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• We are subject to cost-containment efforts by third-party payors that could result in reduced product pricing and/or sales of our products and cause a reduction in future revenue.
−Removed: • Although many third-party payors have adopted some form of coverage policy on continuous glucose monitoring devices, our products do not always have some form of coverage, including simple broad-based contractual coverage, with third-party payors and we frequently experience administrative challenges in obtaining reimbursement for our customers.
−Removed: If we are unable to obtain adequately broad reimbursement at acceptable prices for our products or any future products from third-party payors, our revenue may be negatively impacted.
+Added: • Although many third-party payors have adopted some form of coverage policy for continuous glucose monitoring devices, our products do not always have such coverage, including simple broad-based contractual coverage with third-party payors, and we frequently experience administrative challenges in obtaining coverage or reimbursement for our products.
+Added: If we are unable to obtain adequately broad coverage or reimbursement for our products or any future products from third-party payors, our revenue may be negatively impacted.
• The research and development efforts we undertake independently, and in some instances in connection with our collaborations with third parties, may not result in the development of commercially viable products, the generation of significant future revenues or adequate profitability.
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health care reform legislation, may have a material adverse effect on our business.
−Removed: • If we are unable to successfully complete the pre-clinical studies or clinical trials necessary to support additional PMA, de novo or 501(k) applications or supplements, we may be unable to commercialize our CGM candidate systems under development, which could impair our business, financial condition and operating results.
+Added: • If we are unable to successfully complete the pre-clinical studies or clinical trials necessary to support additional PMA, de novo, or 510(k) applications or supplements, we may be unable to commercialize our CGM systems under development, which could impair our business, financial condition and operating results.
• We are subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from shipping affected products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief.
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• We have indebtedness in the form of convertible senior notes, which could adversely affect our financial health and our ability to respond to changes in our business.
−Removed: • We may be adversely affected by the effects of inflation.
+Added: • Environmental, social and governance, or ESG, regulations, policies and provisions could expose us to numerous risks.
Risks Related to Our Business and Operations
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If we experience decreasing prices for our products and we are unable to reduce our expenses, including the per unit cost of producing our products, there may be a material adverse effect on our business, results of operations, financial condition and cash flows.
−Removed: We have experienced, and anticipate that we will continue to experience, decreasing prices for our products due to pricing pressure from managed care organizations and other third-party payors, increased market power of our payors, as the medical device industry consolidates, and increased competition among suppliers, including manufacturing services providers.
+Added: We have experienced, and anticipate that we will continue to experience, decreasing prices for our products due to pricing pressure from managed care organizations and other third-party payors, increased market power of our payors, and increased competition among suppliers, including manufacturing services providers, as the medical device industry consolidates.
If the prices for our products and services decrease and we are unable to reduce our expenses, including the cost of sourcing materials, logistics and the cost to manufacture our products, our business, results of operations, financial condition and cash flows will be adversely affected.
−Removed: The ongoing COVID-19 pandemic may result in increased costs for manufacturing and outsourced services while also causing additional pressure to reduce the prices for our products if a recession or depression occurs and people are unable to afford our products.
−Removed: We cannot predict the ultimate impact that the ongoing COVID-19 pandemic and its effects could have on our business operations, financial condition and cash flows.
We are subject to cost-containment efforts by third-party payors that could result in reduced product pricing and/or sales of our products and cause a reduction in future revenue.
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Most of our customers rely on third-party payors, including government programs and private health insurance plans, to cover the cost of our products.
−Removed: We expect that the continuing cost reduction and containment measures may reduce the cost or utilization of health care products and could lead to patients being unable to obtain approval for coverage or payment from these third-party payors.
−Removed: Additionally, as a result of the ongoing COVID-19 pandemic, some customers have lost access and others may lose access to their private health insurance plan if they lose their job, and an impact to job status may extend for a prolonged period of time, beyond possible coverage periods through COBRA, or where the cost to maintain coverage may not be affordable to our customer.
−Removed: As most of our customers rely on third-party payors, including government programs and private health insurance plans, to cover the cost of our products, our customers may lose coverage for our products, which may harm our business and results of operations.
+Added: We expect that the continuing cost reduction and containment measures may reduce the cost or utilization of health care products and could lead to patients being unable to obtain approval for coverage or payment from these third-party payors or to costs being shifted to patients for our products.
+Added: Additionally, as a result of the economic slowdown, some customers have lost access and others may lose access to their private health insurance plan if they lose their job, and an impact to job status may extend for a prolonged period of time, beyond possible coverage periods through COBRA, or where the cost to maintain coverage may not be affordable to our customer.
+Added: As most of our customers rely on third-party payors, including government programs and private health insurance plans, to cover the cost of our products, our customers may lose coverage or reimbursement for our products, which may harm our business and results of operations.
We have experienced, and anticipate that we will continue to experience, downward pressure on product pricing.
To the extent these cost containment efforts are not offset by greater patient access to our products, our future revenue may be reduced and our business may be harmed.
−Removed: Although many third-party payors have adopted some form of coverage policy on continuous glucose monitoring devices, our products do not always have some form of coverage, including simple broad-based contractual coverage, with third-party payors and we frequently experience administrative challenges in obtaining reimbursement for our customers.
−Removed: If we are unable to obtain adequately broad reimbursement at acceptable prices for our products or any future products from third-party payors, our revenue may be negatively impacted.
+Added: Although many third-party payors have adopted some form of coverage policy for continuous glucose monitoring devices, our products do not always have such coverage, including simple broad-based contractual coverage with third-party payors, and we frequently experience administrative challenges in obtaining coverage or reimbursement for our products.
+Added: If we are unable to obtain adequately broad coverage or reimbursement for our products or any future products from third-party payors, our revenue may be negatively impacted.
As a medical device company, reimbursement from government and/or commercial third-party healthcare payors, including Medicare and Medicaid, is an important element of our success.
−Removed: The Centers for Medicare & Medicaid Services, or CMS, provides coverage for “Therapeutic Continuous Glucose Monitors” as durable medical equipment eligible for coverage under Medicare Part B.
+Added: The Centers for Medicare &
+Added: Medicaid Services, or CMS, provides coverage for “Therapeutic Continuous Glucose Monitors” as durable medical equipment eligible for coverage under Medicare Part B.
Coverage criteria for therapeutic CGMs is determined by CMS under national coverage determinations as well as by local Medicare Administrative Contractors under local coverage determinations.
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If we are unable to successfully address these hurdles, reimbursement of our products may be limited to a smaller subset of people with diabetes covered by Medicare or to those people with diabetes covered by other third-party payors that have adopted policies for CGM devices allowing for coverage of these devices if certain conditions are met.
−Removed: Adverse coverage or reimbursement decisions relating to our products, or rescission or limitation of favorable determinations, by CMS, its Medicare Administrative Contractors, other state, federal or
−Removed: international payors, and/or third-party commercial payors could significantly reduce reimbursement, which could have an impact on the acceptance of, and demand for, our products and the prices that our customers are willing to pay for them.
−Removed: As of September 30, 2022, the eight largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.
+Added: Adverse coverage or reimbursement decisions relating to our products, or rescission or limitation of favorable determinations, by CMS, its Medicare Administrative Contractors, other state, federal or international payors, and/or third-party commercial payors could significantly reduce reimbursement, which could have an impact on the acceptance of, and demand for, our products and the prices that our customers are willing to pay for them.
+Added: As of March 31, 2023, the eight largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.
In addition, we have negotiated contracted rates with all of those third-party payors for the purchase of our current CGM systems by their members.
Nevertheless, coverage and reimbursement-related barriers remain.
−Removed: Among other things, people with diabetes without insurance that covers our products bear the financial cost of them.
+Added: Among other things, people with diabetes without insurance that covers our products bear the entire financial cost of using our products.
In addition, in the United States, people with diabetes using existing single-point finger stick devices are generally reimbursed all or part of the product cost by Medicare or other third-party payors, which may be perceived as more advantageous for consumers.
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The commercial success of our products in both domestic and international markets will substantially depend on whether timely and comprehensive third-party reimbursement is widely available for individuals that use them.
−Removed: In addition, Medicare, Medicaid, other governmental health programs, health maintenance organizations and other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new and existing medical devices, and, as a result, they may be restrictive, or they may not cover or provide adequate payment for our products.
+Added: CMS has recently adopted coverage guidelines for CGMs, which could have a favorable impact on us.
+Added: Previously, Medicare coverage for CGM was only available to Medicare patients who take at least three doses of insulin a day, limiting CGM reimbursement for Medicare beneficiaries with intensive Type 1 and 2 diabetes.
+Added: The Local Coverage Determination, or LCD, that CMS released in April 2023 extends Medicare CGM coverage to patients who use insulin at least once per day.
+Added: Further, the LCD also allows coverage for patients not taking insulin if the patient has a history of problematic hypoglycemia.
+Added: Nevertheless, third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new and existing medical devices, and, as a result, they may be restrictive, or they may not cover or provide adequate payment for our products.
In order to obtain additional reimbursement arrangements, including under pharmacy benefits, we may have to agree to a net sales price lower than the net sales price we might charge in other sales channels.
Our revenue may be limited by the continuing efforts of government and third-party payors to contain or reduce the costs of healthcare through various increasingly sophisticated means, such as leveraging increased competition, increasing eligibility requirements such as second opinions and other documentation, purchasing in a bundle, or redesigning benefits.
+Added: In December 2021, CMS published a final rule expanding the classification of DME under Medicare Parts B & C to include adjunctive CGMs (i.e., CGMs that do not replace standard blood glucose monitors for treatment decisions) and related supplies.
+Added: This final rule expands coverage of CGMs to include a large competitor’s competing device, which may negatively impact our sales.
We are unable to predict what effect the current or any future healthcare reform will have on our business, or the effect these matters will have on our customers.
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In some foreign markets, pricing and profitability of medical devices are subject to government control.
−Removed: For instance, in Germany, reimbursement is available for continuous glucose monitoring systems under certain conditions, which we believe are met by our current CGM systems.
We are susceptible to changes in government-mandated coverage requirements and other controls which could impact access to and affordability of our products.
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The development of new products, or novel technologies and services and the enhancement of our current CGM products (including seeking and potentially obtaining new indications for use), requires significant investment in research and development, intellectual property protection, clinical trials, regulatory approvals and third party reimbursement.
−Removed: The results of our product development and commercialization efforts may be affected by a range of factors, including our ability to anticipate customer needs, innovate and develop new products (whether independently or through our unique collaboration with Verily
−Removed: under the Restated Collaboration Agreement (See Note 2 “Collaboration with Verily Life Sciences” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more details on the Restated Collaboration Agreement)), determine a feasible or timely regulatory pathway or approach, and launch those products cost effectively into multiple markets and geographies.
+Added: The results of our product development and commercialization efforts may be affected by a range of factors, including our ability to anticipate customer needs, innovate and develop new products (whether independently or with our partners), determine a feasible or timely regulatory pathway or approach, and launch those products cost effectively into multiple markets and geographies.
If we are unable to successfully anticipate customer needs, innovate, develop new products and successfully launch them, we may not be able to generate significant future revenues or profits from these efforts.
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Even if a product receives marketing authorization from the FDA, it may not be accepted in the marketplace by physicians and people with diabetes.
−Removed: In the ordinary course of our business (and in contrast to our collaboration with Verily to commercialize our own next-generation CGM product), we enter into collaborative arrangements with third parties to expand into new markets, including with insulin device manufacturers such as Eli Lilly, Insulet, Novo Nordisk, Tandem Diabetes and The Ypsomed Group to integrate our CGM technology into their insulin delivery systems.
+Added: In the ordinary course of our business we enter into collaborative arrangements with third parties to expand into new markets, including with insulin device manufacturers such as Eli Lilly, Insulet, Novo Nordisk, Tandem Diabetes and The Ypsomed Group to integrate our CGM technology into their insulin delivery systems.
We have also entered into collaborations with several organizations that are currently using, or are developing, programs for the treatment of Type 2 diabetes that utilize our current CGM systems.
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Notwithstanding our prior experience in marketing and selling our products, we might be unable to successfully expand the commercialization of our existing products or begin commercialization of our next-generation CGM systems on a wide-scale for a number of reasons, including the following:
−Removed: • our G6 system prompts the user to replace the sensor no later than the tenth day, which might make it expensive for users;
+Added: • our G6 and G7 systems prompt the user to replace the sensor no later than the tenth day, which might make it expensive for users;
• widespread market acceptance of our products by physicians and people with diabetes will largely depend on our ability to demonstrate their relative safety, effectiveness, reliability, cost-effectiveness and ease of use;
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• we may not have sufficient financial or other resources to adequately expand the commercialization efforts for our products;
+Added: • expanded coverage opportunities for our competitors’ CGM devices and supplies, including coverage for adjunctive CGMs, increasing competition in the marketplace;
• our FDA and other regulatory authority marketing application submissions and reviews may be delayed, or cleared or approved with limited product indications and labeling;
• we may not be able to manufacture our products in commercial quantities commensurate with demand or at an acceptable cost;
−Removed: • people with Type 2 diabetes do not generally receive broad reimbursement from third-party payors for their purchase of CGM products in the United States, since many payors require that a policy holder meet specific medical criteria to qualify for reimbursement, which may reduce widespread access to or use of our products;
+Added: • for people with Type 2 diabetes, current reimbursement from third-party payors is generally limited to people on intensive insulin therapy;
• the uncertainties associated with establishing and qualifying new manufacturing facilities;
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• rapid technological change may make our technology and our products obsolete.
−Removed: In addition to the risks outlined above, our G6 systems are more invasive than many other self-monitored glucose testing systems, including single-point finger stick devices, and people with diabetes may be unwilling to insert a sensor in their body, especially if their current diabetes management involves no more than two finger sticks per day.
+Added: In addition to the risks outlined above, our G6 and G7 systems are more invasive than many other self-monitored glucose testing systems, including single-point finger stick devices, and people with diabetes may be
+Added: unwilling to insert a sensor in their body, especially if their current diabetes management involves no more than two finger sticks per day.
Moreover, people with diabetes may not perceive the benefits of CGM and may be unwilling to change their current treatment regimens.
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If our manufacturing capabilities are insufficient to produce an adequate supply of product at appropriate quality levels, our growth could be limited and our business could be harmed.
−Removed: Our existing manufacturing facilities are designed to manufacture current and next-generation sensors and transmitters, but may not be scaled quickly enough to permit us to manufacture one or more of our CGM systems in quantities sufficient to meet market demand.
+Added: Our existing manufacturing facilities are designed to manufacture current and next-generation CGM systems, but may not be scaled quickly enough to permit us to manufacture one or more of our CGM systems in quantities sufficient to meet market demand.
In the past, we have had difficulty scaling our manufacturing operations to provide a sufficient supply of product to support market demand and our commercialization efforts.
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We may not adequately predict the market demand for our products, in order to produce our products in the quantities we anticipate will be necessary to meet market demand.
−Removed: We will need to adequately predict the market demand for our products and increase our manufacturing capacity by a significant factor over the current level to meet or exceed the anticipated market demand.
−Removed: In addition, we will have to modify our manufacturing design, reliability and process if and when our next-generation CGM, technologies are approved, cleared or otherwise authorized by the applicable regulatory body and commercialized.
+Added: We will need to adequately predict the market demand for our products and increase our manufacturing capacity by a significant factor over the current level to meet or exceed the anticipated market demand by product.
+Added: In addition, we may have to modify our manufacturing design, reliability and process for next-generation products that may hereafter be approved, cleared or otherwise authorized by the applicable regulatory body and commercialized.
There are technical challenges to increasing manufacturing capacity, including equipment design, automation, validation and installation, contractor issues and delays, licensing and permitting delays or rejections, materials procurement, manufacturing site expansion, problems with production yields and quality control and assurance.
−Removed: Continuing to develop commercial-scale manufacturing facilities will require the investment of substantial additional funds and the hiring and
−Removed: retention of additional management, quality assurance, quality control and technical personnel who have the necessary manufacturing experience.
+Added: Continuing to develop commercial-scale manufacturing facilities will require the investment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control and technical personnel who have the necessary manufacturing experience.
Delays in the launch of next-generation products may result in unanticipated continuing increases in demand for current-generation products (to substitute for the unavailability of the next-generation products) which, if not adequately prepared for, may result in deficits in our ability to produce adequate amounts of the prior-generation products to meet demand at appropriate prices.
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In addition, any changes to our manufacturing processes may trigger the need for submissions or notifications to, and in some cases advance approval from, the FDA or other regulatory authorities because of the potential impact of changes on our previously cleared, approved and/or authorized devices.
−Removed: Our facilities are subject to inspections by the FDA and corresponding state agencies on an ongoing basis, and we must comply with Good Manufacturing Practices and FDA Quality Systems Regulations, as well as certain state requirements.
+Added: Our facilities are subject to inspections by the FDA and corresponding state agencies on an ongoing basis, and we must comply with Good Manufacturing Practices and the FDA Quality System Regulation, as well as certain state requirements.
We may be unable to adequately maintain, develop and expand our manufacturing process and operations or maintain compliance with FDA and state agency requirements, and manufacturing issues could impact our cleared and approved products.
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Because of the time required to approve and lease a manufacturing facility, an alternate facility and/or a third-party may not be available on a timely basis to replace production capacity in the event manufacturing capacity is lost.
−Removed: Additionally, the majority of our operations are conducted at facilities located in San Diego, California and Mesa, Arizona.
+Added: Additionally, the majority of our operations are conducted at facilities located in San Diego, California, Mesa, Arizona and, beginning in 2023, Penang Malaysia.
We take precautions to safeguard our facilities, which include manufacturing protocols, insurance, health and safety protocols, and off-site storage of data.
−Removed: However, a natural or man-made disaster, such as fire, flood, earthquake, act of terrorism, cyber-attack or other disruptive event, such as the ongoing COVID-19 pandemic or another public health emergency, could cause substantial delays in our operations, damage, destroy or limit our manufacturing equipment, inventory, or records and cause us to incur additional expenses.
+Added: However, a natural or man-made disaster, such as fire, flood, earthquake, act of terrorism, cyber-attack or other disruptive event, such as a public health emergency, could cause substantial delays in our operations, damage, destroy or limit our manufacturing equipment, inventory, or records and cause us to incur additional expenses.
Earthquakes are of particular significance since our manufacturing facilities in California are located in an earthquake-prone area.
+Added: Wildfires are also increasingly more common in southern California and present risk to our manufacturing operations.
+Added: Our Arizona facility may confront water supply issues resulting from the ongoing drought in the Western United States and our Malaysia facility may confront issues related to its construction on a reclaimed wetland and the political stability of the Malaysia government.
In the event our existing manufacturing facilities or equipment are affected by man-made or natural disasters, we may be unable to manufacture products for sale or meet customer demands or sales projections.
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The insurance we maintain against fires, floods, earthquakes and other natural disasters and similar events may not be adequate to cover our losses in any particular case.
−Removed: Further, insurance coverage may not be available or successfully secured for loss profits or business interruption relating to the COVID-19 pandemic and its impacts.
We depend upon third-party suppliers and outsource to other parties, making us vulnerable to supply disruptions, suboptimal quality, non-compliance and/or price fluctuations, which could harm our business.
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They may fail to follow specific protocols and procedures, fail to comply with applicable regulations, or be the subject of FDA or other regulatory authority audits or inspections that result in allegations of non-compliance (for example, resulting in Form 483 Observations, Warning Letters, or other FDA enforcement actions).
−Removed: Our manufacturers and suppliers may also experience or be impacted by equipment malfunction, environmental factors, and public health emergencies including but not limited to the ongoing COVID-19 pandemic, any of which could delay or impede their ability to meet our demand.
+Added: Our manufacturers and suppliers may also experience or be impacted by equipment malfunction, environmental factors, and public health emergencies, any of which could delay or impede their ability to meet our demand.
Further, if our sole- or single-source suppliers shift their manufacturing and assembly sites to other locations, depending on the circumstances and nature of the item supplied, in addition to quality system activities such as verification and validation, there could be a need for FDA notifications or submissions, and the new locations could be subject to regulatory inspections.
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Outsourcing of services to third parties could expose us to suboptimal quality of service delivery or deliverables and potentially result in repercussions such as missed deadlines or other timeliness issues, erroneous data, supply disruptions, non-compliance (including with applicable legal or regulatory requirements and industry standards) and/or reputational harm, with potential negative effects on our results.
−Removed: Closure of non-essential businesses and shelter-in-place orders occurring in the U.S.
−Removed: and globally as a result of the ongoing COVID-19 pandemic may also adversely impact our outsourced operations.
−Removed: We continue to monitor this situation closely.
We also require the suppliers, service providers and business partners of components or services for our products and related services to comply with law and certain of our policies regarding sourcing practices, but we do not control them or their practices.
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Developing and managing a direct sales organization is a difficult, expensive and time-consuming process.
−Removed: Although we have shifted our sales and marketing activity to be conducted virtually and remotely, restrictions in connection with the
−Removed: COVID-19 outbreak may have a substantial impact on our customers and sales cycles and have impacted and/or interrupted our sales and marketing activity.
To continue to develop our sales and marketing organization to successfully achieve market awareness and sell our products, we must:
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• manage geographically dispersed sales and marketing operations;
−Removed: • effectively train our sales and marketing personnel on the applicable advertising and promotion, and fraud and abuse laws that govern interactions with healthcare professionals and institutions as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance.
+Added: • effectively train our sales and marketing personnel on the applicable advertising and promotion, and fraud and abuse laws that govern interactions with healthcare professionals and institutions as well as
+Added: current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance.
We currently employ sales and marketing personnel for the direct sale and marketing of our products in North America, Asia Pacific, Europe and the Middle East.
−Removed: Our direct sales and marketing team calls on healthcare providers and people with diabetes throughout the applicable country to initiate sales of our products.
+Added: Our direct sales and marketing team calls on healthcare providers and people with diabetes throughout the applicable country, to the extent permissible, to raise awareness and initiate sales of our products.
Our sales and marketing organization competes with the experienced, larger and well-funded marketing and sales operations of our competitors.
We may not be able to successfully manage our dispersed sales force or increase our product sales at acceptable rates.
−Removed: COVID-19 restrictions vary by location across the United States and other regions of the world, which may continue to limit or prohibit our sales force from having in-person interactions with healthcare professionals and people with diabetes, which may result in decreased sales of our products.
We have also entered into distribution arrangements to leverage existing distributors (including wholesalers) already engaged in the distribution of drugs, devices and/or products in the diabetes marketplace.
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Our distributors might not have the resources to continue to support our recent rapid growth.
−Removed: Our distribution agreements with Byram and affiliates, Cardinal Health and affiliates (including Edgepark Medical Supplies), AmerisourceBergen, and McKesson, our most significant wholesalers and distributors, each generated 10% or more of our total revenue during the nine months ended September 30, 2022.
+Added: Our distribution agreements with AmerisourceBergen, Byram and affiliates, Cardinal Health and affiliates (including Edgepark Medical Supplies), and McKesson, our most significant wholesalers and distributors, each generated 10% or more of our total revenue during the three months ended March 31, 2023.
We cannot guarantee that these relationships will continue or that we will be able to maintain this volume of sales from these relationships in the future.
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FDA or other regulatory approval of a commercially viable continuous glucose monitor or sensor produced by one of our competitors could significantly reduce market acceptance of our systems.
−Removed: In addition, certain development efforts throughout the diabetes industry, including that of the National Institutes of Health and other supporters of diabetes research are continually seeking ways to prevent, cure or
−Removed: improve treatment of diabetes.
+Added: In addition, certain development efforts throughout the diabetes industry, including that of the National Institutes of Health and other supporters of diabetes research are continually seeking ways to prevent, cure or improve treatment of diabetes.
Therefore, our products may be rendered obsolete by technological breakthroughs in diabetes monitoring, treatment, prevention or cure.
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Collectively, these companies currently account for the majority of the worldwide sales of self-monitored glucose testing systems.
+Added: Our competitors manufacturing adjunctive CGMs have also recognized expanded Medicare coverage of their CGM devices and supplies following CMS’ December 2021 final rule expanding the classification of DME under
+Added: Medicare Parts B & C to include adjunctive CGMs.
+Added: These devices now directly compete with our CGM products in the Medicare market.
Several companies are developing and/or commercializing products for continuous or periodic monitoring of glucose levels in the interstitial fluid under the skin that compete directly with our products.
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The outbreak of the SARS-CoV-2 virus and its variants and the COVID-19 disease that it causes, or similar public health crises, could have a material adverse impact on our business, financial condition and results of operations, including our manufacturing, commercial operations and sales.
−Removed: The outbreak of the SARS-CoV-2 virus and its variants and the COVID-19 disease that it causes has been and continues to be a global pandemic.
−Removed: The novel coronavirus, as well as new variants of the coronavirus have spread to most regions of the world, including the United States and Europe.
+Added: The outbreak of the SARS-CoV-2 virus and its variants and the COVID-19 disease that it causes has been and continues to be a global pandemic, despite the current gradual decline in reported cases in the United States per the CDC’s COVID Data tracker.
The extent to which this coronavirus impacts our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new variants of the virus and new information that may emerge concerning the virus and the actions to contain it or to mitigate the COVID-19 impact, among others.
It is especially difficult to predict the impact on the global economic markets, which have been and will continue to be highly dependent upon the actions of governments, businesses, and other enterprises in response to the pandemic, as well as the effectiveness of those actions, and vaccine availability, distribution, efficacy and adoption.
−Removed: The ongoing COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, our customers, suppliers or third-party business partners conduct business and as a result, we have, and may continue to experience more pronounced disruptions in our operations.
The spread of COVID-19, which has caused a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, may have a material economic effect on our business.
For example, such restrictions may have a substantial impact on our customers and sales cycles.
−Removed: They have impacted our sales and marketing activity including quite significantly in Europe where more restrictive health protection measures and greater reliance on in-person sales efforts at doctors’ offices create a greater impediment to our selling efforts.
−Removed: Furthermore, changes in hospital or physician policies, federal, state or local regulations, prioritization of hospital or medical resources toward pandemic efforts may negatively affect the demand for our devices.
−Removed: The COVID-19 pandemic has, and may continue to, put pressure on global
−Removed: economic conditions and overall spending for medical device products, and may cause our customers to modify spending priorities or delay or abandon purchasing decisions.
+Added: Changes in hospital or physician policies, federal, state or local regulations, prioritization of hospital or medical resources toward pandemic efforts may negatively affect the demand for our devices.
+Added: The COVID-19 pandemic has, and may continue to, put pressure on global economic conditions and overall spending for medical device products, and may cause our customers to modify spending priorities or delay or abandon purchasing decisions.
Further, if the spread of the coronavirus pandemic continues and our operations are adversely impacted, we risk a delay, default and/or nonperformance under existing agreements.
−Removed: Severe respiratory symptoms, infections and deaths related to the pandemic may disrupt healthcare delivery in the United States as well as the operations of regulatory bodies with responsibility for oversight of healthcare and health and medical products.
−Removed: Such disruptions could result in the focus and prioritization of regulatory resources on emergent matters, which could divert regulatory resources away from more routine regulatory matters that are not COVID-19 related but that have the potential to impact our business.
−Removed: For example, there have been and could continue to be delays in FDA review of applications for marketing authorization, including those which may be necessary for or in connection with proposed changes to our products or the changes to the processes by which they are manufactured.
−Removed: It is unknown how long these disruptions could continue, were they to occur.
−Removed: Any delay in regulatory review resulting from such disruptions could materially affect our ongoing device design, development, and commercialization plans.
−Removed: Furthermore, the ongoing COVID-19 pandemic and associated shelter-in-place orders have and may continue to limit or restrict our ability to initiate, conduct or continue our clinical trials.
−Removed: Delays and disruptions in our clinical trials have and may continue to result in delays for new or expanded marketing authorizations for our products, which could materially affect our development and commercialization plans for our products.
−Removed: For example, we have experienced some delays in certain pivotal clinical trials for our next-generation CGM product.
−Removed: Additionally, as a result of the impact of the ongoing COVID-19 pandemic, some customers have lost, and others may lose, access to their private health insurance plan if they have lost or lose their job.
−Removed: Any prolonged economic downturn or recession as a result of the ongoing COVID-19 pandemic could result in layoffs of employees and a significant increase in unemployment in the United States and elsewhere, which may continue even after the ongoing COVID-19 pandemic is contained.
+Added: As a result of the impact of the ongoing COVID-19 pandemic and recent economic slowdown, some customers have lost, and others may lose, access to their private health insurance plan if they have lost or lose their job.
+Added: Any prolonged economic downturn or recession could result in layoffs of employees and a significant increase in unemployment in the United States and elsewhere, which may continue even after the ongoing COVID-19
+Added: pandemic is contained.
An impact to job status may extend for a prolonged period of time, beyond possible coverage periods through COBRA, or where the cost to maintain coverage may not be affordable to our customer.
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These disruptions may, among other things, impact our ability to produce and supply products in quantities necessary to meet market demand.
−Removed: Reduction in our manufacturing and shipping capabilities may have a material economic effect on our business and the results of our operations.
−Removed: If either we or any third-parties in the supply chain for components, materials or services used in the production of our devices are adversely impacted by the disruptions caused by, or restrictions resulting from, the COVID-19 pandemic, our supply chain may be disrupted, which may impact and/or limit our ability to manufacture and distribute our devices.
−Removed: We continue to take precautions to protect the health and safety of our employees, including monitoring community levels of COVID-19 and masking according to the Center for Disease Control’s recommendations.
+Added: We continue to take precautions to protect the health and safety of our employees, including monitoring community levels of COVID-19 according to the Center for Disease Control’s recommendations.
We continue to address other unique situations that arise among our workforce due to the ongoing COVID-19 pandemic on a case-by-case basis.
1 unchanged sentence
If a number of our essential employees become ill, incapacitated or are otherwise unable to continue working during the current or any future epidemic, our operations may be adversely impacted.
−Removed: While the potential economic impact brought by, and the duration of, the pandemic is difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets.
−Removed: The trading prices for our common stock and other medical device companies have been highly volatile as a result of the ongoing COVID-19 pandemic, which may reduce our ability to access capital on favorable terms or at all.
−Removed: In addition, a recession, depression or other
−Removed: sustained adverse market event resulting from the impact of the ongoing COVID-19 pandemic could materially and adversely affect our business and the value of our common stock.
+Added: While the potential economic impact brought by, and the duration of, the pandemic is difficult to assess or predict, it has already caused significant disruption of global financial markets.
The ultimate impact of the current pandemic, or any other health epidemic, is highly uncertain and subject to change.
3 unchanged sentences
We are subject to a variety of risks due to our international operations that could adversely affect our business, our operations or profitability and operating results.
−Removed: Our operations in countries outside the United States, which accounted for approximately 27% of our revenue for the nine months ended September 30, 2022, are accompanied by certain financial and other risks.
−Removed: In addition to our offices in countries such as, Australia, Canada, Germany, Lithuania, the Philippines, and the United Kingdom, we intend to continue to pursue growth opportunities in sales outside the United States, especially in Asia and Europe.
+Added: Our operations in countries outside the United States, which accounted for approximately 29% of our revenue for the three months ended March 31, 2023, are accompanied by certain financial and other risks.
+Added: In addition to our offices with manufacturing and administrative and operations in countries throughout the world, we intend to continue to pursue growth opportunities in sales outside the United States, especially in Asia and Europe.
Additionally, we may increase our use of administrative and support functions from locations outside the United States.
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goods no longer benefit from the free movement of goods and there is no longer the free movement of people between the U.K.
−Removed: Depending on the application of the terms of the trade
−Removed: and cooperation agreement, we could face new regulatory costs and challenges which could have a material adverse effect on our business, results of operations, or financial condition.
+Added: Depending on the application of the terms of the trade and cooperation agreement, we could face new regulatory costs and challenges which could have a material adverse effect on our business, results of operations, or financial condition.
Laws and regulations governing the export of our products could adversely impact our business.
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Any such violation could adversely affect our reputation, business, financial condition and results of operations.
−Removed: The outbreak of the SARS-CoV-2 virus and its variants and the COVID-19 disease that it causes have also led to healthcare equipment shortages in the U.S.
−Removed: and around the world.
−Removed: For example, in 2020, certain U.S.
−Removed: federal government orders temporarily limited companies from exporting certain equipment (such as ventilators) to other countries.
−Removed: Though no such orders have been issued with respect to CGMs, if supply chain disruption causes significant shortages in CGMs or other equipment, it is possible that we could face additional barriers to exporting our devices outside of the United States.
The failure to comply with U.S.
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Our operations and performance depend on worldwide economic and political conditions.
−Removed: These conditions have been adversely impacted by continued global economic uncertainty, political instability and military hostilities in multiple geographies, including the current conflict in Ukraine, concerns over a potential recession, the potential downgrade of U.S.
−Removed: sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other foreign countries, rising inflation rates, and global health pandemics such as the ongoing COVID-19 pandemic.
+Added: These conditions have been adversely impacted by continued global economic uncertainty, political instability and military hostilities in multiple geographies, including the current conflict in Ukraine, concerns over the potential downgrade of U.S.
+Added: sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other foreign countries, and global health pandemics.
These include potential reductions in the overall stability and suitability of the Euro as a single currency, given the economic and political challenges facing individual Eurozone countries.
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Furthermore, during economic uncertainty, our customers have had job losses and may continue to have issues gaining timely access to sufficient health insurance or credit, which could result in their unwillingness to purchase products or impair their ability to make timely payments to us.
−Removed: potential economic impact brought by and the duration of the ongoing COVID-19 pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which may reduce our ability to access capital on favorable terms or at all.
−Removed: In addition, a recession, depression or other sustained adverse market event resulting from the spread of COVID-19 could materially and adversely affect our business and the value of our common stock.
+Added: In addition, a recession, depression or other sustained adverse market event could materially and adversely affect our access to capital on favorable terms or at all, our business and the value of our common stock.
We cannot predict the reoccurrence of any economic slowdown or the strength or sustainability of the economic recovery, worldwide, in the United States, or in our industry.
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Failure to obtain any required regulatory authorization in foreign jurisdictions will prevent us from marketing our products abroad.
−Removed: We conduct limited commercial and marketing efforts in Africa, Asia, Australia, Canada, Europe, Latin America, the Middle East, and New Zealand with respect to our CGM systems and may seek to market our products in other regions in the future.
+Added: We conduct limited commercial and marketing efforts in certain international markets in the Asia-Pacific, North America and Europe, Middle East and Africa regions, with respect to our CGM systems and may seek to market our products in other regions in the future.
Outside the United States, we can market a product only if we receive a marketing authorization and, in some cases, pricing approval, from the appropriate regulatory authorities.
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We may not obtain foreign regulatory authorizations or approvals on a timely basis, if at all.
−Removed: Obtaining a marketing authorization from the FDA does not ensure authorization or approval by regulatory authorities in other countries will follow, and authorization or approval by one foreign regulatory authority does not ensure authorization or approval by regulatory authorities in other foreign countries or by the FDA.
+Added: Obtaining a marketing authorization from the FDA does not ensure authorization or approval by regulatory authorities in other countries will follow, and authorization or approval
+Added: by one foreign regulatory authority does not ensure authorization or approval by regulatory authorities in other foreign countries or by the FDA.
In addition, in order to obtain the authorization to market our products in certain foreign jurisdictions, in some cases we may need to obtain a Certificate to Foreign Government from the FDA.
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Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.
−Removed: We are subject to a number of foreign, federal and state laws and regulations protecting the use, disclosure, and confidentiality of certain patient health and personal information, including patient records, and restricting the use and disclosure of that protected information.
−Removed: These laws include foreign, federal and state medical privacy laws, breach notification laws and consumer protection laws.
+Added: We are subject to a number of foreign, federal and state laws and regulations protecting the use, disclosure, and confidentiality of certain patient health and personal information, including patient records, and restricting the use and disclosure of that protected information, including state breach notification laws, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, the European Union’s General Data Protection Regulation, or GDPR, the UK Data Protection Act and the UK GDPR, and the California Consumer Privacy Act, or CCPA, among others.
As our customer base grows to include U.S.
federal government agencies, Dexcom may also need comply with Federal Risk and Authorization Management Program and Cybersecurity Maturity Model Certification requirements.
−Removed: These frameworks impose stringent cybersecurity standards and potentially significant non-compliance penalties.
+Added: These frameworks, in addition to similar laws being enacted by other states and counties, impose stringent cybersecurity standards and potentially significant non-compliance penalties, involve the expenditure of significant resources, the investment of significant resources and the investment of significant time and effort to comply.
+Added: As these laws and regulations continue develop in the United States and internationally, we may be required to expend significant time and resources in order to update existing processes or implement additional mechanisms as necessary to ensure compliance with such cybersecurity laws.
In addition, foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States.
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Any such occurrence could compromise our networks and the information stored thereon could be accessed, publicly disclosed, lost or stolen.
−Removed: Any such access, disclosure or
−Removed: other loss of information could result in legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, disrupt our operations and the services we provide to our clients or damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.
+Added: Any such access, disclosure or other loss of information could result in legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, disrupt our operations and the services we provide to our clients or damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.
As we grow and expand our administrative, customer support or IT support services, we may also utilize the services of personnel and contractors located outside of the United States to perform certain functions.
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There are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security concerns.
+Added: For example, from time-to-time, the OCR issues bulletins that outline its interpretations of HIPAA as applied to specific use cases.
+Added: On December 1, 2022, OCR issued a bulletin on the requirements under HIPAA for online tracking technologies ( e.g.
+Added: , cookies, pixels) to protect the privacy and security of health information.
+Added: This bulletin outlined OCR’s position on the use of online tracking technology vendors, when certain information received by such vendors constitutes protected health information under HIPAA, and accordingly, when business associate agreements must be executed between covered entities, like Dexcom, and such vendors.
+Added: Dexcom is assessing its responsibilities under the bulletin and determining its next steps in order to comply with OCR’s guidance in the bulletin.
We also remain subject to federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA.
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For example, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response to alleged privacy and data security violations.
−Removed: California enacted the California Consumer Privacy Act, or CCPA, which came into effect January 1, 2020, was amended and expanded by the California Privacy Rights Act, or CPRA, passed on November 3, 2020.
+Added: California enacted the CCPA, which came into effect January 1, 2020, was amended and expanded by the CPRA, passed on November 3, 2020, which took effect January 1, 2023.
The CCPA and CPRA, among other things, create data privacy obligations for covered companies and provide privacy rights to California residents, including the right to opt out of certain disclosures of their information.
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For instance, in the European Union, increasingly stringent data protection and privacy rules that have and will continue to have substantial impact on the use of patient data across the healthcare industry became effective in May 2018.
−Removed: General Data Protection Regulation, or GDPR, applies across the European Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.
+Added: The GDPR applies across the European Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.
The GDPR fine framework can be up to 20 million euros, or up to 4% of the company’s total global turnover of the preceding fiscal year, whichever is higher.
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We expect continued costs associated with maintaining compliance with GDPR into the future, and these provisions as interpreted by EU agencies, could negatively impact our business, financial condition and results of operations.
−Removed: In addition to the laws discussed above, we may see more stringent state and federal privacy legislation in the future, as the increased cyber attacks during the ongoing COVID-19 pandemic have once again put a spotlight on data privacy and security in the U.S.
+Added: In addition to the laws discussed above, we may see more stringent state and federal privacy legislation in the future, as the increased cyberattacks during the ongoing COVID-19 pandemic have once again put a spotlight on data privacy and security in the U.S.
and other jurisdictions.
1 unchanged sentence
Cybersecurity risks and cyber incidents could result in the compromise of confidential data or critical data systems and give rise to potential harm to customers, remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, or other common law theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business and operations.
−Removed: Cyber incidents can result from deliberate attacks or unintentional events.
−Removed: We collect and store on our networks sensitive information, including intellectual property, proprietary business information and personally identifiable information of individuals, such as our customers and employees.
+Added: There are numerous and evolving risks to our cybersecurity and privacy from cyber threat actors.
+Added: These cyber threat actors, whether internal of external to the Company, are becoming more frequent, sophisticated and coordinated in their attempts to access data, including third parties with whom the Company conducts business through, without limitation, malicious software;
+Added: data privacy breaches by employees, insiders or others with authorized access;
+Added: cyber of phishing-attacks;
+Added: attempts to gain unauthorized access to our data and systems;
+Added: and other electronic security breaches.
+Added: In the ordinary course of business, we collect and store sensitive information on our network, including intellectual property, proprietary business information and personally identifiable information of individuals, such as our customers and employees.
The secure maintenance of this information and technology is critical to our business operations.
−Removed: We have implemented multiple layers of security measures to protect the confidentiality, integrity and availability of this data and the systems and devices that store and transmit such data.
+Added: We have implemented and deploy multiple layers of security measures to protect the confidentiality, integrity and availability of this data and the systems and devices that store and transmit such data.
We utilize current security technologies, and our defenses are monitored and routinely tested internally and by external parties.
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Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these incidents or techniques, timely discover them, or implement adequate preventative measures.
−Removed: In response to the onset of the COVID-19 pandemic, we modified our business practices and initially implemented telework policies for certain categories of “non-essential” employees to the extent possible.
+Added: Additionally, in response to the onset of the COVID-19 pandemic, we modified our business practices and initially implemented telework policies for certain categories of “non-essential” employees to the extent possible.
We have since adopted a hybrid workplace model for our employees.
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The hybrid workplace does, however, introduce additional operational risk, including increased cybersecurity risk.
−Removed: These cyber risks include, among other risks, greater phishing, malware, and other cybersecurity attacks, vulnerability to or disruptions of our information technology infrastructure and systems to support remote operations, increased risk of unauthorized access, use or dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction, alteration or misuse of valuable information, including proprietary business information and personally identifiable information of individuals, all of which could expose us to risks of data or financial loss, litigation and liability.
−Removed: These threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or other service providers to criminal or other unauthorized threat actors, including state-sponsored attacks.
+Added: These cyber risks include, among other risks, increased phishing, malware, and other cybersecurity attacks, vulnerability to, or disruptions of, our information technology infrastructure and systems to support remote operations, increased risk of unauthorized access, use or dissemination of confidential
+Added: information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction, alteration or misuse of valuable information, including proprietary business information and personally identifiable information of individuals, all of which could expose us to risks of data or financial loss, litigation and liability.
+Added: These threats can come from a variety of sources, including criminal hackers, state-sponsored intrusions, industrial espionage and employee malfeasance.
Cyber threats may be generic, or they may be custom-crafted against our information systems.
−Removed: Over the past several years, cyber attacks have become more prevalent and much harder to detect and defend against.
+Added: Over the past several years, cyberattacks have become more prevalent and much harder to detect and defend against.
These threat actors may be able to penetrate our security measures, breach our information technology systems, misappropriate or compromise confidential and proprietary information of our company and our customers, cause system disruptions and shutdowns, or introduce ransomware, malware, or vulnerabilities into our products, systems, and networks or those of our customers and partners.
Our network and storage applications, as well as those of our contractors, may be vulnerable to cyber-attack, malicious intrusion, malfeasance, loss of data privacy or other significant disruption and may be subject to unauthorized access by hackers, employees, consultants or other service providers.
−Removed: In addition, hardware, software or applications we develop or procure from third parties
−Removed: may contain defects in design or manufacture or other problems that could unexpectedly compromise information security or other problems that unexpectedly could interfere with the operation of our products.
+Added: In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security or other problems that unexpectedly could interfere with the operation of our products.
Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors and temporary staff.
+Added: While we maintain cybersecurity insurance coverage there is no guarantee that it will be sufficient to cover the financial, legal, business, or reputational losses that may result from an interruption or breach of our systems.
+Added: Our cybersecurity insurance includes coverage for a breach event covering expenses for notification, credit monitoring, investigation, crisis management, public relations and legal advice.
+Added: Our cybersecurity insurance also provides coverage in relation to regulatory action defense including oversight, investigations and disclosure obligations as well as fines and penalties, potential payment card industry fines and penalties and costs related to cyber extortion;
+Added: however, damages and claims arising from such incidents may not be covered and/or may exceed the amount of any coverage and do not cover the time and effort we incur investigating and responding to any incidents, which may be significant.
We are and may continue to be subject to cybersecurity incidents that bypass our security measures.
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• business interruptions and delays;
−Removed: • the loss, misappropriation, corruption or unauthorized access of data;
+Added: • the loss, misappropriation, corruption or unauthorized access of data, confidential information or intellectual property;
• litigation, including potential class action litigation, and potential liability under privacy, security and consumer protection laws or other applicable laws;
• reputational damage;
+Added: • significant remediation costs, including liability for stolen customer or employee information, repairing system damage, or providing benefit to affected customers or employees;
• increase to insurance premiums;
−Removed: • foreign, federal and state governmental inquiries, any of which could have a material, adverse effect on our financial position and results of operations and harm our business reputation.
−Removed: Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.
+Added: • foreign, federal and state governmental inquiries, violations or sanctions, any of which could have a material, adverse effect on our financial position and results of operations.
+Added: Failure to protect our information technology infrastructure against cyberattacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.
We rely on information technology and telephone networks and systems, including the Internet, to process and transmit sensitive electronic information and to manage or support a variety of business processes and activities, including sales, billing, customer service, procurement and supply chain, manufacturing, and distribution.
−Removed: We use enterprise information technology systems to record, process, and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements.
−Removed: System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud based systems during or as a result of the ongoing COVID-19 pandemic, or failures to adequately scale our data platforms and architectures support patient care could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business or delay our financial reporting.
+Added: We use enterprise information technology systems to record, process, and summarize financial information and results of
+Added: operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements.
+Added: System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud-based systems, or failures to adequately scale our data platforms and architectures support patient care could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business or delay our financial reporting.
Such failures could materially adversely affect our operating results and financial condition.
−Removed: Our information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, ransomware or other malware, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors or catastrophic events.
+Added: Our information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, denial-of-service attacks, phishing attacks, ransomware or other malware, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors or catastrophic events.
Although we have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, such measures cannot provide absolute security.
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• diversion of attention of management and key information technology resources.
−Removed: Cyber attacks aimed at accessing our devices, products, and services, or related devices, products, and services, and modifying or using them in a way inconsistent with our FDA clearances and approvals could create risks to users.
+Added: Cyberattacks aimed at accessing our devices, products, and services, or related devices, products, and services, and modifying or using them in a way inconsistent with our FDA clearances and approvals could create risks to users.
Medical devices are increasingly connected to the internet, hospital networks, and other medical devices to provide features that improve healthcare and increase the ability of healthcare providers to treat patients and patients to manage their conditions.
1 unchanged sentence
These same features may also increase cybersecurity risks and the risks of unauthorized access and use by third parties.
−Removed: As such, cyber attacks aimed at accessing our devices, products, and services, or related devices, products, and services, and modifying or using them in a way inconsistent with our FDA clearances and approvals, which may create risks to users and potential exposure to the company.
+Added: As such, a cyberattack which intrudes, disrupts, or corrupts our devices, products, and services, or related devices, products, and services could impact the quality-of-care patients receive or the confidentiality of patient information.
+Added: Additionally, modifying or using any such devices, products, or services in a way inconsistent with our FDA clearances and approvals, which may create risks to users and potential exposure to the company.
Risks Related to Non-Compliance with Laws, Regulations and Contractual Requirements and Healthcare Industry Shifts
8 unchanged sentences
• inducements and courtesies given to physicians and other health care providers and patients;
−Removed: • labeling and promoting products;
+Added: • labeling, advertising and promoting products;
• the characteristics and quality of our products and services;
+Added: • communications with payors and physicians and other healthcare stakeholders;
• confidentiality, maintenance and security issues associated with medical records and individually identifiable health and other personal information;
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These laws and regulations are extremely complex and, in many cases, still evolving.
−Removed: If our operations are found to violate any of the foreign, federal, state or local laws and regulations which govern our activities, we may be subject to litigation,
−Removed: government enforcement actions, and applicable penalties associated with the violation, potentially including civil and criminal penalties, damages, fines, exclusion from participation in certain payor programs or curtailment of our operations.
+Added: If our operations are found to violate any of the foreign, federal, state or local laws and regulations which govern our activities, we may be subject to litigation, government enforcement actions, and applicable penalties associated with the violation, potentially including civil and criminal penalties, damages, fines, exclusion from participation in certain payor programs or curtailment of our operations.
Compliance obligations under these various laws are oftentimes detailed and onerous, further contributing to the risk that we could be found to be out of compliance with particular requirements.
3 unchanged sentences
While we make every effort to comply with applicable laws, we cannot rule out the possibility that the government or other third parties could interpret these laws differently and challenge our practices under one or more of these laws.
−Removed: This likelihood of allegations of non-compliance is increased by the fact that under certain federal and state laws applicable to our business, individuals may bring an action on behalf of the government alleging violations of such laws, and potentially be awarded a share of any damages or penalties ultimately awarded to the applicable government body.
+Added: This likelihood of allegations of non-compliance is increased by the fact that under certain federal and state laws applicable to our business, individuals may bring an action on behalf of the government alleging violations of
+Added: such laws, and potentially be awarded a share of any damages or penalties ultimately awarded to the applicable government body.
The FDA and the FTC share oversight of medical device promotion.
1 unchanged sentence
Any action against us alleging a violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s time and attention from the operation of our business, and have a material effect on our business.
−Removed: In addition, the laws and regulations impacting or affecting our business may change significantly in the future.
−Removed: Any new laws or regulations may adversely affect our business, including any changes in laws and regulations due to the COVID-19 pandemic.
+Added: In addition, the laws and regulations impacting or affecting our business may change significantly in the future, which may adversely affect our business.
A review of our business by courts or regulatory authorities may result in a determination that could adversely affect our operations.
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In March 2018, via the de novo process, the FDA classified the G6 and substantially equivalent devices of this generic type (i.e., “integrated continuous glucose monitoring systems” or “iCGMs”) into Class II, meaning that going forward products of this generic type may utilize the 510(k) pathway.
−Removed: Since then we have received 510(k) clearances for modifications to the G6.
−Removed: Any subsequent modification of our G6 that could significantly affect its safety or effectiveness (for example, a significant change in design or manufacture), or that would constitute a major change in its intended use, will require us to obtain a new 510(k) clearance or could require a new de novo submission or a PMA.
+Added: Since then we have received 510(k) clearances for modifications to the G6 and approval for G7.
+Added: Any subsequent modifications of our cleared products that could significantly affect their safety or effectiveness (for example, a significant change in design or manufacture), or that would constitute a major change in its intended use, will require us to obtain a new 510(k) clearance or could require a new de novo submission or a PMA.
The FDA requires each manufacturer to make this determination initially, but the FDA may review any such decision and may disagree with a manufacturer’s determination.
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The laws and regulations of health care goods and services that apply to us, including those described above, are subject to evolving interpretations and enforcement discretion.
−Removed: As part of our compliance program, we have reviewed our sales contracts, marketing materials, referral source relationships, programmatic offerings, and billing practices (among others) to reduce the risk of non-compliance with these and other foreign, federal and state laws.
−Removed: If a governmental authority was to conclude that we are not in compliance with applicable laws and regulations, we and our officers, directors and employees could be subject to criminal and civil penalties, as well as administrative sanctions such as exclusion from participation in federal healthcare programs, including but not limited to Medicare and Medicaid.
+Added: We have in place a compliance program, through which we seek to reduce common industry risks of noncompliance with U.S.
+Added: federal and state and applicable foreign laws in areas such as sales contracts, marketing materials, referral source relationships, programmatic offerings, and billing
+Added: practices (among others), monitor for compliance, and address non-compliance if identified.
+Added: If a governmental authority were to conclude that we are not in compliance with applicable laws and regulations, we and our officers, directors and employees could be subject to criminal and civil penalties, as well as administrative sanctions such as exclusion from participation in federal healthcare programs, including but not limited to Medicare and Medicaid.
Any failure to comply with laws, regulations or contractual requirements relating to reimbursement and health care goods and services could adversely affect our reputation, business, financial condition and cash flows.
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As a result, our products are subject to regulation regarding quality and cost by the U.S.
−Removed: Department for Health & Human Services, including CMS, as well as comparable state and non-U.S.
+Added: Department of Health & Human Services, including CMS, as well as comparable state and non-U.S.
agencies responsible for reimbursement and regulation of health care goods and services.
3 unchanged sentences
Insurance companies can also bring a private cause of action claiming treble damages against a manufacturer for causing a false claim to be filed under the federal Racketeer Influenced and Corrupt Organizations Act, or RICO.
−Removed: Additionally, as a manufacturer of FDA‑approved devices reimbursable by federal healthcare programs, we are subject to the federal Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to U.S.-licensed physicians or U.S.
+Added: Additionally, as a manufacturer of FDA‑approved or -cleared devices reimbursable by federal healthcare programs, we are subject to the federal Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to certain U.S.-licensed health care professionals and U.S.
teaching hospitals, and under an expansion of the law to physician assistants, nurse practitioners, and other mid-level practitioners.
−Removed: Reporting requirements have come into effect for payments and transfers of value made to these additional practitioner-types in 2021.
With respect to the federal Anti-Kickback Statute, Congress and the OIG have established a large number of statutory exceptions and regulatory safe harbors that protect financial relationships with our customers and referral sources.
−Removed: An arrangement that fits squarely into an exception or safe harbor is immune from prosecution under the Anti-Kickback Statute.
+Added: An arrangement that fits squarely into an exception or safe harbor will not be deemed to violate the Anti-Kickback Statute.
We train and educate employees and marketing representatives on the Anti-Kickback Statute and their obligations thereunder, and we endeavor to comply with the applicable safe harbors.
−Removed: However, some of our arrangements, like many other common and non-abusive arrangements, may implicate the Anti-Kickback Statute and are not covered by a safe harbor, but nevertheless do not present a material risk to beneficiaries or federal healthcare programs and, as such, would not likely invite government scrutiny or prosecution or warrant the imposition of sanctions.
+Added: However, some of our arrangements, like many other common and non-abusive arrangements, may implicate the Anti-Kickback Statute and are not covered by a safe harbor, but nevertheless we do not believe them to present a significant risk to beneficiaries or federal healthcare programs and, as such, appear unlikely to invite government scrutiny or prosecution, warrant the imposition of sanctions, or be found to violate the statute.
However, we cannot offer assurance that the government or a whistleblower would agree with our position that certain arrangements fall within a safe harbor, or that arrangements that do not squarely meet an exception or safe harbor will not be found to violate the Anti-Kickback Statute.
5 unchanged sentences
Certain Stark Law violations can also trigger exclusion from participation in federal healthcare programs.
−Removed: Historical violations of the Stark Law, if any, could continue to give rise to liability during the statute of limitations period.
+Added: Historical violations of the Stark Law, if any, could continue to give rise to liability during the six year statute of limitations period.
Managed care trends and consolidation in the health care industry could have an adverse effect on our revenues and results of operations.
1 unchanged sentence
Consolidation among managed care organizations has increased the negotiating power of managed care organizations and other private third-party payors.
−Removed: Private third-party payors, as well as governments, increasingly employ formularies to control costs by taking into account discounts in connection with decisions about formulary inclusion or favorable formulary placement.
+Added: third-party payors, as well as governments, increasingly employ formularies to control costs by taking into account discounts in connection with decisions about formulary inclusion or favorable formulary placement.
Failure to obtain or maintain timely adequate pricing or favorable formulary placement for our products, or failure to obtain such formulary placement at favorable pricing, could adversely impact revenue.
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For example, medical device cybersecurity continues to be an area of focus for and evolving guidance from FDA.
+Added: Additionally, at the end of 2022, Congress passed the Food and Drug Omnibus Reform Act of 2022, or FDORA which (among other things), and similarly to the 2022 FDA Guidance, requires device sponsors to submit clinical trial diversity action plans outlining the goals for increasing representation of participants from racial and ethnic minority populations that have been underrepresented in clinical trials.
Any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.
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• the FDA concludes that the results from our trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.
−Removed: Further, the ongoing COVID-19 pandemic and associated shelter-in-place orders could limit or restrict our ability to initiate, conduct or continue our clinical trials.
+Added: Further, health epidemics could limit or restrict our ability to initiate, conduct or continue our clinical trials.
Delays and disruption in our clinical trials could results in delays for expanded FDA clearance or approval of our products.
−Removed: We are unable to predict the length of such delays or the scope of the ongoing impact of the ongoing COVID-19 pandemic on our clinical trials at this time.
−Removed: We are continuing to monitor this situation and to explore methods of remote monitoring, remote clinical assessments and other similar delivery methods to permit the continuation of clinical trial activities.
The results of pre-clinical studies or other forms of early product testing do not necessarily predict future clinical trial results, and prior clinical trial results might not be repeated in subsequent clinical trials.
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Extension of CGM system use to hospitalized patients during the ongoing COVID-19 pandemic allows hospital staff to monitor glucose remotely in patients and may reduce patient/provider interactions, which could help limit viral exposure for hospital staff and help conserve personal protective equipment.
−Removed: In the context of the ongoing COVID-19 pandemic, the FDA has permitted for regulatory flexibility in a variety of specific circumstances, to expedite the development and availability of critical medical products that may be helpful in COVID-19-related efforts.
−Removed: Following direct communication with the FDA regarding the potential use of our CGM devices in a hospital or other in-patient setting, the FDA notified us on April 1, 2020 that in an exercise of its enforcement discretion it will not object, in the context of the COVID-19 pandemic, to Dexcom providing CGM devices and support to users to enable real-time remote patient monitoring in hospitals and other healthcare facilities, to support COVID-19 healthcare-related efforts, so long as we provide
−Removed: certain FDA-specified information with respect to the unique challenges that CGM technologies can raise in the hospital environment.
+Added: In the context of the ongoing COVID-19 pandemic,
+Added: the FDA has permitted for regulatory flexibility in a variety of specific circumstances, to expedite the development and availability of critical medical products that may be helpful in COVID-19-related efforts.
+Added: Following direct communication with the FDA regarding the potential use of our CGM devices in a hospital or other in-patient setting, the FDA notified us on April 1, 2020 that in an exercise of its enforcement discretion it will not object, in the context of the COVID-19 pandemic, to Dexcom providing CGM devices and support to users to enable real-time remote patient monitoring in hospitals and other healthcare facilities, to support COVID-19 healthcare-related efforts, so long as we provide certain FDA-specified information with respect to the unique challenges that CGM technologies can raise in the hospital environment.
As a condition of its exercise of enforcement discretion, the FDA has advised that we communicate the following information related to implementing the use of CGM systems for remote monitoring of hospitalized patients:
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Our provision of our CGM systems to hospitals and other healthcare facilities for use during the ongoing COVID-19 pandemic have and will continue to have the above notice.
−Removed: In February 2022, we received Breakthrough Device designation for our G6 CGM system in the hospital setting.The FDA’s Breakthrough Device designation is designed to expedite the development and regulatory review of medical devices that hold the potential for more effective treatment or diagnosis of life-threatening or irreversibly debilitating disease or condition.
+Added: In February 2022, we received Breakthrough Device designation for our G6 CGM system in the hospital setting.
+Added: The FDA’s Breakthrough Device designation is designed to expedite the development and regulatory review of medical devices that hold the potential for more effective treatment or diagnosis of life-threatening or irreversibly debilitating disease or condition.
We are not actively promoting nor do we plan to actively promote our CGM devices (and related support) for inpatient use, but if we supply them to such facilities as currently permitted by the FDA, this supply could present an increased risk of product liability claims and associated damages should an adverse event occur.
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The FDA may determine this policy has expired if the impact of the ongoing COVID-19 pandemic subsides or the federal public health emergency declaration is lifted and there is no longer an urgent need to use our CGM systems for remote patient monitoring during the ongoing COVID-19 pandemic.
−Removed: As we are unable to predict the duration or ultimate impact of the provision of our CGM systems to hospitals and other healthcare facilities for use during the ongoing COVID-19 pandemic at this time, we do not yet know the ultimate impact to our business or financial results.
−Removed: We will continue to monitor the situation closely.
+Added: As we are unable to predict the ultimate impact of the provision of our CGM systems to hospitals and other healthcare facilities for use during the ongoing COVID-19 pandemic at this time, we do not yet know the ultimate impact to our business or financial results.
+Added: We will continue to closely monitor regulatory developments that impact our products, business, or financial results, including those relating to FDA enforcement discretion and Breakthrough Device Designation for the provision of our CGM systems in the hospital setting.
We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control.
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If these clinical investigators, clinical sites or other third parties do not carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated, or the clinical data may be rejected by the FDA, and we may be unable to obtain regulatory approval for, or successfully commercialize, our products.
−Removed: As a result of the ongoing COVID-19 pandemic, many healthcare facilities were or remain closed or available on a limited basis for non-emergent and elective services.
−Removed: Accordingly, our clinical investigators may not have an opportunity to recruit and enroll patients in our clinical trials and there may be less interest by patients to participate.
−Removed: We cannot predict the trajectory of the ongoing COVID-19 pandemic, the impact of variants, the length or impact of current shelter-in-place orders or any limitation on the provision of non-emergent health services or the normal operation of our clinical sites.
−Removed: Therefore, we cannot predict the ultimate impact that such restrictions may have on our clinical trial enrollment and results.
Health care policy changes, including U.S.
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In November 2020, the OIG published a Special Fraud Alert addressing manufacturer Speaker Programs, signaling both a more narrow government view of AKS compliance with respect to such programs as well as the potential for increased enforcement in this space by government oversight agencies such as the OIG and DOJ.
−Removed: On March 18, 2022, the Advanced Medical Technology Association (“AdvaMed”) announced revisions to its Code of Ethics on Interactions with Health Care Professionals (“Code”).
+Added: On March 18, 2022, the Advanced Medical Technology Association, or AdvaMed, announced revisions to its Code of Ethics on Interactions with Health Care Professionals, or Code.
The revised Code, effective June 1, 2022, addressed concerns noted in the OIG’s Special Fraud Alert, addressing things like virtual meetings, speaker programs and alcohol at events.
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Future significant changes in the healthcare systems in the United States or elsewhere could also have a negative impact on the demand for our current and future products.
−Removed: These include changes that may reduce reimbursement rates for our products and changes that may be proposed or implemented by the current or future laws or regulations.
+Added: These include changes that may reduce
+Added: reimbursement rates for our products and changes that may be proposed or implemented by the current or future laws or regulations.
Risks Related to Intellectual Property Protection and Use
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We have in the past settled some such allegations and may need to do so again in the future.
−Removed: exacerbated by the fact that there are numerous issued patents and pending patent applications relating to self-monitored glucose testing systems in the medical technology field.
+Added: This risk is exacerbated by the fact that there are numerous issued patents and pending patent applications relating to self-monitored glucose testing systems in the medical technology field.
Because patent applications may take years to issue, there may be applications now pending of which we are unaware that may later result in issued patents that our products infringe.
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We may be unable to obtain necessary intellectual property licenses on satisfactory terms.
−Removed: If we do not obtain any such necessary licenses, we may not be able to redesign our products to avoid infringement and any redesign may not receive FDA approval or other requisite marketing authorization in a timely manner or at all.
+Added: If we do not obtain any such necessary licenses, we may not be able to redesign our products to avoid infringement and any redesign may not receive FDA approval or other requisite marketing authorization in a timely
+Added: manner or at all.
Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary intellectual property licenses could prevent us from manufacturing and selling our products, which would have a significant adverse impact on our business.
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Our patent applications may not issue as patents in a form that will be advantageous to us, or at all.
−Removed: issued patents, and those that may issue in the future, may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products.
+Added: Our issued patents, and those that may issue in the future, may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products.
In addition, there are numerous recent changes to the patent laws and proposed changes to the rules of the U.S.
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This liability may vary based on the FDA classification associated with our devices.
−Removed: Notably, the classification of our G6 system as a Class II medical device is likely to weaken our ability to rely on federal preemption of state law claims that assert liability against us for harms arising from use of the G6.
+Added: Notably, the classification of our G6 and G7 systems as Class II medical devices is likely to weaken our ability to rely on federal preemption of state law claims that assert liability against us for harms arising from use of those systems.
We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury.
Claims may be made by customers, healthcare providers or others selling our products.
−Removed: The risk of product liability claims may increase now that our G6 does not require confirmatory finger sticks when making treatment decisions or finger stick tests each day for calibration, although it does require finger stick tests when symptoms do not match readings and when readings are unavailable.
+Added: The risk of product liability claims may increase given that G6 and G7 do not require confirmatory finger sticks when making treatment decisions or finger stick tests each day for calibration, although it does require finger stick tests when symptoms do not match readings and when readings are unavailable.
The risk of claims may also increase if our products are subject to a product recall or seizure.
−Removed: An example of the difficulty of complying with the regulatory requirements associated with the manufacture of our products, we issued notifications to our customers regarding the audible alarms and alerts associated with our receivers.
+Added: An example of the difficulty of complying with the regulatory requirements associated with the manufacture of our
+Added: products, we issued notifications to our customers regarding the audible alarms and alerts associated with our receivers.
Although we have insurance at levels that we believe is appropriate, this insurance is subject to deductibles and coverage limitations.
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Our customers, either on their own or following the advice of their physicians, may use our products in a manner not described in the products’ labeling and that differs from the manner in which it was used in clinical studies and approved by the FDA.
−Removed: For example, our current systems are designed to be used by an individual continuously for up to 10 days for our G6 system, but the individual might be able to circumvent the safeguards designed into the systems and use the products for longer than 10 days.
+Added: For example, our current systems are designed to be used by an individual continuously for up to 10 days for our G6 and G7 systems, but the individual might be able to circumvent the safeguards designed into the systems and use the products for longer than 10 days.
Off-label use of products by customers is common, and any such off-label use of our products could subject us to additional liability, or require design changes to limit this potential off-label use once discovered.
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As a result of the ongoing COVID-19 pandemic, we have received and continue to receive, numerous requests from hospitals and healthcare facilities around the country regarding the use of our CGM devices to remotely monitor COVID-19 patients admitted into the hospital.
−Removed: As noted above, in 2020, the FDA informed us that they intend to exercise enforcement discretion and will not object to our provision of G6 CGM systems to such facilities for use in the inpatient setting during the
+Added: As noted above, in 2020, the FDA informed us that they intend to exercise enforcement discretion and will not object to our provision of G6 CGM systems to such facilities for use in the inpatient setting during the pandemic.
However, our CGM devices are currently approved only for in-home use by patients for the purpose of personal diabetes management and have not otherwise been cleared or approved by the FDA for hospital use.
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Our compliance program includes internal audit and monitoring functions designed to identify potential issues and facilitate remediation as appropriate.
−Removed: We are not presently aware of any material governmental investigations involving our executives or us.
−Removed: However, any future investigations of our executives, our managers or us could result in significant liabilities or penalties to us, as well as adverse publicity.
−Removed: Even if we are found to have complied with applicable law, the investigation or litigation may pose a considerable expense and would divert management’s attention, and have a potentially negative impact on the public’s perception of us, all of which could negatively impact our financial position and results of operations.
+Added: Any future investigations of our executives, our managers or us could result in significant liabilities or penalties to us, as well as adverse publicity.
+Added: Even if we are found to have complied with applicable law, the investigation or litigation may pose a considerable expense and would divert management’s attention, and have a potentially negative impact on the public’s perception of us, all of which could negatively impact our financial position and
+Added: results of operations.
Further, should we be found out of compliance with any of these laws, regulations or programs, depending on the nature of the findings, our business, our financial position and our results of operations could be negatively impacted.
We may be subject to fines, penalties and injunctions if we are determined to be promoting the use of our products for unapproved or improper off-label uses or determined to have made claims that are untruthful or misleading or not adequately substantiated.
−Removed: We believe our marketing, promotional and educational materials and practices comply with FDCA, Federal Trade Commission Act, and other applicable laws and regulations, as may be amended from time to time.
+Added: Our marketing, promotional and educational materials and practices are subject to FDCA, Federal Trade Commission Act, and other applicable laws and regulations, as may be amended from time to time.
If the FDA, FTC or other regulatory body with competent jurisdiction over us, our activities or products takes the position that our marketing, promotional or other materials or activities constitute improper promotion or marketing of an unapproved or improper use, or that they contain untruthful, misleading, or inadequately substantiated statements or claims, such regulatory body could request that we modify our materials or practices, or subject us to regulatory enforcement actions, including the issuance, depending on the regulatory body and the nature of the alleged violation, of a warning letter, injunction, seizure, civil fine and criminal penalties.
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however, there are still significant risks in this area in part due to the potential False Claims Act exposure and the FDA’s continued focus on ensuring devices are marketed in a manner consistent with their FDA-required labeling.
−Removed: We are not actively promoting nor do we plan to actively promote our G6 CGM systems for inpatient use, but if we supply them to such facilities as currently permitted by FDA, this supply could present an increased risk of product liability claims and associated damages should an adverse event occur.
−Removed: Given that the G6 CGM system has not yet been fully evaluated or tested (by us or by the FDA) to the extent that would be required in standard circumstances for product development and marketing authorization, there could be unknown or unanticipated risks presented by use in this environment.
+Added: We are not actively promoting nor do we plan to actively promote our G6 or G7 systems for inpatient use, but if we supply them to such facilities as currently permitted by FDA, this supply could present an increased risk of product liability claims and associated damages should an adverse event occur.
+Added: Given that the G6 and G7 systems have not yet been fully evaluated or tested (by us or by the FDA) to the extent that would be required in standard circumstances for product development and marketing authorization, there could be unknown or unanticipated risks presented by use in this environment.
In some instances in our advertising and promotion, we may make claims regarding our product as compared to competing products, which may subject us to heightened regulatory scrutiny, enforcement risk, and litigation risks.
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Direct-to-consumer marketing and social media efforts may expose us to additional regulatory scrutiny.
−Removed: Our efforts to promote our products via direct-to-consumer marketing and social media initiatives may subject us to additional scrutiny of our practices of effective communication of risk information, benefits or claims, under the oversight of the FDA, FTC, or both.
+Added: Our efforts to promote our products via direct-to-consumer marketing and social media initiatives may subject us to additional scrutiny of our practices of effective communication of risk information, benefits or claims, under the oversight of the FDA, FTC, HHS-OCR, or others.
Other Risks Related to Our Business and Financial Condition
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• research and development relating to our continuous glucose monitoring systems;
−Removed: • sales and marketing and manufacturing expenses associated with the commercialization of our G6 system;
+Added: • sales and marketing and manufacturing expenses associated with the commercialization of our G6 and G7 systems;
• expansion of our workforce.
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We would undertake a reorganization to reduce operating expenses or achieve other business objectives, though we cannot guarantee any specific amount of long-term cost savings.
−Removed: Further, the turnover in our employee
−Removed: base could result in operational and administrative inefficiencies, which could adversely impact the results of our operations, stock price and customer relationships, and could make recruiting for future management and other positions more difficult.
+Added: Further, the turnover in our employee base could result in operational and administrative inefficiencies, which could adversely impact the results of our operations, stock price and customer relationships, and could make recruiting for future management and other positions more difficult.
We may conduct additional financings to continue the development or commercialization of our current or future generation CGM systems.
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The primary collection risks for our accounts receivable relate to the uninsured patient accounts and patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (exclusions, deductibles and copayments) remain outstanding.
−Removed: In addition, as a result of the impact of the ongoing COVID-19 pandemic, some customers have, and others may, lose access to their private health insurance plan if they lose their job.
+Added: In addition, as a result of the economic slowdown, some customers have, and others may, lose access to their private health insurance plan if they lose their job.
As most of our customers rely on third-party payors, including private health insurance plans, to cover the cost of our products, there has been, and may continue to be, a shift in financial responsibility to our customers for the amounts previously covered by their primary insurance carrier.
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Our new organization and strategies may not produce the anticipated benefits, such as supporting our growth strategies and enhancing shareholder value.
−Removed: Our new organization and strategies could be less successful than our previous organizational structure and
+Added: Our new organization and strategies could be less successful than our previous organizational structure and strategies.
In addition, external events including changing technology, changing consumer patterns, acceptance of our products and changes in macroeconomic conditions may impair the value of our assets.
When these changes or events occur, we may incur costs to change our business strategy and may need to write-down the value of assets.
−Removed: For example, current conditions, including COVID-19 and our business decisions, may reduce the value of some of our assets.
+Added: For example, current economic conditions, including rising interest rates, inflation and a potential recession, as well as our business decisions, may reduce the value of some of our assets.
We also make investments in existing or new businesses, including investments in the international expansion of our sales efforts and the build-out of our manufacturing facility in Malaysia.
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Many such companies generate net losses and the market for their products, services, or technologies may be slow to develop or never materialize.
−Removed: We are subject to risks associated with our equity investments including partial or complete loss of invested capital, and significant changes in the fair value of this portfolio could adversely impact our financial results, Some of these investments may have returns that are negative or low, the ultimate business prospects of the businesses related to these investments may be uncertain, and these risks may be exacerbated by COVID-19.
+Added: We are subject to risks associated with our equity investments including partial or complete loss of invested capital, and significant changes in the fair value of this portfolio could adversely impact our financial results.
+Added: Some of these investments may have returns that are negative or low, the ultimate business prospects of the businesses related to these investments may be uncertain, and these risks may be exacerbated by current macroeconomic conditions.
In any of these events, our costs may increase or returns on new investments may be lower than prior to the change in strategy or restructuring.
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Further, due to economic and political conditions, tax rates in various jurisdictions may be subject to change.
−Removed: Our effective tax rates could be affected by numerous factors, including changes in the mix of earnings in countries with differing statutory tax rates,
−Removed: changes in the valuation of deferred tax assets and liabilities, and changes in tax laws or their interpretation, both in and outside the United States.
+Added: Our effective tax rates could be affected by numerous factors, including changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in tax laws or their interpretation, both in and outside the United States.
There is growing pressure in many jurisdictions, including the United States, and from multinational organizations such as the OECD and the European Union to amend existing international tax rules in order to render them more responsive to current global business practices.
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We cannot guarantee the outcome of these examinations.
−Removed: If our effective tax rates were to increase, particularly in the United States, or in other countries implementing legislation to reform existing tax legislation, including the European Union and Germany, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our financial condition, operating results and cash flows could be adversely affected.
+Added: If our effective tax rates were to increase, particularly in the United States, or in
+Added: other countries implementing legislation to reform existing tax legislation, including the European Union and Germany, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our financial condition, operating results and cash flows could be adversely affected.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.
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If we have insufficient future taxable income in the applicable tax jurisdiction for any reason, including any future corporate reorganization or restructuring activities, we may be limited in our ability to utilize some or all of our net operating losses to offset such income and reduce our tax liability in that jurisdiction.
−Removed: We anticipate that the majority of our remaining NOLs will be utilized by the end of 2022, with the exception of the NOLs limited by Section 382 of the Internal Revenue Code of 1986.
+Added: We utilized that the majority of our remaining NOLs by the end of 2021, with the exception of the NOLs limited by Section 382 of the Internal Revenue Code of 1986.
See Note 8 “Income Taxes” to the consolidated financial statements for the fiscal year ended December 31, 2022 in Part II, Item 8 of our Annual Report on Form 10-K that we filed with the SEC on February 9, 2023 for additional information.
There is also a risk that due to regulatory changes or changes to federal or state law, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable either in whole or in part to offset future income tax liabilities.
−Removed: For example, under the Coronavirus Aid, Relief, and Economic Security Act of 2020, or CARES Act, which amended certain provisions of the Tax Cuts and Jobs Act of 2017, or TCJA, NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five taxable years preceding the tax year of such loss, but NOLs arising in taxable years beginning after December 31, 2020 may not be carried back.
−Removed: The TCJA, as amended by the CARES Act, also provides that NOLs from tax years that began after December 31, 2017 may offset no more than 80% of current taxable income annually for taxable years beginning after December 31, 2020.
Valuation of share-based payments, which we are required to perform for purposes of recording compensation expense under authoritative guidance for share-based payment, involves assumptions that are subject to change and difficult to predict.
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Our stock price is highly volatile and investing in our stock involves a high degree of risk, which could result in substantial losses for investors.
−Removed: Historically, the market price of our common stock, like the securities of many other medical products companies, fluctuates and could continue to be volatile in the future, especially as our business continues to grow and our business plan continues to evolve.
−Removed: From January 1, 2022 through September 30, 2022, the closing price of our common stock on the Nasdaq Global Select Market was as high as $132.89 per share and as low as $67.99 per share.
+Added: Historically, the market price of our common stock, like the securities of many other medical products companies, fluctuates and could continue to be volatile in the future, especially as our business continues to grow
+Added: and our business plan continues to evolve.
+Added: From January 1, 2023 through March 31, 2023, the closing price of our common stock on the Nasdaq Global Select Market was as high as $122.92 per share and as low as $104.00 per share.
In addition, the trading prices for our common stock and other medical device companies have been highly volatile as a result of the ongoing COVID-19 pandemic.
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• the consummation, and the anticipated benefits, of our Share Repurchase Program;
−Removed: • other events or factors, including the impact or perceived impact of our four-for-one forward stock split of our common stock, ongoing conflict in Ukraine, recessions, interest rates, local and national elections, international currency fluctuations, corruption, political instability and acts of war or terrorism .
+Added: • other events or factors, including the impact or perceived impact of our four-for-one forward stock split of our common stock, ongoing conflict in Ukraine, recessions, rising interest rates, inflation, local and national elections, international currency fluctuations, corruption, political instability and acts of war or terrorism .
Please also refer to the factors described elsewhere in this “Risk Factors” section.
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We have never declared or paid cash dividends on our capital stock.
−Removed: We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable
−Removed: future and the terms of our credit agreement restrict our ability to declare or pay any dividends.
+Added: We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future and the terms of our credit agreement restrict our ability to declare or pay any dividends.
As a result, stockholders (including holders of our senior convertible notes who receive shares of our common stock, if any, upon conversion of their notes) may only receive a return on their investment in our common stock if the market price of our common stock increases.
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• our stockholders may not take action by written consent;
−Removed: • our Board of Directors is divided into three classes, only one of which is elected each year;
+Added: • our Board of Directors is divided into three classes, only one of which is elected each year (however, over a three year period beginning with the 2022 annual meeting of stockholders the Board will be declassified and by the conclusion of this process all directors will be elected annually;
• we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
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The Amended Credit Agreement is a five-year $200.0 million revolving credit facility, or the Credit Facility.
−Removed: As of September 30, 2022, we had no outstanding borrowings, $7.3 million in outstanding letters of credit, and a total available balance of $192.7 million under the Amended Credit Agreement.
+Added: March 31, 2023, we had no outstanding borrowings, $7.3 million in outstanding letters of credit, and a total available balance of $192.7 million under the Amended Credit Agreement.
Our leverage ratio may affect the availability to us of additional capital resources as well as our operations in several ways, including:
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The Amended Credit Agreement imposes numerous financial and other restrictive covenants on our operations, including covenants relating to our general profitability and our liquidity.
−Removed: As of September 30, 2022, we were in compliance with the covenants imposed by the Amended Credit Agreement.
+Added: As of March 31, 2023, we were in compliance with the covenants imposed by the Amended Credit Agreement.
If we violate these or any other covenants, any outstanding amounts under the Amended Credit Agreement could become due and payable prior to their stated maturity dates, each lender could proceed against any collateral in our operating accounts and our ability to borrow funds in the future may be restricted or eliminated.
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• our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired.
−Removed: We cannot be sure that our leverage resulting from the level of increased debt after the completion of the Notes Offerings will not materially and adversely affect our ability to finance our operations or capital needs or to engage in other business activities.
+Added: We cannot be sure that our leverage resulting from the level of increased debt after the completion of the Notes Offerings will not materially and adversely affect our ability to finance our operations or capital needs or to
+Added: engage in other business activities.
In addition, we cannot be sure that additional financing will be available when required or, if available, will be on terms satisfactory to us.
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We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the 2023 Notes or our common stock.
−Removed: In addition, we do not make any
−Removed: representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
+Added: In addition, we do not make any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
We are subject to counterparty risk with respect to the 2023 Note Hedge transactions.
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These and other provisions of each indenture may have the effect of delaying or preventing a takeover of Dexcom.
+Added: Risks Related to Environmental, Social and Governance Matters
+Added: Environmental, social and governance, or ESG, regulations, policies and provisions could expose us to numerous risks.
+Added: Increasingly regulators, customers, investors, employees and other stakeholders are focusing on ESG matters and related disclosures.
+Added: These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
+Added: For example, collecting, measuring and reporting ESG-related data and information is subject to evolving reporting standards, including the SEC’s proposed climate-related reporting requirements, and similar proposals by other international regulatory bodies.
+Added: In addition, a number of our customers who are payors or distributors have adopted, or may adopt, procurement policies that include ESG provisions that their suppliers or manufacturers must comply with, or they may seek to include such provisions in their terms and conditions.
+Added: An increasing number of participants in the medical device industry are also joining voluntary ESG groups or organizations, such as the Responsible Business Alliance.
+Added: ESG provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with, given the complexity of our supply chain and the outsourced manufacturing of certain components of our products.
+Added: If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions, a customer may stop purchasing products from us, and may take legal action against us, which could harm our reputation, revenue and results of operations.
+Added: Our business could be negatively impacted by evolving expectations and challenges relating to implementing ESG initiatives, setting ESG-related goals, collecting ESG-related data, and disclosing ESG-related information.
+Added: We may communicate certain initiatives and goals regarding ESG-related matters in our SEC filings or in other public disclosures.
+Added: These ESG-related initiatives and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure.
+Added: Further, statements about our ESG-related initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
+Added: In addition, we could be criticized for the scope or nature of such initiatives or goals, or for any revisions to these goals.
+Added: If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG-related goals on a timely basis, or at all, our reputation, business, financial performance and growth could be adversely affected.
+Added: Climate change may have a long-term impact on our business.
+Added: While we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that there are inherent risks related to climate change wherever business is conducted.
+Added: Access to clean water and reliable energy in the communities where we conduct our business, whether for our offices or for our vendors, is a priority.
+Added: Our manufacturing sites in California, Arizona and Malaysia and our operations in the Philippines are vulnerable to climate change effects.
+Added: For example, in California and Arizona, increasing intensity of droughts throughout the states and annual periods of wildfire danger increase the probability of planned and unplanned power outages in the communities where we work and live.
+Added: While this danger has a low-assessed risk of disrupting normal business operations, it has the potential impact on employees’ abilities to commute to work or to work from home and stay connected effectively.
+Added: Climate-related events, including the increasing frequency of extreme weather events and their impact on the U.S., the Philippines, Malaysia and other major regions’ critical infrastructure, have the potential to disrupt our business, our third-party suppliers, and/or the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations.
+Added: We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incur additional expense.
+Added: Our research and development and clinical processes involve the handling of potentially harmful biological materials as well as hazardous materials.
+Added: We are subject to international and domestic (including federal, state and local) laws, rules and regulations governing the use, handling, storage and disposal of hazardous and biological materials and we incur expenses relating to compliance with these laws and regulations.
+Added: If violations of environmental, health and safety laws occur, we could be held liable for damages, penalties and costs of remedial actions.
+Added: These expenses or this liability could have a significant negative impact on our financial condition.
+Added: We may violate environmental, health and safety laws in the future as a result of human error, equipment failure or other causes.
+Added: Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations.
+Added: We are subject to potentially conflicting and changing regulatory agendas of political, business and environmental groups.
+Added: Changes to or restrictions on permitting requirements or processes, hazardous or biological material storage or handling might require unplanned capital investment or relocation.
+Added: Failure to comply with new or existing laws or regulations could harm our business, financial condition and results of operations.
General Risk Factors
1 unchanged sentence
Our operations and performance depend on worldwide economic and political conditions.
−Removed: These conditions have been adversely impacted by continued global economic uncertainty, political instability and military hostilities in multiple geographies (including the conflict between Ukraine and Russia), monetary and financial uncertainties in Europe and other foreign countries, global health pandemics such as the ongoing COVID-19 pandemic, rising interest rates, and domestic and global inflationary trends.
+Added: These conditions have been adversely impacted by continued global economic uncertainty, political instability and military hostilities in
+Added: multiple geographies (including the conflict between Ukraine and Russia), monetary and financial uncertainties in Europe and other foreign countries, global health pandemics, rising interest rates, and domestic and global inflationary trends.
These include potential reductions in the overall stability and suitability of the Euro as a single currency, given the economic and political challenges facing individual Eurozone countries.
4 unchanged sentences
While the potential economic impact brought by and the duration of the ongoing COVID-19 pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which may reduce our ability to access capital on favorable terms or at all.
−Removed: A recession, depression or other sustained adverse market event, including any such event resulting from the spread of COVID-19 could materially and adversely affect our business and the value of our common stock.
+Added: A recession, depression or other sustained adverse market event could materially and adversely affect our business and the value of our common stock.
We cannot predict the reoccurrence of any economic slowdown or the strength or sustainability of the economic recovery, worldwide, in the United States, or in our industry.
33 unchanged sentences
• global political and economic conditions, political instability and military hostilities.
−Removed: We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incur additional expense.
−Removed: Our research and development and clinical processes involve the handling of potentially harmful biological materials as well as hazardous materials.
−Removed: We are subject to international and domestic (including federal, state and local) laws, rules and regulations governing the use, handling, storage and disposal of hazardous and biological materials and we incur expenses relating to compliance with these laws and regulations.
−Removed: If violations of environmental, health and safety laws occur, we could be held liable for damages, penalties and costs of remedial actions.
−Removed: These expenses or this liability could have a significant negative impact on our financial condition.
−Removed: We may violate environmental, health and safety laws in the future as a result of human error, equipment failure or other causes.
−Removed: Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations.
−Removed: We are subject to potentially conflicting and changing regulatory agendas of political, business and environmental groups.
−Removed: Changes to or restrictions on permitting requirements or processes, hazardous or biological material storage or handling might require unplanned capital investment or relocation.
−Removed: Failure to comply with new or existing laws or regulations could harm our business, financial condition and results of operations.
−Removed: Environmental, social and corporate governance, or ESG, regulations, policies and provisions may make our supply chain more complex and may adversely affect our relationships with customers.
−Removed: There is an increasing focus on the governance of environmental and social risks.
−Removed: A number of our customers who are payors or distributors have adopted, or may adopt, procurement policies that include ESG provisions that their suppliers or manufacturers must comply with, or they may seek to include such provisions in their terms and conditions.
−Removed: An increasing number of participants in the medical device industry are also joining voluntary ESG groups or organizations, such as the Responsible Business Alliance.
−Removed: These ESG provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with, given the complexity of our supply chain and the outsourced manufacturing of certain components of our products.
−Removed: If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions, a customer may stop purchasing products from us, and may take legal action against us, which could harm our reputation, revenue and results of operations.
−Removed: Our business could be negatively impacted by corporate citizenship and ESG matters and/or our reporting of such matters.
−Removed: There is an increasing focus from certain investors, customers, consumers, employees, and other stakeholders concerning corporate citizenship and sustainability matters.
−Removed: From time to time, we communicate certain initiatives, including goals, regarding environmental matters, responsible sourcing and social investments, including pursuant to our Sustainability Report.
−Removed: We could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could fail in fully and accurately reporting our progress on such initiatives and goals.
−Removed: In addition, we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters.
−Removed: Our business could be negatively impacted by such matters.
−Removed: Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.
−Removed: Climate change may have a long-term impact on our business.
−Removed: While we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that there are inherent risks related to climate change wherever business is conducted.
−Removed: Access to clean water and reliable energy in the communities where we conduct our business, whether for our offices or for our vendors, is a priority.
−Removed: Our manufacturing sites in California, Arizona and Malaysia and our operations in the Philippines are vulnerable to climate change effects.
−Removed: For example, in California and Arizona, increasing intensity of droughts throughout the states and annual periods of wildfire danger increase the probability of planned and unplanned power outages in the communities where we work and live.
−Removed: While this danger has a low-assessed risk of disrupting normal business operations, it has the potential impact on employees’ abilities to commute to work or to work from home and stay connected effectively.
−Removed: Climate-related events, including the increasing frequency of extreme weather events and their impact on the U.S., the Philippines, Malaysia and other major regions’ critical infrastructure, have the potential to disrupt our business, our third-party suppliers, and/or the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations.
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.