What changed in this filing

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Item 1A. Risk Factors

2023-10-26 compared with 2023-07-27 · 82 added, 81 removed, 1161 unchanged (12% of the section changed)

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• We operate in a highly competitive market and face competition from large, well-established companies with significant resources, and, as a result, we may not be able to compete effectively.

• Global pandemics 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.

• We are subject to risks associated with public health issues, including pandemics, which could have a material adverse effect on our business, financial condition and results of operations.

• 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.

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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.

As of June 30, 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.

As of September 30, 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.

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Moreover, it is not uncommon for governmental, including federal and/or state, agencies and their contractors to conduct periodic routine billing and compliance reviews that may entail extensive documentation requests, cooperation with which may require significant time and resources, and may result in identification of overpayments that may need to be refunded.

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.

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.

CMS has adopted coverage guidelines for CGMs, which could have a favorable impact on us.

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Further, the LCD also allows coverage for patients not taking insulin if the patient has a history of problematic hypoglycemia.

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.

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• the introduction and market acceptance of competing products and technologies, which may have a lower cost or price, allow for a convenience improvement and/or allow for improved accuracy and reliability;

• the introduction and market acceptance of new drug therapies for the treatment and management of diabetes;

• greater name or brand recognition and more established medical product distribution channels by some of our competitors;

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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.

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.

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.

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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.

install and maintain manufacturing equipment, among others, all of which can lead to unexpected delays in manufacturing output.

The scaling of manufacturing capacity is subject to numerous risks and uncertainties, and may lead to variability in product quality or reliability, increased construction timelines, as well as resources required to design, install and maintain manufacturing equipment, among others, all of which can lead to unexpected delays in manufacturing output.

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.

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We have generally been able to obtain adequate supplies of such materials, components and services.

However, we also rely on single and/or sole sources for certain components and materials used in manufacturing, such as for the application-specific integrated circuit that is incorporated into the transmitter and certain polymers used to synthesize the polymeric biointerface membranes for our products.

However, we also rely on single and/or sole sources for certain components and materials used in manufacturing, such as for the application-specific integrated

circuit that is incorporated into the transmitter and certain polymers used to synthesize the polymeric biointerface membranes for our products.

In some cases, our agreements with these and other suppliers can be terminated by either party upon short notice.

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Our distributors might not have the resources to continue to support our recent rapid growth.

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 six months ended June 30, 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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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.

Therefore, our products may be rendered obsolete by technological breakthroughs in diabetes monitoring, treatment, prevention or cure.

In selling our current CGM systems, we compete directly with the Diabetes Care division of Abbott Laboratories;

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

We also have begun to become aware of companies outside the traditional medical device sector that are attempting to develop competitive products and services, including for general health and wellness, or population health.

We are also aware of companies outside the traditional medical device sector that are attempting to develop competitive products and services, including for general health and wellness, or population health.

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

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While we largely navigated disruptions to our business as a result of the COVID-19 pandemic, a future public health issue, pandemic or outbreak of COVID-19 could lead to delays in the manufacturing and supply of products, which could have a material adverse effect on our business, financial condition and results of operations.

Moreover, any future public health issue, such as a resurgence in COVID-19 infections, including due to new variants of the

virus for which current vaccines may not be effective, could result in the imposition of new governmental restrictions, quarantine requirements or other measures to slow the spread of the virus, which could result in closures or other restrictions that significantly disrupt our operations or those of our third-party distributors, suppliers or other service providers, or otherwise adversely affect our customers or their businesses or operations, or result in economic weakness or slowdowns in one or more of our key geographies, any of which could adversely affect our business, financial condition and results of operations.

Moreover, any future public health issue, such as a resurgence in COVID-19 infections, including due to new variants of the virus for which current vaccines may not be effective, could result in the imposition of new governmental restrictions, quarantine requirements or other measures to slow the spread of the virus, which could result in closures or other restrictions that significantly disrupt our operations or those of our third-party distributors, suppliers or other service providers, or otherwise adversely affect our customers or their businesses or operations, or result in economic weakness or slowdowns in one or more of our key geographies, any of which could adversely affect our business, financial condition and results of operations.

Risks Related to our International Operations

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

Our operations in countries outside the United States, which accounted for approximately 29% of our revenue for the six months ended June 30, 2023, are accompanied by certain financial and other risks.

Our operations in countries outside the United States, which accounted for approximately 28% of our revenue for the nine months ended September 30, 2023, are accompanied by certain financial and other risks.

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.

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We have a significant presence in the European Union, as well as significant sales in the European Union, such that any changes in tax laws in the European Union will impact our business.

The overall impact of such legislation in European Union member states is uncertain, and our business and financial condition could be adversely affected by any laws impacting our tax rate.

The overall impact of such legislation in

European Union member states is uncertain, and our business and financial condition could be adversely affected by any laws impacting our tax rate.

While it is impossible for us to predict whether these and other proposals will be implemented, or how they will ultimately impact us, they may materially impact our results of operations if, for example, our profits earned abroad are subject to U.S.

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The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction.

Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of the trade

and cooperation agreement or otherwise, could prevent us from marketing our CGM systems in the U.K.

Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of the trade and cooperation agreement or otherwise, could prevent us from marketing our CGM systems in the U.K.

and/or the E.U.

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In addition, the government agencies may seek to hold us liable for successor liability for anti-corruption law violations committed by any companies in which we invest or that we acquire.

Any alleged or actual violations of these regulations may subject us to government scrutiny, severe criminal or civil sanctions and other liabilities, including exclusion from government contracting, and could disrupt our business, and result in a material adverse effect on our business, financial condition, and results of operations.

Any alleged or actual violations of these regulations may subject us to

government scrutiny, severe criminal or civil sanctions and other liabilities, including exclusion from government contracting, and could disrupt our business, and result in a material adverse effect on our business, financial condition, and results of operations.

Current uncertainty in global economic and political conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that our actual results could differ materially from expectations.

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These conditions have made and may continue to make it difficult for our customers and potential customers to afford our products, and could cause our customers to stop using our products or to use them less frequently.

If that were to occur, our revenue may decrease and our

performance may be negatively impacted.

If that were to occur, our revenue may decrease and our performance may be negatively impacted.

In addition, the pressure on consumers to absorb more of their own health care costs has resulted in some cases in higher deductibles and limits on durable medical equipment, which may cause seasonality in purchasing patterns.

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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.

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.

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.

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For example, data localization laws in some countries generally mandate that certain types of data collected in a particular country be stored and/or processed within that country.

We may be subject to inquiries, investigations and audits in Europe and around the world, particularly in the areas of consumer and data protection, which will arise in the ordinary course of business and may increase in frequency as we continue to grow and

expand our operations.

Legislators and regulators may make legal and regulatory changes, or interpret and apply existing laws, in ways that make our products less useful to our customers, require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to change our business practices.

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Covered entities must report breaches of unsecured protected health information to affected individuals without unreasonable delay and notification must also be made to the U.S.

Department of Health & Human Services, Office for Civil Rights, or OCR and, in certain situations involving large breaches, to the media.

Department of Health & Human Services, Office

for Civil Rights, or OCR and, in certain situations involving large breaches, to the media.

state laws and regulations may also require us to notify affected individuals and state agencies in the event of a data breach involving individually identifiable information.

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For example, from time-to-time, the OCR issues bulletins that outline its interpretations of HIPAA as applied to specific use cases.

On December 1, 2022, OCR issued a bulletin on the

requirements under HIPAA for online tracking technologies ( e.g.

On December 1, 2022, OCR issued a bulletin on the requirements under HIPAA for online tracking technologies ( e.g.

, cookies, pixels) to protect the privacy and security of health information.

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Data transfer risk remains a potential issue as certain Data Protection Authorities continue to raise concerns about the transfer of data to the United States.

Though a new framework to permit cross-border transfers - the EU-US Data Privacy Framework - recently came into effect, it may be challenged as well.

Though a new framework to permit cross-border transfers - the EU-US Data Privacy Framework - came into effect in 2023, it may be challenged as well.

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.

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and other electronic security breaches.

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.

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.

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

As cyber threats continue to evolve, we may be required to

expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cybersecurity vulnerabilities.

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

The occurrence of any of these events could result in:

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Other countries have attempted or are attempting to change or limit the legal protections available to businesses that depend on the internet for the delivery of their services.

If our systems are breached or suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may significantly suffer and we may be subject to litigation, government enforcement actions and other actions for which we could face financial liability and other adverse consequences which may include:

suffer and we may be subject to litigation, government enforcement actions and other actions for which we could face financial liability and other adverse consequences which may include:

• additional government oversight of our operations;

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These laws and regulations are extremely complex and, in many cases, still evolving.

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.

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.

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Any product for which we obtain marketing approval, clearance or authorization (and the activities related to its production, distribution, and promotion, sale, and marketing) will be subject to continual review and periodic inspections by the FDA and other regulatory bodies, which may include inspection of our manufacturing processes, complaint handling and adverse event reporting, post-approval clinical data and promotional activities for such product.

The FDA’s Medical Device Reporting, or MDR, regulations require that we report to the FDA any incident in which our product may have caused or contributed to a death or serious injury, or in which our product malfunctioned and, if the malfunction were to recur, it would likely cause or contribute to a death or serious injury.

The FDA’s Medical Device Reporting, or MDR, regulations require that we report to the FDA any incident in

which our product may have caused or contributed to a death or serious injury, or in which our product malfunctioned and, if the malfunction were to recur, it would likely cause or contribute to a death or serious injury.

If the FDA determines that there is a reasonable probability that a device intended for human use would cause serious, adverse health consequences or death, the agency may issue a cease distribution and notification order and a mandatory recall order.

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Compliance with ongoing regulatory requirements can be complex, expensive and time-consuming.

Failure by us or one of our suppliers or distributors to comply with statutes and regulations administered by the FDA,

competent authorities and other regulatory bodies, or failure to take adequate response to any observations, could result in, among other things, any of the following actions:

Failure by us or one of our suppliers or distributors to comply with statutes and regulations administered by the FDA, competent authorities and other regulatory bodies, or failure to take adequate response to any observations, could result in, among other things, any of the following actions:

• warning letters or untitled letters that require corrective action;

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

If we are not able to maintain

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

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

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

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This process can be expensive, prolonged and uncertain, requires detailed and comprehensive scientific and human clinical data, and may never result in the FDA granting a PMA.

The FDA’s de novo classification of our G6 system under the generic name “ integrated continuous glucose monitoring system, ” makes it a predicate device for future 510(k) submissions.

The FDA’s de novo classification of our G6 system under the generic name “ integrated continuous glucose monitoring system, ” makes it a predicate device for future

510(k) submissions.

Complying with this classification requires ongoing compliance with the general controls required by the federal Food Drug and Cosmetic Act and the special controls specified by the FDA’s G6 order as a Class II device.

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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.

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.

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.

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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.

Allegations of violations of the Anti-Kickback Statute can also trigger liability under the federal Civil Monetary Penalty Law and federal civil False Claims Act, thereby increasing the penalty structure for these violations.

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Additionally, the FDA may disagree with our interpretation of the data from our pre-clinical studies, product testing, and clinical trials, or may find the clinical trial design, conduct or results inadequate to prove safety or effectiveness, and may require us to pursue the development of additional data, which could further delay the approval of our products.

unable to demonstrate the safety and effectiveness of our products in our clinical trials to the FDA’s satisfaction, where clinical data are required, we will be unable to obtain regulatory approval to market our products in the United States.

If we are unable to demonstrate the safety and effectiveness of our products in our clinical trials to the FDA’s satisfaction, where clinical data are required, we will be unable to obtain regulatory approval to market our products in the United States.

In addition, the data we collect from our current clinical trials, our pre-clinical studies and other clinical trials may not be sufficient to support FDA approval, even if our endpoints are met.

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

The FDA can also decide, at any time, to change its position regarding its Breakthrough Device Designation and/or enforcement discretion for our devices, and require that we seek marketing authorization for this additional intended use by submitting a 510(k) premarket notification, or that we seek and obtain Emergency Use

Authorization.

The COVID-19 public health emergency declared by the Department of Health and Human Services expired on May 11, 2023.

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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.

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.

In March, 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, 2022, addressed concerns noted in the OIG’s Special Fraud Alert, addressing things like virtual meetings, speaker programs and alcohol at events.

The revised Code also addresses value-based care arrangements.

We continue to assess industry responses to the Special Fraud Alert and have and may continue to make modifications to certain aspects of our speaker programs, which may have a detrimental impact on our ability to educate healthcare providers about our products and to promote use of our products, which may lead to decreased product sales and negatively impact our business, financial condition and results of operations.

our products and to promote use of our products, and which may in turn lead to decreased product sales and negatively impact our business, financial condition and results of operations.

Comprehensive healthcare legislation, signed into law in the United States in March 2010, titled the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, collectively, the ACA, imposes certain stringent compliance, recordkeeping, and reporting requirements on companies in various sectors of the life sciences industry, and enhanced penalties for non-compliance.

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

Government and commercial payors may, in the future, consider healthcare

policies and proposals intended to curb rising healthcare costs, including those that could significantly affect reimbursement for healthcare products such as our systems.

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

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

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

See “Legal Proceedings” in Part I, Item 1 above for more information.

See “Legal Proceedings” in Part II, Item 1 above for more information.

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

In addition, if the relevant patents are upheld as valid and enforceable and we are found to infringe such patents, we could be prohibited from selling any of our products that is found to infringe unless we could obtain licenses to use the technology covered by the patent or are able to design around the patent.

In addition, if the relevant patents are upheld as valid and enforceable and we are found to infringe such patents, we could be

prohibited from selling any of our products that is found to infringe unless we could obtain licenses to use the technology covered by the patent or are able to design around the patent.

We may be unable to obtain a license on terms acceptable to us, if at all, and we may not be able to redesign our products to avoid infringement.

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and if the court finds the case to be exceptional, we may be required to pay attorneys’ fees for the prevailing party.

If we are found to infringe third-party copyrights or trademarks or misappropriate third-party trade secrets, based on the intellectual property at issue, a court could order us to pay statutory damages, actual damages, or profits, such as reasonable royalty or lost profits of the owners, unjust enrichment, disgorgement of

profits, and/or a reasonable royalty, and the court could potentially award attorneys’ fees or exemplary or enhanced damages.

Although patent and intellectual property disputes in the medical device area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and would likely include ongoing royalties.

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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.

Claims may be made by customers, healthcare providers or others selling our products.

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.

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To the extent that inpatient use of our CGM systems causes or contributes to an adverse event, we may be subjected to additional product liability lawsuits.

Defending a suit, regardless of merit, could be costly, could divert management attention and might result in adverse publicity, which could result in reduced acceptance of our products in the market.

Defending a suit, regardless of merit, could be costly, could divert management

attention and might result in adverse publicity, which could result in reduced acceptance of our products in the market.

We could become the subject of governmental investigations, claims and litigation.

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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.

The FDA applies a heightened level of scrutiny to comparative claims when applying its statutory standards for advertising and promotion, including with regard to its requirement that promotional labeling be truthful and not misleading.

There is potential for differing interpretations of whether certain communications are consistent with a product’s FDA-required labeling, and FDA will evaluate communications on a fact-specific basis.

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• research and development relating to our continuous glucose monitoring systems;

• sales and marketing and manufacturing expenses associated with the commercialization of our G6 and G7 systems;

• sales and marketing and manufacturing expenses associated with the commercialization of our CGM 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.

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.

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

Any additional financing may be dilutive to stockholders or may

require us to grant a lender a security interest in our assets.

Any additional financing may be dilutive to stockholders or may require us to grant a lender a security interest in our assets.

The amount of funding we may need will depend on many factors, including:

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Additionally, we also invest in early to late-stage companies for strategic reasons and to support key business initiatives, and we may not realize a return on our equity investments.

Many such companies

generate net losses and the market for their products, services, or technologies may be slow to develop or never materialize.

Many such companies generate net losses and the market for their products, services, or technologies may be slow to develop or never materialize.

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.

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This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We intend to continue to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

We intend to continue to invest resources to comply with evolving laws, regulations, and standards, and this investment

may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

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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.

We record compensation expense in the consolidated statements of operations for share-based payments, such as employee stock options, restricted stock units and employee stock purchase plan shares, using the fair value method.

The requirements of the authoritative guidance for share-based payment have and will continue to have a material effect on our future financial results reported under U.S.

We record compensation expense in the consolidated statements of operations for share-based payments, such as restricted stock units and employee stock purchase plan shares, using the fair value method.

The requirements of the authoritative guidance for share-based payment have and will continue to have a material effect

on our future financial results reported under U.S.

generally accepted accounting principles, or GAAP, and make it difficult for us to accurately predict the impact on our future financial results.

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Historically, the market price of our common stock, like the securities of many other medical products companies, fluctuates and could continue to be volatile in the future, especially as our business continues to grow and our business plan continues to evolve.

From January 1, 2023 through June 30, 2023, the closing price of our common stock on the Nasdaq Global Select Market was as high as $130.98 per share and as low as $104.00 per share.

From January 1, 2023 through September 30, 2023, the closing price of our common stock on the Nasdaq Global Select Market was as high as $137.93 per share and as low as $86.06 per share.

The market price of our common stock is influenced by many factors that are beyond our control, including the following:

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• global health pandemics, such as the recent COVID-19 pandemic;

• other events or factors, including the, 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 .

• other events or factors, including the, ongoing conflicts in Ukraine and Israel, 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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In June 2023, we entered into the First Amendment to our Second Amended and Restated Credit Agreement, or the Amended Credit Agreement, with JPMorgan Chase and other syndicate lenders, which amended and restated the credit agreement, or the Credit Agreement, we had previously entered into in December 2018 and amended in May 2020 and October 2021, respectively.

The Amended Credit Agreement is a five-year $200.0 million

revolving credit facility, or the Credit Facility.

As of June 30, 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.

The Amended Credit Agreement is a five-year $200.0 million revolving credit facility, or the Credit Facility.

As of September 30, 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.

As of June 30, 2023, we were in compliance with the covenants imposed by the Amended Credit Agreement.

As of September 30, 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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In May 2023, we completed an offering of approximately $1.25 billion aggregate principal amount of 0.375% senior convertible notes due 2028, or 2028 Notes, which offering we refer to as the 2023 Notes Offering.

We refer to the 2018 Notes Offering, the 2020 Notes Offering, and the 2023 Notes Offering, collectively, as the Notes Offerings, and we refer to the 2023 Notes, the 2025 Notes, and the 2028 Notes, collectively, as the Notes.

We refer to the 2018 Notes Offering, the 2020

Notes Offering, and the 2023 Notes Offering, collectively, as the Notes Offerings, and we refer to the 2023 Notes, the 2025 Notes, and the 2028 Notes, collectively, as the Notes.

As a result of the Notes Offerings, we incurred $3.31 billion principal amount of indebtedness, the principal amount of which we may be required to pay at maturity.

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We may incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, some of which may be secured debt.

We are not restricted under the terms of the indentures governing the Notes from incurring additional debt, securing existing or future debt, recapitalizing our debt, or taking a number of other actions that are not limited by the terms of the indenture governing the convertible senior notes that could have the effect of diminishing our ability to make payments on the Notes when due.

We are not restricted under the terms of the indentures governing

the Notes from incurring additional debt, securing existing or future debt, recapitalizing our debt, or taking a number of other actions that are not limited by the terms of the indenture governing the convertible senior notes that could have the effect of diminishing our ability to make payments on the Notes when due.

The capped call transactions we entered into in connection with the pricing of the 2028 Notes may affect the value of our 2028 Notes and common stock.

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An increasing number of participants in the medical device industry are also joining voluntary ESG groups or organizations, such as the Responsible Business Alliance.

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.

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.

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.

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Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure.

The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components,

manufacturing and shipping, as well as weakening exchange rates and other similar effects.

The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and shipping, as well as weakening exchange rates and other similar effects.

As a result of inflation, we have experienced and may continue to experience cost increases.

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The method in which we market and sell our products may have an impact on the manner in which we recognize revenue.

In addition, changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business.

In addition, changes to

existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business.

Additionally, changes to existing accounting rules or standards, such as the potential requirement that U.S.

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• global political and economic conditions, political instability and military hostilities.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

ITEM 4 - MINE SAFETY DISCLOSURES

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

What changed 10-Q

Item 1A. Risk Factors