are included in interest and other income (expense), net in our consolidated statements of operations.

We carry our marketable equity securities at fair value with realized and unrealized gains and losses reported in income (loss) from equity investments in our consolidated statements of operations.

2 unchanged sentences

We do not generally intend to sell these investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

See Note 3 “Fair Value Measurements” and Short-Term Marketable Securities in Note 4 “Balance Sheet Details” for more information on our marketable securities.

See Note 3 “Fair Value Measurements” and Short-Term Marketable Securities in Note 4 “Balance Sheet Details” to the consolidated financial statements for more information on our marketable securities.

Accounts Receivable and Allowance for Doubtful Accounts

5 unchanged sentences

Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a customer account is uncollectible.

Generally, receivable balances greater than one year past due are deemed uncollectible.

Generally, receivable balances that are more than one year past due are deemed uncollectible.

Concentration of Credit Risk and Significant Customers

1 unchanged sentence

We limit our exposure to credit risk by placing our cash and investments with a few major financial institutions.

We have also established guidelines regarding diversification of our investments and their maturities that are designed to maintain principal and maximize liquidity.

We have also established guidelines regarding diversification of our investments and their maturities that are designed to maintain principal and

maximize liquidity.

We review these guidelines periodically and modify them to take advantage of trends in yields and interest rates and changes in our operations and financial position.

4 unchanged sentences

2022 2021 2020 2022 2021

Distributor A 28 % 23 % 17 % 16 % 19 %

Distributor B 12 % 11 % 12 % 11 % 10 %

Distributor C 21 % 18 % 10 % 13 % 12 %

Distributor D 18 % 11 % * 13 % *

Customer A 32 % 28 % 23 % 19 % 16 %

Customer B 11 % 12 % 11 % 10 % 11 %

Customer C 26 % 21 % 18 % 17 % 13 %

Customer D 29 % 18 % 11 % 22 % 13 %

Customer E 10 % * * * *

* Less than 10%

** Total revenue for each customer is net of fees, cash discounts, and rebates directly allocable to that customer.

Rebates paid to other entities are excluded;

therefore, the combined value may exceed 100%.

Inventory is valued at the lower of cost or net realizable value on a part-by-part basis that approximates first in, first out.

3 unchanged sentences

Factors influencing these adjustments include inventories on hand and on order compared to estimated future usage and sales for existing and new products, as well as judgments regarding quality control testing data and assumptions about the likelihood of scrap and obsolescence.

Once written down the adjustments are considered permanent and are not reversed until the related inventory is sold or disposed of.

Once written down the adjustments are considered permanent and are not reversed until the related inventory is disposed of or sold.

Our products require customized products and components that currently are available from a limited number of sources.

23 unchanged sentences

We may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit’s estimated fair value was significantly in excess of the carrying value of its net assets and we do not believe there have been significant changes in the reporting unit’s operations that would significantly decrease its estimated fair value or significantly increase its net assets.

If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future

projections and/or use of a market approach by looking at market values of comparable companies.

If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies.

Key assumptions for these projections include revenue growth, future gross margin and operating margin growth, and weighted cost of capital and terminal growth rates.

10 unchanged sentences

We recorded no goodwill impairment charges for the twelve months ended December 31, 2022, 2021 or 2020.

The change in goodwill for the twelve months ended December 31, 2021 consisted of goodwill we recorded for acquisitions that were not significant, individually or in the aggregate, and translation adjustments on our foreign currency denominated goodwill.

The change in goodwill for the twelve months ended December 31, 2022 and 2020 consisted of translation adjustments on our foreign currency denominated goodwill.

Intangible Assets and Other Long-Lived Assets

Intangible assets are included in intangibles and other assets, net in our consolidated balance sheets.

We amortize intangible assets with a finite life, such as acquired technology, customer relationships, trade names and trademarks, on a straight-line basis over their estimated useful lives, which range from one to seven years .

We amortize intangible assets with a finite life, such as the customer relationships, acquired technology and intellectual property, trademarks and trade name, and other intangibles, on a straight-line basis over their estimated useful lives, which range from one to seven years .

We review intangible assets that have finite lives and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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The intangible assets associated with these milestones are amortized over the remaining estimated useful life of the underlying asset.

We recorded no intangible asset impairment charges for the twelve months ended December 31, 2021, 2020 or 2019.

We recorded no significant intangible asset impairment charges for the twelve months ended December 31, 2022, 2021 or 2020.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

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We file federal and state income tax returns in the United States and income tax returns in various other foreign jurisdictions with varying statutes of limitations.

Due to net operating losses incurred, our income tax returns from inception to date are subject to examination by taxing authorities.

Due to net operating losses incurred on our U.S.

Federal returns, our income tax returns from inception to date are subject to examination by taxing authorities.

We recognize interest expense and penalties related to income tax matters, including unrecognized tax benefits, as a component of income tax expense.

We recognize income tax expense for basis differences related to global intangible low-taxed income ("GILTI") as a period cost if and when incurred.

GILTI is a category of income that is earned abroad by U.S.-controlled foreign corporations (CFCs) and is subject to special treatment under the U.S.

Warranty Accrual

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We review the adequacy of our estimates for transaction price adjustments and variable consideration at each reporting date.

If the actual amounts of consideration that we receive differ from our estimates, we would adjust our estimates and that would affect reported revenue in the period that such variances become known.

If the actual amounts of consideration we receive differ from our estimates, we would adjust our estimates and that would affect reported revenue in the period that such variances become known.

If any of these judgments were to change, it could cause a material increase or decrease in the amount of revenue we report in a particular period.

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Revenue Recognition

The timing of revenue recognition is based on the satisfaction of performance obligations.

Substantially all of the performance obligations associated with our Components are satisfied at a point in time, which typically occurs at shipment of our products.

Terms of direct and distributor orders are generally Freight on Board (FOB) shipping point for U.S.

orders or Free Carrier (FCA) shipping point for international orders.

For certain sales transactions, control transfers at delivery of the product to the customer.

We record revenue from sales of Components upon transfer of control of the product to the customer.

We typically determine transfer of control based on when the product is shipped or delivered and title passes to the customer.

In cases where our free-of-charge software, mobile applications and updates are deemed to be separate performance obligations, revenue is recognized over time on a ratable basis over the estimated life of the related Reusable Hardware component.

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We record deferred revenue when we have entered into a contract with a customer and cash payments are received or due prior to transfer of control or satisfaction of the related performance obligation.

Our performance obligations are generally satisfied within 12 months of the initial contract date.

The deferred revenue balances related to performance obligations that will be satisfied after 12 months was $ 16.1 million as of December 31, 2021 and $ 8.2 million as of December 31, 2020.

These balances are included in other long-term liabilities in our consolidated balance sheets.

Our performance obligations are generally satisfied within twelve months of the initial contract date.

The deferred revenue balances related to performance obligations that will be satisfied after twelve months was $ 19.0 million as of December 31, 2022 and $ 16.1 million as of December 31, 2021.

These balances are included in other

long-term liabilities in our consolidated balance sheets.

Revenue recognized in the period from performance obligations satisfied in previous periods was not material for the periods presented.

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We record these costs in selling, general and administrative expense in our consolidated statements of operations.

Senior Convertible Notes

In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible debt instruments, amends the guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted earnings per share calculations.

We previously followed in Accounting Standard Codification, or ASC, 470-20, which required us to separate each of our convertible debt instruments at issuance into two units of accounting, a liability component, based on our nonconvertible debt borrowing rate at issuance, and an equity component.

Under ASU 2020-06, we now account for each of our convertible debt instruments as a single unit of accounting, a liability, because we concluded that there were no material conversion features that require bifurcation as a derivative under ASC 815-15 and our convertible debt instruments were not issued at a substantial premium.

Since we adopted ASU 2020-06 using the full retrospective approach, we were required to apply the guidance to all convertible debt instruments we had outstanding as of January 1, 2020.

Upon adoption of ASU 2020-06 as of January 1, 2020, we recognized $ 67.8 million cumulative-effect adjustment to increase retained earnings for the decrease in interest expense and $ 242.3 million decrease in additional paid in capital for the elimination of the equity component.

We have updated these financial statements to reflect the cumulative adjustment for the periods presented.

We have labeled our prior period financial statements and related notes “As Adjusted” to indicate the change required under the new accounting guidance.

Below is a summary of the changes in our consolidated balance sheets we originally reported as of December 31, 2020 and 2021 under the ASC 470-20 legacy guidance compared to our adjusted consolidated balance sheets under the new ASU 2020-06 guidance we adopted and reflective of our four -for-one forward stock split:

Consolidated Balance Sheet As of December 31, 2020

(In millions) As Previously Reported ASU 2020-06 Adjustment Stock Split Adjustment As Adjusted

Deferred tax assets $ 216.4 $ 91.3 $ — $ 307.7

Long-term senior convertible notes 1,667.2 365.9 — 2,033.1

Common stock 0.1 — 0.3 0.4

Additional paid-in-capital 2,125.3 ( 398.5 ) ( 0.3 ) 1,726.5

Accumulated deficit $ ( 202.1 ) $ 123.9 $ — $ ( 78.2 )

Consolidated Balance Sheet As of December 31, 2021

(In millions) As Previously Reported ASU 2020-06 Adjustment Stock Split Adjustment As Adjusted

Deferred tax assets $ 220.8 $ 69.7 $ — $ 290.5

Long-term senior convertible notes 1,702.7 279.1 — 1,981.8

Common stock 0.1 — 0.3 0.4

Additional paid-in-capital 2,504.5 ( 395.5 ) ( 0.3 ) 2,108.7

Retained earnings (accumulated deficit) $ ( 47.4 ) $ 186.1 $ — $ 138.7

Below is a summary of the changes in our consolidated statements of operations for the twelve months ended December 31, 2020 and December 31, 2021 we originally reported at December 31, 2021 under the ASC 470-20 legacy guidance compared to our adjusted balance sheets under the new ASU 2020-06 guidance we adopted and reflective of our four -for-one forward stock split:

Consolidated Statement of Operations Twelve Months Ended December 31, 2020

(In millions, except per share data) As Previously Reported ASU 2020-06 Adjustment As Adjusted

Loss on extinguishment of debt $ ( 5.9 ) $ 5.9 $ —

Interest expense ( 84.7 ) 67.0 ( 17.7 )

Income before income taxes 225.0 72.9 297.9

Income tax expense (benefit) ( 268.6 ) 16.8 ( 251.8 )

Net income 493.6 56.1 549.7

Basic net income per share 1.31 0.15 1.46

Diluted net income per share (1)

$ 1.27 $ 0.06 $ 1.33

Shares used to compute diluted net income per share 389.8 30.6 420.4

(1) Dilutive net income used for diluted net income per share under ASU 2020-06 includes $ 11.1 million add back of interest expense, net of tax, attributable to assumed conversion of senior convertible notes.

Consolidated Statement of Operations Twelve Months Ended December 31, 2021

(In millions, except per share data) As Previously Reported ASU 2020-06 Adjustment As Adjusted

Loss on extinguishment of debt $ ( 1.5 ) $ 1.4 $ ( 0.1 )

Interest expense ( 100.3 ) 81.5 ( 18.8 )

Income before income taxes 173.9 82.9 256.8

Income tax expense 19.2 20.7 39.9

Net income 154.7 62.2 216.9

Basic net income per share 0.40 0.16 0.56

Diluted net income per share (1)

$ 0.39 $ 0.14 $ 0.53

Shares used to compute diluted net income per share 400.4 28.4 428.8

(1) Dilutive net income used for diluted net income per share under ASU 2020-06 includes $ 11.4 million add back of interest expense, net of tax, attributable to assumed conversion of senior convertible notes.

Below is a summary of our consolidated balance sheet as of December 31, 2022 and consolidated statement of operations for the twelve months ended December 31, 2022 under the ASC 470-20 legacy guidance compared to the new ASU 2020-06 guidance we adopted.

Consolidated Balance Sheet As of December 31, 2022

(In millions) As computed under ASC 470-20 ASU 2020-06 Adjustment As reported under ASU 2020-06

Prepaid and other current assets $ 191.5 $ 1.1 $ 192.6

Deferred tax assets 293.1 48.1 341.2

Current portion of long-term senior convertible notes 740.9 31.7 772.6

Long-term senior convertible notes 1,034.9 162.8 1,197.7

Additional paid-in-capital 2,652.2 ( 394.1 ) 2,258.1

Retained earnings $ 231.1 $ 248.8 $ 479.9

Consolidated Statement of Operations Twelve Months Ended December 31, 2022

(In millions, except per share data) As computed under ASC 470-20 ASU 2020-06 Adjustment As reported under ASU 2020-06

Loss on extinguishment of debt $ ( 0.4 ) $ 0.4 $ —

Interest expense ( 101.9 ) 83.3 ( 18.6 )

Income before income taxes 307.1 83.7 390.8

Income tax expense 28.6 21.0 49.6

Net income 278.5 62.7 341.2

Basic net income per share 0.72 0.16 0.88

Diluted net income per share (1)

$ 0.70 $ 0.12 $ 0.82

Shares used to compute diluted net income per share 400.5 27.0 427.5

(1) Dilutive net income used for diluted net income per share under ASU 2020-06 includes $ 11.0 million add back of interest expense, net of tax, attributable to assumed conversion of senior convertible notes.

Product Shipment Costs

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Below are some example activities and how we account for them:

The amount and the timing of the cost recognition of such milestones in our financial statements is driven by the accounting for the specific type of equity instrument under ASC 718 that aligns with the terms of the agreement, including any performance conditions.

• Payments to collaboration partners through issuance of common stock as consideration in an asset acquisition are considered share-based payment to non-employees in exchange for goods within the scope of ASC Topic 718, “Compensation - Stock Compensation.” The amount and the timing of the cost recognition of such milestones in our financial statements is driven by the accounting for the specific type of equity instrument under ASC 718 that aligns with the terms of the agreement, including any performance conditions.

• The value associated with in-process research and development (“IPR&D”) in an asset acquisition incurred prior to regulatory approval is expensed as it does not have an alternative future use and is recorded as research and development expense.

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Diluted net income per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents.

Potentially dilutive common shares consist of shares issuable from restricted stock units, warrants and our senior convertible notes.

Potentially dilutive common shares issuable upon vesting of restricted stock units and exercise of warrants are determined using the average share price for each period under the treasury stock method.

Potentially dilutive common shares consist of shares issuable from restricted stock units, or RSUs, performance stock units, or PSUs, warrants, and our senior convertible notes.

Potentially dilutive common shares issuable upon vesting of RSUs, PSUs, and exercise of warrants are determined using the average share price for each period under the treasury stock method.

Potentially dilutive common shares issuable upon conversion of our senior convertible notes are determined using the if-converted method.

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Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions, except per share data) As Adjusted As Adjusted

Net income $ 341.2 $ 216.9 $ 549.7

Add back interest expense, net of tax attributable to assumed conversion of senior convertible notes 11.0 11.4 11.1

Net income - diluted $ 352.2 $ 228.3 $ 560.8

Net income per common share

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Dilutive potential common stock outstanding:

Restricted stock units 0.5 1.0 1.2

Restricted stock units and performance stock units 1.0 2.1 4.0

Warrants 10.2 11.5 8.4

Senior convertible notes 26.9 28.3 30.5

Diluted weighted average shares outstanding 427.5 428.8 420.4

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Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions) As Adjusted As Adjusted

Restricted stock units 0.4 — 0.1

Warrants — — 5.2

Senior convertible notes 6.8 7.2 9.2

Total 6.8 7.2 14.6

Recent Accounting Guidance

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law.

ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted.

Our adoption of ASU 2019-12 at the beginning of the first quarter of 2021 did not have a significant impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU No.

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Early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

We will adopt ASU 2020-06 in the first quarter of 2022, and expect to use the full retrospective method, reflecting the application of the new standard in each prior reporting period.

We have started the process of evaluating the impact of the full retrospective adoption of ASU 2020-06 on our consolidated financial statements.

We continue to evaluate the effect of ASU 2020-06 on our consolidated financial statements.

Under ASU 2020-06, we will account for our senior convertible notes entirely as a liability and will no longer separately account for them with liability and equity components.

Therefore, we will no longer recognize a debt discount for the value of the conversion option, instead we will record the face value of our senior convertible notes as a liability on our consolidated balance sheet.

The derecognition of the unamortized debt discount will result in an increase in the Long-term senior convertible notes on our consolidated balance sheet.

The elimination of the separation model for the convertible debt instruments is expected to reduce additional paid-in capital.

As the separation of the embedded conversion feature will no longer be amortized into income as interest expense, non-cash interest expense will decrease by the full amount of the previous accretion of debt discount, offset by incremental interest expense from amortization of debt issuance costs that were allocated to the equity component.

We will finalize our retrospective presentation of our historical financial statements under the new standard in connection with our Form 10-Q filings during fiscal year 2022 and our Form 10-K for the fiscal year ending December 31, 2022.

We adopted ASU 2020-06 in the first quarter of 2022 using the full retrospective method, reflecting the application of the new standard in each prior reporting period.

Recently Issued Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU No.

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ASU 2021-08 is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted.

The amendments should be applied prospectively to business combinations occurring on or after the the adoption date.

We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

The amendments should be applied prospectively to business combinations occurring on or after the adoption date.

Any impact this guidance will have on our consolidated financial statements is dependent on when and if we complete future business combinations.

Development and Other Agreements

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The Restated Collaboration Agreement requires us to use commercially reasonable efforts to develop, launch and commercialize the CGM product(s) that are the subject of the collaboration according to certain timing and other objectives, and provides for one executive sponsor from each of Dexcom and Verily to meet periodically and make decisions related to the collaboration (within a limited scope of authority) by consensus.

In consideration of Verily’s performance of its obligations under the joint development plan of the Restated Collaboration Agreement, the licenses granted to us and the amendment of the original agreement, we have made upfront and incentive payments and we will make potential future payments for contingent milestones upon the achievement of certain goals.

In consideration of Verily’s performance of its obligations under the joint development plan of the Restated Collaboration Agreement, the licenses granted to us and the amendment of the original agreement, we made upfront, incentive, and the product regulatory approval payments, and will make potential payments for contingent sales-based milestones upon the achievement of certain revenue targets.

We account for the contingent milestones payable in shares of our common stock as equity instruments within the scope of ASC Topic 718.

The product regulatory approval and sales-based milestones are accounted for as performance-based awards that vest when the performance conditions have been achieved and are recognized when the achievement of the respective contingent milestone is deemed probable.

The value of the contingent milestones is based on our closing stock price on December 28, 2018, which was $ 29.57 per share.

Upfront and Incentive payments

In the fourth quarter of 2018, we made an initial payment for an upfront fee of $ 250.0 million through the issuance of 7,363,772 shares of our common stock.

We recorded a $ 217.7 million charge in our consolidated statements of operations during 2018 relating to the issuance of this common stock because this milestone payment did not meet the capitalization criteria.

The value of the charge was based on our closing stock price of $ 118.28 per share on December 28, 2018, the date on

which we obtained the necessary regulatory approvals and represents the date the performance- based awards were issued.

In 2019, we made a cash incentive payments of $ 3.2 million due to the completion of certain development obligations and we recorded these payments as research and development expense in our consolidated statements of operations.

Upon the first regulatory approval of our next CGM system, a milestone payment equivalent to 736,377 shares of our common stock will become payable.

Additional sales-based milestone payments equivalent to 1,288,660 shares of our common stock may become due and payable upon achievement of certain revenue targets.

All milestones may be paid in cash or shares of our common stock, at our election.

If we elect to make these milestone payments in cash, any such cash payment would be equal to the number of shares that would otherwise be issued for the given milestone payment multiplied by the value of our stock on the date the relevant milestone is achieved, adjusted for stock splits, dividends, and the like.

We intend to pay the regulatory and sales-based contingent milestones in shares of our common stock.

We account for the contingent milestones payable in shares of our common stock as equity instruments within the scope of ASC Topic 718.

The regulatory and sales-based milestones are accounted for as performance-based awards that vest when the performance conditions have been achieved and will be recognized if and when the achievement of the respective contingent milestones are deemed probable.

The value of the contingent milestones is based on our closing stock price of $ 118.28 per share on December 28, 2018.

The value of the charge was based on our closing stock price of $ 29.57 per share on December 28, 2018, the date on which we obtained the necessary regulatory approvals and represents the date the performance- based awards were issued.

In 2019, we made a cash incentive payment of $ 3.2 million due to the completion of certain development obligations and we recorded these payments as research and development expense in our consolidated statements of operations.

Contingent milestones

In the fourth quarter of 2021, we determined the achievement of the regulatory approval milestone to be probable and recorded an $ 87.1 million research and development charge in our consolidated statements of operations.

This charge is associated with IPR&D obtained in an asset acquisition prior to regulatory approval and therefore does not have an alternative future use.

The sales-based milestones are contingent upon the achievement of certain revenue targets for a future commercial product.

As of December 31, 2021, we have not determined the achievement of the sales-based milestones to be probable and as such, no cost has been recognized for these milestones.

In the first quarter of 2022, we received regulatory approval and issued 2,945,508 shares of our common stock in connection with our achievement of the related milestone.

In December 2022, we received FDA approval and determined the achievement of the sales-based milestones to be probable.

As such, we capitalized the full value of the sales-based milestones, $ 152.4 million, as an intangible asset.

The sales-based milestones are contingent upon the achievement of certain revenue targets.

The value of the sales based milestones is based on:

1) 5,154,640 shares of our common stock, as agreed upon in November 2018 and 2) our closing stock price on December 28, 2018 of $ 29.57 per share.

December 28, 2018 is the date on which we obtained the necessary regulatory approvals and represents the date the performance- based awards were issued.

The intangible asset will be amortized using the straight-line method over its estimated useful life of 64 months through March 2028.

The related amortization expense is recognized in Cost of Sales in our consolidated

statements of operations and disclosed in Note 4 “Intangibles, Net” to the consolidated financial statements in Part II, Item 8 of this Annual Report.

All milestones may be paid in cash or shares of our common stock, at our election.

We intend to pay the sales-based contingent milestones in shares of our common stock.

The Restated Collaboration Agreement will continue until December 31, 2028, unless terminated by either party upon uncured material breach of the Restated Collaboration Agreement by the other party.

Upon achievement of the first sales-based milestone event and payment of the corresponding milestone fee by us, the term of the Restated Collaboration Agreement will be extended until December 31, 2033, unless terminated by either party upon uncured material breach of the Restated Collaboration Agreement by the other party.

Fair Value Measurements

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government agencies (1)

— 1,530.7 — 1,530.7

Commercial paper — 119.4 — 119.4

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Other assets (2)

10.2 — — 10.2

Total assets measured at fair value on a recurring basis $ 386.1 $ 1,858.7 $ — $ 2,244.8

(1) Includes debt obligations issued by U.S.

government-sponsored enterprises or U.S.

government agencies.

(2) Includes assets which are held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.

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Corporate debt — 224.3 — 224.3

Supranationals — 54.0 — 54.0

Total debt securities, available-for-sale — 1,678.6 — 1,678.6

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We hold certain other investments that we do not measure at fair value on a recurring basis.

The carrying values of these investments are not significant and we include them in other assets in our consolidated balance sheets.

The carrying values of these investments are $ 19.0 million as of December 31, 2022 and $ 4.5 million as of December 31, 2021.

We include them in other assets in our consolidated balance sheets.

It is impracticable for us to estimate the fair value of these investments on a recurring basis due to the fact that these entities are privately held and limited information is available.

We monitor the information that becomes available from time to time and adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant adverse effect on the fair values.

Fair Value of Senior Convertible Notes

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Total fair value of outstanding senior convertible notes $ 3,451.1 $ 4,022.5

For more information on the carrying values of our senior convertible notes, see Senior Convertible Notes in Note 5 to the consolidated financial statements.

For more information on the carrying values of our senior convertible notes, see Senior Convertible Notes in Note 5 “Debt” to the consolidated financial statements.

Foreign Currency and Derivative Financial Instruments

From time to time we use foreign currency contracts to manage foreign currency risks.

Our foreign currency contracts are not designated as hedges and, therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities.

The fair values of these derivatives are based on quoted market prices, which are Level 1 inputs, and the derivative instruments are recorded in current assets or current liabilities in our consolidated balance sheets consistent with the nature of the instrument at period end.

Derivative gains and losses are included in interest and other income (expense), net in our consolidated statements of operations.

As of December 31, 2021 and December 31, 2020, notional amounts of $ 40.0 million and $ 48.0 million, respectively, were outstanding to hedge certain foreign currency risk.

We enter into foreign currency forward contracts to hedge monetary assets and liabilities denominated in foreign currencies.

Our foreign currency forward contracts are not designated as hedging instruments.

Therefore, changes in the fair values of these contracts are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities.

The duration of these contracts is generally one month.

The derivative gains and losses are included in interest and other income (expense), net in our consolidated statements of operations.

As of December 31, 2022 and December 31, 2021, the notional amounts of outstanding foreign currency forward contracts were $ 62.0 million and $ 40.0 million, respectively.

The resulting impact on our consolidated financial statements from currency hedging activities was not significant for the twelve months ended December 31, 2022, 2021 and 2020.

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In general, non-financial assets, including goodwill, intangible assets, and property and equipment, are measured at fair value when there are indicators of impairment and are recorded at fair value only when an impairment is recognized.

We recorded no significant impairment losses during the twelve months ended December 31, 2021, 2020 and 2019.

During the fourth quarter 2022, we vacated a leased building and made it available for sublease, resulting in an impairment of its asset group which consisted primarily of leasehold improvements and right-of-use asset.

We recorded $ 23.0 million in impairment losses during the twelve months ended December 31, 2022.

See Note 6 “Leases” to the consolidated financial statements for more information.

There were no significant impairment losses during the twelve months ended December 31, 2021 and 2020.

Balance Sheet Details

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government agencies (1)

$ 1,535.1 $ 0.2 $ ( 4.6 ) $ 1,530.7

Commercial paper 119.6 — ( 0.2 ) 119.4

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Corporate debt 224.6 — ( 0.3 ) 224.3

Supranationals 54.1 — ( 0.1 ) 54.0

Total debt securities, available-for-sale $ 1,680.6 $ — $ ( 2.0 ) $ 1,678.6

As of December 31, 2021, the estimated market value of our debt securities with contractual maturities up to 12 months and up to 18 months were $ 1.36 billion and $ 320.7 million, respectively.

As of December 31, 2020, all of our debt securities had contractual maturities of less than 12 months.

Gross realized gains and losses on sales of our debt securities for the twelve months ended December 31, 2021, 2020 and 2019 were not significant.

(1) Includes debt obligations issued by U.S.

government-sponsored enterprises or U.S.

government agencies.

As of December 31, 2022, the estimated market value of our short-term debt securities with contractual maturities up to 12 months was $ 1.81 billion.

As of December 31, 2021, the estimated market value of our short-term debt securities with contractual maturities up to 12 months and up to 18 months was $ 1.36 billion and $ 320.7 million, respectively.

Gross realized gains and losses on sales of our short-term debt securities for the twelve months ended December 31, 2022, 2021 and 2020 were not significant.

We periodically review our portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns.

For debt securities where the fair value of the investment is less than the amortized cost basis, we have assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment.

Unrealized losses on available-for-sale debt securities at December 31, 2021 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Unrealized losses on available-for-sale debt securities at December 31, 2022 were primarily due to increases in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Accordingly, we have not recorded an allowance for credit losses.

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During the twelve months ended December 31, 2022, 2021 and 2020, we had no unrealized gains or losses recognized during the reporting period on equity investments.

Realized gains from the sale of an equity investment were $ 11.6 million for the twelve months ended December 31, 2021.

Realized gains from the sale of an equity investment were $ 0.2 million and $ 11.6 million for the twelve months ended December 31, 2022 and 2021, respectively.

Accounts Receivable

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During the twelve months ended December 31, 2022, 2021 and 2020, we recorded excess and obsolete inventory charges of $ 13.9 million, $ 28.1 million and $ 24.4 million respectively, in cost of sales as a result of our ongoing assessment of sales demand, inventory on hand for each product and the continuous improvement and innovation of our products.

The raw materials inventory balance of $ 145.2 million as of December 31, 2021 includes $ 5.5 million of pre-launch inventory related to our next CGM product.

Prepaid and Other Current Assets

Prepaid and other current assets were $ 81.6 million and $ 53.9 million as of December 31, 2021 and 2020, respectively.

The increase in prepaid assets is driven primarily due to an increase in software and inventory related prepaid expenses.

(In millions) 2022 2021

Prepaid expenses $ 48.9 $ 39.8

Prepaid inventory 67.8 12.1

Income tax receivables 38.9 2.3

Other current assets 37.0 27.4

Total prepaid and other current assets $ 192.6 $ 81.6

Property and Equipment

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Loss on disposal of property and equipment during the twelve months ended December 31, 2022, 2021 and 2020 recorded in operating expenses was $ 2.2 million, $ 24.5 million and $ 13.6 million, respectively.

Intangibles and Other Assets, Net

We recorded net intangible assets of $ 22.6 million, consisting primarily of customer-related relationships, as result of an acquisition in the third quarter of 2021.

Accounts Payable and Accrued Liabilities

Intangibles, Net

The following table summarizes the components of gross intangible assets, accumulated amortization, and net intangible asset balances as of December 31, 2022 and December 31, 2021

December 31, 2022

(Dollars in millions) Weighted Average Useful Life

(in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Verily intangible asset (1)

5.3 $ 152.4 $ ( 2.4 ) $ 150.0

Customer relationships 3.3 24.1 ( 8.7 ) 15.4

Acquired technology and intellectual property (2)

1.7 14.6 ( 9.6 ) 5.0

Trademarks and trade name 3.5 4.2 ( 1.3 ) 2.9

Intangibles, other 0.0 0.2 ( 0.2 ) —

Total 4.9 $ 195.5 $ ( 22.2 ) $ 173.3

(1) See Note 2 “Development and Other Agreements” to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information.

(2) Excludes Verily intangible asset.

December 31, 2021

(Dollars in millions) Weighted Average Useful Life

(in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Customer relationships 4.5 $ 22.9 $ ( 3.5 ) $ 19.4

Acquired technology and intellectual property 2.7 15.2 ( 7.1 ) 8.1

Trademarks and trade name 4.5 4.4 ( 0.5 ) 3.9

Intangibles, other 1.1 0.3 ( 0.2 ) 0.1

Total 4.0 $ 42.8 $ ( 11.3 ) $ 31.5

The following table presents the total amortization expense of finite-lived intangible assets for the twelve months ended December 31, 2022, 2021 and 2020:

Twelve Months Ended

(In millions) 2022 2021 2020

Amortization expense included in cost of sales $ 4.3 $ 1.9 $ 0.6

Amortization expense included in operating expenses 7.5 3.7 2.5

Total amortization of intangible assets $ 11.8 $ 5.6 $ 3.1

The following table presents estimated future amortization of the Company’s finite-lived intangible assets as of December 31, 2022:

(In millions)

Thereafter 7.1

Total $ 173.3

Other assets were $ 47.1 million and $ 10.5 million as of December 31, 2022 and December 31, 2021, respectively.

The increase in other assets is primarily due to an increase in long-term equity investments in privately held entities, long-term prepaid assets, and term deposits.

Accounts Payable and Accrued Liabilities

(In millions) As Adjusted

Accounts payable trade $ 237.9 $ 189.4

22 unchanged sentences

Finance lease obligations $ 59.6 $ 57.0

Contractual obligations — 12.6

Deferred revenue, long-term 19.0 16.1

Deferred tax liabilities 4.9 5.9

Other tax liabilities 32.7 2.8

Other liabilities 12.1 8.2

2 unchanged sentences

The carrying amounts of our senior convertible notes were as follows as of the dates indicated:

(Dollars in millions) 2021 2020

(In millions) As Adjusted

Principal amount:

2 unchanged sentences

Total principal amount 1,982.3 1,999.8

Unamortized debt discount ( 282.7 ) ( 371.1 )

Unamortized debt issuance costs ( 12.0 ) ( 18.0 )

Carrying amount of liability component $ 1,702.7 $ 1,667.2

Carrying value of equity component $ 449.4 $ 461.0

Remaining amortization period of debt discount on the liability component:

Senior Convertible Notes due 2023 1.9 years 2.9 years

Senior Convertible Notes due 2025 3.9 years 4.9 years

For our senior convertible notes for which the if-converted value exceeded the principal amount, the amount in excess of principal is as follows as of the dates indicated:

Carrying amount of senior convertible notes $ 1,970.3 $ 1,981.8

For our senior convertible notes for which the if-converted value exceeded the principal amount, the amount in excess of principal was as follows as of the dates indicated:

(In millions) 2022 2021

4 unchanged sentences

Twelve Months Ended

(Dollars in millions) 2021 2020 2019

2022 2021 2020

(Dollars in millions) As Adjusted As Adjusted

Cash interest expense:

2 unchanged sentences

Non-cash interest expense:

Accretion of debt discount 83.0 68.6 45.8

Amortization of debt issuance costs 5.9 6.0 5.5

Total interest expense recognized on senior notes $ 14.7 $ 15.3 $ 14.8

Effective interest rates:

Effective interest rate:

Senior Convertible Notes due 2022 (2)

* 5.1 % 5.1 %

Senior Convertible Notes due 2023 1.1 % 1.1 % 1.1 %

10 unchanged sentences

We settled these conversions by issuing 5,649,988 shares of our common stock.

As a result of the repurchase and conversions of the 2022 Notes, we recorded a loss on extinguishment of debt of $ 5.9 million for the twelve months ended December 31, 2020.

The loss on extinguishment of debt included the unamortized debt issuance costs for the 2022 Notes.

0.75 % Senior Convertible Notes due 2023

7 unchanged sentences

Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2023 Notes includes customary terms and covenants, including certain events of default after which the 2023 Notes may be due and payable immediately.

Since upon conversion by the holders we may elect to settle such conversion in shares of our common stock, cash, or a combination thereof, we accounted for the cash conversion option as an equity instrument classified to stockholders’ equity.

As a result, we recognized $ 171.6 million in additional paid-in capital, net of debt issuance costs, during 2018.

Holders of $ 57.7 million in aggregate principal amount of the 2023 Notes elected conversion at their option during the twelve months ended December 31, 2021.

For the twelve months ended December 31, 2021, holders of $ 57.7 million in aggregate principal amount of the 2023 Notes elected conversion at their option.

We settled these conversions by issuing a combination of common stock and treasury stock.

We issued 1,403,112 shares to settle the converted 2023 Notes during the twelve months ended December 31, 2021, of which 794,588 shares were issued out of treasury stock.

As a result of the elected conversions, we recorded a loss on extinguishment of debt of $ 1.4 million.

We received 967,380

shares of common stock from the exercise of a portion of the 2023 Note Hedge that we purchased concurrently with the issuance of the 2023 Notes, as described below.

For the twelve months ended December 31, 2022, holders of $ 17.5 million in aggregate principal amount of the 2023 Notes elected conversion at their option.

We settled these conversions using treasury stock.

We issued 425,552 treasury shares to settle the converted 2023 Notes.

We received 287,492 shares of common stock from the exercise of a portion of the 2023 Note Hedge that we purchased concurrently with the issuance of the 2023 Notes, as described below.

13 unchanged sentences

Conversion Rights at Our Option

Dexcom may not redeem the 2023 Notes prior to December 1, 2021.

Dexcom did not have a right to redeem the 2023 Notes prior to December 1, 2021.

On or after December 1, 2021 and prior to September 1, 2023, Dexcom may redeem for cash all or part of the 2023 Notes, at its option, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Dexcom provides notice of redemption.

4 unchanged sentences

The 2023 Note Hedge will expire on December 1, 2023.

The 2023 Note Hedge is expected to reduce the potential equity dilution upon any conversion of the 2023 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2023 Notes if the daily volume-weighted average price per share of our common stock exceeds the strike price of the 2023 Note Hedge.

converted 2023 Notes if the daily volume-weighted average price per share of our common stock exceeds the strike price of the 2023 Note Hedge.

The strike price of the 2023 Note Hedge initially corresponds to the conversion price of the 2023 Notes and is subject to certain adjustments under the terms of the 2023 Note Hedge.

An assumed exercise of the 2023 Note Hedge by us is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive

with respect to the calculation of diluted earnings per share.

An assumed exercise of the 2023 Note Hedge by us is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share.

See above for a description of conversion activity related to the 2023 Notes and shares received as the result of exercising a portion of the 2023 Note Hedge.

9 unchanged sentences

The net proceeds from the offering, after deducting initial purchasers’ discounts and estimated costs directly related to the offering, were approximately $ 1.19 billion.

The initial conversion rate of the 2025 Notes is 1.6655 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $ 600.42 per share, subject to adjustments, with a maximum conversion rate of 2.3732.

The initial conversion rate of the 2025 Notes is 6.6620 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $ 150.11 per share, subject to adjustments.

The 2025 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion.

2 unchanged sentences

Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2025 Notes includes customary terms and covenants, including certain events of default after which the 2025 Notes may be due and payable immediately.

As a result, we recognized $ 289.4 million in additional paid-in-capital, net of debt issuance costs, during 2020.

Conversion Rights at the Option of the Holders

14 unchanged sentences

In October 2021, we entered into a Second Amended and Restated Credit Agreement (the "Amended Credit Agreement"), which amended and restated the credit agreement we had previously entered into in December 2018 and amended in May 2020 (the “Credit Agreement”).

The Amended Credit Agreement is a five-year revolving credit facility that provides for an available principal amount of $ 200.0 million, which can be increased up to $ 500.0 million at our option subject to customary conditions and approval of our lenders.

The Amended Credit Agreement is a five-year revolving credit facility that provides for an available principal amount of $ 200.0 million which can be increased up to $ 500.0 million at our option subject to customary conditions and approval of our lenders (the “Credit Facility”).

The Amended Credit Agreement will mature on October 13, 2026.

9 unchanged sentences

The first base rate is the Alternate Base Rate (“ABR”) and loans comprising each ABR borrowing shall bear interest at the ABR plus the applicable rate between 0.375 % to 1.000 %.

The ABR is the highest of (a) the prime rate last quoted by The Wall Street Journal, (b) the Federal Reserve Bank of New York (“NYFRB”) rate plus one half of 1%, and (c) the Adjusted London Interbank Offered Rate (“LIBO Rate”) for a one month interest period plus 1 %.

The second base rate is the Term Benchmark rate and loans comprising each Term Benchmark borrowing shall bear interest at the Adjusted LIBO Rate, the Adjusted Euro Interbank Offered Rate (“EURIBOR Rate”), the Adjusted Stockholm Interbank Offered Rate (“STIBOR Rate”), the Adjusted Canadian Dollar Offered Rate (“CDOR”), Adjusted Australian Dollar (“AUD”) Rate, the Adjusted Bank Bill Benchmark Rate (“BKBM Rate”) or the Adjusted Tokyo Interbank Offered Rate (“TIBOR Rate”), as applicable based on the currency denomination borrowed, plus the applicable rate between 1.375 % to 2.000 % .

The ABR is the highest of (a) the prime rate last quoted by The Wall Street Journal, (b) the Federal Reserve Bank of New York rate plus one half of 1%, and (c) the Adjusted London Interbank Offered Rate (“LIBO Rate”) for a one month interest period plus 1 %.

The second base rate is the Term Benchmark rate and loans comprising each Term Benchmark borrowing shall bear interest at the Adjusted LIBO Rate, the Adjusted Euro Interbank Offered Rate, the Adjusted Stockholm Interbank Offered Rate, the Adjusted Canadian Dollar Offered Rate, Adjusted Australian Dollar Rate, the Adjusted Bank Bill Benchmark Rate or the Adjusted Tokyo Interbank Offered Rate, as applicable based on the currency denomination borrowed, plus the applicable rate between 1.375 % to 2.000 % .

The third base rate is the Daily Simple RepoFunds Rate (“RFR”) and loans comprising each Daily Simple RFR Loan shall bear interest at a rate per annum equal to the applicable Daily Simple RFR plus the applicable rate between 1.375 % to 2.000 % plus an additional 0.0326 %.

2 unchanged sentences

The Amended Credit Agreement contains covenants that limit certain indebtedness, liens, investments, transactions with affiliates, dividends and other restricted payments, subordinated indebtedness and amendments to subordinated indebtedness documents, and sale and leaseback transactions of Dexcom or any of its domestic subsidiaries.

The Amended Credit Agreement also requires us to maintain a maximum leverage ratio and a minimum fixed charge coverage ratio.

Amended Credit Agreement also requires us to maintain a maximum leverage ratio and a minimum fixed charge coverage ratio.

We were in compliance with these covenants as of December 31, 2022.

As of December 31, 2022, we also have a guarantee facility related to our international operations which is collateralized by a $ 10.7 million term deposit that is included in non-current “Other assets” on our consolidated balance sheets.

Leases and Other Commitments

We lease office, manufacturing and warehouse space facilities under various domestic and international non-cancellable operating and finance lease arrangements.

We also have a land lease in Penang, Malaysia, that expires in 2080, for the build-out of our international manufacturing facility.

Our leases, excluding our land lease in Penang, Malaysia, have remaining lease terms of up to nineteen years , some of which include one or more options to extend the leases for up to five years per option.

Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised.

We also have land leases in Penang, Malaysia that expire through 2082 for the build-out of our international manufacturing facility.

Our leases, excluding our land leases in Penang, Malaysia, have remaining lease terms of up to eighteen years .

Some of the leases include one or more options to extend the leases for up to five years per option.

Options to extend or terminate the lease are included in the lease liability if they are reasonably certain of being exercised.

Leases are classified as operating or financing at lease commencement.

14 unchanged sentences

Long-term portion $ 94.6 $ 59.6

(1) Total future lease cost excludes $ 0.6 million of legally binding minimum lease payments for leases signed but not yet commenced .

Certain lease agreements require us to return designated areas of leased space to its original condition upon termination of the lease agreement, for which we record an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation.

8 unchanged sentences

Operating lease cost 22.6 23.3 18.4

Right-of-use asset impairment 6.3 — —

Short-term lease cost 3.5 2.3 1.3

1 unchanged sentence

Total lease cost $ 49.3 $ 38.7 $ 27.8

(1) Short-term lease cost is primarily related to temporary office space associated with the transition of certain operations to the Philippines.

(1) Variable lease costs are primarily related to common area maintenance charges and property taxes .

As the result of the Company’s transition to a flexible working environment, we vacated a building in San Diego during the fourth quarter and made it available for sublease.

This resulted in an impairment indicator.

We tested the asset group as of November 30, 2022 consisting primarily of the leasehold improvements and right-of-use asset for recoverability by comparing its carrying value to an estimate of future undiscounted cash flows.

Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group were below its carrying value.

We determined the fair value of the asset group by discounting the estimated future cash flows using level 3 fair value inputs under ASC 820 as described in Note 1.

As a result of the impairment test, we recorded a non-cash charge of $ 23.0 million for the twelve months ended December 31, 2022 in the “ Selling, general and administrative ” caption of our consolidated statements of operations.

The fair value of the asset group immediately subsequent to the impairment was $ 2.5 million and was categorized as Level 3 within the ASC 820, “Fair Value Measurements” fair value hierarchy.

Other information related to our leases is as follows:

21 unchanged sentences

In addition, from time to time we may bring claims or initiate lawsuits against various third parties with respect to matters arising out of the ordinary course of our business, including commercial and employment related matters.

During the fiscal year ended December 31, 2021, we and certain Abbott entities served complaints for patent infringement, validity and other patent related actions against each other in multiple jurisdictions, inside and outside the United States.

During the year ended December 31, 2022, we and certain Abbott Diabetes Care, Inc.

(“Abbott”) entities served complaints for patent infringement, validity and other patent related actions against each other in multiple jurisdictions, inside and outside the United States.

We intend to vigorously pursue our claims and defenses in these cases to protect our intellectual property and to defend against Abbott’s infringement allegations.

3 unchanged sentences

Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions) As Adjusted As Adjusted

United States $ 463.5 $ 318.2 $ 343.6

3 unchanged sentences

Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions) As Adjusted As Adjusted

Federal $ 32.6 $ 5.7 $ —

15 unchanged sentences

UK 90.5 102.4 Indefinite

Other foreign 9.7 — 2033

R&D credits — 80.1

1 unchanged sentence

California R&D credits $ 96.4 $ 81.4 Indefinite

On June 29, 2020, California’s Governor Newsom signed AB 85 into law, suspending California net operating loss utilization and imposing a $5.0 million cap on the amount of business incentive tax credits companies can utilize, effective for tax years 2020 through 2022.

As a result of the legislation, we are utilizing $ 2.2 million of California research and development credits for the tax year ended December 31, 2021.

Utilization of net operating losses and credit carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions.

1 unchanged sentence

The limitation will result in approximately $ 1.7 million of U.S.

research and development tax credits that will expire unused.

The related deferred tax

assets have been removed from the components of our deferred tax assets as summarized in the table below.

research and development tax credits that will expire unused, and is therefore, not reflected in the tax credit carryforwards above.

In addition, the related deferred tax assets have been removed from the components of our deferred tax assets as summarized in the table below.

The tax benefits related to the remaining federal and state net operating losses and tax credit carryforwards may be further limited or lost if future cumulative changes in ownership exceed 50% within any three-year period.

4 unchanged sentences

Realization of deferred tax assets is dependent upon future earnings in applicable tax jurisdictions.

(In millions) 2021 2020

(In millions) As Adjusted

Deferred tax assets:

6 unchanged sentences

Collaborative agreement milestone accrual (1)

Convertible debt 9.3 21.6

Total gross deferred tax assets 485.2 397.0

3 unchanged sentences

Fixed assets and acquired intangibles assets ( 69.9 ) ( 42.5 )

Convertible debt discount ( 48.1 ) ( 55.9 )

Other ( 0.3 ) —

Total deferred tax liabilities ( 70.2 ) ( 42.5 )

Net deferred tax assets (liabilities) $ 336.3 $ 284.6

(1) This amount is related to the $ 87.1 million charge recorded in the fourth quarter of 2021 associated with our Restated Collaboration Agreement with Verily, as discussed in Note 2 to the consolidated financial statements.

The current year change in net deferred tax assets of $ 1.5 million is primarily comprised of purchase accounting adjustments of $ 7.3 million recorded in goodwill and $ 0.5 million tax effect of unrealized loss on investments recorded in other comprehensive income, offset by $ 4.9 million of deferred tax benefit recorded through income tax expense and $ 1.1 million of convertible debt adjustments recorded as a reduction to additional paid-in capital.

We maintain a valuation allowance of $ 69.9 million against our California research and development tax credits, foreign tax credits, and certain foreign intangible assets.

We maintain a valuation allowance of $ 78.7 million against our California research and development tax credits and certain foreign intangible assets.

During the year ended December 31, 2022, the valuation allowance increased by $ 8.9 million primarily due to generation of California research and development tax credits.

The reconciliation between our effective tax rate on income (loss) from continuing operations and the statutory rate is as follows:

Twelve Months Ended

(In millions) 2021 2020 2019

2022 2021 2020

(In millions) As Adjusted As Adjusted

federal statutory tax rate $ 82.1 $ 53.9 $ 62.6

5 unchanged sentences

Stock and officers compensation ( 1.2 ) ( 20.4 ) ( 28.7 )

Collaboration agreement milestone share-based payment ( 52.9 ) — —

Change in statutory tax rates 1.0 ( 10.0 ) ( 4.1 )

3 unchanged sentences

$ 49.6 $ 39.9 $ ( 251.8 )

We have elected to account for Global Intangible Low-Taxed Income (“GILTI”) in the period the tax is incurred.

The following table summarizes the activity related to our gross unrecognized tax benefits:

4 unchanged sentences

Balance at December 31, 2020 36.6

Decreases related to prior year tax positions ( 0.9 )

Increases related to prior year tax positions 0.4

Increases related to current year tax positions 9.8

Balance at December 31, 2021 46.8

Increases related to prior year tax positions 0.4

Decreases related to prior year tax positions ( 0.9 )

Increases related to current year tax positions 6.1

Balance at December 31, 2022 $ 52.0

Of the total unrecognized tax benefits at December 31, 2021, 2020, and 2019, $ 29.5 million, $ 23.5 million, and $ 0 , respectively, would reduce our annual effective tax rate if recognized.

Of the total unrecognized tax benefits at December 31, 2022, 2021, and 2020, $ 32.5 million, $ 29.5 million and $ 23.5 million, respectively, would affect our annual effective tax rate if recognized.

Also included in the balance of unrecognized tax benefits at December 31, 2022 is $ 0.2 million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred tax assets.

Interest and penalties are classified as a component of income tax expense and were not material for any period presented.

11 unchanged sentences

The impact of this tax holiday was immaterial in in 2022, 2021, and 2020.

We have been granted an investment tax

allowance incentive by the Malaysian Investment Development Authority (MIDA) in Malaysia, which is effective through December 31, 2025.

We have been granted a tax holiday by the Malaysian Investment Development Authority (MIDA) in Malaysia, which will not be triggered until we commence operations.

The tax incentive had no effect on foreign taxes during 2022, 2021, or 2020.

9 unchanged sentences

Under the terms of the 401(k) Plan, we may elect to match a discretionary percentage of contributions.

We match 50 % of contributions up to 5 % of annual compensation.

We match 50 % of contributions up to 5 % of eligible compensation.

Total matching contributions were $ 11.1 million, $ 9.9 million and $ 6.7 million for the twelve months ended December 31, 2022, 2021 and 2020, respectively.

11 unchanged sentences

As of December 31, 2022, approximately 15.3 million shares remained available for future issuance under the 2015 Plan.

We issue new shares of common stock to satisfy RSU and PSU vesting under our employee equity incentive plans.

RSU awards typically vest in annual installments over three or four years and vesting is subject to continued service.

1 unchanged sentence

PSUs vest three years from the date of grant, subject to continued employment through that date.

Treasury Stock

Share Repurchase Program and Treasury Shares

Repurchased shares of our common stock are held as treasury shares until they are reissued or retired.

1 unchanged sentence

Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount.

We issue new shares of common stock to satisfy RSU and PSU vesting under our employee equity incentive plans.

We repurchased 0.8 million shares of our common stock in 2018.

No shares of our common stock were repurchased during 2019 or 2020.

Treasury stock increased by 43,198 net shares during 2021 as a result of shares received from the exercise of a portion of the 2023 Note Hedge less the issuance of shares to settle the converted 2023 Notes.

We have not yet determined the ultimate disposition of our treasury shares and consequently we continue to hold them as treasury shares rather than retiring them.

The following table summarizes our treasury share activity for the periods shown.

No treasury share activity occurred during the twelve months ended December 31, 2020.

Twelve Months Ended

(In millions) 2022 2021

Shares issued in connection with 2023 Notes conversions 0.4 0.8

Shares received from Note Hedge ( 0.3 ) ( 1.0 )

Shares issued in connection with the Restated Collaboration Agreement 2.9 —

Shares repurchased under the Share Repurchase Program ( 6.6 ) —

On July 26, 2022, a duly authorized committee of our Board of Directors authorized and approved a share repurchase program of up to $ 700.0 million of our outstanding common stock, with a repurchase period ending no later than June 30, 2023 (the “Share Repurchase Program”).

Shares of common stock repurchased under the Share Repurchase Program become treasury shares.

Repurchases of our common stock under the Share Repurchase Program may be made from time to time, on the open market, in privately negotiated transactions or by other methods, at our discretion, and in accordance with the limitations set forth in Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, and other applicable federal and state laws and regulations.

On August 1, 2022, we entered into an accelerated share repurchase (“ASR”) agreement with JPMorgan Chase Bank, National Association (“JP Morgan”) to repurchase up to $ 700.0 million of our common stock on an accelerated basis through September 29, 2022.

On August 3, 2022, we paid $ 700.0 million to JP Morgan and received an initial delivery of approximately 3.0 million shares of common stock.

The final notional amount under the ASR agreement was $ 557.7 million or approximately 6.6 million shares of our common stock based on the daily average volume-weighted average price of our common stock during the term of the ASR for the period from August 1, 2022 to August 31, 2022, less a discount.

The ASR agreement concluded on September 1, 2022.

The ASR was a forward contract indexed to our own common stock.

The forward contract met all of the applicable criteria for equity classification, so we did not account for it as a derivative instrument.

We have reflected the shares delivered to us by the financial institution as treasury shares as of the dates they were delivered to us in computing weighted average shares outstanding for both basic and diluted net income per share.

Repurchased shares of our common stock are held as treasury shares until they are reissued or retired.

We have not yet determined the ultimate disposition of repurchased shares and consequently we continue to hold them as treasury shares rather than retiring them.

Future stock repurchases under the Share Repurchase Program are at the discretion of our management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.

The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time.

Stock Options

1 unchanged sentence

As of December 31, 2022 and December 31, 2021, we had no stock options outstanding.

The total intrinsic value of stock options exercised during the twelve months ended December 31, 2020 and 2019 was $ 7.9 million and $ 7.4 million, respectively.

The total intrinsic value of stock options exercised during the twelve months ended December 31, 2020 was $ 7.9 million.

Equity Award Activity

All periods presented have also been adjusted to reflect the four -for-one stock split.

Refer to Note 1, “Organization and Significant Accounting Policies,” to the consolidated financial statements for further information.

A summary of RSU and PSU activity under the 2015 Plan for the twelve months ended December 31, 2022, 2021 and 2020 is as follows:

4 unchanged sentences

Balance at December 31, 2019 19.6 7.2 $ 24.20

Additional shares authorized 2.2 —

Granted ( 2.0 ) 2.0 75.09

43 unchanged sentences

Dexcom is domiciled in the United States.

We sell our CGM systems through a direct sales force in United States, Australia, Canada, New Zealand, and some countries in Europe, and through distribution arrangements in the United States, and certain countries in Africa, Asia, Europe, Latin America, and the Middle East, as well as Australia, Canada, and New Zealand.

We sell our CGM systems through a direct sales organization and through distribution arrangements that allow distributors to sell our products.

Revenue by geographic region

38 unchanged sentences

Write-offs and adjustments ( 0.5 )

Recoveries 0.1

Balance at December 31, 2022 $ 7.3

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-K

Item 9A. Controls and Procedures