TANDEM DIABETES CARE INC 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Credit and Interest Rate Risks We invest our excess cash in marketable securities consisting primarily of U.S. Treasury securities, U.S. Government-sponsored enterprise securities, commercial paper and corporate debt securities. Some of the financial instruments in which we invest subject us to market risk, in that a change in prevailing interest rates may cause the principal amount of the instrument to fluctuate. Other financial instruments in which we invest subject us to credit risk, in that the value of the instrument may fluctuate based on the issuer’s ability to pay. Credit rating agencies have, from time to time, issued downgrades or revised outlooks to negative for certain issuers of the debt securities held in our short-term investment portfolio. We review our portfolio of available-for-sale debt securities quarterly to determine if any investment is impaired due to changes in credit risk or other potential valuation concerns. Unrealized losses on available-for-sale debt securities as of December 31, 2025 were primarily due to an increase in market interest rates after certain debt securities were purchased. Based on the credit quality of the available-for-sale debt securities in an unrealized loss position, and our current estimates of future cash flows to be collected from those securities, we believe the unrealized losses were not credit losses (see Note 3, “Short-Term Investments”). The primary objectives of our investment activities are to maintain liquidity and preserve principal while maximizing the income we receive from our financial instruments without significantly increasing risk. We have established guidelines regarding approved investments and maturities of investments, which are primarily designed to maintain liquidity and preserve principal. Because of the short-term maturities of our financial instruments, we do not believe that an increase or decrease in market interest rates would have a significant impact on the realized value of our investment portfolio. A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to actual rates as of December 31, 2025, would have affected the estimated fair value of our investments portfolio by approximately $1.6 million. In March 2024, we issued $316.3 million principal amount of Convertible Senior Notes, due in 2029, which bear interest at a fixed rate of 1.50% per year. Accordingly, we are not subject to interest rate risk related to the Convertible Senior Notes (see Note 7, “Debt”). 68 Foreign Currency Exchange Rate Risk Our operations are primarily located in the United States. We also have a sales and marketing office in Canada, a distribution center in the Netherlands, and offices in other countries in Europe such as Switzerland and the UK. Beginning in 2026, we have initiated direct sales activities in other select European markets and will continue this transition across additional markets. Our sales to customers in the United States are made in U.S. dollars. Sales from our distribution center in Europe and certain other international markets are made under agreements denominated in local currencies. Approximately 30% of our sales were denominated in foreign currencies for the year ended December 31, 2025. In addition, we purchase certain inventory from a third-party contract manufacturer located in Mexico. We believe our exposure to foreign currency rate fluctuations is primarily related to our operations in Europe and Canada where fluctuations in the rate of exchange between the U.S. dollar and the local currency could adversely affect our financial results, including income and losses as well as assets and liabilities. As we expand and further develop our operations in international markets, particularly in Europe, we are exposed to additional foreign currency exchange rate risk. In addition, from time to time, we have foreign currency exchange risk related to existing assets and liabilities, certain inventory purchase agreements, other committed transactions and forecasted future cash flows. Beginning in 2025, we started using derivative instruments, including foreign currency exchange forward contracts, to hedge a portion of our foreign currency exposure. We expect to continue evaluating and using hedging strategies where appropriate. However, we may choose not to hedge some exposures for a variety of reasons, including prohibitive economic costs. 69 Item 8. Consolidated Financial Statements and Supplementary Data. Our consolidated financial statements as of December 31, 2025 and 2024 and for each of the three years in the period ended December 31, 2025, and the Report of the Independent Registered Public Accounting Firm are included in this report as listed in the index. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 71 Consolidated Balance Sheets as of December 31, 2025 and 2024 73 Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2025 , 2024 and 2023 74 Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2025 , 2024 and 2023 75 Consolidated Statements of Cash Flows for the Years ended December 31, 2025 , 2024 and 2023 76 Notes to Consolidated Financial Statements 77 70 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Tandem Diabetes Care, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Tandem Diabetes Care, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 19, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 71 Warranty Reserve – Estimation of Expected Replacement Rates Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company has a warranty reserve of $55.3 million. The Company accrues for costs related to the warranty reserve liability at the time of shipment. Warranty costs are estimated primarily based on the expected replacement rates utilizing historical experience. Auditing management’s expected replacement rates on pumps was complex as it required a significant level of effort due to the amount of data utilized in determining the expected replacement rates. Management’s estimate considers historical claims experience and the assumption of historical data is predictive of future activity and events. It is possible that the future replacement rates may not be reflective of historical product replacement rates and changes in this assumption could have a material impact on the Company’s estimated reserve. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the warranty reserve process. Specifically, we tested controls over management's review and calculation of the expected replacement rates, including controls over the accuracy and completeness of data used. To test the Company’s expected replacement rates, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying data used in the calculation. We involved our data science professionals to evaluate the methodologies and assumptions and test the calculations used by the Company. We recalculated the warranty expected replacement rates using historical data. We performed sensitivity analyses of the expected replacement rates assumption to evaluate the impact of changes in the warranty reserve. /s/ Ernst & Young LLP We have served as the Company's auditor since 2009. San Diego, California February 19, 2026 72 TANDEM DIABETES CARE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) December 31, December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 90,634 $ 69,234 Short-term investments 202,032 369,095 Accounts receivable, net 165,491 114,585 Inventories 128,769 149,612 Prepaid and other current assets 31,217 21,965 Total current assets 618,143 724,491 Property and equipment, net 83,580 78,150 Operating lease right-of-use assets 96,172 85,306 Equity method investments 60,351 74,545 Other long-term assets 22,866 5,166 Total assets $ 881,112 $ 967,658 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 47,067 $ 44,730 Accrued expenses 21,012 18,170 Employee-related liabilities 70,409 64,128 Current portion of convertible senior notes, net — 40,670 Operating lease liabilities 19,472 18,208 Deferred revenue 9,527 11,831 Other current liabilities 75,237 49,312 Total current liabilities 242,724 247,049 Convertible senior notes, net - long-term 310,036 308,266 Operating lease liabilities - long-term 114,967 106,421 Deferred revenue - long-term 8,474 10,455 Other long-term liabilities 49,741 32,369 Total liabilities 725,942 704,560 Commitments and contingencies (Note 14) — — Stockholders’ equity: Common stock, $ 0.001 par value; 200,000 shares authorized, 68,291 and 66,264 shares issued and outstanding as of December 31, 2025 and 2024, respectively 68 66 Additional paid-in capital 1,402,044 1,312,804 Accumulated other comprehensive income (loss) 5,593 ( 1,947 ) Accumulated deficit ( 1,252,535 ) ( 1,047,825 ) Total stockholders’ equity 155,170 263,098 Total liabilities and stockholders’ equity $ 881,112 $ 967,658 The accompanying notes are an integral part of the consolidated financial statements. 73 TANDEM DIABETES CARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share data) Year Ended December 31, 2025 2024 2023 Sales $ 1,014,736 $ 940,203 $ 747,718 Cost of sales 468,722 450,629 380,028 Gross profit 546,014 489,574 367,690 Operating expenses: Selling, general and administrative 444,989 389,824 352,503 Research and development 193,114 198,877 169,667 Acquired in-process research and development expenses 75,217 — 78,750 Litigation and settlement expense 19,951 — — Total operating expenses 733,271 588,701 600,920 Operating loss ( 187,257 ) ( 99,127 ) ( 233,230 ) Other income (expense), net: Interest income and other income, net 9,086 17,993 22,858 Interest expense ( 7,907 ) ( 7,415 ) ( 9,882 ) Loss from equity method investments ( 14,194 ) ( 2,053 ) — Loss on extinguishment of debt — ( 1,268 ) — Total other income (expense), net ( 13,015 ) 7,257 12,976 Loss before income taxes ( 200,272 ) ( 91,870 ) ( 220,254 ) Income tax expense 4,438 4,155 2,357 Net loss $ ( 204,710 ) $ ( 96,025 ) $ ( 222,611 ) Other comprehensive income (loss): Unrealized gain (loss) on short-term investments $ 517 $ ( 311 ) $ 3,606 Unrealized loss on cash flow hedges ( 312 ) — — Foreign currency translation gains (losses) 7,335 ( 3,005 ) ( 420 ) Comprehensive loss $ ( 197,170 ) $ ( 99,341 ) $ ( 219,425 ) Net loss per share - basic and diluted $ ( 3.04 ) $ ( 1.47 ) $ ( 3.43 ) Weighted average shares used to compute basic and diluted net loss per share 67,285 65,451 64,969 The accompanying notes are an integral part of the consolidated financial statements. 74 TANDEM DIABETES CARE, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Shares Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Balance as of December 31, 2022 64,513 $ 65 $ 1,170,888 $ ( 1,817 ) $ ( 729,189 ) $ 439,947 Exercise of stock options 73 — 1,295 — — 1,295 Vesting of restricted stock units, net of shares withheld for taxes 467 — ( 7,790 ) — — ( 7,790 ) Issuance of common stock under Employee Stock Purchase Plan 499 1 10,678 — — 10,679 Stock-based compensation expense — — 88,926 — — 88,926 Unrealized gain on short-term investments — — — 3,606 — 3,606 Foreign currency translation losses — — — ( 420 ) — ( 420 ) Net loss — — — — ( 222,611 ) ( 222,611 ) Balance as of December 31, 2023 65,552 $ 66 $ 1,263,997 $ 1,369 $ ( 951,800 ) $ 313,632 Stock repurchases and retirement of shares ( 1,107 ) ( 1 ) ( 29,999 ) — — ( 30,000 ) Exercise of stock options 112 — 2,233 — — 2,233 Vesting of restricted stock units, net of shares withheld for taxes 937 1 ( 21,160 ) — — ( 21,159 ) Issuance of common stock under Employee Stock Purchase Plan 770 — 12,195 — — 12,195 Stock-based compensation expense 101,167 — — 101,167 Purchase of capped call options related to convertible notes due 2029 — — ( 15,813 ) — — ( 15,813 ) Unwind of capped call options related to convertible notes due 2025 — — 184 — — 184 Unrealized loss on short-term investments — — — ( 311 ) — ( 311 ) Foreign currency translation losses — — — ( 3,005 ) — ( 3,005 ) Net loss — — — — ( 96,025 ) ( 96,025 ) Balance as of December 31, 2024 66,264 $ 66 $ 1,312,804 $ ( 1,947 ) $ ( 1,047,825 ) $ 263,098 Exercise of stock options 83 — 1,149 — — 1,149 Vesting of restricted stock units, net of shares withheld for taxes 1,194 1 ( 15,611 ) — — ( 15,610 ) Issuance of common stock under Employee Stock Purchase Plan 750 1 11,853 — — 11,854 Stock-based compensation expense — — 91,849 — — 91,849 Unrealized gain on short-term investments — — — 517 — 517 Unrealized loss on cash flow hedges — — — ( 312 ) — ( 312 ) Foreign currency translation adjustments — — — 7,335 — 7,335 Net loss — — — — ( 204,710 ) ( 204,710 ) Balance as of December 31, 2025 68,291 $ 68 $ 1,402,044 $ 5,593 $ ( 1,252,535 ) $ 155,170 The accompanying notes are an integral part of the consolidated financial statements. 75 TANDEM DIABETES CARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2025 2024 2023 Operating Activities Net loss $ ( 204,710 ) $ ( 96,025 ) $ ( 222,611 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization expense 17,666 16,607 15,715 Amortization of debt issuance costs 1,860 2,089 2,204 Provision for expected credit losses 9,478 9,979 5,540 Operating lease and other impairment charges 6,697 2,000 14,099 Amortization of discount or (accretion of premium) on short-term investments ( 3,828 ) ( 2,321 ) 3,587 Loss from equity method investments 14,194 2,053 — Stock-based compensation expense 92,381 101,383 88,076 Loss on extinguishment of debt — 1,268 — Acquired in-process research and development expenses 75,217 — 78,750 Other 4,363 ( 1,027 ) 515 Changes in operating assets and liabilities: Accounts receivable, net ( 56,812 ) ( 20,795 ) 4,277 Inventories 24,816 5,810 ( 46,053 ) Prepaid and other current assets ( 9,088 ) ( 5,565 ) ( 9,139 ) Other long-term assets ( 6,888 ) 893 ( 3,187 ) Accounts payable 2,227 ( 2,392 ) ( 4,864 ) Accrued expenses ( 664 ) 5,550 2,537 Employee-related liabilities 5,995 20,859 5,167 Deferred revenue ( 4,788 ) ( 34,736 ) 21,525 Operating leases and other current liabilities 19,225 17,597 4,302 Other long-term liabilities 2,938 998 7,750 Net cash provided by (used in) operating activities ( 9,721 ) 24,225 ( 31,810 ) Investing Activities Purchases of short-term investments ( 85,660 ) ( 264,311 ) ( 510,859 ) Proceeds from maturities and redemptions of short-term investments 257,072 306,464 546,218 Purchases of property and equipment ( 19,948 ) ( 19,231 ) ( 26,804 ) Acquisition of in-process research and development ( 78,588 ) — ( 69,496 ) Purchases of equity investments, strategic investments, and intangible assets — ( 46,404 ) ( 24,799 ) Net cash provided by (used in) investing activities 72,876 ( 23,482 ) ( 85,740 ) Financing Activities Proceeds from issuance of convertible senior notes due 2029, net of $ 9,400 debt issuance costs — 306,850 — Repurchase of $ 246,740 principal amount of convertible senior notes due 2025 — ( 246,123 ) — Principal payments on convertible senior notes due 2025 ( 40,760 ) — Payment for capped call transactions related to convertible senior notes due 2029 — ( 15,813 ) — Repurchase and retirement of common stock — ( 30,000 ) — Cash used to settle withholding taxes on vested restricted stock, net of proceeds from issuance of common stock under Company stock plans ( 2,607 ) ( 6,730 ) 4,184 Other financing activities — 183 ( 71 ) Net cash provided by (used in) financing activities ( 43,367 ) 8,367 4,113 Effect of foreign exchange rate changes on cash 1,612 1,256 ( 212 ) Net increase (decrease) in cash and cash equivalents 21,400 10,366 ( 113,649 ) Cash and cash equivalents at beginning of period 69,234 58,868 172,517 Cash and cash equivalents at end of period $ 90,634 $ 69,234 $ 58,868 Supplemental disclosures of cash flow information Interest paid $ 5,049 $ 3,076 $ 7,565 Income taxes paid $ 5,056 $ 3,098 $ 1,923 Supplemental schedule of non-cash investing and financing activities Operating lease right-of-use assets obtained in exchange for operating lease obligations $ 26,169 $ 4,370 $ — Purchases of property and equipment included in accounts payable and accrued expenses $ 3,699 $ 511 $ 2,946 Intangible costs in other long-term liabilities $ 13,300 $ — $ — The accompanying notes are an integral part of the consolidated financial statements. 76 TANDEM DIABETES CARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation The Company Tandem Diabetes Care, a global insulin delivery and diabetes technology company, focused on the design development and commercialization of technology solutions that reduce the burden of diabetes management. Tandem Diabetes Care, Inc. is incorporated in the state of Delaware. Unless the context requires otherwise, the terms the “Company” or “Tandem” refer to Tandem Diabetes Care, Inc., together with its wholly-owned subsidiaries. The Company manufactures, sells, and supports insulin pump products that are designed to address the evolving needs and preferences of differentiated segments of the insulin-dependent diabetes market. The Company offers an insulin pump portfolio, which includes both the t:slim X2 and the Tandem Mobi. Both pumps feature Control-IQ+ technology, which is the Company’s most advanced algorithm for managing insulin delivery, using information received from integrated continuous glucose monitoring (CGM) sensors. New software for the insulin pumps may be updated remotely by the individual users as new advancements become available. The insulin pumps are compatible with other complementary digital health offerings, such as the Company’s mobile application and cloud-based diabetes management applications. The Company offers durable insulin pumps that are designed for years of daily use. The Company sells single-use supplies that are used together with the pumps and are replaced every few days. These supplies include cartridges for storing insulin, and infusion sets that contain a cannula and connect the pump to a user’s body to administer insulin. Basis of Presentation and Principles of Consolidation The Company has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The statements include the accounts of Tandem Diabetes Care, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The functional currency of the Company’s foreign subsidiaries is their respective local currency. The Company translates the financial statements of its foreign subsidiaries into U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates for each period for revenue, costs and expenses. Translation-related adjustments are included in other comprehensive income (loss), and in accumulated other comprehensive income (loss) in the stockholders’ equity section of the Company’s consolidated balance sheets. Foreign exchange gains or losses resulting from balances denominated in a currency other than the functional currency are recognized in interest income and other income, net in the Company’s consolidated statements of operations. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes as of the date of the consolidated financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less from the date of purchase and that can be liquidated without prior notice or penalty to be cash equivalents. 77 Short-Term Investments The Company’s short-term investments are classified as available-for-sale securities. Such securities are carried at fair value as determined by prices for identical or similar securities at the balance sheet date. The Company’s short-term investments consist of Level 1 and Level 2 financial instruments in the fair value hierarchy. The net unrealized gains or losses on available-for-sale securities that are not related to credit factors are reported as a component of other comprehensive income (loss) within the consolidated statements of operations and as a component within accumulated other comprehensive income (loss) in stockholders’ equity on the consolidated balance sheets. The Company determines realized gains or losses on the sale of available-for-sale securities using the specific identification method and includes net realized gains and losses as a component of other income or expense within the consolidated statements of operations. The Company reviews its available-for-sale debt securities for credit losses quarterly, considering a variety of factors, including the significance of the decline in value as compared to the amortized cost basis, underlying factors contributing to a decline in the prices of securities in a single asset class, and the market and economy in general. Losses on available-for-sale debt securities as a result of credit factors are recognized by recording an impairment loss as a component of other income or expense within the consolidated statements of operations and a corresponding allowance for credit losses. The Company did not recognize any impairment losses related to its short-term investments during the years ended December 31, 2025, 2024 and 2023. Accounts Receivable The Company grants credit to various customers in the ordinary course of business and is paid directly by customers who use its products, distributors and third-party insurance payors. The Company maintains an allowance for its current estimate of expected credit losses. Provisions for expected credit losses are estimated based on historical experience, assessment of specific customer-related risks, review of outstanding invoices, forecasts about the future, and various other assumptions and estimates that are believed to be reasonable under the circumstances, including changes to credit risks as a result of recessionary concerns, changes in discretionary spending, increased interest rates, and other macroeconomic factors. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. The Company maintains deposit accounts in federally insured financial institutions in excess of federally insured limits and has investments in money market funds that are not federally insured. Additionally, the Company has established guidelines regarding investment instruments and their maturities, which are designed to maintain preservation of principal and liquidity. The following table summarizes the percentages of total sales and accounts receivable, net for customers who accounted for 10% or more of the respective amounts for the periods presented: Total Sales Accounts Receivable, net Year Ended December 31, December 31, 2025 2024 2023 2025 2024 Distributor A 10.7 % 11.2 % 12.2 % 13.2 % 11.1 % Distributor B * * * 10.6 % * Distributor C * * * * 11.8 % Distributor D 13.4 % 11.5 % 10.8 % 12.7 % 11.2 % * Amount related to the respective customer represented less than 10% for the period presented. 78 Valuation of Inventories Inventories are valued at the lower of cost or net realizable value, determined by the first-in, first-out method. Inventory is recorded using standard cost, including material, labor and overhead costs. The Company periodically reviews inventories for potential impairment and adjusts inventory for potentially excess or obsolete goods to state inventories at their net realizable value. Factors influencing these adjustments include quantities on hand and firm purchase commitments, expectations of future use, judgments based on quality control testing data and assessments of the likelihood of scrapping or obsoleting certain inventories based on future demand for its products and market conditions. Long-Lived Assets Property and Equipment Property and equipment, which primarily consist of office furniture and equipment, manufacturing and scientific equipment, computer equipment and software, and leasehold improvements, are stated at cost, less accumulated depreciation. Property and equipment are depreciated over the estimated useful lives of the assets, generally three to seven years , using the straight-line method. Leasehold improvements and related equipment are amortized over the lesser of the estimated useful lives of the assets or the remaining lease term, unless there is a transfer of title or purchase option that is reasonably certain to be exercised. Maintenance and repair costs are expensed as incurred. Operating Lease Right-of-Use Assets and Liabilities Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized when the Company takes possession of the leased property (Commencement Date) based on the present value of lease payments over the lease term. For lease agreements that contain lease and non-lease components, the Company accounts for both of those components as a single lease component. Rent expense on noncancelable leases containing known future scheduled rent increases is recorded on a straight-line basis over the term of the respective leases beginning on the Commencement Date. The difference between rent expense and rent paid is accounted for as a component of operating lease right-of-use assets on the Company’s consolidated balance sheets. Landlord improvement allowances and other similar lease incentives are recorded as a reduction of the right-of-use lease assets, and are amortized on a straight-line basis as a reduction to operating lease costs. Intangible Assets Subject to Amortization Finite-lived intangible assets are recorded at cost, net of accumulated amortization and, if applicable, impairment charges. Amortization of finite-lived intangible assets is recognized over their estimated useful lives using a straight-line or accelerated attribution method, depending on the economic benefit associated with the asset. Impairment of Long-Lived Assets Long-lived assets, such as property and equipment, operating lease right-of-use assets, and acquired intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined using unobservable (Level 3) inputs, including discounted cash flow models, future estimated sublease income, and third-party independent appraisals, as considered necessary. There is uncertainty in the projected undiscounted future cash flows used in the Company’s impairment review analysis, which requires the use of estimates and assumptions. If actual performance does not meet or exceed projected performance, or if the assumptions used in the model change in the future, the Company may be required to recognize additional impairment charges in future periods. The Company recognized the impairment of operating lease right-of-use assets in 2025, and the impairment of operating lease right-of-use assets and related leasehold improvements and furniture and fixtures in 2023 (see Note 6, “Leases”). There were no other impairments of long-lived assets, including acquired intangible assets, during the years ended December 31, 2025, 2024 and 2023. 79 Equity Method Investments In November 2024, the Company invested an additional $ 46.4 million cash in one of its private company investees, resulting in a change to equity method accounting following that date. The Company held equity method investments of $ 60.4 million and $ 74.5 million as of December 31, 2025 and December 31, 2024, respectively. The Company uses the equity method to account for investments in companies if it owns more than 20% of the investee company’s outstanding equity or the investment provides the Company with the ability to exercise significant influence but not control over the operating and financial policies of the investee. The Company assesses whether it has significant influence by considering various factors, including the nature and magnitude of the investment, voting rights held and participation in the governance of the investee, if any. The Company may also consider additional relevant factors, such as the presence of other business relationships. The Company’s consolidated net loss included its proportionate share of the net loss of its equity method investee, which was $ 14.2 million and $ 2.1 million for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2023, the Company did not hold any equity method investments and therefore did no t recognize a share of net income or loss from any equity method investments. Revenue Recognition Revenue is generated primarily from sales of insulin pumps, single-use insulin cartridges and infusion sets to individual customers with third-party insurance coverage and through a network of distributors that resell the products to insulin-dependent diabetes customers. The Company recognizes revenue when it transfers control of the promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services, net of estimated rebates, prompt payment discounts and a provision for product returns. Revenue Recognition for Arrangements with Multiple Performance Obligations The Company considers the individual deliverables in its product offerings to be separate performance obligations. The transaction price is the net consideration to which the Company expects to be entitled, determined from either the stated value in contractual arrangements or the estimated cash to be collected in non-contracted arrangements. The transaction price also includes an estimate of variable consideration at the time of sale. Variable consideration includes, but is not limited to: rebates, prompt payment discounts, and a provision for product returns. These amounts are recorded as a reduction of accounts receivable when no payment is required from the Company and as a liability when a payment is required. The Company allocates consideration to the individual performance obligations and recognizes consideration based on when the performance obligation is satisfied, considering whether or not this occurs at a point in time or over time. Generally, insulin pumps, cartridges, infusion sets, and accessories are deemed performance obligations that are satisfied at a point in time when the customer obtains control of the promised good, which typically is upon shipment for our distributor arrangements and upon receipt for direct sales to individual customers. Complementary products, such as the Company’s data management and software update platforms, are considered distinct performance obligations that are satisfied over time, as access and support for these products is provided throughout the typical four-year warranty period of the insulin pumps. Accordingly, revenue related to the complementary products is deferred and recognized over a four-year period. Where there is no standalone value for the complementary product, the Company determines its value by applying the expected cost plus a margin approach and then allocates the residual to the insulin pumps. Variable Consideration The amount of variable consideration that is included in the transaction price is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The Company is subject to certain rebates on pricing programs with managed care organizations, including pharmacy benefit managers and governmental or third-party commercial payors. The terms of these programs may vary depending on the customer and contractual arrangements. The Company estimates provisions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known market events or trends and channel inventory data. Sales rebates are recorded as a reduction of revenue and are included within other current or long-term liabilities on the consolidated balance sheets, depending on the anticipated settlement period of the rebate. Actual rebate payments may differ from estimated amounts recorded in the accompanying consolidated financial statements. 80 As of December 31, 2025 and 2024, total estimated sales rebates were included in the following consolidated balance sheet accounts (in thousands): December 31, 2025 December 31, 2024 Other current liabilities $ 7,601 $ 2,229 Other long-term liabilities 4,835 7,167 Total sales rebate $ 12,436 $ 9,396 Revenue Recognition for Tandem Choice Program From September 2022 through December 2024, the Company offered a technology access program referred to as Tandem Choice that provided eligible in-warranty t:slim X2 customers in the United States with the flexibility to obtain the Tandem Mobi once commercially available. The program created a material right, for which a portion of each t:slim X2 pump sales transaction price was allocated and deferred. The Company began selling Tandem Mobi insulin pumps in February 2024, at which time eligibility for Tandem Choice ended and no further deferrals were recorded. Eligible customers who purchased a t:slim X2 insulin pump during the program period could exercise the option through December 31, 2024. The Company recognized the deferred sales when the obligations under the Tandem Choice program were satisfied. If a customer elected to participate in the program, the Company recognized upgrade fees received, and the associated cost of goods sold, at the time of fulfillment. The remaining deferrals were recognized at program expiration on December 31, 2024. For the year ended December 31, 2024, the Company recognized net revenue of $ 30.2 million as a result of the Tandem Choice program. For the year ended December 31, 2023, the Company deferred revenue of $ 25.1 million as a result of the Tandem Choice program. There was no comparative adjustment to pump sales in 2025. Sales Returns The Company offers a 90-day right of return to customers in the United States and Canada from the date of shipment of its insulin pumps, provided a physician’s confirmation of the medical reason for the return is received. Estimated allowances for sales returns are based on historical returned quantities as compared to pump shipments in those same periods of return, adjusted for known or expected changes in the marketplace when appropriate. The amounts recorded in deferred revenue on the Company’s consolidated balance sheets for allowances for sales returns were not material for the periods presented. Actual product returns have not differed materially from estimated amounts recorded in the accompanying consolidated financial statements. Derivative Instruments and Hedging Activities The Company records the fair value of derivative instruments as either current assets or current liabilities on the consolidated balance sheets. Changes in the fair value of derivative instruments are recorded each period in current earnings or other comprehensive income (loss), depending on whether a derivative instrument is designated as part of a hedging transaction. For a derivative to qualify as a hedge at inception and throughout the hedged period, the Company formally documents the nature and relationships between the hedging instrument and hedged item. For derivatives formally designated as hedges, the Company assesses both at inception and quarterly thereafter, whether the hedging derivatives are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. Gains or losses on cash flow hedges are reclassified from other comprehensive income (loss) to earnings when the hedged transaction occurs and affects consolidated results. Gains or losses on fair value hedges are recognized in earnings immediately and offset against changes in the fair value of the underlying hedged asset, liability or firm commitment. If the Company determines that a forecasted transaction is no longer probable or no longer qualifies for hedge accounting treatment, the Company discontinues hedge accounting and any related unrealized gain or loss on the derivative instrument is recognized in current earnings. Derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current earnings. 81 Warranty Reserve The Company generally provides a four-year warranty on its insulin pumps to end-user customers and may replace any pumps that do not function as intended in accordance with the product specifications within the warranty period. In addition, the Company offers a six-month warranty on single-use insulin cartridges and infusion sets. Estimated warranty costs are recorded at the time of shipment, and the Company reevaluates the estimate of the warranty reserve obligation at each reporting period. Warranty costs are primarily estimated based on expected replacement rates using historical experience and the expected product replacement cost. Returned insulin pumps may be refurbished and redeployed. Experience has shown that initial data for any new pump version or pump platform may be insufficient. Therefore, the Company relies on long-term historical replacement data from existing platforms until sufficient data is available. As actual experience accumulates, the Company adjusts its warranty reserve estimate accordingly. In addition, the availability of replacement data may differ by country due to local compliance and privacy regulations, which may require the Company to estimate its warranty liability using available information or data from similar markets. The Company may further adjust the warranty reserve when appropriate, considering revised expectations of product performance based on enhanced hardware, or new features and capabilities that may become available through Tandem Device Updater. Warranty expense is recorded as a component of cost of sales in the consolidated statements of operations. The following table provides a reconciliation of the changes in product warranty liabilities for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Balance at beginning of the period $ 51,408 $ 37,173 $ 36,537 Provision for warranties issued during the period 38,506 48,938 35,690 Settlements made during the period ( 37,357 ) ( 36,632 ) ( 32,617 ) Increases in warranty estimates 2,762 1,929 ( 2,437 ) Balance at end of the period $ 55,319 $ 51,408 $ 37,173 As of December 31, 2025 and 2024, total product warranty reserves were included in the following consolidated balance sheet accounts (in thousands): December 31, 2025 December 31, 2024 Other current liabilities $ 33,277 $ 31,048 Other long-term liabilities 22,042 20,360 Total warranty reserve $ 55,319 $ 51,408 82 Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award, and the portion that is ultimately expected to vest is recognized as compensation expense over the requisite service period on a straight-line basis. The Company estimates the fair value of employee purchase rights under the Company’s Employee Stock Purchase Plan (ESPP) using the Black-Scholes option pricing model on the date of grant. The Black-Scholes option pricing model requires the use of assumptions about a number of variables, including stock price volatility, expected term, dividend yield and risk-free interest rate (see Note 8, “Stockholders’ Equity”). The fair value of restricted stock unit (RSU) awards issued under the Company’s stock incentive plans that vest solely based on service, is estimated based on the fair market value of the underlying stock on the date of grant. The fair value of RSU awards that vest based upon predefined Company performance metrics and the awardee’s continuing service through the measurement date is generally estimated based on the fair market value of the underlying stock on the date of grant and the probability that the specified performance criteria will be met. These awards vest upon the Company’s actual performance relative to predefined performance metrics and subject to the awardee’s continuous service through the respective measurement dates as defined in the award agreements. For certain performance-based RSUs with market-based criteria, the Company used a Monte Carlo methodology to estimate the fair value at the date of grant. At each reporting period, the Company reassesses the probability of the achievement of such performance metrics. Any expense change resulting from an adjustment in the estimated shares to be released is recorded in the period of adjustment. With respect to RSU awards with a market condition, the Company recognizes compensation expense ratably over the requisite service period under an award based on the fair market value of the award at the time of grant, regardless of whether the market condition is satisfied. Previously recognized compensation cost would be reversed only if the employee terminated employment before completing the requisite service period. Shipping and Handling Expenses Shipping and handling expenses associated with product delivery are included within cost of sales in the Company’s consolidated statements of operations. Amounts billed to a customer for shipping and handling are reported as revenues. Research and Development Costs All research and development costs are expensed as incurred. Such costs include personnel-related costs, including stock-based compensation, supplies, license fees, development prototypes, outside design and testing services, depreciation, allocated facilities and information services, clinical trial costs, milestone payments under the Company’s licensing, development and commercialization agreements, and other indirect costs. Acquired In-Process Research and Development Expenses Acquired in-process research and development (IPR&D) expenses reflect the costs of externally developed IPR&D projects acquired directly in a transaction other than a business combination that do not have an alternative future use, including the initial costs of rights to IPR&D projects. The acquired IPR&D is expensed on acquisition date. Future costs to develop these IPR&D projects are recorded in research and development expenses on the consolidated statements of operations as incurred. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets or liabilities are recognized based on the temporary differences between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. Tax law and rate changes are reflected in income in the period such changes are enacted. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the consolidated statements of operations for the period that the adjustment is determined to be required. 83 The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. Comprehensive Loss All components of comprehensive loss, including net loss, are reported in the consolidated financial statements in the period in which they are recognized. Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on marketable securities, unrealized gains and losses on hedging activities, and foreign currency translation adjustments. Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period, without consideration for common share equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding, including all potentially dilutive common share equivalents. Dilutive common share equivalents are comprised of stock options and unvested RSUs outstanding under the Company’s stock incentive plans, potential awards to be granted pursuant to the ESPP, and common stock warrants, each calculated using the treasury stock method, and shares issuable upon conversion of the convertible senior notes calculated using the if-converted method. For the years ended December 31, 2025, 2024 and 2023, there was no difference in the weighted average number of shares used to calculate basic and diluted net loss per share due to the Company’s net loss position in each period. The number of common share equivalents excluded from the computation of diluted earnings per share because either the effect would have been anti-dilutive, or the performance criteria related to the units had not yet been met, are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Options to purchase common stock 94 124 135 Unvested restricted stock units 2,661 2,858 2,089 Warrants to purchase common stock 194 194 194 Awards granted under the ESPP 73 58 14 Convertible senior notes (if-converted) 9,151 8,202 2,554 12,173 11,436 4,986 Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. The Company adopted ASU 2023‑09 in the current fiscal year on a prospective basis. The standard only impacts disclosures and did not affect the recognition or measurement of income taxes. Adoption had no impact on the Company’s consolidated results of operations, financial position, or cash flows. 84 Accounting Pronouncements Issued and Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03), and in January 2025, the FASB issued Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (ASU 2025-01). ASU 2024-03 requires entities to disclose information about purchases of inventory, employee compensation, and intangible asset amortization in each income statement line item that contains those expenses. ASU 2024-03, as clarified by ASU 2025-01, is effective for the annual reporting period beginning after December 15, 2026 and interim reporting periods within the annual reporting period beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2024-03, as clarified by ASU 2025-01, to determine the impact it may have on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06 Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which modernizes the accounting guidance for internal-use software, including website development costs. The amendments eliminate the consideration of software development stages and introduce a new capitalization threshold based on the entity’s commitment to fund the project and the probability of completion. ASU 2025-06 will be effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual periods. Early adoption is permitted. The Company is currently evaluating ASU 2025-06 to determine the impact it may have on its consolidated financial statements. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (ASU 2025-09). This update is intended to better align hedge accounting with entities’ risk management strategies and simplify application. Key provisions include allowing grouping of forecasted transactions with similar risk exposure, introducing a model for hedging variable-rate debt instruments that permit rate selection, permitting component hedging for certain nonfinancial forecasted transactions, clarifying treatment of certain compound derivatives, and restoring operability for specific dual hedge strategies. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026, including interim periods, with early adoption permitted. The Company is currently evaluating ASU 2025-09 to determine the impact it may have on its consolidated financial statements. In December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270): Narrow-Scope Improvements (ASU 2025-11), which clarifies and improves the guidance for interim financial reporting. The amendments introduce a disclosure principle requiring entities to disclose events since the end of the previous annual reporting period that materially affect the entity, consolidate a comprehensive list of interim disclosure requirements within ASC 270, and provide guidance on the form and content of condensed interim financial statements. ASU 2025-11 will be effective for interim reporting periods in fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2025-11 to determine the impact it may have on its consolidated financial statements. 3. Short-Term Investments The Company invests in marketable securities primarily consisting of debt instruments of the United States Government, United States Government-sponsored enterprises, and financial institutions and corporations with strong credit ratings. The following represents a summary of the estimated fair value of short-term investments as of December 31, 2025 and December 31, 2024 (in thousands): As of December 31, 2025 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Available-for-sale securities: United States Government-sponsored enterprises $ 101,230 $ 773 $ ( 8 ) $ 101,995 United States Treasury securities 34,267 71 — 34,338 Commercial paper 21,500 17 ( 1 ) 21,516 Corporate debt securities 44,082 102 ( 1 ) 44,183 Total $ 201,079 $ 963 $ ( 10 ) $ 202,032 85 As of December 31, 2024 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Available-for-sale securities: United States Government-sponsored enterprises $ 133,139 $ 275 $ ( 134 ) $ 133,280 United States Treasury securities 103,645 197 ( 140 ) 103,702 Commercial paper 23,225 39 — 23,264 Corporate debt securities 105,635 248 ( 47 ) 105,836 Foreign government bonds 3,013 — — 3,013 Total $ 368,657 $ 759 $ ( 321 ) $ 369,095 The contractual maturities of available-for-sale debt securities as of December 31, 2025, were as follows (in thousands): Years to Maturity As of December 31, 2025 Within One Year One to Two Years Estimated Fair Value United States Government-sponsored enterprises $ 40,048 $ 61,947 $ 101,995 United States Treasury securities 21,451 12,887 34,338 Commercial paper 21,516 — 21,516 Corporate debt securities 35,319 8,864 44,183 Total $ 118,334 $ 83,698 $ 202,032 The Company has classified all marketable securities as short-term investments, regardless of contractual maturity, based on the Company’s ability and intent to use any of these securities to satisfy the Company’s liquidity needs. The Company reviews its portfolio of available-for-sale debt securities quarterly to determine if any investment is impaired due to changes in credit risk or other potential valuation concerns. 4. Composition of Certain Financial Statement Items Accounts Receivable Accounts receivable, net consisted of the following as of December 31, 2025 and 2024 (in thousands): December 31, December 31, 2025 2024 Accounts receivable $ 173,884 $ 121,836 Less: allowance for credit losses ( 8,393 ) ( 7,251 ) Accounts receivable, net $ 165,491 $ 114,585 Allowance for Credit Losses The following table provides a reconciliation of the changes in the allowance for estimated accounts receivable credit losses for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Balance at beginning of the period $ 7,251 $ 4,898 $ 4,327 Provision for expected credit losses 9,478 9,979 5,540 Write-offs and adjustments, net of recoveries ( 8,336 ) ( 7,626 ) ( 4,969 ) Balance at end of the period $ 8,393 $ 7,251 $ 4,898 86 Inventories Inventories consisted of the following as of December 31, 2025 and 2024 (in thousands): December 31, December 31, 2025 2024 Raw materials $ 31,770 $ 32,602 Work-in-process 23,805 33,517 Finished goods 73,194 83,493 Total inventories $ 128,769 $ 149,612 Property and Equipment Property and equipment, net consisted of the following as of December 31, 2025 and 2024 (in thousands): As of December 31, 2025 2024 Leasehold improvements $ 40,126 $ 37,106 Office furniture and equipment 12,061 11,813 Computer equipment and software 5,167 9,811 Manufacturing and scientific equipment 99,273 82,248 Total cost 156,627 140,978 Less: accumulated depreciation and amortization ( 73,047 ) ( 62,828 ) Total property and equipment, net $ 83,580 $ 78,150 Depreciation and amortization expense related to property and equipment was $ 15.1 million, $ 14.7 million, and $ 13.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. Intangible Assets Subject to Amortization On May 21, 2025, the Company and various Roche entities (collectively “Roche”) entered into a Settlement, Mutual Release and Cross-License Agreement (the “Roche Cross-License Agreement”). The Roche Cross-License Agreement resolved all actual or potential patent disputes as of the agreement date. Under the terms of the Roche Cross-License Agreement, the Company agreed to pay Roche $ 36.0 million over a four-year period, with an initial cash payment of $ 8.0 million and four equal annual installments of $ 7.0 million thereafter. The installment payments include approximately $ 4.4 million of imputed interest. As a result, the Company recorded a $ 31.6 million liability, representing the present value of the total settlement obligation. Upon payment of the initial installment, which occurred in the second quarter of 2025, both parties granted each other non-exclusive, non-royalty-bearing, non-transferrable, and irrevocable licenses to their respective insulin delivery system-related patents and applications for a period of 10 years. The Company allocated the present value of the settlement consideration between the value of the licensed patents and the release of past and potential future claims. Based on a relative fair value approach, $ 13.3 million was capitalized as an intangible asset for the value of the license, which will be amortized over seven years , reflecting the estimated useful life of the acquired patents. The remaining consideration was expensed as settlement and litigation expense with related legal fees in the second quarter of 2025. The fair value of the licensed patents was estimated using a discounted cash flow model, which incorporated assumptions including projected revenues associated with the licensed technology, a technology migration rate, an estimated royalty rate, and a discount rate. The fair value of the past damages claimed was estimated based on applicable historical revenues and an estimated royalty rate. 87 Intangible assets subject to amortization consist of the licensed patent rights obtained through the Roche settlement, technology-based intangibles acquired with Sugarmate, and patents purchased or licensed that are related to the Company’s commercialized products. Intangible assets as of December 31, 2025 and 2024, which were included in other long-term assets on the consolidated balance sheets, were as follows (in thousands): December 31, 2025 2024 Intangible assets, gross amount $ 25,802 $ 12,502 Accumulated amortization ( 14,082 ) ( 11,577 ) Intangible assets, net $ 11,720 $ 925 Weighted average remaining amortization period (in months) 77 6 Amortization expense related to intangible assets subject to amortization was $ 2.5 million for the year ended December 31, 2025 and recorded in selling, general and administrative expense and cost of sales in the consolidated statements of operations. Amortization expense related to intangible assets subject to amortization was $ 1.9 million for each of the years ended December 31, 2024 and 2023, respectively and is recorded in selling, general and administrative expense in the consolidated statements of operations. The estimated aggregate future amortization expense is $ 2.6 million in 2026, $ 2.7 million in 2027, $ 2.3 million in 2028, $ 2.0 million in 2029, $ 1.3 million in 2030, and the remaining $ 0.7 million thereafter. Amortization expense for intangible assets obtained through the Roche settlement will be recorded in cost of sales in the consolidated statements of operations. 5. Fair Value Measurements The Company performs fair value measurements in accordance with U.S. GAAP. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. To measure fair value of assets and liabilities, the Company uses the following fair value hierarchy based on three levels of inputs: Level 1 — observable inputs, such as quoted prices in active markets for identical assets or liabilities; Level 2 — significant other observable inputs that are observable either directly or indirectly; and Level 3 — significant unobservable inputs for which there are little or no market data, which require the Company to develop its own assumptions. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and employee-related liabilities are reasonable estimates of their fair values because of the short-term nature of these assets and liabilities. Short-term investments are carried at fair value. The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in thousands): Fair Value Measurements as of December 31, 2025 Total Level 1 Level 2 Level 3 Assets Cash equivalents (1) $ 75,642 $ 75,642 $ — $ — Available-for-sale securities: United States Government-sponsored enterprises 101,995 — 101,995 — United States Treasury securities 34,338 34,338 — — Commercial paper 21,516 — 21,516 — Corporate debt securities 44,183 — 44,183 — Total assets $ 277,674 $ 109,980 $ 167,694 $ — Liabilities Foreign exchange forward contracts $ 312 $ — $ 312 $ — Total liabilities $ 312 $ — $ 312 $ — 88 Fair Value Measurements as of December 31, 2024 Total Level 1 Level 2 Level 3 Assets Cash equivalents (1) $ 56,234 $ 56,234 $ — $ — United States Government-sponsored enterprises 133,280 — 133,280 — United States Treasury securities 103,702 103,702 — — Commercial paper 23,264 — 23,264 — Corporate debt securities 105,836 — 105,836 — Foreign government bonds 3,013 — 3,013 — Total assets $ 425,329 $ 159,936 $ 265,393 $ — (1) Generally, cash equivalents include money market funds and investments with a maturity of three months or less from the date of purchase. The Company’s Level 1 financial instruments, which are in active markets, are valued using unadjusted quoted market prices for identical instruments. The Company’s Level 2 financial instruments are valued using market prices on less active markets with observable valuation inputs such as interest rates and yield curves. The Company obtains the fair value of Level 2 financial instruments from quoted market prices, calculated prices or quotes from third-party pricing services. The Company validates these prices through independent valuation testing and review of portfolio valuations provided by the Company’s investment managers. The Company’s foreign currency forward contracts are designated as cash flow hedges (see Note 9 “Derivatives”) and are commitments to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate. There were no transfers into or out of Level 3 assets during the years ended December 31, 2025 and 2024, respectively. Fair Value of Convertible Senior Notes The Company’s Convertible Senior Notes are carried at amortized cost on the consolidated balance sheets (see Note 7, “Debt”). The Company estimated the fair value of its convertible senior notes based on Level 2 quoted market prices as follows (in thousands): Fair Value Measurements as of December 31, 2025 December 31, 2024 Convertible Senior Notes due 2025 $ — $ 39,130 Convertible Senior Notes due 2029 324,979 407,752 Total fair value of outstanding convertible senior notes $ 324,979 $ 446,882 6. Leases The Company’s leases consist of operating leases for facility space to support general office, research and development, manufacturing and warehouse facilities, and equipment. These non-cancellable operating leases have initial lease terms from two years to thirteen years . Headquarters Lease In September 2021, the Company entered into a lease agreement for 181,949 square feet of general administrative, laboratory, and research and development office space (the Premises) located on High Bluff Drive in San Diego, California (Headquarters Lease). The Headquarters Lease term expires in April 2035. In December 2023, the Company entered into an agreement to sublease the Phase II portion of the leased premises under the Headquarters Lease, from January 2025 through March 2029, for which accounting commenced in January 2025. 89 The Company recognizes the sublease income on a straight-line basis over the term of the sublease which is classified in the Company’s consolidated statements of operations and comprehensive loss as a reduction of rent expense in selling, general and administrative expense (SG&A). The difference between sublease income recognized and cash received from the subtenant accrues as a deferred rent receivable. Operating Lease Impairment Charges As part of our evaluation of the sublease agreement related to the Headquarters Lease, the Company compared the estimated undiscounted sublease income to the net book value of the underlying right of use asset. Because the expected sublease income was less than the net book value of the sublease assets, the Company recorded a $ 3.6 million impairment charge in operating expenses in 2025 by reducing the net book value of the subleased assets to their estimated fair value, which is determined by discounting the estimated sublease income using the estimated incremental borrowing rate of the subtenant. Additionally, in 2025, the Company transferred certain development activities from its Lausanne, Switzerland location to the United States. In connection with this relocation, the Company evaluated the impact on related fixed assets and operating lease arrangements. The Company also reviewed its assumptions for estimated future sublease income for its Vista Sorrento lease. As a result, the Company recorded a $ 3.1 million impairment charge in operating expenses in 2025, comprised of operating lease impairment charges and write-offs of fixed assets consisting primarily of leasehold improvements. In 2023, the Company consolidated facilities by moving the administrative functions and other operations from the leased space on Vista Sorrento Parkway in San Diego, California (Vista Sorrento Lease) to the Company’s new headquarters, located on High Bluff Drive in San Diego, California. In connection with permanently ceasing use of the Vista Sorrento Lease, the Company recorded a $ 14.1 million impairment charge as the carrying amount of the assets related to the Vista Sorrento Lease exceeded its fair value based on the Company’s estimate of future discounted cash flows related to the leased facility. The $ 14.1 million charge was comprised of an $ 11.2 million impairment of operating lease right-of-use assets and a $ 2.9 million write-off of fixed assets, and was recorded as a component of selling, general and administrative expenses in the consolidated statements of operations. Supplemental Lease Disclosure Information The Company’s lease costs recorded in the consolidated statements of operations were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Operating lease cost (excluding sublease income) $ 17,135 $ 14,276 $ 15,971 Short-term lease cost 162 87 108 Loss on lease termination and right-of-use asset impairment charges 6,697 — 11,224 Sublease income $ ( 2,263 ) $ — $ — Total lease cost $ 21,731 $ 14,363 $ 27,303 Maturities of operating lease liabilities as of December 31, 2025 were as follows (in thousands): Years Ending December 31, 2026 $ 19,472 2027 21,865 2028 18,401 2029 16,553 2030 17,063 Thereafter 80,062 Total undiscounted lease payments 173,416 Less: amount representing interest ( 38,977 ) Present value of operating lease liabilities 134,439 Less: current portion of operating lease liabilities ( 19,472 ) Operating lease liabilities - long-term $ 114,967 90 The weighted-average remaining lease term and weighted-average discount rate for operating leases were as follows: December 31, 2025 December 31, 2024 Weighted-average remaining lease term (in years) 8.6 9.2 Weighted-average discount rate used to determine operating lease liabilities 5.8 % 5.3 % Cash amounts paid included in the measurement of lease liabilities, representing operating cash flows, were $ 20.2 million, $ 17.9 million, and $ 13.9 million for the years ended December 31, 2025, 2024, and 2023, respectively. 7. Debt Convertible Senior Notes Due 2029 On March 8, 2024, the Company completed an offering of $ 316.3 million aggregate principal amount of 1.50 % Convertible Senior Notes due 2029 (the 2029 Notes). The proceeds from the issuance of the 2029 Notes were $ 306.8 million, net of debt issuance costs. The Company used approximately $ 246.1 million of the net proceeds to repurchase approximately $ 246.7 million in aggregate principal amount of its Convertible Senior Notes Due 2025 (the 2025 Notes) concurrently with the pricing of the 2029 Notes in privately negotiated transactions. The Company also paid $ 1.3 million of accrued interest due at time of the note repurchase. As a result of the repurchase, the Company recognized a $ 1.3 million loss on extinguishment of debt in the consolidated statements of operations for the year ended December 31, 2024. The loss on extinguishment of debt included the unamortized debt issuance costs related to the portion of the 2025 Notes repurchased. The Company also used $ 30.0 million of the net proceeds to repurchase shares of the Company’s common stock from certain purchasers of the 2029 Notes at a purchase price equal to the last reported sale price per share of the Company’s common stock on March 5, 2024, which was $ 27.105 per share. In addition, the Company used $ 15.8 million of the net proceeds to pay the cost of the capped call transactions (2029 Capped Call Transactions) discussed below. The 2029 Notes are the Company’s senior unsecured obligations. Interest is payable in cash semi-annually in arrears on March 15 and September 15 of each year beginning on September 15, 2024, at a rate of 1.50 % per year. The 2029 Notes mature on March 15, 2029 unless repurchased, redeemed, or converted in accordance with their terms before the maturity date. The initial conversion rate for the 2029 Notes is 28.9361 shares of common stock per $1,000 principal amount of the 2029 Notes, which is equivalent to an initial conversion price of approximately $ 34.56 per share of the Company’s common stock (2029 Notes Conversion Price). The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2029 Notes. The Company may not redeem the 2029 Notes before March 22, 2027. The Company has the option to redeem for cash all or any portion of the 2029 Notes on or after March 22, 2027 if the last reported sale price of the Company’s common stock has been at least 130 % of the 2029 Notes Conversion Price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period, at a redemption price equal to 100 % of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest. No sinking fund is provided for the 2029 Notes. Holders of the 2029 Notes may convert all or a portion of their 2029 Notes at their option before December 15, 2028, in multiples of $1,000 principal amounts, only under the following circumstances: • during any calendar quarter commencing after the quarter ending on June 30, 2024 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the 2029 Notes Conversion Price on each applicable trading day; • during the five business day period after any ten consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of the 2029 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate of the 2029 Notes on such trading day; 91 • if the Company calls such 2029 Notes for redemption, at any time before the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2029 Notes called (or deemed called) for redemption; or • on the occurrence of specified corporate events. On or after December 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2029 Notes, in integral multiples of $1,000 principal amount, at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the 2029 Notes. Convertible Senior Notes Due 2025 In May 2020, the Company completed an offering of $ 287.5 million aggregate principal amount of 1.50 % Convertible Senior Notes due 2025 (the 2025 Notes). The proceeds from the issuance of the Notes were $ 244.6 million, net of debt issuance costs and cash used to pay the cost of certain related capped call transactions. In March 2024, the Company repurchased for cash $ 246.7 million aggregate principal amount of the 2025 Notes, concurrently with the pricing of the 2029 Notes in privately negotiated transactions. The 2025 Notes matured in the second quarter of 2025, and the Company settled the balance of $ 40.8 million using existing cash balances. The net carrying amount of the Company’s convertible senior notes on the consolidated balance sheets consisted of the following (in thousands): December 31, 2025 December 31, 2024 Principal amount: Convertible Senior Notes Due 2029 $ 316,250 $ 316,250 Convertible Senior Notes Due 2025 — 40,760 Total principal amount 316,250 357,010 Unamortized debt issuance costs ( 6,214 ) ( 8,074 ) Total debt, net $ 310,036 $ 348,936 Less: current portion — ( 40,670 ) Long-term senior convertible notes $ 310,036 $ 308,266 As of December 31, 2025, the if-converted value of the 2029 Notes did no t exceed the principal amount. As of December 31, 2024, the if-converted value of the 2029 Notes exceeded the principal amount by $ 13.4 million. The following table summarizes the effective interest rates for each of our convertible senior notes for the periods shown: Year Ended December 31, 2025 2024 2023 Effective interest rate: Convertible Senior Notes Due 2025 (1) 2.1 % 2.1 % 2.2 % Convertible Senior Notes Due 2029 2.1 % 2.1 % * (1) The effective interest rate presented represents the rate applicable for the period outstanding. The 2025 Notes matured in May 2025, and the outstanding principal balance was settled using cash balances. * Not applicable as no notes were outstanding at this date. 92 The following table details interest expense related to the Notes recognized for the years ended months ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Contractual interest expense (1) $ 4,948 $ 5,161 $ 7,565 Amortization of debt issuance costs 1,860 1,906 1,803 Total interest expense $ 6,808 $ 7,067 $ 9,368 (1) Contractual interest expense for the year ended December 31, 2023 included $ 3.3 million of additional interest. In October 2023, the Company was notified that additional interest beyond the 1.50 % per annum had been accruing on the 2025 Notes since May 2021, under the terms of the indenture. This additional interest accrued at a rate of 0.50 % per annum on the outstanding principal amount of the Notes to approximately $ 3.3 million. The additional accrued interest was fully paid during the fourth quarter of 2023. 2029 Capped Call Transactions In connection with the issuance of the 2029 Notes, the Company entered into Capped Call Transactions in March 2024 with certain counterparties at a net cost of $ 15.8 million (2029 Capped Call Transactions). The 2029 Capped Call Transactions are expected generally to reduce potential dilution to the Common Stock upon any conversion of the 2029 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $ 42.01 per share, and is subject to certain adjustments under the terms of the 2029 Capped Call Transactions. Promissory Note Payable In connection with the acquisition of Capillary Biomedical, Inc. in 2022, the Company assumed a $ 4.7 million promissory note payable. The promissory note accrues interest at the rate of 5.0 % per year, and becomes due and payable upon the first sale or license of the commercialized product. As of December 31, 2025 and 2024, the loan balance, including accrued interest, was $ 4.9 million and $ 4.8 million, respectively, and was included as a component of other current liabilities on the consolidated balance sheets. 8. Stockholders’ Equity Shares Reserved for Future Issuance The following shares of the Company's common stock were reserved for future issuance as of December 31, 2025 (in thousands): Shares reserved for issuance upon conversion of Convertible Senior Notes 9,151 Shares underlying outstanding warrants 194 Shares underlying outstanding stock options 2,789 Shares underlying unvested restricted stock units 3,657 Shares authorized for issuance pursuant to awards granted under the ESPP 1,934 Shares authorized for future equity award grants 539 Total 18,264 93 Common Stock Warrants Warrants outstanding to purchase shares of the Company's common stock as of December 31, 2025 are equity-classified and were as follows: Issue Date Exercise Price Per Share Warrants Outstanding Expiration Date of Warrants Outstanding March 2017 $ 23.50 193,788 March 2027 Each warrant allows the holder to purchase one share of common stock at the per share exercise price of the warrant. Stock Options The maximum term of stock options granted under the Company’s active plans is ten years . Stock options have an exercise price equal to the closing price of the Company's common stock on the applicable award date. The Company did not grant any stock options in the periods presented. The following table summarizes stock option activities under the Company’s stock incentive plans: Total Stock Options Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2022 4,442,313 $ 57.95 6.12 $ 30,236 Exercised ( 72,536 ) $ 17.86 $ 1,400 Canceled/forfeited/expired ( 473,773 ) $ 90.14 $ 95 Outstanding as of December 31, 2023 3,896,004 $ 54.79 5.30 $ 11,703 Exercised ( 112,171 ) $ 19.90 $ 2,483 Canceled/forfeited/expired ( 257,277 ) $ 85.51 $ — Outstanding as of December 31, 2024 3,526,556 $ 53.65 4.32 $ 16,147 Exercised ( 83,425 ) $ 13.77 $ 940 Canceled/forfeited/expired ( 654,144 ) $ 62.79 $ 31 Outstanding as of December 31, 2025 2,788,987 $ 52.70 3.41 $ 3,452 Vested and expected to vest as of December 31, 2025 2,788,987 $ 52.70 3.41 $ 3,452 Exercisable as of December 31, 2025 2,788,987 $ 52.70 3.41 $ 3,452 Restricted Stock Units Restricted stock units (RSUs) have a grant value equal to the closing price of the Company’s common stock on the award date. RSUs granted before March 2022 generally vest over a four-year period based on continuous service as to 25 % of the underlying shares on the first anniversary of the award, with the balance of the RSUs vesting quarterly over the following three years . RSUs granted after March 2022 generally vest over a three-year period based on continuous service to the Company as to 33 % of the underlying shares on the first anniversary of the award, with the balance of the RSUs vesting quarterly over the following two years . In addition, the Company granted 297,456 , 151,660 and 110,074 performance-based RSUs during the years ended December 31, 2025, 2024 and 2023, respectively, of which 297,456 , 151,660 , and 92,308 units remained outstanding as of December 31, 2025. 94 The following table summarizes RSU activities, which includes performance-based RSUs, for the Company’s stock incentive plans: Total RSUs Weighted-Average Grant Date Fair Value Aggregate Intrinsic Value (in thousands) Unvested awards outstanding as of December 31, 2022 1,833,832 $ 72.57 $ 82,431 Granted 2,359,907 $ 28.13 Vested ( 735,155 ) $ 73.17 Canceled/forfeited ( 282,425 ) $ 59.17 Unvested awards outstanding as of December 31, 2023 3,176,159 $ 40.61 $ 93,951 Granted 2,332,553 $ 44.52 Vested ( 1,475,409 ) $ 42.76 Canceled/forfeited ( 294,533 ) $ 41.05 Unvested awards outstanding as of December 31, 2024 3,738,770 $ 42.17 $ 134,670 Granted 2,411,096 $ 20.19 Vested ( 1,909,227 ) $ 43.26 Canceled/forfeited ( 584,350 ) $ 34.25 Unvested awards outstanding as of December 31, 2025 3,656,289 $ 28.33 $ 77,900 Awards expected to vest as of December 31, 2025 3,501,145 $ 28.36 $ 74,551 The aggregate fair value of RSUs that vested during the years ended December 31, 2025, 2024 and 2023 was $ 41.4 million, $ 58.5 million, and $ 21.2 million, respectively, which represents the market value of the Company’s common stock on the date the RSUs vested. The number of RSUs vested includes shares of common stock the Company withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures. Employee Stock Purchase Plan The ESPP enables eligible employees to purchase shares of the Company’s common stock using their after-tax payroll deductions, subject to certain conditions. Eligible employees may contribute, through payroll deductions, up to 15 % of their earnings for the purchase of common stock under the ESPP. The purchase price of common stock under the ESPP is the lesser of: (a) 85 % of the fair market value of a share of the Company’s common stock on the first date of an offering or (b) 85 % of the fair market value of a share of the Company’s common stock on the date of purchase. During the years ended December 31, 2025, 2024 and 2023, 749,971 , 770,362 and 499,431 shares of our common stock, respectively, were purchased under the ESPP for proceeds of $ 11.9 million, $ 12.2 million and $ 10.7 million, respectively. Stock-Based Compensation The following table summarizes the allocation of stock-based compensation expense included in the consolidated statements of operations for all stock-based compensation arrangements (in thousands): Year Ended December 31, 2025 2024 2023 Cost of sales $ 6,395 $ 7,361 $ 6,212 Selling, general and administrative 60,074 62,794 56,303 Research and development 25,912 31,228 25,561 Total stock-based compensation expense $ 92,381 $ 101,383 $ 88,076 The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $ 1.2 million and $ 1.8 million as of December 31, 2025 and 2024, respectively. 95 As of December 31, 2025, the total unamortized stock-based compensation expense of approximately $ 78.3 million will be recognized over the remaining weighted average vesting term of approximately 1.7 years. The Company records stock-based compensation expense associated with the ESPP using the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model for the ESPP were as follows: ESPP Year Ended December 31, 2025 2024 2023 Weighted average grant date fair value (per share) $ 9.84 $ 17.01 $ 10.35 Risk-free interest rate 3.9 % 4.7 % 4.9 % Dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 74.8 % 67.5 % 63.9 % Expected term (in years) 1.3 1.3 1.3 Risk-free Interest Rate . The risk-free interest rate assumption was based on the United States Treasury’s rates for United States Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. Expected Dividend Yield . The dividend yield is zero because the Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Expected Volatility . The expected volatility was estimated based on a weighted-average of the Company’s actual historical volatility of its common stock measured over the expected term. Expected Term . The Company utilized the simplified method for estimating the expected term of stock option grants. Under this approach, the weighted-average expected term is presumed to be the average of the vesting term and the contractual term of the option. The Company also estimates forfeitures at the time of grant, and revises those estimates in subsequent periods if actual forfeitures differ from its estimates. 9. Derivatives Due to the global nature of the Company’s operations, a portion of its revenue and operating expense are denominated in currencies other than the U.S. dollar, exposing the Company to foreign currency exchange rate fluctuations. To mitigate the impact of these fluctuations, the Company uses foreign currency forward contracts to hedge a portion of its forecasted international revenue and operating expense. The Company’s foreign currency forward contracts are denominated primarily in Euros, Canadian dollars and Swiss francs (CHF). As of December 31, 2025, the Company’s outstanding foreign currency forward contracts settle within nine months. These contracts are designated as cash flow hedges. Unrealized gains or losses on these contracts are recorded in accumulated other comprehensive income (loss) (AOCI). Realized gains and losses of such contracts are recognized in revenue and operating expenses in the same period during which the hedged transactions affect the consolidated results of operations. The cash flow effects of our derivative contracts in the consolidated statements of cash flows are included in net cash provided by operating activities. All derivative instruments are used solely for risk management purposes and are not for speculative trading purposes. For the periods presented, the Company did not have any non-designated hedges. The notional value of foreign currency forward contracts outstanding related to forecasted transactions was $ 68.2 million as of December 31, 2025. The Company did no t have any forward contracts outstanding as of December 31, 2024. The Company recorded an unrealized loss on foreign currency forward contracts of $ 0.3 million for the year ended December 31, 2025. 96 The following table summarizes the effect of foreign currency forward contracts designated as hedging instruments in our consolidated statements of operations (in thousands): Year Ended December 31, 2025 Net Gains (Losses) Reclassified from AOCI into Operating Income Designated cash flow hedges: Revenue $ ( 614 ) Operating expense $ ( 60 ) The Company did not enter into any foreign currency forward contracts that qualified for hedge accounting in 2024 and 2023, and therefore there were no derivative assets or liabilities, nor adjustments to revenue or operating expense as a result of cash flow hedges during the years ended December 31, 2024 and 2023. 10. Employee Benefits Defined Contribution Plans The Company has defined contribution plans for certain of its employees. The Company’s largest defined contribution plan is the 401(k) plan for employees in the United States who are at least 18 years of age. Eligible employees may participate in the plan beginning on the first day of the calendar month following their date of hire. Unless they affirmatively elect otherwise, eligible employees are automatically enrolled in the plan following 30 days from their date of hire. Under the terms of the plan, eligible employees may make voluntary contributions as a percent of compensation and the Company may elect to match a discretionary percentage of employee contributions. The total cost recognized by the Company for the 401(k) plan was $ 4.9 million, $ 4.6 million and $ 4.2 million, respectively, for the years ended December 31, 2025, 2024 and 2023. The Company’s contributions for its defined contribution plans for employees internationally were not material for each of the years ended December 31, 2025, 2024 and 2023. 11. Income Taxes The loss before provision for income taxes for the Company’s operations was as follows (in thousands): Year Ended December 31, 2025 2024 2023 United States $ ( 226,958 ) $ ( 78,156 ) $ ( 135,411 ) Foreign 26,686 ( 13,714 ) ( 84,843 ) Loss before provision for income taxes $ ( 200,272 ) $ ( 91,870 ) $ ( 220,254 ) The components of income tax expense were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ 461 $ 636 $ 308 State 27 1,143 345 Foreign 3,950 2,376 1,704 Total current tax expense 4,438 4,155 2,357 Deferred: Federal — — — State — — — Foreign — — — Total deferred income tax benefit — — — Income tax expense $ 4,438 $ 4,155 $ 2,357 97 The expense for income taxes reconciles to the amount computed by applying the federal statutory rate to loss before taxes as follows (in thousands): Year Ended December 31, 2025 $ % Income tax benefit at federal statutory rate (1) $ ( 42,057 ) 21.00 % State income tax, net of federal benefit (2) ( 1,038 ) 0.52 % Foreign tax effects Switzerland Foreign rate differential ( 3,041 ) 1.52 % Changes in valuation allowance ( 7,037 ) 3.51 % Other tax effects 166 ( 0.08 ) % Other foreign jurisdictions ( 1,722 ) 0.86 % Effect of changes in tax laws or rates enacted in the current period — — % Effect of cross-border tax laws Subpart F income inclusion 348 ( 0.17 ) % Tax credits Research and development credits ( 10,370 ) 5.18 % Foreign tax credits ( 2,667 ) 1.33 % Changes in valuation allowance 54,580 ( 27.25 ) % Nontaxable or nondeductible items Non-deductible stock-based compensation 3,952 ( 1.97 ) % Other non-deductible and non-taxable ( 103 ) 0.05 % Other Stock-based compensation - (windfall) shortfall 11,542 ( 5.76 ) % Net impact on liquidation of foreign subsidiary ( 17,262 ) 8.62 % Other 1,850 ( 0.94 ) % Changes in unrecognized tax benefits 17,297 ( 8.64 ) % Income tax expense $ 4,438 ( 2.22 ) % Year Ended December 31, 2024 2023 Income tax benefit at federal statutory rate (1) $ ( 19,293 ) $ ( 46,253 ) State income tax, net of federal benefit ( 1,444 ) ( 1,313 ) Convertible debt repurchase transaction 1,658 — Research and development credits ( 7,865 ) ( 6,283 ) Section 382 limitation — ( 5 ) Stock-based compensation 5,772 14,904 Officers' compensation 1,043 1,547 Recognition of acquired deferred tax assets — ( 5,048 ) Acquired IPR&D expenses — 14,938 Cross-border tax impacts ( 1,422 ) ( 307 ) Foreign rate differential 2,075 7 Other 1,159 1,374 Change in valuation allowance 22,472 28,796 Income tax expense $ 4,155 $ 2,357 (1) For the years ended December 31, 2025, 2024 and 2023, the U.S. federal statutory tax rate was 21%. 98 (2) The state of California comprises greater than 50% of our state tax benefit. The amounts of cash income taxes paid, net of refunds received, by the Company are as follows: Year Ended December 31, 2025 Federal $ 2,246 State Illinois 353 Other states 775 Foreign Netherlands 1,541 Other foreign 141 Total cash paid in income taxes, net of refunds received $ 5,056 Significant components of the Company’s net deferred income tax assets as of December 31, 2025 and 2024 are shown in the table below (in thousands). The Company assesses all available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative book loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this analysis, a valuation allowance of $ 270.3 million and $ 210.4 million as of December 31, 2025 and 2024, respectively, was recorded to offset the net deferred tax asset as realization of such asset is uncertain. However, the amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company’s projections for future growth. December 31, 2025 2024 Deferred tax assets: Net operating loss (NOL) carryforwards $ 62,970 $ 40,536 Research and development tax credits carryforwards 56,670 32,298 Capitalized research and development expenses 57,122 74,974 Accrued compensation 31,339 38,053 Lease liabilities 31,996 29,165 Warranty reserve 13,096 12,222 Intangible assets 30,390 — Other 13,771 8,610 Total deferred tax assets 297,354 235,858 Deferred tax liabilities: Fixed assets ( 4,185 ) ( 5,485 ) Operating lease right-of-use assets ( 22,887 ) ( 19,792 ) Other — ( 218 ) Total deferred tax liabilities ( 27,072 ) ( 25,495 ) Less valuation allowance ( 270,282 ) ( 210,363 ) Net deferred tax assets $ — $ — As of December 31, 2025, the Company had accumulated federal and state NOL carryforwards of approximately $ 379.0 million, and $ 349.3 million, respectively. Out of the total federal NOL carryforwards, approximately $ 295.3 million were generated after January 1, 2018, and therefore do not expire. NOLs generated after January 1, 2018, are subject to 80% limitation in accordance with the Tax Cuts and Jobs Act of 2017. The remaining federal NOL carryforwards of $ 83.7 million will begin to expire in 2034, and state NOL carryforwards continue to expire. The California NOL carryforwards of $ 200.5 million will begin expiring in 2029. The Company had approximately $ 34.3 million of international carryforwards as of December 31, 2025, which begin to expire in 2030. 99 The Company also has federal and California research and development credit carryforwards of approximately $ 41.0 million and $ 38.4 million, respectively, as of December 31, 2025. The federal research and development credit carryforwards will begin expiring in 2040, unless previously utilized. The California research and development credit will carry forward indefinitely. Use of the Company's NOL and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations may result in the expiration of NOL carryforwards before utilization. The Company has completed an analysis through December 31, 2024 to determine whether its NOLs and credits are likely to be limited by Section 382. The Company is currently in a loss position for the year ended December 31, 2025 and will continue monitoring future ownership changes under Section 382. Additionally, ownership changes occurring after December 31, 2025 and future years may also limit the Company’s ability to fully utilize any remaining tax benefits. The evaluation of uncertainty in a tax position is a two-step process. The first step involves recognition. The Company determines whether it is more likely than not that a tax position will be sustained upon tax examination, including resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position are derived from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate resolution with a taxing authority. The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Gross unrecognized tax benefits at the beginning of the year $ 27,474 $ 21,527 $ 16,986 Increases related to current year positions 49,606 5,947 3,961 Increases (decreases) related to prior year positions ( 8,941 ) — 580 Gross unrecognized tax benefits at the end of the year $ 68,139 $ 27,474 $ 21,527 As of December 31, 2025 and 2024, the Company had $ 39.8 million and $ 24.9 million of unrecognized tax benefits, respectively, that, if recognized and realized would impact the effective tax rate, subject to the valuation allowance. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. The Company had no material accrual for interest and penalties on the Company’s consolidated balance sheets and the amount of interest and penalties recognized in the consolidated statements of operations were not material for the years ended December 31, 2025, 2024 and 2023. The Company is subject to taxation in the United States and various foreign and state jurisdictions. Prior to 2018, the losses were all attributable to the United States. The Company’s tax years from 2006 (inception) are subject to examination by the United States and state authorities due to the carry forward of unutilized NOLs and research and development credits. Undistributed earnings of the foreign subsidiaries are indefinitely reinvested. Thus, the Company has not recognized any deferred taxes on foreign unremitted earnings. 100 12. Business Segment and Geographic Information Segment Reporting Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance. The Company is organized based on its current product portfolio, which consists primarily of insulin pumps, single-use insulin cartridges and infusion sets for the storage and delivery of insulin. The Company views its operations and manages its business as one reporting segment because key operating decisions and resource allocations are made by the CODM using consolidated financial data. Accordingly, the Company is organized as a single operating segment and therefore a single reportable segment: Insulin Pumps and Supplies. The Company’s CODM is the Chief Executive Officer (CEO), who evaluates segment performance based on segment net income (loss) on a consolidated basis. Segment net income (loss) was consistent with the net loss amounts reported in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2025, 2024 and 2023. There were no significant segment expenses that are regularly provided to the CODM other than those reported in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2025, 2024 and 2023. The Company’s CODM is provided segment assets information on a consolidated basis for the evaluation of Company performance. Total segment assets were consistent with total assets reported in the Company’s consolidated balance sheets for December 31, 2025 and December 31, 2024. Disaggregation of Sales Segment revenues were consistent with revenue reported in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2025, 2024 and 2023. The Company primarily sells its products through national and regional distributors in the United States on a non-exclusive basis, and through distribution partners internationally. In the United States and Canada, the Company also uses a direct sales force. The Company disaggregates its revenue by geography, major sales channel and product as management believes these categories best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors. Sales by Geographic Region and Customer Sales Channel During the years ended December 31, 2025, 2024 and 2023, no individual country internationally generated revenue that represented more than 10% of total revenue. The table below sets forth revenues for the Company’s two primary geographical markets, based on the geographic location to which its products are shipped (in thousands): Year Ended December 31, 2025 2024 2023 United States $ 706,936 $ 672,685 $ 554,878 International 307,800 267,518 192,840 Total Sales $ 1,014,736 $ 940,203 $ 747,718 Sales by Product During the years ended December 31, 2025, 2024 and 2023, sales by product were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Pump $ 464,139 $ 434,169 $ 365,842 Supplies and other 550,597 475,785 406,983 Net sales recognized (deferred) for Tandem Choice program — 30,249 ( 25,107 ) Total Sales 1,014,736 940,203 747,718 101 Sales to distributors accounted for 63 %, 61 %, and 64 % of the Company’s total United States sales for the years ended December 31, 2025, 2024 and 2023, respectively. Sales from the pharmacy channel accounted for 4 % of the Company’s total United States sales for the year ended December 31, 2025. There were no sales from the pharmacy channel for the years ended December 31, 2024 and 2023. Sales to distributors accounted for the vast majority of the Company’s total international sales for the years ended December 31, 2025, 2024 and 2023, respectively. 13. Acquisitions In December 2022, the Company entered into a share purchase agreement to acquire all of the registered shares of AMF Medical (Original Transaction). AMF Medical is the original developer of the Sigi Patch Pump, which continued to be under development and was not yet commercially available as of December 31, 2025. In 2023, the Company completed the acquisition of AMF Medical. The total aggregate consideration for the Original Transaction included a previous strategic investment of CHF 8.0 million made in 2022, a cash payment of CHF 62.4 million paid at the closing of the Transaction, and additional contingent earnout payments of up to CHF 129.6 million. The contingent consideration was to be recognized as certain defined contingencies were resolved and the respective consideration was paid or became payable. The transaction was accounted for as an asset acquisition as substantially all the value of the gross assets was concentrated in a single asset. The Company recorded a $ 78.8 million charge in 2023 representing the value of acquired in-process research and development assets with no alternative future use, including acquisition-related expenses, on its consolidated statements of operations in acquired in-process research and development expenses (IPR&D). In January 2025, the Company entered into an amended agreement that removed contingent liabilities included in the Original Transaction. Under the revised term, the Company agreed to pay CHF 68.0 million, consisting of a CHF 40.0 million ($ 43.5 million USD) payment made in January 2025 and a final payment of CHF 28.0 million ($ 35.1 million USD) made in October 2025. All other payment obligations under the Original Transaction were removed. The total consideration of CHF 68.0 million ($ 75.2 million USD) was recognized as acquired IPR&D in the Company’s consolidated statements of operations and comprehensive loss in the first quarter of 2025. In addition, the Company recognized $ 3.4 million of foreign exchange losses in total other income (expense), net during the fourth quarter of 2025. 14. Commitments and Contingencies Legal and Regulatory Matters From time to time, the Company is involved in various legal proceedings, regulatory matters, and other disputes or claims arising from or related to claims incident to the normal course of the Company’s business activities, including actions with respect to intellectual property, data privacy, employment, regulatory, product liability and contractual matters. Although the results of such legal proceedings and claims cannot be predicted with certainty, as of December 31, 2025 the Company believes it is not currently a party to any legal proceedings, regulatory matters, or other disputes or claims for which a material loss was considered probable or for which the amount or range of loss was reasonably estimable. However, regardless of the merit of the claims raised or the outcome, legal proceedings may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors. Letters of Credit As of December 31, 2025, in connection with one of the Company’s operating leases (see Note 6, “Leases”), the Company had a $ 4.9 million unsecured irrevocable standby letter of credit arrangement with a bank, under which the landlord of the building is the beneficiary. The Company is required to maintain the standby letter of credit throughout the term of the lease, which expires in April 2035. Purchase Obligations The Company has agreements with suppliers and other parties to purchase inventory, other goods and services and long-lived assets. Product inventory obligations consist primarily of purchase order commitments for raw materials used in the production of insulin pumps and cartridges, and finished goods infusion sets. Cancellation of outstanding purchase orders is generally allowed under the standard terms of our purchase order agreements, but may require payment of costs incurred through the date of cancellation. As of December 31, 2025, obligations under our purchase agreements totaled approximately $ 365.4 million, of which approximately $ 267.7 million is scheduled to be received and become payable within one-year with the remainder due in the year thereafter. 102 15. Fourth Quarter Financial Data (Unaudited) The financial information for the three months ended December 31, 2025 and 2024 presented in the following table reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results of the interim periods (in thousands, except per share data): For the Quarter Ended December 31, 2025 December 31, 2024 Sales (1) $ 290,383 $ 282,648 Gross profit (1)(2) $ 167,460 $ 157,455 Operating expenses $ 159,166 $ 158,036 Operating income (loss) $ 8,294 $ ( 581 ) Net income (loss) $ ( 589 ) $ 755 Basic net income (loss) per share $ ( 0.01 ) $ 0.01 Weighted average shares used to compute basic net income (loss) per share 68,014 65,939 Diluted net income (loss) per share $ ( 0.01 ) $ 0.01 Weighted average shares used to compute diluted net income (loss) per share 68,014 66,157 (1) The Company recognized revenue of $ 30.2 million for the quarter ended December 31, 2024, as a result of the Tandem Choice program (see Note 2, “Summary of Significant Accounting Policies”). There was no comparative adjustment to sales for the quarter ended December 31, 2025. (2) For the quarter ended December 31, 2024, the Company recognized charges to cost of sales of $ 0.6 million for Tandem Choice fulfillments in 2024. There was no comparative adjustment to cost of sales for the quarter ended December 31, 2025. The numerator and denominator of the basic and diluted net income per share computations are calculated as follows for the three months ended December 31, 2024 (in thousands). For the Quarter Ended December 31, 2024 Net income - basic and diluted $ 755 Weighted average shares outstanding - basic 65,939 Dilutive common share equivalents: Options to purchase common stock 112 Warrants to purchase common stock 59 Awards to be granted under the ESPP 47 Weighted average shares outstanding - diluted 66,157 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable.