What changed in this filing

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Item 1. Financial Statements

2023-10-26 compared with 2023-07-27 · 160 added, 117 removed, 607 unchanged (31% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

(In millions, except par value data) June 30, 2023 December 31, 2022

(In millions, except par value data) September 30, 2023 December 31, 2022

Current assets:

27 unchanged sentences

Preferred stock, $ 0.001 par value, 5.0 million shares authorized;

no shares issued and outstanding at June 30, 2023 and December 31, 2022

no shares issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $ 0.001 par value, 800.0 million shares authorized;

394.6 million and 386.1 million shares issued and outstanding, respectively, at June 30, 2023;

405.5 million and 386.4 million shares issued and outstanding, respectively, at September 30, 2023;

and 393.2 million and 386.3 million shares issued and outstanding, respectively, at December 31, 2022

4 unchanged sentences

Treasury stock, at cost;

8.5 million shares at June 30, 2023 and 6.9 million shares at December 31, 2022

19.1 million shares at September 30, 2023 and 6.9 million shares at December 31, 2022

( 2,080.0 ) ( 595.0 )

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share data) 2023 2022 2023 2022

8 unchanged sentences

Operating income 205.5 147.5 380.8 265.8

Interest expense ( 5.9 ) ( 4.7 ) ( 10.5 ) ( 9.3 )

Income from equity investments 1.0 — 1.0 0.2

Interest and other income, net 37.1 3.0 59.0 2.2

Other income (expense), net

33.9 ( 1.3 ) 82.4 ( 8.4 )

Income before income taxes 240.4 146.2 464.2 257.6

Income tax expense (benefit) 43.4 24.4 59.3 ( 36.8 )

Income tax expense 119.7 45.0 179.0 8.2

Net income $ 120.7 $ 101.2 $ 285.2 $ 249.4

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

7 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In millions) Common Stock Additional

2 unchanged sentences

Shares Amount

Balance at March 31, 2023 387.6 $ 0.4 $ 2,305.6 $ ( 6.5 ) $ 528.5 $ ( 595.0 ) $ 2,233.0

Balance at June 30, 2023 386.1 $ 0.4 $ 2,269.0 $ ( 29.3 ) $ 644.4 $ ( 784.1 ) $ 2,100.4

Issuance of common stock under equity incentive plans 0.1 — — — — — —

Purchases of treasury stock ( 1.6 ) — — — — ( 189.1 ) ( 189.1 )

Purchase of capped call transactions, net of tax — — ( 76.3 ) — — — ( 76.3 )

Issuance of common stock for Employee Stock Purchase Plan 0.1 — 14.3 — — — 14.3

Purchases of treasury stock, including excise tax — — — — — 0.2 0.2

Conversions of 2023 Notes 10.6 — ( 0.4 ) — — — ( 0.4 )

Benefit of note hedge upon conversions of 2023 Notes ( 10.5 ) — 1,296.1 — — ( 1,296.1 ) —

Share-based compensation expense — — 39.0 — — — 39.0

1 unchanged sentence

Other comprehensive loss, net of tax — — — ( 6.3 ) — — ( 6.3 )

Balance at June 30, 2023 386.1 $ 0.4 $ 2,269.0 $ ( 29.3 ) $ 644.4 $ ( 784.1 ) $ 2,100.4

Three Months Ended June 30, 2022

Balance at September 30, 2023 386.4 $ 0.4 $ 3,618.0 $ ( 35.6 ) $ 765.1 $ ( 2,080.0 ) $ 2,267.9

Three Months Ended September 30, 2022

(In millions) Common Stock Additional

2 unchanged sentences

Shares Amount

Balance at March 31, 2022 392.5 $ 0.4 $ 1,996.3 $ ( 6.1 ) $ 236.0 $ ( 37.3 ) $ 2,189.3

Issuance of common stock under equity incentive plans 0.1 — — — — — —

Balance at June 30, 2022 392.6 $ 0.4 $ 2,028.9 $ ( 23.0 ) $ 286.9 $ ( 37.3 ) $ 2,255.9

Issuance of common stock for Employee Stock Purchase Plan 0.2 — 12.4 — — — 12.4

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

Share-based compensation expense — — 30.8 — — — 30.8

1 unchanged sentence

Other comprehensive loss, net of tax — — — ( 18.1 ) — — ( 18.1 )

Balance at June 30, 2022 392.6 $ 0.4 $ 2,028.9 $ ( 23.0 ) $ 286.9 $ ( 37.3 ) $ 2,255.9

Balance at September 30, 2022 386.2 $ 0.4 $ 2,072.1 $ ( 41.1 ) $ 388.1 $ ( 595.0 ) $ 1,824.5

See accompanying notes

Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In millions) Common Stock Additional

5 unchanged sentences

Issuance of common stock for Employee Stock Purchase Plan 0.3 — 26.6 — — — 26.6

Purchases of treasury stock ( 1.6 ) — — — — ( 189.1 ) ( 189.1 )

Purchases of treasury stock, including excise tax ( 1.6 ) — — — — ( 188.9 ) ( 188.9 )

Conversions of 2023 Notes 10.6 — ( 0.4 ) — — — ( 0.4 )

Benefit of note hedge upon conversions of 2023 Notes ( 10.5 ) — 1,296.1 — — ( 1,296.1 ) —

Purchase of capped call transactions, net of tax — — ( 76.3 ) — — — ( 76.3 )

2 unchanged sentences

Other comprehensive loss, net of tax — — — ( 24.0 ) — — ( 24.0 )

Balance at June 30, 2023 386.1 $ 0.4 $ 2,269.0 $ ( 29.3 ) $ 644.4 $ ( 784.1 ) $ 2,100.4

Six Months Ended June 30, 2022

Balance at September 30, 2023 386.4 $ 0.4 $ 3,618.0 $ ( 35.6 ) $ 765.1 $ ( 2,080.0 ) $ 2,267.9

Nine Months Ended September 30, 2022

(In millions) Common Stock Additional

6 unchanged sentences

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

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

Conversions of 2023 Notes 0.4 — 4.2 — — 13.2 17.4

3 unchanged sentences

Other comprehensive loss, net of tax — — — ( 41.6 ) — — ( 41.6 )

Balance at June 30, 2022 392.6 $ 0.4 $ 2,028.9 $ ( 23.0 ) $ 286.9 $ ( 37.3 ) $ 2,255.9

Balance at September 30, 2022 386.2 $ 0.4 $ 2,072.1 $ ( 41.1 ) $ 388.1 $ ( 595.0 ) $ 1,824.5

See accompanying notes

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(In millions) 2023 2022

29 unchanged sentences

Purchases of capped call transactions ( 101.3 ) —

Payments for conversions of senior convertible notes

Other financing activities ( 3.4 ) ( 16.3 )

Net cash provided by financing activities 950.7 1.0

Net cash provided by (used in) financing activities 313.3 ( 551.5 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 4.6 ) ( 12.6 )

24 unchanged sentences

In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2022 included in the Annual Report on Form 10-K that we filed with the SEC on February 9, 2023.

10 unchanged sentences

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

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

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

We expect that the revenue we generate from the sales of our products will fluctuate from quarter to quarter.

3 unchanged sentences

Significant Accounting Policies

There were no material changes to our significant accounting policies as described in Note 1 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 during the six months ended June 30, 2023.

Use of Estimates

11 unchanged sentences

Payment terms vary by contract type and type of customer and generally range from 30 to 90 days.

Accounts receivable as of June 30, 2023 included unbilled accounts receivable of $ 9.2 million.

Accounts receivable as of September 30, 2023 included unbilled accounts receivable of $ 8.8 million.

We expect to invoice and collect all unbilled accounts receivable within twelve months.

1 unchanged sentence

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

The deferred revenue balances related to performance obligations that will be satisfied after twelve months was $ 21.4 million as of June 30, 2023 and $ 19.0 million as of December 31, 2022.

The deferred revenue balances related to performance obligations that will be satisfied after twelve months was $ 21.3 million as of September 30, 2023 and $ 19.0 million as of December 31, 2022.

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

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share data) 2023 2022 2023 2022

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

Restricted stock units and performance stock units — 1.3 — 0.5

Senior convertible notes — 8.0 7.7 —

Total — 8.2 7.7 0.2

Recent Accounting Guidance

51 unchanged sentences

We validate the quoted market prices provided by our primary pricing service by comparing the fair values of our Level 2 marketable securities portfolio balance provided by our primary pricing service against the fair values provided by our investment managers.

The following table summarizes financial assets that we measured at fair value on a recurring basis as of June 30, 2023, classified in accordance with the fair value hierarchy:

The following table summarizes financial assets that we measured at fair value on a recurring basis as of September 30, 2023, classified in accordance with the fair value hierarchy:

Fair Value Measurements Using

27 unchanged sentences

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

There were no transfers into or out of Level 3 securities during the three and six months ended June 30, 2023 and June 30, 2022.

There were no transfers into or out of Level 3 securities during the three and nine months ended September 30, 2023 and September 30, 2022.

Fair Value of Senior Convertible Notes

1 unchanged sentence

Fair Value Measurements Using Level 1

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Senior Convertible Notes due 2023 $ 281.3 $ 2,136.2

8 unchanged sentences

The duration of these contracts is generally one month.

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

As of June 30, 2023 and December 31, 2022, the notional amounts of outstanding foreign currency forward contracts were $ 61.0 million and $ 62.0 million, respectively.

The resulting impact on our consolidated financial statements from currency hedging activities was not significant for the three and six months ended June 30, 2023 and June 30, 2022.

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

As of September 30, 2023 and December 31, 2022, the notional amounts of outstanding foreign currency forward contracts were $ 89.0 million and $ 62.0 million, respectively.

The resulting impact on our consolidated financial statements from currency hedging activities was not significant for the three and nine months ended September 30, 2023 and September 30, 2022.

Our foreign currency exposures vary but are primarily concentrated in the Australian Dollar, the British Pound, the Canadian Dollar, the Euro, and the Malaysian Ringgit.

8 unchanged sentences

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

The carrying values of these investments are $ 35.0 million as of June 30, 2023 and $ 19.0 million as of December 31, 2022.

The carrying values of these investments are $ 38.5 million as of September 30, 2023 and $ 19.0 million as of December 31, 2022.

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

1 unchanged sentence

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

There were no significant impairment losses during the three and six months ended June 30, 2023 and June 30, 2022.

Balance Sheet Details

There were no significant impairment losses during the three and nine months ended September 30, 2023 and September 30, 2022.

Balance Sheet Details and Other Financial Information

Short-Term Marketable Securities

Short-term marketable securities, consisting of available-for-sale debt securities, were as follows as of the dates indicated:

June 30, 2023

September 30, 2023

(In millions) Amortized

18 unchanged sentences

government agencies.

As of June 30, 2023, the estimated market value of our short-term debt securities with contractual maturities up to 12 months was $ 2.44 billion.

As of September 30, 2023, the estimated market value of our short-term debt securities with contractual maturities up to 12 months was $ 2.60 billion.

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

Gross realized gains and losses on sales of our short-term debt securities for the three and six months ended June 30, 2023 and June 30, 2022 were not significant.

Gross realized gains and losses on sales of our short-term debt securities for the three and nine months ended September 30, 2023 and September 30, 2022 were not significant.

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

1 unchanged sentence

reports, and the severity of impairment.

Unrealized losses on available-for-sale debt securities at June 30, 2023 were primarily due to increases in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Unrealized losses on available-for-sale debt securities at September 30, 2023 were primarily due to increases in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

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

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

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Raw materials $ 277.5 $ 159.0

3 unchanged sentences

Prepaid and Other Current Assets

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Prepaid expenses $ 55.2 $ 48.9

5 unchanged sentences

Property and Equipment

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Land and land improvements $ 31.8 $ 26.9

8 unchanged sentences

Total property and equipment, net $ 1,078.9 $ 1,055.6

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Long-term investments $ 38.5 $ 19.0

3 unchanged sentences

Accounts Payable and Accrued Liabilities

(In millions) June 30, 2023 December 31, 2022

(In millions)

September 30, 2023 December 31, 2022

Accounts payable trade $ 242.4 $ 237.9

6 unchanged sentences

Accrued Payroll and Related Expenses

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Accrued wages, bonus and taxes $ 129.1 $ 96.8

2 unchanged sentences

Other Long-Term Liabilities

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Finance lease obligations

5 unchanged sentences

Total other long-term liabilities $ 133.9 $ 128.3

Other Income (Expense), Net

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

Interest and dividend income

$ 41.5 $ 5.7 $ 101.2 $ 10.4

Interest expense

( 4.9 ) ( 4.6 ) ( 15.4 ) ( 13.9 )

Other expense, net

( 2.7 ) ( 2.4 ) ( 3.4 ) ( 4.9 )

Total other income (expense), net

$ 33.9 $ ( 1.3 ) $ 82.4 $ ( 8.4 )

Senior Convertible Notes

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

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Principal amount:

6 unchanged sentences

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

(In millions) June 30, 2023 December 31, 2022

(In millions) September 30, 2023 December 31, 2022

Senior Convertible Notes due 2023 $ 158.1 $ 1,361.5

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

12 unchanged sentences

Interest on the 2028 Notes began accruing upon issuance and is payable semi-annually on May 15 and November 15 of each year.

* Not applicable as no notes were outstanding at this date.

0.75 % Senior Convertible Notes due 2023

2 unchanged sentences

The initial conversion rate of the 2023 Notes is 24.3476 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $ 41.07 per share, subject to adjustments.

We entered into transactions for a convertible note hedge (the “2023 Note Hedge”) and warrants (the “2023 Warrants”) concurrently with the issuance of the 2023 Notes.

We entered into transactions for a convertible note hedge (the “2023 Note Hedge”) and

warrants (the “2023 Warrants”) concurrently with the issuance of the 2023 Notes.

The 2023 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion.

6 unchanged sentences

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

During the second quarter of 2023, holders of $ 532.2 million in aggregate principal amount of the 2023 Notes exercised their conversion option.

We elected to settle these conversions through a combination of cash for the principal amount and common stock for any amount due in excess of the principal amount.

The conversions will settle in the third quarter of 2023.

From July 1, 2023 through July 26, 2023, holders of $ 7.8 million in aggregate principal amount of the 2023 Notes exercised their conversion option.

For the three and nine months ended September 30, 2023, we settled $ 650.5 million in aggregate principal amount of the 2023 Notes through a combination of $ 650.5 million in cash for the principal amount and 10,599,907 shares of common stock for the amount in excess of the principal amount.

We received 10,585,850 shares of common stock from the exercise of a portion of the 2023 Note Hedge that we purchased concurrently with the issuance of the 2023 Notes, as described below.

The remaining outstanding principal of $ 124.3 million as of September 30, 2023 and any amount in excess of the principal amount will settle on or before the maturity date of December 1, 2023.

Conversion Rights at the Option of the Holders

1 unchanged sentence

We will also be required to increase the conversion rate for holders who convert their 2023 Notes in connection with certain fundamental changes occurring prior to the maturity date or following the delivery by Dexcom of a notice of redemption.

Holders of the 2023 Notes may convert all or a portion of their notes at their option prior to 5:00 p.m., New York City time, on the business day immediately preceding September 1, 2023, in multiples of $1,000 principal amount, only under the following circumstances:

Holders of the 2023 Notes had the ability to convert all or a portion of their notes at their option prior to 5:00 p.m., New York City time, on the business day immediately preceding September 1, 2023, in multiples of $1,000 principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after March 31, 2019 (and only during such calendar quarter), if the last reported sale price of Dexcom’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 2023 Notes on each such trading day;

2 unchanged sentences

(4) upon the occurrence of specified corporate transactions.

Circumstance (1) listed above occurred during the quarters ended December 31, 2022, March 31, 2023, and June 30, 2023.

As a result, the 2023 Notes were convertible at the option of the holder from January 1, 2023 through August 31, 2023.

On or after September 1, 2023, until 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date, holders of the 2023 Notes may convert all or a portion of their notes regardless of the foregoing circumstances.

Circumstance (1) listed above occurred during the quarters ended December 31, 2022 and March 31, 2023.

As a result, the 2023 Notes were convertible at the option of the holder from January 1, 2023 through June 30, 2023.

Circumstance (1) listed above also occurred during the quarter ended June 30, 2023 and as a result, the 2023 Notes will remain convertible at the option of the holder from July 1, 2023 through September 30, 2023.

See above for a description of conversion activity related to the 2023 Notes.

1 unchanged sentence

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

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

The redemption price will be equal to 100 % of the principal amount of the 2023 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

On or after December 1, 2021 and prior to September 1, 2023, Dexcom was permitted to redeem for cash all or part of the 2023 Notes, at its option, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in

effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Dexcom provides notice of redemption.

The redemption price was equal to 100 % of the principal amount of the 2023 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

2023 Note Hedge

12 unchanged sentences

The strike price of the 2023 Warrants is initially $ 49.60 per share and is subject to certain adjustments under the terms of the warrant agreements.

the treasury share method for assumed conversion of the 2023 Warrants when computing the weighted average common shares outstanding for diluted earnings per share.

We use the treasury share method for assumed conversion of the 2023 Warrants when computing the weighted average common shares outstanding for diluted earnings per share.

0.25 % Senior Convertible Notes due 2025

10 unchanged sentences

Prior to 5:00 p.m., New York City time, on the business day immediately preceding August 15, 2025, holders of the 2025 Notes may convert all or a portion of their notes, in multiples of $1,000 principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after September 30, 2020 (and only during such calendar quarter), if the last reported sale price of Dexcom’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the Notes on each such trading day;

not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the Notes on each such trading day;

(2) during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each day of that five day consecutive trading day period was less than 98 % of the product of the last reported sale price of Dexcom’s common stock and the applicable conversion rate of the Notes on such trading day;

3 unchanged sentences

Conversion Rights at Our Option

Dexcom may not redeem the 2025 Notes prior to May 20, 2023.

Dexcom was not permitted to redeem the 2025 Notes prior to May 20, 2023.

On or after May 20, 2023 and prior to August 15, 2025, Dexcom may redeem for cash all or part of the 2025 Notes, at its option, if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Dexcom provides notice of redemption.

2 unchanged sentences

In May 2023, we completed an offering of $ 1.25 billion aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 0.375 % and a maturity date of May 15, 2028 (the “2028 Notes”).

The net proceeds from the offering, after deducting initial purchasers’ discounts and estimated costs directly related to

the offering, were approximately $ 1.23 billion.

The net proceeds from the offering, after deducting initial purchasers’ discounts and estimated costs directly related to the offering, were approximately $ 1.23 billion.

The initial conversion rate of the 2028 Notes is 6.1571 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $ 162.41 per share, subject to adjustments.

21 unchanged sentences

The 2028 Capped Calls have an initial cap price of $ 212.62 per share, subject to adjustments, which represents a premium of 80 % over the closing price of our common stock of $ 118.12 per share on the Nasdaq Global Select Market on May 2, 2023.

The cost to purchase the 2028 Capped Calls of

$ 101.3 million was recorded as a reduction to additional paid-in capital in our consolidated balance sheets as the 2028 Capped Calls met the criteria for classification in stockholders’ equity.

The cost to purchase the 2028 Capped Calls of $ 101.3 million was recorded as a reduction to additional paid-in capital in our consolidated balance sheets as the 2028 Capped Calls met the criteria for classification in stockholders’ equity.

Revolving Credit Agreement

5 unchanged sentences

Information related to availability and outstanding borrowings on our Amended Credit Agreement is as follows as of the date indicated:

(In millions) June 30, 2023

(In millions) September 30, 2023

Available principal amount 200.0

6 unchanged sentences

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

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

The second base rate is the Term Benchmark rate and loans comprising each Term Benchmark borrowing shall bear interest at the Adjusted Term

SOFR, the Adjusted Euro Interbank Offered Rate, the Adjusted Stockholm Interbank Offered Rate, the Adjusted Canadian Dollar Offered Rate, Adjusted Australian Dollar Rate, the Adjusted Bank Bill Benchmark Rate or the Adjusted Tokyo Interbank Offered Rate, as applicable based on the currency denomination borrowed, plus the applicable rate between 1.375 % to 2.000 %.

The third base rate is the Adjusted Daily Simple RepoFunds Rate (“RFR”) and loans comprising each Daily Simple RFR Loan shall bear interest at a rate per annum equal to the applicable Daily Simple RFR for Sterling or Dollars (as applicable) plus the applicable rate between 0.0326 % to 0.100 % depending on the loan denomination.

3 unchanged sentences

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

We were in compliance with these covenants as of June 30, 2023.

As of June 30, 2023, we also have a guarantee facility related to our international operations which is collateralized by a $ 5.5 million term deposit that is included in non-current “Other assets” on our consolidated balance sheets.

We were in compliance with these covenants as of September 30, 2023.

As of September 30, 2023, we also have a guarantee facility related to our international operations which is collateralized by a $ 5.3 million term deposit that is included in non-current “Other assets” on our consolidated balance sheets.

Contingencies

1 unchanged sentence

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

For the six months ended June 30, 2023, we and certain Abbott Diabetes Care, Inc.

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

In June and July 2021, we initiated patent infringement litigation against Abbott in the United States and in Germany over certain of Abbott's continuous glucose monitoring products.

In both the United States and Germany, we seek injunctive relief and monetary damages.

In July 2021, Abbott initiated patent infringement litigation against Dexcom in the United States, United Kingdom, and in Germany over certain of Dexcom's continuous glucose monitoring products.

Abbott seeks injunctive relief and monetary damages.

In response to the suits in the United Kingdom, Dexcom brought infringement counterclaims there.

One trial on liability has already been conducted in the United Kingdom, and the parties are awaiting a ruling.

In December 2021, Abbott filed a breach of contract suit against Dexcom in the United States alleging that Dexcom breached the parties' 2014 Settlement and License Agreement.

Dexcom’s patent infringement claims in the United States are stayed pending resolution of Abbott’s breach of contract claims.

Between June 2021 through the nine months ended September 30, 2023, we and certain Abbott Diabetes Care, Inc.

(“Abbott”) entities have served complaints against each other in multiple jurisdictions, including in the United States (United States District Court ("U.S.D.C.”), District of Delaware), the United Kingdom (Business and Property Courts of England and Wales), France (United Patent Court (“UPC”) in Paris), Spain (Commercial Courts of Barcelona) and Germany (National Courts (“N.C.”) of Munich, Mannheim, Dusseldorf and Hamburg and the UPC in Munich), primarily involving claims of patent infringement, invalidity and other patent related actions.

In June and July of 2021, we initiated patent infringement litigation against Abbott in the United States (U.S.D.C., Western District of Texas) and Germany (N.C.

in Mannheim) and filed additional patent infringement actions in May 2023 in Germany (N.C.

in Munich) over certain of Abbott's continuous glucose monitoring products.

In July and August 2023, we initiated patent infringement litigation in France and Germany in the UPC and in Spain (Commercial Courts of Barcelona).

Between July 2021 through the nine months ended September 30, 2023, Abbott initiated patent infringement litigation against Dexcom in multiple jurisdictions, including the United States (U.S.D.C., Delaware), the United Kingdom (Business and Property Courts of England and Wales), and in Germany (N.C.

in Mannheim, Dusseldorf and Hamburg) over certain of Dexcom's continuous glucose monitoring products.

In response to the lawsuits initiated by Abbott in the United Kingdom, Dexcom also filed patent infringement counterclaims in that jurisdiction.

Three trials on liability have already been conducted in the United Kingdom.

On October 18, judgment was handed down in favor of Dexcom in one of these trials.

The parties are awaiting rulings on the remaining two .

Dexcom and Abbott seek injunctive relief and monetary damages as a result of their respective claims.

In December 2021, Abbott filed a breach of contract lawsuit against Dexcom in the U.S.D.C., District of Delaware alleging that Dexcom breached the parties' Settlement and License Agreement dated July 2, 2014 (“SLA”).

The U.S.D.C., District of Delaware consolidated Abbott’s breach of contract lawsuit with Dexcom’s patent infringement lawsuit which had been transferred from the U.S.D.C., Western District of Texas.

Dexcom asserted counterclaims that Abbott also breached the SLA.

A jury trial on Abbott’s breach of contract claims commenced on July 10, 2023.

On July 14, 2023, the jury awarded a verdict finding Abbott was not licensed to several claims of certain Dexcom patents and that Abbott was licensed to a few claims.

We will continue to enforce the remaining claims in the patents asserted in Delaware and elsewhere.

Abbott’s U.S.

patent infringement action against Dexcom is currently scheduled for trial on November 5, 2023.

In February and March of 2023, Abbott initiated additional patent infringement litigation against Dexcom in both the United States and in Germany.

Abbott seeks injunctive relief and monetary damages.

Due to uncertainty surrounding patent litigation processes in the U.S.

and Europe, we are unable to reasonably estimate the ultimate outcome of any of the litigation matters at this time.

On July 14, 2023, the jury verdict determined that Abbott was not licensed to thirteen claims of certain Dexcom patents and that Abbott was licensed to five claims.

Dexcom’s patent infringement claims in Delaware are stayed until November 10, 2023, at which point the U.S.

Patent and Trademark Office will have issued

its final written decisions on certain patents involved in the lawsuit.

We will continue to enforce the remaining claims of the patents asserted in Delaware.

Abbott’s patent infringement action against Dexcom is currently scheduled for trial in the U.S.D.C., District of Delaware on March 11, 2024.

In the lead up to trial, the U.S.D.C., District of Delaware invalidated one of Abbott’s patents and Abbott dropped four other patents from the litigation.

Commencing in December 2023, Abbott has several patent infringement hearings against Dexcom in the National Court in Hamburg and Munich wherein Abbott is seeking damages and injunctive relief.

In March and April of 2024, Dexcom has several patent infringement hearings in Munich against Abbott, wherein Dexcom is seeking damages and injunctive relief.

Due to uncertainty surrounding patent litigation procedures initiated by Dexcom and Abbott throughout multiple jurisdictions, we are unable to reasonably estimate the ultimate outcome of any of the litigation matters at this time.

We intend to protect our intellectual property and defend against Abbott’s claims vigorously in all of these actions.

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We estimate our annual effective tax rate to be 24.7 % for the full year 2023, which differs from the U.S.

federal statutory rate due to state and foreign income taxes, nondeductible executive compensation, and increases to unrecognized tax benefits, partially offset by federal tax credits generated.

Our actual effective tax rate of 26.5 % for the six months ended June 30, 2023 was primarily due to income tax expense from normal, recurring operations, partially offset by discrete excess tax benefits recognized for share-based compensation for employees, net of disallowed executive compensation.

federal statutory rate due to state and foreign income taxes, nondeductible executive compensation, increases to unrecognized tax benefits, and impact of foreign operations, partially offset by federal tax credits generated.

Our actual effective tax rate of 38.6 % for the nine months ended September 30, 2023 was primarily due to income tax expense from normal, recurring operations, increased by discrete foreign taxes related to an intra-entity transfer of certain intellectual property, and decrease in the state tax rate applied to beginning of year deferred tax assets, partially offset by tax benefits recognized for share-based compensation for employees, net of disallowed executive compensation.

In August 2023, we completed an intra-entity asset transfer of certain intellectual property between two of our wholly owned foreign subsidiaries to align our structure with the expansion of international business operations.

We recorded a $ 186.6 million deferred tax asset, which represents the difference between the basis of the intellectual property for financial statement and tax purposes, applying the appropriate enacted statutory tax rate.

Based on available evidence, management believes it is not more-likely-than-not that the additional foreign deferred tax asset will be realizable, and is therefore, fully offset by a valuation allowance.

The transfer resulted in $ 65.2 million of net tax expense, which increased our actual effective tax rate for the nine months ended September 30, 2023.

Stockholders’ Equity

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022 2023 2022

3 unchanged sentences

Total share-based compensation expense $ 39.0 $ 30.8 $ 113.9 $ 92.5

At June 30, 2023, unrecognized estimated compensation costs related to RSUs, PSUs and ESPP totaled $ 272.5 million and are expected to be recognized through 2027.

At September 30, 2023, unrecognized estimated compensation costs related to RSUs, PSUs and ESPP totaled $ 238.4 million and are expected to be recognized through 2027.

Equity Award Activity

The total vest date fair value of RSUs and PSUs that vested during the six months ended June 30, 2023 was $ 127.3 million and $ 9.9 million, respectively.

The total vest date fair value of RSUs and PSUs that vested during the nine months ended September 30, 2023 was $ 138.5 million and $ 9.9 million, respectively.

Share Repurchase Program and Treasury Shares

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

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

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

On July 26, 2022, a duly authorized committee of our Board of Directors authorized and approved a share repurchase program of up to $ 700.0 million of our outstanding common stock, with a repurchase period that ended on June 30, 2023 (the “2022 Share Repurchase Program”).

Shares of common stock repurchased under the 2022 Share Repurchase Program became treasury shares.

We repurchased approximately $ 557.7 million of our outstanding common stock throughout the duration of the 2022 Share Repurchase Program.

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There were no share repurchases under the 2022 Share Repurchase Program in 2023.

In May 2023, we used a portion of the proceeds of the 2028 Notes to repurchase 1.6 million shares of our common stock for $ 188.7 million for an average per share price of $ 118.12 , via privately negotiated transactions, independent of the Share Repurchase Program.

In May 2023, we used a portion of the proceeds of the 2028 Notes to repurchase 1.6 million shares of our common stock for $ 188.7 million, excluding excise tax due under the Inflation Reduction Act of 2022, for an average per share price of $ 118.12 , via privately negotiated transactions, independent of the 2022 Share Repurchase Program.

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

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Revenue by geographic region

During the three and six months ended June 30, 2023 and June 30, 2022, no individual country outside the United States generated revenue that represented more than 10% of our total revenue.

During the three and nine months ended September 30, 2023 and September 30, 2022, no individual country outside the United States generated revenue that represented more than 10% of our total revenue.

The following table sets forth revenue by our two primary geographical markets, the United States and International, based on the geographic location to which we deliver the components, for the periods shown:

Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022

September 30, 2023 Three Months Ended

September 30, 2022

(In millions) Amount % of Total Amount % of Total

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Total revenue $ 975.0 100 % $ 769.6 100 %

Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

(In millions) Amount % of Total Amount % of Total

6 unchanged sentences

Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022

September 30, 2023 Three Months Ended

September 30, 2022

(In millions) Amount % of Total Amount % of Total

2 unchanged sentences

Total revenue $ 975.0 100 % $ 769.6 100 %

Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

(In millions) Amount % of Total Amount % of Total

2 unchanged sentences

Total revenue $ 2,587.8 100 % $ 2,094.6 100 %

Subsequent Events

On October 24, 2023, our Board of Directors authorized and approved a share repurchase program of up to $ 500.0 million of our outstanding common stock, with a repurchase period ending no later than October 31, 2024 (the “2023 Share Repurchase Program”).

Repurchases of our common stock under the 2023 Share Repurchase Program may be made from time to time, on the open market, in privately negotiated transactions or by other methods, at our discretion, and in accordance with the limitations set forth in Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, and other applicable federal and state laws and regulations.

The timing of any repurchases will depend on market conditions and will be made at our discretion.

The 2023 Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time.

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

What changed 10-Q

Item 1. Financial Statements