What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 143 added, 83 removed, 173 unchanged (57% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis together with our financial statements and related notes in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (Quarterly Report).

This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to considerable risks and uncertainties.

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New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Forward-looking statements speak only as of the date they were made and we undertake no obligation to update or review any forward-looking statement because of new information, future events or other factors.

Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update or review any forward-looking statement because of new information, future events or other factors except as required by law.

We qualify all of our forward-looking statements by these cautionary statements.

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In support of this strategy, our Tandem pump platforms include t:slim X2 and Tandem Mobi (Mobi), both of which feature Control-IQ+ advanced hybrid closed-loop technology.

We develop our automated insulin delivery (AID) systems and related technology solutions using a consumer-focused approach.

This has resulted in a differentiated device portfolio that provides users with the distinct features and functionality they seek and in a manner that makes the features usable and intuitive.

We launched our flagship t:slim pump platform in August 2012, and its next generation, the t:slim X2, in October 2016.

The t:slim X2 insulin pump is an all-in-one system that features a slim, sleek, user-friendly color touchscreen and holds up to 300 units of insulin.

In 2024, we expanded our portfolio with the commercial availability of Mobi in the United States, starting with iOS control, followed by Android control in March 2026.

We develop our diabetes technology solutions using a consumer-focused approach.

This has resulted in a differentiated insulin pump portfolio, including the t:slim X2 insulin pump (t:slim X2) and Tandem Mobi (Mobi), which provide users with distinct easy-to-use features and functionality.

The t:slim X2 is an all-in-one system that features a slim, sleek, user-friendly color touchscreen and holds up to 300 units of insulin.

Mobi is designed for people who seek even greater discretion and flexibility, and includes features such as expanded pump-control from a mobile application, inductive charging, and an on-pump button that can be used for bolusing and other actions.

Our insulin pumps offer the option to detach in addition to Bluetooth connectivity and are typically used as part of an AID system.

When used as an AID system, our insulin pumps are integrated with a CGM and powered by our Control-IQ+ technology.

Our insulin pumps offer the option to detach in addition to Bluetooth connectivity and are typically used as part of an Automated Insulin Delivery (AID) system.

Our insulin pumps are compatible for use with industry-leading CGM sensors from Abbott and Dexcom.

When used as an AID system, the CGM sensor data powers our Control-IQ+ technology.

Results from four independent pivotal studies using Control-IQ technology have been published in the New England Journal of Medicine since 2019.

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Control-IQ+ also offers an easy set-up feature and settings for sleep and exercise activities that adjust the algorithm parameters to better match the different physiological needs during these activities.

In addition, in the first quarter of 2026 we offered users the choice of integrating with multiple CGM sensors, such as such as the Dexcom G6 and G7, and the Abbott FreeStyle Libre 2 Plus and FreeStyle Libre 3 Plus.

As part of our ecosystem of diabetes solutions, we also offer a web-based data management platform, Tandem Source, that provides users, their caregivers and their healthcare providers with a fast, easy and visual way to display diabetes therapy management data from our pumps and integrated CGMs.

Tandem Source also provides us with data that we can analyze to reveal patterns, trends, outcomes and associations that can be used for product development and in the analysis of clinical outcomes data.

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This includes a novel, extended-wear infusion site option for Mobi that will transform the pump into a tubeless patch device.

In the second quarter 2026, we submitted a 510(k) application with the U.S.

Food and Drug Administration (FDA) for Tandem Mobi tubeless capability.

In addition, our pipeline also includes a next-generation Mobi patch pump that leverages the technology acquired with the Sigi Patch Pump to deliver further miniaturization.

Our development efforts also include extended-wear infusion set technology, dual glucose-ketone sensor integration, and algorithm advancement in pursuit of offering fully closed loop technology.

Our development efforts also include extended-wear infusion set technology, dual glucose-ketone sensor compatibility, and algorithm advancement in pursuit of offering fully closed loop technology.

Third-Party Reimbursement

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This would eliminate the upfront pump reimbursement.

Under this model, customers would no longer incur a significant upfront cost when a patient initiates pump therapy, thus reducing the initial financial burden and supporting broader patient access.

With a lower upfront cost, this model is expected to increase adoption of our products by reducing a barrier for patients when evaluating pump therapy.

Overall, we anticipate higher revenue in this model over the four-year life of each customer compared to a medical benefit today.

Internationally, insurance reimbursement processes vary by geography.

Overall, we anticipate higher revenue in this model over the four-year life of each customer compared to the current medical benefit structure.

Internationally, insurance reimbursement models may vary by geography.

In markets where we have direct operations, we are responsible for all reimbursement, tender application and fulfillment activities.

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The success of our products is variable and we believe it correlates to market acceptance, anticipated product launches and commercial availability.

• Seasonality in the United States is associated with annual insurance deductibles and coinsurance requirements of the medical benefit in insurance plans used by our customers and the customers of our distributors.

In the United States, we typically experience a higher volume of pump shipments in the second half of the year due to the nature of these reimbursement dynamics.

• Seasonality in the United States is associated with annual insurance deductibles and coinsurance requirements of the insurance plan benefit used by our customers and the customers of our distributors.

In the United States, we typically experience a higher volume of pump shipments in the second half of the year due to the nature of these reimbursement dynamics under the medical benefit.

As we expand our access through the pharmacy benefit with no upfront reimbursement for an insulin pump, we anticipate there will be less of a seasonal impact on the business in future periods related to insurance deductibles and coinsurance requirements.

Other factors that may impact sales across the year include the timing of winter, summer and other seasonal holidays, particularly in our international markets.

• Regulatory approval and/or upcoming launches of other new Tandem or competing products could also adversely impact timing of purchasing decisions.

Other factors that may impact sales across the year include the timing of seasonal holidays, particularly in our international markets.

• Regulatory approval and/or upcoming launches of new Tandem or competing products could also adversely impact timing of purchasing decisions.

• In periods following new product launches, particularly with new hardware platforms, our cost of sales may increase on a per unit basis until the new products achieve manufacturing scale and operating expenses may be elevated by increased sales and marketing spending to support the product launches.

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• In 2026, our primary focus is to continue increasing our sales through the pharmacy benefit with improved scalability of operations, expanded coverage and a change in the reimbursement model.

Our pharmacy contracts are structured as pay-as-you-go with reimbursement only for the ongoing supply purchases at a price premium to the DME model.

Under this model, in the first quarter of 2026, we began experiencing a decrease in sales and gross profit when pumps are shipped.

As pharmacy utilization scales, we expect the decrease in sales from pump shipments to be offset by an increase in supply sales and gross profit from both our existing installed base and increased volumes.

• We generally have had broad insurance coverage for our current products from third-party payors.

Our pharmacy contracts are structured as pay-as-you-go with reimbursement for the ongoing supply purchases only, at a price premium to the DME model.

Under this model, in 2026, we began experiencing a decrease in sales and gross profit when pumps are shipped.

As pharmacy utilization scales, we expect the decrease in sales from pharmacy pump shipments to be offset by an increase in supply sales and gross profit from both our existing installed base and new customers.

• We generally have had broad insurance coverage for our products through third-party payors.

Our sales and results of operations may be impacted by the failure to secure or retain adequate coverage consistent with current reimbursement levels, changes in reimbursement structures, or availability of affordable options for our customers.

• We depend on a limited number of third-party suppliers for certain components and products.

Their inability to provide an adequate supply of components or products could harm our business.

For example, one of our key infusion set suppliers has recently experienced supply challenges, which has impacted our overall inventory levels and supply sales, and we expect inventory constraints to persist through 2026.

If we are unable to obtain sufficient quantities of such supplies or other necessary components to meet demand on a timely basis going forward, we could lose additional customer orders, our reputation may be harmed, and our business could suffer.

Macroeconomic Factors

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Our sales may fluctuate from period to period.

See also “Trends and Uncertainties Impacting Financial Results — Markets, Seasonality, Competition, and Product Launches” above.

See also “Trends and Uncertainties Impacting Financial Results” above.

Cost of Sales

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Therefore, the percentage of pump sales relative to total sales has had a significant impact on our overall gross margin percentage.

Under the a pay-as-you-go model through the pharmacy benefit in the U.S., our overall gross profit and gross margin percentage may be negatively impacted when pumps are shipped during the initial stages of this new model, but may be partially or fully offset by the anticipated benefit from higher profits for our recurring sale of supplies.

Under the pay-as-you-go model through the pharmacy benefit in the United States, our overall gross profit and gross margin percentage may be negatively impacted when pumps are shipped during the initial stages of this new model, but that impact may be partially or fully offset by the anticipated benefit from higher profits for our recurring sale of supplies.

Selling, General and Administrative

Our selling, general and administrative (SG&A) expenses primarily consist of salary, cash-based incentive compensation, fringe benefits and non-cash stock-based compensation for our sales, marketing and administrative functions, which also includes our clinical, customer support, technical services, insurance verification and regulatory affairs personnel.

Our sales territories in the United States are generally maintained by sales representatives and field clinical specialists, and supported by managed care liaisons, additional sales management and other customer support personnel.

Other significant SG&A expenses typically include those incurred for commercialization activities associated with new product launches, travel, trade shows, outside legal fees, independent auditor fees, outside consultant fees, insurance premiums, facilities costs and information technology costs.

Our SG&A expenses primarily consist of salary, cash-based incentive compensation, fringe benefits, and non-cash stock-based compensation for our sales, marketing and administrative functions in the United States and select international markets, which also includes our clinical, customer support, technical services, insurance verification and regulatory affairs personnel.

Our sales territories are generally maintained by sales representatives and field clinical specialists, and supported by managed care liaisons, additional sales management, and other customer support personnel.

Other significant SG&A expenses typically include costs of technology infrastructure for customer sales and support, commercialization activities associated with new product launches, travel, trade shows, outside legal fees, independent auditor fees, outside consultant fees, insurance premiums, facilities costs, and information technology costs.

Research and Development

Our research and development (R&D) activities primarily consist of engineering and research programs associated with our hardware, software and digital health products under development, as well as activities associated with our core technologies and processes.

Our R&D activities primarily consist of engineering and research programs associated with our hardware, software, and digital health products under development, as well as activities associated with our core technologies and processes.

R&D expenses are primarily related to employee compensation, including salary, cash-based incentive compensation, fringe benefits, and non-cash stock-based compensation.

We also incur R&D expenses for supplies, development prototypes, outside design and testing services, depreciation, allocated facilities and information services, clinical trials, payments under our licensing, development and commercialization agreements, and other indirect costs.

Acquired In-process Research and Development (IPR&D)

Acquired In-process Research and Development

Acquired IPR&D reflects costs of external research and development projects acquired directly in a transaction other than a business combination, which do not have an alternative future use.

Litigation and Settlement Expense

Litigation and settlement expense reflects costs of litigation and settlement in conjunction with the Settlement Agreement with Roche entered into during the second quarter of 2025.

Other Income and Expense, Net

Other income and expense primarily consist of interest earned on our cash equivalents and short-term investments, income or loss from equity method investments, foreign currency transaction gains and losses and interest expense which includes the amortization of debt issuance costs related to our convertible senior notes.

Other income and expense primarily consist of interest earned on our cash equivalents and short-term investments, income or loss from equity method investment, foreign currency transaction gains and losses, and interest expense, which includes the amortization of debt issuance costs related to our convertible senior notes.

Income Tax Expense (Benefit)

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Three Months Ended

June 30, Six Months Ended June 30,

(in thousands, except percentages) 2026 2025 2026 2025

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Acquired in-process research and development expenses

Litigation and settlement expense

— 19,951 — 19,951

Total operating expenses 158,572 177,665 312,794 416,950

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Interest income and other income, net

Interest expense (2,204) (1,862)

Loss from equity method investments

1,225 (632) 4,851 3,561

Interest expense (2,450) (1,905) (4,654) (3,767)

Loss from equity method investment (5,641) (3,375) (9,506) (6,917)

Total other income (expense), net (6,866) (5,912) (9,309) (7,123)

Loss before income taxes (20,658) (57,722) (40,535) (179,811)

Income tax expense

Income tax expense (benefit) 510 (5,322) 1,026 3,145

Net loss $ (21,168) $ (52,400) $ (41,561) $ (182,956)

Comparison of the Three Months Ended March 31, 2026 and 2025

For the three months ended March 31, 2026, we shipped more than 29,000 pumps worldwide.

Comparison of the Three Months Ended June 30, 2026 and 2025

For the three months ended June 30, 2026, we shipped more than 33,000 pumps worldwide.

Sales were $254.6 million, which included $75.3 million of international sales.

Sales were $234.4 million for the three months ended March 31, 2025, which included $83.8 million of international sales.

Sales were $240.7 million for the three months ended June 30, 2025, which included $70.5 million of international sales.

Overall, the increase was primarily driven by an improvement in price, favorable channel mix and increased pump volumes, while supply sales were impacted by an inventory constraint relating to a key supplier.

Sales by product in the United States were as follows (in thousands):

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Total Sales in the United States $ 179,292 $ 170,209

For the first quarter 2026, sales in the United States increased primarily due to an increase in pump shipments and improved average selling prices for supply sales.

Pump shipments were more than 19,000 pumps in the first quarter 2026 compared to more than 17,000 pumps for the first quarter 2025.

Sales within the pharmacy channel accounted for 6% of sales in the United States for the first quarter 2026.

Sales within the pharmacy channel were not material for the first quarter 2025.

For the second quarter 2026, sales in the United States increased primarily due to favorable channel dynamics with the increased adoption of the new pharmacy channel business model.

The adoption of this model resulted in a decrease in pump average selling prices that was more than offset by a corresponding increase in supply prices.

This change in reimbursement structure was effective beginning in the first quarter 2026.

Pump shipments grew to more than 22,000 pumps in the second quarter 2026 compared to approximately 21,000 pumps for the second quarter 2025.

Supply sales increased although volumes were impacted by the constraint in inventory.

Sales through the pharmacy channel accounted for 10% and 3% of sales in the United States for the second quarter 2026 and 2025, respectively.

International sales by product were as follows (in thousands):

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$ 75,268 $ 70,469

For the first quarter 2026, total international sales increased primarily due to favorable changes in foreign exchange rates and improved average selling prices, partially offset by lower pump and supply volumes.

International sales for the first quarter 2026 also increased due to a one-time benefit for transitioning to rental customers from distributors in Switzerland.

Pump shipments were more than 10,000 pumps for the first quarter 2026 compared to more than 11,000 pumps for the first quarter 2025.

The decrease in pump shipments was attributable to distributor destocking in anticipation of our initiation of direct sales activities in select countries, which began in the first quarter of 2026.

Sales to distributors accounted for 89% of international sales in the first quarter of 2026 and 96% of international sales in the first quarter of 2025.

For the second quarter 2026, total international sales increased primarily due to improved average selling prices, an increase in pump shipments, and favorable changes in foreign exchange rates, offset by lower supply sales due to the inventory constraint.

Pump shipments were approximately 11,000 pumps in the second quarter 2026 compared to approximately 9,000 pumps for the second quarter 2025.

Direct sales to customers accounted for 13% and 4% of international sales in the second quarter 2026 and 2025, respectively.

Cost of Sales and Gross Profit

Our cost of sales for the three months ended March 31, 2026 was $110.4 million, resulting in gross profit of $136.8 million, compared to cost of sales of $116.0 million and gross profit of $118.4 million for the same period in 2025.

The gross margins for the three-month periods ended March 31, 2026 and 2025 were 55% and 51%, respectively.

This increase in gross margin was primarily driven by improved average selling prices,as well as favorable impact from product mix, foreign currency and lower material costs.

Our cost of sales for the three months ended June 30, 2026 was $109.8 million, resulting in gross profit of $144.8 million, compared to cost of sales of $114.8 million and gross profit of $125.9 million for the same period in 2025.

The gross margins for the three months ended June 30, 2026 and 2025 were 57% and 52%, respectively.

This increase in gross margin was primarily driven by favorable pricing from the increase in U.S.

pharmacy sales and direct international sales, as well as efficiencies gained in both manufacturing and non-manufacturing costs.

Operating Expenses

Our operating expenses for the three months ended March 31, 2026 were $154.2 million, compared to $239.3 million for the three months ended March 31, 2025.

The decrease was primarily driven by a reduction of one-time charges incurred in the first quarter 2025 including $75.2 million in IPR&D charges (see Note 13, “Acquisitions”) and $11.2 million in operating lease impairment charges and restructuring charges related to relocation of certain research and development activities.

Additionally, operating expenses decreased due to a reduction of stock-based compensation expense.

Our operating expenses for the three months ended June 30, 2026 were $158.6 million, compared to $177.7 million for the three months ended June 30, 2025.

The decrease was primarily driven by a one-time litigation and settlement charge of $20.0 million incurred in the second quarter 2025 (see Note 2, “Intangible Assets Subject to Amortization”).

Selling, General and Administrative Expenses.

SG&A expenses were $108.2 million for the three months ended March 31, 2026, compared to $113.9 million for the same period in 2025.

The decrease in SG&A expenses was primarily driven by a reduction of one-time charges incurred in the first quarter 2025, including $6.7 million of non-recurring facility impairment costs and $2.2 million of restructuring costs.

These decreases were partially offset by a $9.5 million increase from commercial investments in our sales infrastructure, including sales force expansion in the United States, costs to support direct operations in Europe, and initiatives to create future efficiencies.

Additionally, stock-based compensation expense decreased by $6.3 million.

Three Months Ended

SG&A expenses were $111.6 million for the three months ended June 30, 2026, compared to $109.6 million for the same period in 2025.

The increase in SG&A expenses was primarily driven by $7.8 million in commercial investments in our U.S.

sales infrastructure, costs to support direct operations in Europe, marketing activities, and other initiatives to create future efficiencies.

The increase was partially offset by a $5.8 million decrease in stock-based compensation expense.

Research and Development Expenses .

R&D expenses were $46.9 million for the three months ended June 30, 2026, compared to $48.1 million for the same period in 2025.

The decrease in R&D expenses was primarily driven by a reduction of stock-based compensation expense by $3.4 million, partially offset by an increase in clinical trial expense.

Litigation and Settlement Expense.

We did not incur any litigation and settlement expenses for the three months ended June 30, 2026.

Litigation and settlement expenses of $20.0 million for the three months ended June 30, 2025 related to the Settlement Agreement with Roche.

Other Income (Expense), Net

Total other income (expense), net for the three months ended June 30, 2026 was a loss of $6.9 million, compared to a loss of $5.9 million for the same period in 2025.

The increase in other income (expense), net was primarily driven by the increase in loss on equity investment and interest expense, offset by an increase in interest income earned on our cash equivalents and short-term investments.

Income Tax Expense (Benefit)

We recognized income tax expense of $0.5 million on a pre-tax loss of $20.7 million for the three months ended June 30, 2026, compared to income tax benefit of $5.3 million on a pre-tax loss of $57.7 million for the three months ended June 30, 2025.

Income tax expense for the three months ended June 30, 2026, was primarily attributable to state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

Comparison of the Six Months Ended June 30, 2026 and 2025

For the six months ended June 30, 2026, we shipped nearly 63,000 pumps worldwide.

Sales were $501.8 million, which included $161.6 million of international sales.

Sales were $475.1 million for the six months ended June 30, 2025, which included $154.3 million of international sales.

Sales by product in the United States were as follows (in thousands):

Six Months Ended

Pump $ 160,943 $ 157,608

Supplies and other 179,192 163,233

Total Sales in the United States $ 340,135 $ 320,841

For the six months ended June 30, 2026, sales in the United States increased due to favorable channel dynamics with the increased adoption of the new pharmacy channel business model, where the decrease in pump average selling prices was more than offset by a corresponding increase in supply prices.

This change in reimbursement structure was effective beginning in the first quarter of 2026.

Pump shipments exceeded 41,000 in the six months ended June 30, 2026 compared to more than 38,000 pumps in the six months ended June 30, 2025.

Supply sales increased although volumes were impacted by the constraint in inventory, Sales within the pharmacy channel accounted for 8% and 2% of the Company’s U.S.

sales for the six months ended June 30, 2026 and 2025, respectively.

International sales by product were as follows (in thousands):

Six Months Ended

Pump $ 64,135 $ 56,354

Supplies and other 97,511 97,905

Total International Sales

$ 161,646 $ 154,259

For the six months ended June 30, 2026, total international sales increased primarily due to improved average selling prices, favorable changes in foreign exchange rates, and in increase in pump shipments, partially offset by a decrease in supplies volumes.

International sales for the six months ended June 30, 2026 also included a one-time benefit for the transition to direct servicing of rental customers in Switzerland.

Pump shipments were more than 21,000 in the six months ended June 30, 2026 compared to 20,000 pumps in the six months ended June 30, 2025.

Direct sales to customers, including the one-time benefit in Switzerland, accounted for 12% and 4% of international sales for the six months ended June 30, 2026 and 2025, respectively.

Cost of Sales and Gross Profit

Our cost of sales for the six months ended June 30, 2026 was $220.2 million , resulting in gross profit of $281.6 million, compared to cost of sales of $230.8 million and gross profit of $244.3 million for the same period in 2025.

The gross margins for the six months ended June 30, 2026 and 2025 were 56% and 51%, respectively.

This increase in gross margin was primarily driven by favorable pricing from the increase in U.S.

pharmacy sales and direct international sales, as well as efficiencies gained in both manufacturing and non-manufacturing costs.

Operating Expenses

Our operating expenses for the six months ended June 30, 2026 were $312.8 million, compared to $417.0 million for the six months ended June 30, 2025.

The decrease was primarily driven by a reduction of one-time charges incurred in the six months ended June 30, 2025, including $75.2 million in IPR&D charges (see Note 13, “Acquisitions”), $20.0 million in litigation and settlement expenses (see Note 2, “Intangible Assets Subject to Amortization”) and $11.2 million in operating lease impairment charges and restructuring charges related to relocation of certain R&D activities.

Selling, General and Administrative Expenses.

SG&A expenses were $219.8 million for the six months ended June 30, 2026, compared to $223.4 million for the same period in 2025.

After one-time costs, the increase in SG&A expenses was primarily driven by a $17.4 million increase from commercial investments in sales infrastructure, including sales force expansion in the United States, costs to support direct operations in Europe, marketing activities, and other initiatives to create future efficiencies in operations.

The increase was offset by a $12.1 million decrease in stock-based compensation expense.

Six Months Ended

Selling, general and administrative

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Research and Development Expenses .

R&D expenses were $46.0 million for the three months ended March 31, 2026, compared to $50.2 million for the same period in 2025.

The decrease in R&D expenses was primarily driven by a reduction of one-time charges of $2.3 million for non-recurring restructuring costs incurred in the first quarter 2025.

Additionally, stock-based compensation expense decreased by $3.2 million.

The decrease in R&D expenses was partially offset by an increase in clinical trial expense.

Three Months Ended

R&D expenses were $93.0 million for the six months ended June 30, 2026, compared to $98.3 million for the same period in 2025.

After one-time costs, the decrease in R&D expenses was primarily driven by a $6.6 million decrease in stock-based compensation expense.

The decrease was partially offset by an increase in clinical trial expense.

Six Months Ended

Research and development

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Acquired In-Process Research and Development (IPR&D) Expenses.

We did not incur any IPR&D expenses for the three months ended March 31, 2026.

Acquired IPR&D expenses were $75.2 million for the three months ended March 31, 2025, which represented costs associated with the revised AMF purchase agreement (see Note 13, “Acquisitions”).

We did not incur any IPR&D expenses for the six months ended June 30, 2026.

Acquired IPR&D expenses were $75.2 million for the six months ended June 30, 2025, which represented costs associated with the revised AMF purchase agreement (see Note 13, “Acquisitions”).

Litigation and Settlement Expense.

We did not incur any litigation and settlement expense for the six months ended June 30, 2026.

Litigation and settlement expenses of $20.0 million for the six months ended June 30, 2025 related to the Settlement Agreement with Roche.

Other Income (Expense), Net

Total other income (expense), net for the three months ended March 31, 2026 was a loss of $2.4 million, compared to $1.2 million for the same period in 2025.

Other income (expense), net for the three months ended March 31, 2026 primarily consisted of a $3.9 million loss on equity investment, $2.2 million of interest expense which included the amortization of debt issuance costs related to our convertible senior notes.

This was partially offset by $3.6 million of interest income earned on our cash equivalents and short-term investments.

Other expense, net for the three months ended March 31, 2025 primarily consisted of $3.5 million loss on equity investment and $1.9 million of interest expense which included the amortization of debt issuance costs related to our convertible senior notes, offset by $4.2 million of interest income earned on our cash equivalents and short-term investments.

Total other income (expense), net for the six months ended June 30, 2026 was a $9.3 million loss, compared to $7.1 million for the same period in 2025.

The increase in other expense, net was primarily driven by an increase in loss on equity investment offset by an increase in interest income earned on our cash equivalents and short-term investments.

Income Tax Expense (Benefit)

We recognized income tax expense of $0.5 million on a pre-tax loss of $19.9 million for the three months ended March 31, 2026, compared to income tax expense of $8.5 million on a pre-tax loss of $122.1 million for the three months ended March 31, 2025.

Income tax expense for the three months ended March 31, 2026, was primarily attributable to state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

We recognized income tax expense of $1.0 million on a pre-tax loss of $40.5 million for the six months ended June 30, 2026, compared to income tax expense of $3.1 million on a pre-tax loss of $179.8 million for the six months ended June 30, 2025.

Income tax expense for the six months ended June 30, 2026 was primarily attributable to state and foreign income tax expense as a result of current taxable income in certain jurisdictions.

Liquidity and Capital Resources

As of March 31, 2026, we had $570.3 million in cash and cash equivalents and short-term investments.

As of June 30, 2026, we had $456.0 million in cash and cash equivalents and short-term investments.

We believe that our cash and cash equivalents, short-term investments, and future cash flows from operations will be sufficient to fund our ongoing core business activities for at least the next twelve months.

Our historical cash outflows have primarily been associated with cash used for operating activities such as research and development activities, sales, marketing and commercialization of our products worldwide, expansion of clinical and customer support organizations, the acquisition of intellectual property, equity investments and asset acquisitions, capital expenditures and debt service costs.

We also believe our current liquidity position provides flexibility to support our longer-term operating objectives.

Our historical cash outflows have primarily been associated with cash used for operating activities such as R&D activities, sales, marketing and commercialization of our products worldwide, expansion of clinical and customer support organizations, the acquisition of intellectual property, equity investments and asset acquisitions, capital expenditures and debt service costs.

Historically, our principal sources of cash have included cash collected from product sales, private and public offerings of equity securities, exercises of employee stock awards, and debt financing.

We expect to rely primarily on product sales to fund our material cash requirements in both the short and long term.

The following table shows a summary of our cash flows for the three months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended March 31,

The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025 (in thousands):

Six Months Ended June 30,

Net cash provided by (used in):

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Effect of foreign exchange rate changes on cash 2,229 (263)

Net increase (decrease) in cash and cash equivalents

$ 88,691 $ (15,660)

Net decrease in cash and cash equivalents $ (27,816) $ (5,122)

Operating Activities .

Net cash provided by operating activities was $11.1 million for the three months ended March 31, 2026, compared to $18.3 million of cash used in the same period in 2025.

For the three months ended March 31, 2026, net loss was $20.4 million, net non-cash adjustments were $27.8 million, and the change in working capital balances was an increase of $3.7 million.

For the three months ended March 31, 2025, net loss was $130.6 million, net non-cash adjustments were $118.1 million and the change in working capital balances was a decrease of $5.8 million.

Net cash used in operating activities was $23.6 million for the six months ended June 30, 2026, compared to $27.8 million of cash used in the same period in 2025.

For the six months ended June 30, 2026, net loss was $41.6 million, net non-cash adjustments were $55.8 million, and the change in working capital balances was a decrease of $37.8 million, including a $7.0 million cash outflow for the annual payment related to the Roche Settlement Agreement.

For the six months ended June 30, 2025, net loss was $183.0 million, net non-cash adjustments were $151.8 million, and the change in working capital balances was an increase of $3.4 million.

Investing Activities .

Net cash used in investing activities was $195.4 million for the three months ended March 31, 2026, which primarily consisted of $216.1 million in purchases of short-term investments, and $6.3 million in purchases of property and equipment, partially offset by $27.0 million in proceeds from maturities and redemptions of short-term investment.

Net cash provided by investing activities was $9.2 million for the three months ended March 31, 2025, which primarily consisted of $65.1 million in proceeds from maturities and redemptions of short-term investments, offset by $43.5 million paid for IPR&D, $9.5 million in purchases of short-term investments, and $3.0 million in purchases of property and equipment.

Net cash used in investing activities was $282.8 million for the six months ended June 30, 2026, which primarily consisted of $260.5 million in purchases of short-term investments, $81.4 million in purchases of equity investments and $10.3 million in purchases of property and equipment, partially offset by $69.5 million in proceeds from maturities and redemptions of short-term investments.

Net cash provided by investing activities was $67.3 million for the six months ended June 30, 2025, which primarily consisted of $146.4 million in proceeds from maturities and redemptions of short-term investments, offset by $43.5 million paid for IPR&D, $26.5 million in purchases of short-term investments, and $9.2 million in purchases of property and equipment.

Financing Activities.

Net cash provided by financing activities was $274.2 million for the three months ended March 31, 2026, which consisted of net proceeds of $291.2 million from the issuance of the 2032 Notes, partially offset by $15.3 million used to pay the cost of the capped call transactions related to the 2032 Notes.

Net cash provided by financing activities was $276.3 million for the six months ended June 30, 2026, which consisted of net proceeds of $291.2 million from the issuance of the 2032 Notes, partially offset by $15.3 million used to pay the cost of the 2032 Capped Call Transactions.

In addition, $0.5 million was used in payments for tax withholdings related to the issuance of common stock under our stock plans, net of proceeds received from common stock issuances for the period.

Net cash used in financing activities was $4.7 million for the three months ended March 31, 2025, which consisted of payments for tax withholdings related to the issuance of common stock under our stock plans, partially offset by proceeds received from common stock issuances for the period.

Net cash used in financing activities was $44.4 million for the six months ended June 30, 2025, which consisted of $40.8 million used to pay the principal of the 2025 Notes and $3.6 million used in payments for tax withholdings related to the issuance of common stock under our stock plans, net of proceeds received from common stock issuances for the period.

Our liquidity position and capital requirements are subject to fluctuation based on a number of factors.

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Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies Involving Management Estimates and Assumptions,” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis