filings.toolsItem 16. FORM 10-K SUMMARY
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Item 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DEXCOM, INC. (Registrant) | ||||||||||||||||||||
| Dated: February 12, 2026 | By: | /s/ JEREME M. SYLVAIN | ||||||||||||||||||
| Jereme M. Sylvain, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jacob S. Leach and Jereme M. Sylvain, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||||||||||||
| /s/ JACOB S. LEACH | President, Chief Executive Officer, and Director (Principal Executive Officer) | February 12, 2026 | ||||||||||||
| Jacob S. Leach | ||||||||||||||
| /s/ JEREME M. SYLVAIN | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | February 12, 2026 | ||||||||||||
| Jereme M. Sylvain | ||||||||||||||
| /s/ KEVIN R. SAYER | Executive Chairman of the Board of Directors | February 12, 2026 | ||||||||||||
| Kevin R. Sayer | ||||||||||||||
| /s/ MARK G. FOLETTA | Interim Chairman of the Board of Directors and Lead Independent Director | February 12, 2026 | ||||||||||||
| Mark G. Foletta | ||||||||||||||
| /s/ STEVEN R. ALTMAN | Director | February 12, 2026 | ||||||||||||
| Steven R. Altman | ||||||||||||||
| /s/ DR. EUAN ASHLEY | Director | February 12, 2026 | ||||||||||||
| Dr. Euan Ashley | ||||||||||||||
| /s/ NICHOLAS AUGUSTINOS | Director | February 12, 2026 | ||||||||||||
| Nicholas Augustinos | ||||||||||||||
| /s/ RICHARD A. COLLINS | Director | February 12, 2026 | ||||||||||||
| Richard A. Collins | ||||||||||||||
| /s/ RIMMA DRISCOLL | Director | February 12, 2026 | ||||||||||||
| Rimma Driscoll | ||||||||||||||
| /s/ RENÉE GALÁ | Director | February 12, 2026 | ||||||||||||
| Renée Galá | ||||||||||||||
| /s/ BRIDGETTE P. HELLER | Director | February 12, 2026 | ||||||||||||
| Bridgette P. Heller | ||||||||||||||
| /s/ KYLE MALADY | Director | February 12, 2026 | ||||||||||||
| Kyle Malady | ||||||||||||||
| DexCom, Inc. | ||
| Index to Consolidated Financial Statements |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of DexCom, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of DexCom, Inc. and subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for the year ended December 31, 2025, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also 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 (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 12, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting.
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 audit. 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 audit 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 audit 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 audit 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 audit provides 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 critical audit matters does not alter in any way our opinion on the 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.
Pharmacy Rebates in the United States — Refer to Note 1. Revenue Recognition – Variable Consideration to the financial statements
Critical Audit Matter Description
As disclosed in Note 1 to the financial statements, when revenue is recognized, the Company includes an estimate of variable consideration in the calculation of the transaction price. Variable consideration includes, but is not limited to, rebates, chargebacks, product returns provision, and prompt payment discounts. The Company classifies these items as a liability unless the criteria for right of offset are met; in such cases, the Company may classify these items as a reduction of accounts receivable.
The Company is subject to rebates on pricing programs with managed care organizations, such as pharmacy benefit managers, government, and third-party payors. The estimate of pharmacy rebates in the United States (collectively, “U.S. pharmacy rebates”) involves the consideration of contractual arrangements, estimates of products sold subject to rebate, known events or trends, and channel inventory data. Given the subjectivity and complexity of evaluating management’s assumptions used in the estimation of U.S. pharmacy rebates, auditing U.S. pharmacy rebates requires a high degree of auditor judgment and an increased extent of effort.
F-2
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the U.S. pharmacy rebates included the following, among others:
-
We tested the effectiveness of certain controls related to management’s assessment of assumptions related to estimating the U.S. pharmacy rebates reserve and the associated variable consideration.
-
We evaluated the appropriateness and consistency of the Company’s methods and assumptions used to calculate the U.S. pharmacy rebates reserve and the associated variable consideration by:
◦Testing the underlying data, including historical and current year gross sales to distributor customers, rebate payments, and inventory sold reported from distributors.
◦Evaluating the Company’s ability to estimate the U.S. pharmacy rebates accrual accurately by comparing actual amounts incurred for the U.S. pharmacy rebates accruals to historical estimates.
◦Evaluating known events or trends affecting the U.S. pharmacy rebates.
/s/ Deloitte & Touche LLP
San Diego, CA
February 12, 2026
We have served as the Company’s auditor since 2025.
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of DexCom, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of DexCom, Inc. (the Company) as of December 31, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (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, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
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.
/s/ Ernst & Young LLP
We served as the Company’s auditor from 2000 to 2025.
San Diego, California
February 14, 2025
F-4
| DexCom, Inc. | ||||||||||||||
| Consolidated Balance Sheets |
| December 31, | |||||||||||
| (In millions, except par value data) | 2025 | 2024 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 917.7 | $ | 606.1 | |||||||
| Short-term marketable securities | 1,081.0 | 1,973.3 | |||||||||
| Accounts receivable, net | 1,216.1 | 1,005.7 | |||||||||
| Inventory | 629.1 | 542.6 | |||||||||
| Prepaid and other current assets | 189.4 | 173.7 | |||||||||
| Total current assets | 4,033.3 | 4,301.4 | |||||||||
| Property and equipment, net | 1,559.9 | 1,339.9 | |||||||||
| Operating lease right-of-use assets | 77.4 | 62.8 | |||||||||
| Goodwill | 24.2 | 22.8 | |||||||||
| Intangibles, net | 70.8 | 103.4 | |||||||||
| Deferred tax assets | 295.6 | 481.2 | |||||||||
| Other assets | 278.7 | 173.0 | |||||||||
| Total assets | $ | 6,339.9 | $ | 6,484.5 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 1,944.0 | $ | 1,585.1 | |||||||
| Accrued payroll and related expenses | 169.2 | 112.0 | |||||||||
| Current portion of long-term senior convertible notes | — | 1,204.4 | |||||||||
| Short-term operating lease liabilities | 21.6 | 22.5 | |||||||||
| Other current liabilities | 7.7 | 8.0 | |||||||||
| Total current liabilities | 2,142.5 | 2,932.0 | |||||||||
| Long-term senior convertible notes | 1,240.9 | 1,237.0 | |||||||||
| Long-term operating lease liabilities | 73.4 | 65.0 | |||||||||
| Other long-term liabilities | 137.1 | 147.9 | |||||||||
| Total liabilities | 3,593.9 | 4,381.9 | |||||||||
| Commitments and contingencies (Note 6) | |||||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.001 par value, 5.0 million shares authorized; no shares issued and outstanding at December 31, 2025 and December 31, 2024 | — | — | |||||||||
| Common stock, $0.001 par value, 800.0 million shares authorized; 410.7 million and 384.8 million shares issued and outstanding, respectively, at December 31, 2025; and 408.9 million and 390.7 million shares issued and outstanding, respectively, at December 31, 2024 | 0.4 | 0.4 | |||||||||
| Additional paid-in capital | 2,281.5 | 2,093.8 | |||||||||
| Accumulated other comprehensive income (loss) | 115.0 | (8.0) | |||||||||
| Retained earnings | 2,433.9 | 1,597.6 | |||||||||
| Treasury stock, at cost; 25.9 million shares at December 31, 2025 and 18.2 million shares at December 31, 2024 | (2,084.8) | (1,581.2) | |||||||||
| Total stockholders’ equity | 2,746.0 | 2,102.6 | |||||||||
| Total liabilities and stockholders’ equity | $ | 6,339.9 | $ | 6,484.5 |
See accompanying notes
F-5
| DexCom, Inc. | ||||||||||||||
| Consolidated Statements of Operations |
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions, except per share data) | 2025 | 2024 | 2023 | ||||||||||||||
| Revenue | $ | 4,662.0 | $ | 4,033.0 | $ | 3,622.3 | |||||||||||
| Cost of sales | 1,860.1 | 1,594.8 | 1,333.4 | ||||||||||||||
| Gross profit | 2,801.9 | 2,438.2 | 2,288.9 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 599.1 | 552.4 | 505.8 | ||||||||||||||
| Selling, general and administrative | 1,291.0 | 1,285.8 | 1,185.4 | ||||||||||||||
| Total operating expenses | 1,890.1 | 1,838.2 | 1,691.2 | ||||||||||||||
| Operating income | 911.8 | 600.0 | 597.7 | ||||||||||||||
| Other income, net | 176.6 | 109.0 | 112.7 | ||||||||||||||
| Income before income taxes | 1,088.4 | 709.0 | 710.4 | ||||||||||||||
| Income tax expense | 252.1 | 132.8 | 168.9 | ||||||||||||||
| Net income | $ | 836.3 | $ | 576.2 | $ | 541.5 | |||||||||||
| Basic net income per share | $ | 2.14 | $ | 1.46 | $ | 1.40 | |||||||||||
| Shares used to compute basic net income per share | 390.2 | 393.6 | 386.0 | ||||||||||||||
| Diluted net income per share | $ | 2.09 | $ | 1.42 | $ | 1.30 | |||||||||||
| Shares used to compute diluted net income per share | 405.5 | 412.7 | 425.5 |
See accompanying notes
F-6
| DexCom, Inc. | ||
| Consolidated Statements of Comprehensive Income |
| Twelve Months Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Net income | $ | 836.3 | $ | 576.2 | $ | 541.5 | ||||||||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
| Translation adjustments and other | 122.2 | 8.6 | (9.2) | |||||||||||||||||
| Unrealized gain on marketable debt securities | 0.8 | 0.1 | 4.1 | |||||||||||||||||
| Total other comprehensive income (loss), net of tax | 123.0 | 8.7 | (5.1) | |||||||||||||||||
| Comprehensive income | $ | 959.3 | $ | 584.9 | $ | 536.4 |
See accompanying notes
F-7
| DexCom, Inc. | ||||||||||||||
| Consolidated Statements of Stockholders’ Equity |
| Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Translation Adjustments and Other | Net Unrealized Gain (Loss) on Marketable Securities | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | 386.3 | $ | 0.4 | $ | 2,258.1 | $ | (7.8) | $ | (3.8) | $ | 479.9 | $ | (595.0) | $ | 2,131.8 | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under equity incentive plans | 1.4 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Employee Stock Purchase Plan | 0.3 | — | 26.6 | — | — | — | — | 26.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with achievement of sales-based milestone, net of issuance costs | 3.7 | — | (323.4) | — | — | — | 323.2 | (0.2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock, including excise tax | (6.3) | — | (0.2) | — | — | — | (689.0) | (689.2) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tax benefit related to Senior Convertible Notes | — | — | (4.4) | — | — | — | — | (4.4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Conversions of 2023 Notes | 12.2 | — | (13.1) | — | — | — | — | (13.1) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Benefit of note hedge upon conversions of 2023 Notes | (12.2) | — | 1,496.5 | — | — | — | (1,490.3) | 6.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of capped call transactions, net of tax | — | — | (76.3) | — | — | — | — | (76.3) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 150.8 | — | — | — | — | 150.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 541.5 | — | 541.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | (9.2) | 4.1 | — | — | (5.1) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | 385.4 | 0.4 | 3,514.6 | (17.0) | 0.3 | 1,021.4 | (2,451.1) | 2,068.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under equity incentive plans | 1.3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Employee Stock Purchase Plan | 0.4 | — | 28.2 | — | — | — | — | 28.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with achievement of sales-based milestone, net of issuance costs | 1.5 | — | (188.1) | — | — | — | 188.1 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock, including excise tax | (10.4) | — | — | — | — | — | (749.5) | (749.5) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise and settlement of warrants | 12.5 | — | (1,431.3) | — | — | — | 1,431.3 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 170.4 | — | — | — | — | 170.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 576.2 | — | 576.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 8.6 | 0.1 | — | — | 8.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | 390.7 | 0.4 | 2,093.8 | (8.4) | 0.4 | 1,597.6 | (1,581.2) | 2,102.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under equity incentive plans | 1.4 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Employee Stock Purchase Plan | 0.4 | — | 28.1 | — | — | — | — | 28.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock, including excise tax | (7.7) | — | — | — | — | — | (503.6) | (503.6) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 159.6 | — | — | — | — | 159.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 836.3 | — | 836.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 122.2 | 0.8 | — | — | 123.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 384.8 | $ | 0.4 | $ | 2,281.5 | $ | 113.8 | $ | 1.2 | $ | 2,433.9 | $ | (2,084.8) | $ | 2,746.0 |
See accompanying notes
F-8
| DexCom, Inc. | ||||||||||||||
| Consolidated Statements of Cash Flows |
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating activities | |||||||||||||||||
| Net income | $ | 836.3 | $ | 576.2 | $ | 541.5 | |||||||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 251.8 | 217.7 | 186.0 | ||||||||||||||
| Share-based compensation | 159.6 | 170.4 | 150.8 | ||||||||||||||
| Non-cash interest expense | 7.3 | 7.5 | 7.8 | ||||||||||||||
| Deferred income taxes | 182.2 | (43.8) | (55.0) | ||||||||||||||
| Net (gains) losses on equity investments | (78.1) | 1.4 | (1.9) | ||||||||||||||
| Other non-cash income and expenses | (21.8) | (48.7) | (83.9) | ||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable, net | (201.9) | (35.0) | (260.1) | ||||||||||||||
| Inventory | (63.7) | 12.4 | (252.6) | ||||||||||||||
| Prepaid and other assets | (14.8) | (5.8) | 19.3 | ||||||||||||||
| Operating lease right-of-use assets and liabilities, net | (7.1) | (6.5) | (4.5) | ||||||||||||||
| Accounts payable and accrued liabilities | 347.0 | 211.7 | 466.5 | ||||||||||||||
| Accrued payroll and related expenses | 55.4 | (60.0) | 37.2 | ||||||||||||||
| Deferred revenue and other liabilities | (11.5) | (8.0) | (2.6) | ||||||||||||||
| Net cash provided by operating activities | 1,440.7 | 989.5 | 748.5 | ||||||||||||||
| Investing activities | |||||||||||||||||
| Purchases of marketable securities | (1,246.6) | (2,576.3) | (3,200.4) | ||||||||||||||
| Proceeds from sale and maturity of marketable securities | 2,164.7 | 2,824.4 | 2,947.4 | ||||||||||||||
| Purchases of property and equipment | (363.5) | (358.8) | (236.6) | ||||||||||||||
| Purchases of non-marketable equity securities | (19.2) | (81.3) | (19.5) | ||||||||||||||
| Other investing activities | 0.6 | (15.5) | 1.9 | ||||||||||||||
| Net cash provided by (used in) investing activities | 536.0 | (207.5) | (507.2) | ||||||||||||||
| Financing activities | |||||||||||||||||
| Net proceeds from issuance of common stock | 28.1 | 28.2 | 26.6 | ||||||||||||||
| Purchases of treasury stock | (500.0) | (750.0) | (688.7) | ||||||||||||||
| Proceeds from issuance of convertible notes, net of issuance costs | — | — | 1,230.6 | ||||||||||||||
| Purchases of capped call transactions | — | — | (101.3) | ||||||||||||||
| Payments for conversions of senior convertible notes | — | — | (787.3) | ||||||||||||||
| Repayments for maturity of senior convertible notes | (1,207.5) | — | — | ||||||||||||||
| Other financing activities | (7.0) | (13.0) | 1.5 | ||||||||||||||
| Net cash used in financing activities | (1,686.4) | (734.8) | (318.6) | ||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 21.5 | (7.4) | 1.5 | ||||||||||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | 311.8 | 39.8 | (75.8) | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 607.3 | 567.5 | 643.3 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 919.1 | $ | 607.3 | $ | 567.5 | |||||||||||
| Reconciliation of cash, cash equivalents and restricted cash, end of period: | |||||||||||||||||
| Cash and cash equivalents | $ | 917.7 | $ | 606.1 | $ | 566.3 | |||||||||||
| Restricted cash | 1.4 | 1.2 | 1.2 | ||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 919.1 | $ | 607.3 | $ | 567.5 |
F-9
| 2025 | 2024 | 2023 | |||||||||||||||
| Supplemental disclosure of non-cash investing and financing transactions: | |||||||||||||||||
| Shares issued for repurchase and conversions of senior convertible notes | $ | — | $ | — | $ | 1,501.9 | |||||||||||
| Shares received under note hedge upon conversion of 2023 Notes | $ | — | $ | — | $ | (1,490.3) | |||||||||||
| Acquisition of property and equipment included in accounts payable and accrued liabilities | $ | 62.7 | $ | 75.4 | $ | 53.2 | |||||||||||
| Supplemental cash flow information: | |||||||||||||||||
| Cash paid during the year for interest | $ | 11.4 | $ | 11.4 | $ | 12.4 | |||||||||||
| Cash paid during the year for income taxes | $ | 94.4 | $ | 198.0 | $ | 212.3 |
See accompanying notes
F-10
| DexCom, Inc. | ||||||||||||||
| Notes to Consolidated Financial Statements | ||||||||||||||
| December 31, 2025 |
| 1. Organization and Significant Accounting Policies |
| Organization and Business |
We are a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring, or CGM, systems for the management of diabetes and metabolic health by patients, caregivers, and clinicians around the world. Unless the context requires otherwise, the terms “we,” “us,” “our,” the “company,” or “Dexcom” refer to DexCom, Inc. and its subsidiaries.
| Basis of Presentation and Principles of Consolidation |
These consolidated financial statements include the accounts of DexCom, Inc. and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
We have reclassified certain prior period amounts to conform to the current period presentation.
We determine the functional currencies of our international subsidiaries by reviewing the environment where each subsidiary primarily generates and expends cash. For international subsidiaries whose functional currencies are the local currencies, we translate the financial statements 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. We include translation-related adjustments in comprehensive income and in accumulated other comprehensive income (loss) in the equity section of our consolidated balance sheets. We record gains and losses resulting from transactions with customers and vendors that are denominated in currencies other than the functional currency and from certain intercompany transactions in other income, net in our consolidated statements of operations.
| Use of Estimates |
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make certain estimates and assumptions that affect the amounts reported in our consolidated financial statements and the disclosures made in the accompanying notes. Areas requiring significant estimates include pharmacy rebates, inventory reserves, loss contingencies, and the amount of our worldwide tax provision. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates.
| Fair Value Measurements |
The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:
Level 1—Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.
Level 2—Uses inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.
Level 3—Uses unobservable inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assets and liabilities include those whose fair values are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques and significant judgment or estimation.
F-11
We estimate the fair value of most of our cash equivalents using Level 1 inputs. We estimate the fair value of our marketable equity securities using Level 1 inputs and we estimate the fair value of our marketable debt securities using Level 2 inputs. We carry our marketable securities at fair value. We carry our other financial instruments, such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, at cost, which approximates the related fair values due to the short-term maturities of these instruments. See Note 2 “Fair Value Measurements” for more information.
| Cash and Cash Equivalents |
We consider highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents.
| Marketable Securities |
We have classified our marketable securities with remaining maturity at purchase of more than three months and remaining maturities of one year or less as short-term marketable securities. We have also classified marketable securities with remaining maturities of greater than one year as short-term marketable securities based upon our ability and intent to use any and all of those marketable securities to satisfy the liquidity needs of our current operations.
We calculate realized gains or losses on our marketable securities using the specific identification method. We carry our marketable debt securities at fair value with unrealized gains and losses reported as a separate component of stockholders’ equity in our consolidated balance sheets and included in comprehensive income. Interest income and realized gains and losses on marketable debt securities are included in other income, net in our consolidated statements of operations. We carry our marketable equity securities at fair value with realized and unrealized gains and losses reported in other income, net in our consolidated statements of operations.
We invest in various types of debt securities, including debt securities in government-sponsored entities, corporate debt securities, U.S. Treasury securities, supranational securities, and commercial paper. See Note 2 “Fair Value Measurements” and Note 3 “Balance Sheet Details and Other Financial Information—Short-Term Marketable Securities” for more information on our marketable securities.
| Accounts Receivable and Allowance for Doubtful Accounts |
Accounts receivable are generally recorded at the invoiced amount, net of prompt pay discounts, for distributors and at net realizable value for direct customers, which is determined using estimates of claim denials and historical reimbursement experience without regard to aging category. Accounts receivable are not interest bearing. We evaluate the creditworthiness of customers based on historical trends, the financial condition of our customers, and external market factors. We generally do not require collateral from our customers. We maintain an allowance for doubtful accounts for potential credit losses. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a customer account is uncollectible. Generally, receivable balances that are more than one year past due are deemed uncollectible.
| Concentration of Credit Risk and Significant Customers |
Financial instruments which potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, short-term marketable securities, and accounts receivable. We limit our exposure to credit risk by placing our cash and investments with a few major financial institutions. We have also established guidelines regarding diversification of our investments and their maturities that are designed to maintain principal and maximize liquidity. We review these guidelines periodically and modify them to take advantage of trends in yields and interest rates and changes in our operations and financial position. We monitor the creditworthiness of our customers based on historical trends, the financial condition of our customers, and external market factors.
F-12
The following table sets forth the percentages of total revenue and gross accounts receivable for customers that represent 10% or more of the respective amounts:
| Revenue* | Gross Accounts Receivable | ||||||||||||||||||||||||||||
| Twelve Months Ended December 31, | As of December 31, | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | |||||||||||||||||||||||||
| Customer A | 55 | % | 40 | % | 35 | % | 24 | % | 18 | % | |||||||||||||||||||
| Customer B | 35 | % | 35 | % | 30 | % | 20 | % | 21 | % | |||||||||||||||||||
| Customer C | 46 | % | 42 | % | 37 | % | 24 | % | 27 | % |
- Total revenue for each customer is net of fees, cash discounts, and rebates directly allocable to that customer. Rebates paid to other entities are excluded; therefore, the combined value may exceed 100%.
| Inventory |
Inventory is valued at the lower of cost or net realizable value on a part-by-part basis that approximates first in, first out. We capitalize inventory produced in preparation for commercial launches when it becomes probable that the product will receive regulatory approval and that the related costs will be recoverable through the commercialization of the product. A number of factors are considered, including the status of the regulatory application approval process, management’s judgment of probable future commercial use, and net realizable value.
We record adjustments to inventory for potential excess or obsolete inventory, as well as inventory that does not pass quality control testing, in order to state inventory at net realizable value. Factors influencing these adjustments include inventories on hand and on order compared to estimated future usage and sales for existing and new products, as well as judgments regarding quality control testing data and assumptions about the likelihood of scrap and obsolescence. Once written down the adjustments are considered permanent. The reduced carrying amount is recognized when the inventory is sold or disposed of.
Our products require customized products and components that currently are available from a limited number of sources. We purchase certain components and materials from single sources due to quality considerations, costs or constraints resulting from regulatory requirements.
Historically, our inventory reserves have been adequate to cover our actual losses. However, if actual product life cycles, product quality or market conditions differ from our assumptions, additional inventory adjustments that would increase cost of sales could be required.
| Property and Equipment |
Property and equipment is stated at cost less accumulated depreciation and amortization. We capitalize additions and improvements and expense maintenance and repairs as incurred. We also capitalize certain costs incurred for the development of enterprise-level business and finance software that we use internally in our operations. Costs incurred in the application development phase are capitalized while costs related to planning and other preliminary project activities and to post-implementation activities are expensed as incurred.
We calculate depreciation using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are generally three to five years for computer software and hardware, including internal use software, four to fifteen years for machinery and equipment, and five years for furniture and fixtures. Leasehold and land improvements are amortized over the shorter of the estimated useful lives of the assets or the remaining lease term. Buildings are amortized over the shorter of the ownership of the building or forty years. We include the amortization of assets that are recorded under finance leases in depreciation expense. On retirement or disposition, the asset cost and related accumulated depreciation are removed from our consolidated balance sheets and any gain or loss is recognized in our consolidated statements of operations.
We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We estimate the recoverability of the asset by comparing the carrying amount to the future undiscounted cash flows that we expect the asset to generate. We estimate the fair value of the asset based on the present value of future cash flows for those assets. If the carrying value of an asset exceeds its estimated fair value, we would record an impairment loss equal to the difference.
F-13
| Goodwill |
We record goodwill when the fair value of consideration transferred in a business combination exceeds the fair value of the identifiable assets acquired and liabilities assumed. Goodwill and other intangible assets that have indefinite useful lives are not amortized, but are tested annually for impairment during the fourth fiscal quarter and whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than the carrying value.
Goodwill impairment testing is performed at the reporting unit level. We perform an initial assessment of qualitative factors to determine whether the existence of events and circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit has been reduced below its carrying amount. If, after assessing the totality of relevant events and circumstances, we determine that it is not more likely than not that the fair value is less than its carrying value, no further testing is performed; however, if we conclude otherwise, we will perform a quantitative impairment test comparing the estimated fair value to its carrying value. Any excess carrying value is recorded as an impairment loss.
We recorded no significant goodwill impairment charges for the twelve months ended December 31, 2025, 2024 or 2023. The change in goodwill for the twelve months ended December 31, 2025 primarily consisted of translation adjustments on our foreign currency denominated goodwill. The change in goodwill for the twelve months ended December 31, 2024 primarily consisted of the divestiture of our non-diabetes distribution business and translation adjustments on our foreign currency denominated goodwill.
| Intangible Assets and Other Long-Lived Assets |
Intangible assets are included in intangibles and other assets, net in our consolidated balance sheets. We amortize intangible assets with a finite life, such as the customer relationships, acquired technology and intellectual property, trademarks and trade name, and other intangibles, on a straight-line basis over their estimated useful lives, which range from one to fourteen years. We review intangible assets that have finite lives and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We estimate the fair value of the asset based on the present value of future cash flows for those assets. If the carrying value of an asset exceeds its estimated fair value, we would record an impairment loss equal to the difference.
For transactions other than a business combination, we also capitalize as intangible assets the cost of certain milestones payable by us to collaborative partners and incurred at or after the product has obtained regulatory approval for marketing. The intangible assets associated with these milestones are amortized over the remaining estimated useful life of the underlying asset.
We recorded no significant intangible asset impairment charges for the twelve months ended December 31, 2025, 2024 or 2023.
| Income Taxes |
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. The effect of a change in tax rate on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under tax law and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
F-14
We file federal and state income tax returns in the United States and income tax returns in various other foreign jurisdictions with varying statutes of limitations. Due to net operating losses incurred, our income tax returns from 2007 to date are subject to examination by taxing authorities. We recognize interest expense and penalties related to income tax matters, including unrecognized tax benefits, as a component of income tax expense.
We recognize income tax expense for basis differences related to global intangible low-taxed income (“GILTI”) as a period cost if and when incurred. GILTI is a category of income that is earned abroad by U.S.-controlled foreign corporations (CFCs) and is subject to special treatment under the U.S. tax code.
| Warranty Accrual |
Estimated warranty costs associated with a product are recorded at the time revenue is recognized. We estimate future warranty costs by analyzing historical warranty experience for the timing and amount of returned product, and expectations for future warranty activity based on changes and improvements to the product or process that are in place or will be in place in the future. We evaluate these estimates on at least a quarterly basis to determine the continued appropriateness of our assumptions.
| Loss Contingencies |
We are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. We review the status of each significant matter quarterly and assess our potential financial exposure. If the potential loss from a claim or legal proceeding is considered probable and the amount can be reasonably estimated, we record a liability and an expense for the estimated loss and disclose it in our financial statements if it is significant. If we determine that a loss is possible and the range of the loss can be reasonably determined, we do not record a liability or an expense but we disclose the range of the possible loss. We base our judgments on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results.
| Comprehensive Income |
Comprehensive income consists of two elements, net income and other comprehensive income (loss). We report all components of comprehensive income, including net income, in our financial statements in the period in which they are recognized. Total comprehensive income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. We report net income and the components of other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on marketable securities, net of their related tax effect to arrive at total comprehensive income.
| Revenue Recognition |
We generate our revenue from the sale of disposable sensors and our reusable transmitter and receiver, collectively referred to as Reusable Hardware. We also refer to Reusable Hardware and disposable sensors in this section as Components. We generally recognize revenue when control is transferred to our customers in an amount that reflects the net consideration to which we expect to be entitled.
In determining how revenue should be recognized, a five-step process is used, which includes identifying performance obligations in the contract, determining whether the performance obligations are separate, allocating the transaction price to each separate performance obligation, estimating the amount of variable consideration to include in the transaction price and determining the timing of revenue recognition for separate performance obligations.
Contracts and Performance Obligations
We consider customer purchase orders, which in most cases are governed by agreements with distributors or third-party payors, to be contracts with a customer. For each contract, we consider the obligation to transfer Components to the customer, each of which are distinct, to be separate performance obligations.
F-15
Transaction Price
Transaction price for the Components reflects the net consideration to which we expect to be entitled. Transaction price is typically based on the contracted rates and may include an estimate of variable consideration. Variable consideration is included in the transaction price only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring when the uncertainty associated with the variable consideration is subsequently resolved.
Variable Consideration
We include an estimate of variable consideration in the calculation of the transaction price at the time of sale, when control of the Components transfers to the customer. Variable consideration includes, but is not limited to: rebates, chargebacks, product returns provision, and prompt payment discounts. We classify these items as a liability unless the criteria for right of offset are met; in such cases, we classify these items as a reduction of accounts receivable.
Estimates
We review the adequacy of our estimates for transaction price adjustments and variable consideration at each reporting date. If the actual amounts of consideration we receive differ from our estimates, we would adjust our estimates and that would affect reported revenue in the period that such variances become known. If any of these judgments were to change, it could cause a material increase or decrease in the amount of revenue we report in a particular period.
Rebates
We are subject to rebates on pricing programs with managed care organizations, such as pharmacy benefit managers, governmental and third-party commercial payors, primarily in the U.S. We estimate rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data.
Chargebacks
We participate in chargeback programs, primarily with government entities in the U.S., under which pricing on products below negotiated list prices is provided to participating entities and equal to the difference between their acquisition cost and the lower negotiated price. We estimate chargebacks primarily based on historical experience on a product and program basis, current contract prices under the chargeback programs and channel inventory data.
Product Returns
In accordance with the terms of their distribution agreements, most distributors do not have rights of return. The distributors typically have a limited time frame to notify us of any missing, damaged, defective or non-conforming products. We estimate our product returns primarily based on historical experience by applying a historical return rate to the amounts of revenue estimated to be subject to returns. Additionally, we consider other specific factors such as estimated shelf life of inventory in the distribution channel and changes to customer terms.
Prompt Payment Discounts
We provide customers with prompt payment discounts, which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period. We estimate prompt payment discounts based on eligible sales and contractual discount rates.
Revenue Recognition
We record revenue from sales of Components upon transfer of control of the product to the customer. We typically determine transfer of control based on when the product is shipped or delivered and title passes to the customer.
Contract Balances
Contract balances represent amounts presented in our consolidated balance sheets when either we have transferred goods or services to the customer or the customer has paid consideration to us under the contract. These contract balances include accounts receivable and deferred revenue. Payment terms vary by contract type and type of customer and generally range from 30 to 90 days.
Accounts receivable as of December 31, 2025 and December 31, 2024 included unbilled accounts receivable of $16.9 million and $15.2 million, respectively. We expect to invoice and collect all unbilled accounts receivable within twelve months.
F-16
We record deferred revenue when cash payments have been received prior to satisfaction of the related performance obligation. Our performance obligations are generally satisfied within twelve months of the initial contract date. The current and non-current deferred revenue balances as of December 31, 2025 and December 31, 2024 were not material.
Deferred Cost of Sales
Deferred cost of sales are included in prepaid and other current assets in our consolidated balance sheets.
Incentive Compensation Costs
We generally expense incentive compensation associated with our internal sales force when incurred because the amortization period for such costs, if capitalized, would have been one year or less. We record these costs in selling, general and administrative expense in our consolidated statements of operations.
| Research and Development |
We expense costs of research and development as we incur them. Our research and development expenses primarily consists of engineering and research expenses related to our sensing technology, clinical trials, regulatory expenses, quality assurance programs, employee compensation, and business process outsourcers.
Our technology includes certain software that we develop. We expense software development costs as we incur them until technological feasibility has been established, at which time we capitalize development costs until the product is available for general release to customers. To date, our software has been available for general release concurrent with the establishment of technological feasibility and, accordingly, we have not capitalized any development costs.
| Collaboration Agreements |
We may enter into agreements with collaboration partners for the development and commercialization of our products. These arrangements may include payments contingent on the occurrence of certain events such as development, regulatory or sales-based milestones.
When we account for these agreements, we consider the unique nature, terms and facts and circumstances of each transaction. Below are some example activities and how we account for them:
-
Payments to collaboration partners through issuance of common stock as consideration in an asset acquisition are considered share-based payment to non-employees in exchange for goods within the scope of ASC Topic 718, “Compensation - Stock Compensation.” The amount and the timing of the cost recognition of such milestones in our financial statements is driven by the accounting for the specific type of equity instrument under ASC 718 that aligns with the terms of the agreement, including any performance conditions.
-
The value associated with in-process research and development (“IPR&D”) in an asset acquisition incurred prior to regulatory approval is expensed as it does not have an alternative future use and is recorded as research and development expense.
-
The value associated with IPR&D in an asset acquisition incurred at or after regulatory approval is usually capitalized as an intangible asset and amortized over the periods in which the related products are expected to contribute to future cash flows.
| Advertising Costs |
We expense costs to produce advertising as we incur them whereas costs to communicate advertising are expensed when the advertising is first run. Advertising costs are included in selling, general and administrative expenses. Advertising expense was $223.8 million, $194.2 million and $180.8 million for the twelve months ended December 31, 2025, 2024 and 2023, respectively.
F-17
| Leases |
We determine if an arrangement is a lease at inception. Lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease right-of-use assets and liabilities with terms of more than 12 months are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the present value is our collateralized incremental borrowing rate unless the interest rate implicit in the lease is readily determinable.
For operating leases, lease expense is recognized on a straight-line basis within operating expenses over the lease term. For finance leases, lease expense is recognized as interest and depreciation; interest using the effective interest method and depreciation on a straight-line basis over the shorter of the estimated useful lives of the assets or, in the instance where title does not transfer at the end of the lease term, the lease term. Short-term leases with lease terms of 12 months or less are not recorded on the balance sheet and are recognized on a straight line basis over the lease term.
Operating lease right-of-use assets and lease liabilities are presented separately in our consolidated balance sheets. Finance lease right-of-use assets are included in property and equipment and finance lease liabilities are included in accounts payable and accrued liabilities and in other long-term liabilities in our consolidated balance sheets.
Our lease agreements may contain lease components and non-lease components. For certain asset classes, we have elected to account for both of those components as a single lease component. We use a portfolio approach to account for the right-of-use assets and liabilities associated with certain machinery and equipment leases. Variable lease payments may include payments associated with non-lease components, payments that do not depend on a rate or index, or other costs. Variable lease payments are recognized in the period in which the obligation for those payments are incurred.
| Share-Based Compensation |
Share-based compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized straight-line over the requisite service period of the individual grants, which typically equals the vesting period.
We value time-based restricted stock units, or RSUs, at the date of grant using the intrinsic value method. Certain RSUs granted to senior management vest based on the achievement of pre-established performance or market goals. We estimate the fair value of these performance/market-based RSUs, or PSUs, at the date of grant using the intrinsic value method and the probability that the specified performance criteria will be met. We update our assessment of the probability that the specified performance criteria will be achieved each quarter and adjust our estimate of the fair value of the PSUs if necessary. The Monte Carlo methodology that we use to estimate the fair value of PSUs at the date of grant incorporates into the valuation the possibility that the market condition may not be satisfied. Provided that the requisite service is rendered, the total fair value of the PSUs at the date of grant must be recognized as compensation expense even if the market condition is not achieved. However, the number of shares that ultimately vest can vary significantly with the performance of the specified market criteria.
If any of the assumptions used change significantly, share-based compensation expense may differ materially from what we have recorded in the current period.
We account for forfeitures as they occur by reversing any share-based compensation expense related to awards that will not vest.
| Net Income Per Share |
Basic net income per share attributable to common stockholders is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents.
Potentially dilutive common shares consist of shares issuable from RSUs, PSUs, warrants, our senior convertible notes, and collaborative sales-based milestones. Potentially dilutive common shares issuable upon vesting of RSUs, PSUs, and exercise of warrants are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of our senior convertible notes are determined using the if-converted method.
F-18
The following table sets forth the computation of basic and diluted net income per share:
| Twelve Months Ended December 31, | ||||||||||||||||||||
| (In millions, except per share data) | 2025 | 2024 | 2023 | |||||||||||||||||
| Net income | $ | 836.3 | $ | 576.2 | $ | 541.5 | ||||||||||||||
| Add back interest expense, net of tax attributable to assumed conversion of senior convertible notes | 11.0 | 11.5 | 12.6 | |||||||||||||||||
| Net income - diluted | $ | 847.3 | $ | 587.7 | $ | 554.1 | ||||||||||||||
| Net income per common share | ||||||||||||||||||||
| Basic | $ | 2.14 | $ | 1.46 | $ | 1.40 | ||||||||||||||
| Diluted | $ | 2.09 | $ | 1.42 | $ | 1.30 | ||||||||||||||
| Basic weighted average shares outstanding | 390.2 | 393.6 | 386.0 | |||||||||||||||||
| Dilutive potential securities: | ||||||||||||||||||||
| Collaborative sales-based milestones | — | 0.2 | 0.7 | |||||||||||||||||
| RSUs and PSUs | 0.6 | 0.7 | 1.1 | |||||||||||||||||
| Senior convertible notes | 14.7 | 15.7 | 26.2 | |||||||||||||||||
| Warrants | — | 2.5 | 11.5 | |||||||||||||||||
| Diluted weighted average shares outstanding | 405.5 | 412.7 | 425.5 |
Outstanding anti-dilutive securities not included in the calculations of diluted net income per share attributable to common stockholders were as follows:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| RSUs and PSUs | 1.1 | 1.3 | — | ||||||||||||||
| Recent Accounting Guidance |
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-09, Improvements to Income Tax Disclosures. The ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. The ASU is effective for annual periods beginning after December 15, 2024. We adopted this standard on a prospective basis for the annual period ending December 31, 2025.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The ASU requires disaggregated disclosure of certain costs and expenses in the notes to the financial statements. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The ASU may be applied on either a prospective or a retrospective basis. We are currently evaluating the impact of this standard on our disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt-Debt with Conversion and Other Options. The ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The ASU is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted. The ASU may be applied on either a prospective or a retrospective basis. We will adopt this standard in the first quarter of 2026 on a prospective basis and we do not expect this standard to have a material impact on our consolidated financial statements.
F-19
In December 2025, the FASB issued ASU 2025-11, Interim Reporting. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The ASU may be applied on either a prospective or a retrospective basis. We are currently evaluating the impact of this standard on our disclosures.
F-20
| 2. Fair Value Measurements |
Assets and Liabilities Measured at Fair Value on a Recurring Basis
We estimate the fair values of our Level 1 financial instruments, which are in active markets, using unadjusted quoted market prices for identical instruments.
We obtain the fair values of our Level 2 financial instruments, which are not in active markets, from a primary professional pricing source that uses quoted market prices for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Fair values obtained from this professional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers or other market related data, are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset.
We estimate the fair values of our Level 3 financial instruments based on unobservable inputs and other estimation techniques due to the absence of quoted market prices and inherent lack of liquidity.
The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2025, classified in accordance with the fair value hierarchy:
| Fair Value Measurements Using | |||||||||||||||||||||||
| (In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Cash equivalents | $ | 392.8 | $ | — | $ | — | $ | 392.8 | |||||||||||||||
| Debt securities, available-for-sale: | |||||||||||||||||||||||
| U.S. government agencies (1) | — | 357.3 | — | 357.3 | |||||||||||||||||||
| Commercial paper | — | 123.4 | — | 123.4 | |||||||||||||||||||
| Corporate debt | — | 600.3 | — | 600.3 | |||||||||||||||||||
| Total debt securities, available-for-sale | — | 1,081.0 | — | 1,081.0 | |||||||||||||||||||
| Other long-term assets: | |||||||||||||||||||||||
| Convertible notes receivable | — | — | 10.5 | 10.5 | |||||||||||||||||||
| Other assets (2) | 20.0 | — | — | 20.0 | |||||||||||||||||||
| Total assets measured at fair value on a recurring basis | $ | 412.8 | $ | 1,081.0 | $ | 10.5 | $ | 1,504.3 |
(1)Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.
(2)Includes assets which are primarily held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.
F-21
The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2024, classified in accordance with the fair value hierarchy:
| Fair Value Measurements Using | |||||||||||||||||||||||
| (In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Cash equivalents | $ | 134.2 | $ | — | $ | — | $ | 134.2 | |||||||||||||||
| Debt securities, available-for-sale: | |||||||||||||||||||||||
| U.S. government agencies (1) | — | 1,150.1 | — | 1,150.1 | |||||||||||||||||||
| Commercial paper | — | 312.1 | — | 312.1 | |||||||||||||||||||
| Corporate debt | — | 511.1 | — | 511.1 | |||||||||||||||||||
| Total debt securities, available-for-sale | — | 1,973.3 | — | 1,973.3 | |||||||||||||||||||
| Other long-term assets: | |||||||||||||||||||||||
| Convertible notes receivable | — | — | 10.5 | 10.5 | |||||||||||||||||||
| Other assets (2) | 20.6 | — | — | 20.6 | |||||||||||||||||||
| Total assets measured at fair value on a recurring basis | $ | 154.8 | $ | 1,973.3 | $ | 10.5 | $ | 2,138.6 |
(1)Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.
(2)Includes assets which are held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.
There were no transfers into or out of Level 3 securities during the twelve months ended December 31, 2025 and 2024.
Foreign Currency and Derivative Financial Instruments
As we conduct business globally in many currencies, we are exposed to foreign exchange rate changes. To limit this exposure, we enter into foreign currency forward contracts to hedge monetary assets and liabilities, including intercompany loans, denominated in non-functional currencies. Our foreign currency forward contracts are not designated as hedging instruments. Therefore, changes in the fair values of these contracts are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities. The duration of these contracts are generally one to six months. The derivative gains and losses are included in other income, net in our consolidated statements of operations.
As of December 31, 2025 and December 31, 2024, the notional amounts of outstanding foreign currency forward contracts were $229.3 million and $66.0 million, respectively. The resulting impact on our consolidated financial statements from currency hedging activities was not significant for the twelve months ended December 31, 2025, 2024 and 2023.
We monitor the costs and the impact of foreign currency risks upon our financial results as part of our risk management program. We do not use derivative financial instruments for speculation or trading purposes or for activities other than risk management. We do not require and are not required to pledge collateral for these financial instruments and we do not carry any master netting arrangements to mitigate the credit risk.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
In accordance with authoritative guidance, we measure certain non-financial assets and liabilities at fair value on a non-recurring basis. These measurements are usually performed using the discounted cash flow method or cost method and Level 3 inputs. These include items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets, including goodwill, intangible assets, and property and equipment, are measured at fair value when there are indicators of impairment and are recorded at fair value only when an impairment is recognized.
F-22
Our non-marketable equity investments without readily determinable fair values are accounted for under the measurement alternative. As such, we measure these investments at cost less impairment, adjusted for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer. It is impracticable for us to estimate the fair value of these investments on a recurring basis due to the fact that these entities are privately held and limited information is available. We include the carrying values of these investments in other assets in our consolidated balance sheets. Adjustments to the carrying values of these investments as a result of observable price changes and impairments are recorded in other income, net in our consolidated statements of operations.
The carrying values of our non-marketable equity investments were $218.0 million as of December 31, 2025 and $119.3 million as of December 31, 2024. During the twelve months ended December 31, 2025, we recorded upward adjustments of $82.5 million for observable price changes, and did not record any upward adjustments during the twelve months ended December 31, 2024 and 2023.
For our non-marketable equity investments held as of December 31, 2025, the cumulative upward adjustments for observable price changes were $82.5 million and cumulative downward adjustments and impairments were not significant.
During the twelve months ended December 31, 2025, net unrealized gains on non-marketable equity investments were $80.0 million. During the twelve months ended December 31, 2024 and 2023, unrealized gains (losses) on non-marketable equity investments were not significant.
There were no significant impairment losses on assets and liabilities measured at fair value on a non-recurring basis during the twelve months ended December 31, 2025, 2024, and 2023.
F-23
| 3. Balance Sheet Details and Other Financial Information |
| Short-Term Marketable Securities |
Short-term marketable securities, consisting of available-for-sale debt securities, were as follows:
| December 31, 2025 | |||||||||||||||||||||||
| (In millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Market Value | |||||||||||||||||||
| Debt securities, available-for-sale: | |||||||||||||||||||||||
| U.S. government agencies (1) | $ | 356.6 | $ | 0.7 | $ | — | $ | 357.3 | |||||||||||||||
| Commercial paper | 123.4 | — | — | 123.4 | |||||||||||||||||||
| Corporate debt | 599.4 | 0.9 | — | 600.3 | |||||||||||||||||||
| Total debt securities, available-for-sale | $ | 1,079.4 | $ | 1.6 | $ | — | $ | 1,081.0 |
(1) Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.
| December 31, 2024 | |||||||||||||||||||||||
| (In millions) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Market Value | |||||||||||||||||||
| Debt securities, available-for-sale: | |||||||||||||||||||||||
| U.S. government agencies (1) | $ | 1,149.4 | $ | 1.3 | $ | (0.6) | $ | 1,150.1 | |||||||||||||||
| Commercial paper | 312.2 | — | (0.1) | 312.1 | |||||||||||||||||||
| Corporate debt | 511.1 | 0.4 | (0.4) | 511.1 | |||||||||||||||||||
| Total debt securities, available-for-sale | $ | 1,972.7 | $ | 1.7 | $ | (1.1) | $ | 1,973.3 |
(1) Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.
As of December 31, 2025, the estimated market value of our short-term debt securities with contractual maturities up to 12 months was $1.08 billion. As of December 31, 2024, the estimated market values of our short-term debt securities with contractual maturities up to 12 months and up to 18 months were $1.73 billion and $247.7 million, respectively. Gross realized gains and losses on sales of our short-term debt securities for the twelve months ended December 31, 2025, 2024 and 2023 were not significant.
We periodically review our portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, we have assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale debt securities at December 31, 2025 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. Accordingly, we have not recorded an allowance for credit losses. We do not intend to sell these investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.
| Accounts Receivable |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Accounts receivable | $ | 1,228.6 | $ | 1,014.9 | |||||||
| Less: allowance for doubtful accounts | (12.5) | (9.2) | |||||||||
| Total accounts receivable, net | $ | 1,216.1 | $ | 1,005.7 |
Reserve for prompt payment cash discounts recorded against accounts receivable, excluding allowance for doubtful accounts, was $20.7 million, $17.3 million, $13.7 million as of December 31, 2025, 2024, and 2023, respectively.
F-24
| Inventory |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Raw materials | $ | 257.6 | $ | 327.1 | |||||||
| Work-in-process | 105.0 | 28.1 | |||||||||
| Finished goods | 266.5 | 187.4 | |||||||||
| Total inventory | $ | 629.1 | $ | 542.6 |
During the twelve months ended December 31, 2025, 2024 and 2023, we recorded inventory reserve charges of $92.8 million, $53.5 million and $16.6 million respectively. These charges are recorded in cost of sales and reflect reserves established through our ongoing evaluation of quality control data, forecasted demand, analysis of risk exposure and the continued improvement and innovation of our products.
| Prepaid and Other Current Assets |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Prepaid expenses | $ | 66.4 | $ | 87.5 | |||||||
| Deferred compensation plan assets | 20.0 | 18.6 | |||||||||
| Income tax receivables | 60.8 | 27.9 | |||||||||
| Indirect tax receivables | 13.0 | 10.6 | |||||||||
| Other current assets | 29.2 | 29.1 | |||||||||
| Total prepaid and other current assets | $ | 189.4 | $ | 173.7 |
| Property and Equipment |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Building | $ | 319.7 | $ | 291.0 | |||||||
| Computer software and hardware | 87.8 | 76.6 | |||||||||
| Furniture and fixtures | 41.0 | 40.2 | |||||||||
| Land and land improvements | 58.3 | 53.1 | |||||||||
| Leasehold improvements | 302.1 | 293.8 | |||||||||
| Machinery and equipment | 1,016.3 | 908.9 | |||||||||
| Construction in progress | 593.5 | 354.6 | |||||||||
| Total cost | 2,418.7 | 2,018.2 | |||||||||
| Less: accumulated depreciation and amortization | (858.8) | (678.3) | |||||||||
| Total property and equipment, net | $ | 1,559.9 | $ | 1,339.9 |
Depreciation expense related to property and equipment for the twelve months ended December 31, 2025, 2024 and 2023 was $219.0 million, $181.2 million and $147.4 million, respectively.
Loss on disposal of property and equipment during the twelve months ended December 31, 2025, 2024 and 2023 recorded in operating expenses was $7.1 million, $5.1 million and $0.7 million, respectively.
F-25
| Intangibles, Net |
The following table summarizes the components of gross intangible assets, accumulated amortization, and net intangible asset balances:
| December 31, 2025 | ||||||||||||||||||||||||||
| (Dollars in millions) | Remaining Weighted Average Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||
| Verily intangible asset (1) | 2.3 | $ | 152.4 | $ | (88.1) | $ | 64.3 | |||||||||||||||||||
| Customer relationships | 1.0 | 18.5 | (16.4) | 2.1 | ||||||||||||||||||||||
| Acquired technology and intellectual property (2) | 6.5 | 19.6 | (15.6) | 4.0 | ||||||||||||||||||||||
| Trademarks and trade name | 0.6 | 4.0 | (3.6) | 0.4 | ||||||||||||||||||||||
| Intangibles, other | 0.0 | 0.2 | (0.2) | — | ||||||||||||||||||||||
| Total | 2.4 | $ | 194.7 | $ | (123.9) | $ | 70.8 |
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Remaining Weighted Average Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||||
| Verily intangible asset (1) | 3.3 | $ | 152.4 | $ | (59.5) | $ | 92.9 | ||||||||||||||||||||||||||||||||||
| Customer relationships | 1.8 | 17.5 | (13.0) | 4.5 | |||||||||||||||||||||||||||||||||||||
| Acquired technology and intellectual property (2) | 7.2 | 19.6 | (14.7) | 4.9 | |||||||||||||||||||||||||||||||||||||
| Trademarks and trade name | 1.6 | 3.8 | (2.7) | 1.1 | |||||||||||||||||||||||||||||||||||||
| Intangibles, other | 0.0 | 0.2 | (0.2) | — | |||||||||||||||||||||||||||||||||||||
| Total | 3.4 | $ | 193.5 | $ | (90.1) | $ | 103.4 | ||||||||||||||||||||||||||||||||||
| (1) Our prior collaboration with Verily provides us with exclusive and non‑exclusive rights to Verily intellectual property for glucose‑monitoring products. Upon FDA approval in Q4 2022, we concluded the sales‑based milestones were probable and capitalized $152.4 million as an intangible asset, amortized over 64 months. | |||||||||||||||||||||||||||||||||||||||||
| (2) Excludes Verily intangible asset. |
The following table presents the total amortization expense of finite-lived intangible assets:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Amortization expense included in cost of sales | $ | 28.6 | $ | 29.8 | $ | 30.5 | |||||||||||
| Amortization expense included in operating expenses | 4.2 | 6.7 | 8.1 | ||||||||||||||
| Total amortization of intangible assets | $ | 32.8 | $ | 36.5 | $ | 38.6 |
The following table presents estimated future amortization of finite-lived intangible assets as of December 31, 2025:
| (In millions) | ||||||||
| 2026 | $ | 31.6 | ||||||
| 2027 | 29.6 | |||||||
| 2028 | 7.6 | |||||||
| 2029 | 0.5 | |||||||
| 2030 | 0.5 | |||||||
| Thereafter | 1.0 | |||||||
| Total | $ | 70.8 |
F-26
| Other Assets |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Non-marketable equity securities | $ | 218.0 | $ | 119.3 | |||||||
| Capitalized software | 19.1 | 17.6 | |||||||||
| Long-term deposits | 17.2 | 13.8 | |||||||||
| Other assets | 24.4 | 22.3 | |||||||||
| Total other assets | $ | 278.7 | $ | 173.0 |
| Accounts Payable and Accrued Liabilities |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Accounts payable trade | $ | 344.3 | $ | 345.3 | |||||||
| Accrued rebates | 1,487.6 | 1,135.9 | |||||||||
| Accrued tax, audit, and legal fees | 27.0 | 38.4 | |||||||||
| Accrued warranty | 10.4 | 5.9 | |||||||||
| Deferred compensation plan liabilities | 20.0 | 18.6 | |||||||||
| Income tax payable | 8.9 | 3.9 | |||||||||
| Other accrued liabilities | 45.8 | 37.1 | |||||||||
| Total accounts payable and accrued liabilities | $ | 1,944.0 | $ | 1,585.1 |
| Accrued Payroll and Related Expenses |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Accrued wages, bonus and taxes | $ | 134.6 | $ | 74.5 | |||||||
| Other accrued employee benefits | 34.6 | 37.5 | |||||||||
| Total accrued payroll and related expenses | $ | 169.2 | $ | 112.0 |
| Accrued Warranty |
Warranty costs are reflected in our statements of operations as cost of sales. Reconciliations of our accrued warranty costs were as follows:
| Twelve Months Ended December 31, | |||||||||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||
| Beginning balance | $ | 5.9 | $ | 12.6 | $ | 12.8 | |||||||||||||||||||||||
| Charges to costs and expenses | 73.0 | 47.2 | 51.5 | ||||||||||||||||||||||||||
| Costs incurred | (68.5) | (53.9) | (51.7) | ||||||||||||||||||||||||||
| Ending balance | $ | 10.4 | $ | 5.9 | $ | 12.6 |
| Other Long-Term Liabilities |
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Asset retirement obligation | $ | 20.6 | $ | 17.0 | |||||||
| Finance lease obligations | 53.8 | 58.5 | |||||||||
| Income tax payable | 46.6 | 44.8 | |||||||||
| Other liabilities | 16.1 | 27.6 | |||||||||
| Total other long-term liabilities | $ | 137.1 | $ | 147.9 |
F-27
| Other Income, Net |
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Interest and dividend income | $ | 112.7 | $ | 134.2 | $ | 135.0 | |||||||||||
| Interest expense | (18.3) | (19.0) | (20.3) | ||||||||||||||
| Net gains (losses) on equity investments | 78.1 | (1.4) | 1.9 | ||||||||||||||
| Other income (expense), net | 4.1 | (4.8) | (3.9) | ||||||||||||||
| Total other income, net | $ | 176.6 | $ | 109.0 | $ | 112.7 |
F-28
| 4. Debt |
| Senior Convertible Notes |
As of December 31, 2025, the if-converted value of our unsecured senior convertible notes due 2028, or 2028 Notes, did not exceed their outstanding principal amount. As of December 31, 2024, the if-converted value of our 2028 Notes and our unsecured senior convertible notes due 2025, or 2025 Notes, did not exceed their outstanding principal amount.
The carrying amounts of our senior convertible notes were as follows:
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Principal amount: | |||||||||||
| 2025 Notes | $ | — | $ | 1,207.5 | |||||||
| 2028 Notes | 1,250.0 | 1,250.0 | |||||||||
| Total principal amount | 1,250.0 | 2,457.5 | |||||||||
| Unamortized debt issuance costs | (9.1) | (16.1) | |||||||||
| Carrying amount of senior convertible notes | $ | 1,240.9 | $ | 2,441.4 |
The following table summarizes the components of interest expense and the effective interest rates for our senior convertible notes:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cash interest expense: | |||||||||||||||||
| Contractual coupon interest (1) | $ | 7.3 | $ | 7.7 | $ | 9.1 | |||||||||||
| Non-cash interest expense: | |||||||||||||||||
| Amortization of debt issuance costs | 7.0 | 7.2 | 7.3 | ||||||||||||||
| Total interest expense recognized on senior notes | $ | 14.3 | $ | 14.9 | $ | 16.4 | |||||||||||
| Effective interest rate: | |||||||||||||||||
| 2025 Notes | 0.5 | % | 0.5 | % | 0.5 | % | |||||||||||
| 2028 Notes | 0.7 | % | 0.7 | % | 0.7 | % | |||||||||||
| (1) Interest on the 2025 Notes began accruing upon issuance and was payable semi-annually on May 15 and November 15 of each year until the 2025 Notes matured in November 2025. Interest on the 2028 Notes, began accruing upon issuance and is payable semi-annually on May 15 and November 15 of each year. | |||||||||||||||||
Fair Value of Senior Convertible Notes
The fair value, based on trading prices (Level 1 inputs), of our senior convertible notes were as follows:
| Fair Value Measurements Using Level 1 | |||||||||||
| (In millions) | December 31, 2025 | December 31, 2024 | |||||||||
| 2025 Notes | $ | — | $ | 1,163.7 | |||||||
| 2028 Notes | 1,152.1 | 1,122.3 | |||||||||
| Total fair value of outstanding senior convertible notes | $ | 1,152.1 | $ | 2,286.0 |
F-29
Convertible Debt Summary
The following table summarizes key details of the 2025 Notes and 2028 Notes:
| Senior Convertible Notes | Offering Completion Date | Maturity Date | Stated Interest Rate | Aggregate Principal Amount Issued | Net Proceeds**(1)** | Initial Conversion Rate**(2)** (per $1,000 principal amount) | Conversion Price (per share) | Settlement Methods**(3)** | ||||||||||||||||||
| 2025 Notes(4) | May 2020 | November 15, 2025 | 0.25% | $1.21 billion | $1.19 billion | 6.6620 shares | $150.11 | Cash and/or shares | ||||||||||||||||||
| 2028 Notes | May 2023 | May 15, 2028 | 0.375% | $1.25 billion | $1.23 billion | 6.1571 shares | $162.41 | Cash and/or shares | ||||||||||||||||||
| (1) Net proceeds are calculated by deducting the initial purchasers’ discounts and estimated costs directly related to the offering from the aggregate principal amount of the applicable series of notes. | ||||||||||||||||||||||||||
| (2) Subject to adjustments as defined in the applicable indentures. | ||||||||||||||||||||||||||
| (3) Pursuant to the Indenture of the 2025 Notes, on August 15, 2025, we elected to satisfy conversion obligations on or after August 15, 2025 through the combination of cash and/or shares of our common stock. The 2028 Notes may be settled upon conversion in cash, stock, or a combination thereof, solely at our discretion. | ||||||||||||||||||||||||||
| (4) The 2025 Notes matured in November 2025 and we repaid the principal of $1.21 billion entirely in cash on the maturity date. |
We use the if-converted method for assumed conversion of our senior convertible notes to compute the weighted average shares of common stock outstanding for diluted earnings per share.
No principal payments are due on any of our senior convertible notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indentures relating to our senior convertible notes include customary terms and covenants, including certain events of default after which the senior convertible notes may be due and payable immediately.
2028 Capped Call Transactions
In May 2023, in connection with the offering of the 2028 Notes, we entered into privately negotiated capped call transactions, or the 2028 Capped Calls, with certain financial institutions. The 2028 Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2028 Notes, the number of shares of our common stock initially underlying the 2028 Notes. The 2028 Capped Calls are expected generally to reduce potential dilution to our common stock upon conversion of the 2028 Notes and/or offset any cash payments that we are required to make in excess of the principal amount of converted 2028 Notes, as the case may be, with such reduction and/or offset subject to a cap. The 2028 Capped Calls have an initial cap price of $212.62 per share, subject to adjustments, which represents a premium of 80% over the closing price of our common stock of $118.12 per share on the Nasdaq Global Select Market on May 2, 2023. The cost to purchase the 2028 Capped Calls of $101.3 million was recorded as a reduction to additional paid-in capital in our consolidated balance sheets as the 2028 Capped Calls met the criteria for classification in stockholders’ equity.
F-30
Conversion Rights for Senior Convertible Notes
Holders of our outstanding senior convertible notes have the right to require us to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change (as defined in the applicable indenture relating to the notes). We are also required to increase the conversion rate for holders who convert their notes in connection with certain fundamental changes occurring prior to the maturity date or following the delivery by Dexcom of a notice of redemption.
The following table outlines the conversion options related to our 2028 Notes:
| Summary of Conversions Rights at the Option of the Holders for the 2028 Notes, or the Notes | ||||||||
| Conversion Rights at the Option of the Holders | Holders of the Notes have the ability to convert all or a portion of their notes in multiples of $1,000 principal amount, at their option prior to 5:00 p.m., New York City time, on the business day immediately preceding February 15, 2028 for the 2028 Notes only under the following circumstances: | |||||||
| Circumstance 1**(1)** | During any calendar quarter commencing after the applicable period (and only during such calendar quarter), if the last reported sale price of Dexcom’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price for the Notes on each applicable trading day | |||||||
| Circumstance 2 | During the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of Dexcom’s common stock and the applicable conversion rate of the Notes on each such trading day | |||||||
| Circumstance 3 | If we call any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date (only with respect to the notes called or deemed called for redemption) | |||||||
| Circumstance 4 | Upon the occurrence of specified corporate events | |||||||
| Circumstance 5**(2)** | Holders of the Notes may convert all or a portion of their notes regardless of the foregoing circumstances prior to the close of business on the second scheduled trading day immediately preceding the maturity date | |||||||
| (1) Circumstance 1 is available after the calendar quarter ended September 30, 2023 for the 2028 Notes. | ||||||||
| (2) Circumstance 5 is available on or after February 15, 2028 for the 2028 Notes. | ||||||||
| Summary of Conversion Right at the Option of the Company for the 2028 Notes | ||||||||
| Conversion Right at Our Option**(1)** | Dexcom may redeem for cash all or part of the Notes, at its option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Dexcom provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date | |||||||
| (1) Dexcom does not have the right to redeem the 2028 Notes prior to May 20, 2026. Dexcom has the right to redeem the 2028 Notes on or after May 20, 2026 and prior to February 15, 2028. | ||||||||
Conversion Activity for Senior Convertible Notes
There was no conversion activity for the 2025 Notes or 2028 Notes for the twelve months ended December 31, 2025.
F-31
| Amended Credit Agreement |
Terms of the Amended Credit Agreement
In June 2023, we entered into the First Amendment to the Second Amended and Restated Credit Agreement, as amended, or the Amended Credit Agreement, which we had previously entered into in October 2021. The Amended Credit Agreement is a five-year revolving credit facility, or the Credit Facility, that provides for an available principal amount of $200.0 million which can be increased up to $500.0 million at our option subject to customary conditions and approval of our lenders. The Amended Credit Agreement will mature on October 13, 2026. Borrowings under the Amended Credit Agreement are available for general corporate purposes, including working capital and capital expenditures.
The following table sets forth information related to availability and outstanding borrowings on our Amended Credit Agreement as of December 31, 2025:
| (In millions) | |||||
| Available principal amount | $ | 200.0 | |||
| Letters of credit sub-facility | 25.0 | ||||
| Outstanding borrowings | — | ||||
| Outstanding letters of credit | 7.9 | ||||
| Total available balance | $ | 192.1 |
Revolving loans under the Amended Credit Agreement bear interest at our choice of one of three base rates plus a range of applicable rates that are based on our leverage ratio. The minimum and maximum range of applicable rates per annum with respect to any ABR Loan, Term Benchmark Revolving Loan, or RFR Revolving Loan, each as defined in the Amended Credit Agreement under the captions “ABR Spread”, “Term Benchmark”, and “RFR Spread”, or “Unused Commitment Fee Rate”, respectively, are outlined in the following table:
| Range | ABR Spread | Term Benchmark/RFR Spread | Unused Commitment Fee Rate | ||||||||
| Minimum | 0.375% | 1.375% | 0.175% | ||||||||
| Maximum | 1.000% | 2.000% | 0.250% | ||||||||
Our obligations under the Amended Credit Agreement are guaranteed by our existing and future wholly-owned domestic subsidiaries, and are secured by a first-priority security interest in substantially all of the assets of Dexcom and the guarantors, including all or a portion of the equity interests of our domestic subsidiaries and first-tier foreign subsidiaries but excluding real property and intellectual property (which is subject to a negative pledge). The Amended Credit Agreement contains covenants that limit certain indebtedness, liens, investments, transactions with affiliates, dividends and other restricted payments, subordinated indebtedness and amendments to subordinated indebtedness documents, and sale and leaseback transactions of Dexcom or any of its domestic subsidiaries. The Amended Credit Agreement also requires us to maintain a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with these covenants as of December 31, 2025.
As of December 31, 2025, we have other guarantee facilities related to certain international operations that are partially collateralized, which are included in non-current “Other assets” on our consolidated balance sheets. These facilities are not significant to the consolidated financial statements.
F-32
| 5. Leases and Other Commitments |
| Leases |
We have leases for certain machinery and facilities, including office, manufacturing and warehouse space facilities under various domestic and international operating and finance lease arrangements. We also have land leases in Penang, Malaysia that expire through 2082 and in Athenry, Ireland that expire in 3023 for the build-out of our international manufacturing facilities. Our leases, excluding our land leases in Malaysia and Ireland, have remaining lease terms of up to fifteen years. Some of the leases include one or more options to extend the leases for up to five years per option. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
The following table sets forth the maturities of our operating and finance lease liabilities as of December 31, 2025:
| (In millions) | Operating Leases**(1)** | Finance Leases | |||||||||
| 2026 | $ | 25.9 | $ | 9.7 | |||||||
| 2027 | 21.4 | 7.8 | |||||||||
| 2028 | 16.5 | 5.8 | |||||||||
| 2029 | 9.9 | 5.5 | |||||||||
| 2030 | 9.0 | 5.7 | |||||||||
| Thereafter | 28.9 | 48.9 | |||||||||
| Total future lease cost | 111.6 | 83.4 | |||||||||
| Less: Imputed interest | (16.6) | (22.9) | |||||||||
| Present value of future payments | 95.0 | 60.5 | |||||||||
| Less: Current portion | (21.6) | (6.7) | |||||||||
| Long-term portion | $ | 73.4 | $ | 53.8 | |||||||
| (1) Total future lease cost excludes $9.3 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Certain lease agreements require us to return designated areas of leased space to its original condition upon termination of the lease agreement, for which we record an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. In subsequent periods, the asset retirement obligation is accreted for the change in its present value and the capitalized asset is depreciated, both over the term of the associated lease agreement. Asset retirement obligations of $20.6 million and $17.0 million as of December 31, 2025 and 2024, respectively, are included in other long-term liabilities in our consolidated balance sheets.
The components of lease expense were as follows:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Finance lease cost: | |||||||||||||||||
| Amortization of finance leases | $ | 8.3 | $ | 7.2 | $ | 6.5 | |||||||||||
| Interest on lease liabilities | 3.3 | 3.4 | 3.2 | ||||||||||||||
| Operating lease cost | 21.5 | 22.4 | 22.9 | ||||||||||||||
| Short-term lease cost | 5.1 | 3.8 | 2.4 | ||||||||||||||
| Variable lease cost | 8.4 | 9.0 | 8.3 | ||||||||||||||
| Total lease cost | $ | 46.6 | $ | 45.8 | $ | 43.3 |
F-33
Other information related to our leases is as follows:
| Twelve Months Ended December 31, | |||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows from operating leases | $ | 28.6 | $ | 27.5 | $ | 28.1 | |||||||||||
| Operating cash flows from finance leases | 3.3 | 3.4 | 3.2 | ||||||||||||||
| Financing cash flows from finance leases | 6.9 | 13.0 | 4.7 | ||||||||||||||
| Right-of-use assets obtained in exchange for lease liabilities: | |||||||||||||||||
| Operating leases | 30.4 | 8.8 | 7.5 | ||||||||||||||
| Finance leases | $ | 2.4 | $ | 14.6 | $ | 4.2 | |||||||||||
| Weighted average remaining lease term: | |||||||||||||||||
| Operating leases | 5.9 years | 4.2 years | 5.0 years | ||||||||||||||
| Finance leases | 12.0 years | 12.6 years | 14.1 years | ||||||||||||||
| Weighted average discount rate: | |||||||||||||||||
| Operating leases | 5.4 | % | 6.1 | % | 6.1 | % | |||||||||||
| Finance leases | 5.3 | % | 5.4 | % | 5.3 | % |
Amortization of operating lease right-of-use asset included in cash flows from operating activities in our consolidated statements of cash flows was $16.7 million, $16.7 million, and $16.5 million for the twelve months ended December 31, 2025, 2024 and 2023, respectively.
| Purchase Commitments |
We are party to various purchase arrangements related to our operational, manufacturing, and research and development activities. We had approximately $1.25 billion and $954.9 million of open purchase orders and other contractual obligations in the ordinary course of business, the majority of which are due within one year, as of December 31, 2025 and December 31, 2024, respectively.
F-34
| 6. Contingencies |
| Litigation |
We are subject to various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercial insurance, product liability, intellectual property and employment related matters. In addition, from time to time we may bring claims or initiate lawsuits against various third parties with respect to matters arising out of the ordinary course of our business, including commercial and employment related matters.
Due to uncertainty surrounding the securities class action litigation, the derivative actions, and the G6 and G7 Class Action Litigation we are unable to reasonably estimate the ultimate outcome of any of the litigation matters at this time. We intend to defend against these claims vigorously in all of these actions.
We do not believe we are party to any other currently pending legal proceedings, the outcome of which could have a material adverse effect on our business, financial condition, or results of operations. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition, or results of operations.
F-35
| 7. Income Taxes |
Income (loss) before income taxes subject to taxes in the following jurisdictions is as follows:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 961.4 | $ | 659.8 | $ | 732.4 | |||||||||||
| Outside of the United States | 127.0 | 49.2 | (22.0) | ||||||||||||||
| Total | $ | 1,088.4 | $ | 709.0 | $ | 710.4 |
Significant components of the provision for income taxes are as follows:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 37.1 | $ | 157.4 | $ | 149.1 | |||||||||||
| State | 7.1 | 16.5 | 18.1 | ||||||||||||||
| Foreign | 25.7 | 2.7 | 56.7 | ||||||||||||||
| Total current income taxes | 69.9 | 176.6 | 223.9 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 169.7 | (55.2) | (93.7) | ||||||||||||||
| State | 16.0 | (2.0) | 14.6 | ||||||||||||||
| Foreign | (3.5) | 13.4 | 24.1 | ||||||||||||||
| Total deferred income taxes | 182.2 | (43.8) | (55.0) | ||||||||||||||
| Total | $ | 252.1 | $ | 132.8 | $ | 168.9 |
Income taxes paid are as follows:
| Twelve Months Ended December 31, | |||||
| (In millions) | 2025 | ||||
| Federal | $ | 68.0 | |||
| State | 10.6 | ||||
| Foreign | 15.8 | ||||
| Total | $ | 94.4 |
Significant loss and tax credit carryforwards and years of expiration are as follows:
| December 31, | Year of Expiration | ||||||||||||||||
| (In millions) | 2025 | 2024 | |||||||||||||||
| Net operating loss: | |||||||||||||||||
| Federal | $ | 3.8 | $ | 12.1 | 2028 | ||||||||||||
| California | 162.0 | 162.0 | 2037 | ||||||||||||||
| Other states | 5.1 | 5.8 | 2028 | ||||||||||||||
| Tax credits: | |||||||||||||||||
| Federal | |||||||||||||||||
| Foreign tax credits | 1.2 | 0.1 | 2032 | ||||||||||||||
| California R&D credits | 134.6 | 124.9 | Indefinite | ||||||||||||||
| California AMT Credits | $ | 0.5 | $ | 0.5 | Indefinite |
F-36
Utilization of net operating losses and credit carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. An ownership change limitation occurred in February 2009 resulting in an immaterial amount of U.S. research and development tax credits that will expire unused, and therefore, are not reflected in the credit carryforwards above or in the related deferred tax assets in the table below.
Significant components of our deferred tax assets and liabilities as of December 31, 2025 and 2024 are shown below. Significant judgment is required to evaluate the need for a valuation allowance against deferred tax assets. We review all available positive and negative evidence, including projections of pre-tax book income, earnings history, reliability of forecasting, and reversal of temporary differences. A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon future earnings in applicable tax jurisdictions.
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 12.6 | $ | 14.4 | |||||||
| Capitalized research and development expenses | 103.6 | 265.0 | |||||||||
| Tax credits | 85.6 | 79.2 | |||||||||
| Share-based compensation | 20.6 | 22.5 | |||||||||
| Fixed and intangible assets | 187.3 | 263.6 | |||||||||
| Accrued liabilities and reserves | 86.8 | 87.4 | |||||||||
| Convertible debt | 11.3 | 16.0 | |||||||||
| Total gross deferred tax assets | 507.8 | 748.1 | |||||||||
| Less: valuation allowance | (160.7) | (221.9) | |||||||||
| Total net deferred tax assets | 347.1 | 526.2 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Fixed assets and acquired intangibles assets | (45.8) | (59.3) | |||||||||
| Net unrealized gain on equity investments | (18.4) | — | |||||||||
| Other | — | (0.3) | |||||||||
| Total deferred tax liabilities | (64.2) | (59.6) | |||||||||
| Net deferred tax assets (liabilities) | $ | 282.9 | $ | 466.6 |
We maintain a valuation allowance of $160.7 million against our California research and development tax credits, foreign tax credits, and certain foreign intangible assets. During the year ended December 31, 2025, the valuation allowance decreased by $61.2 million primarily in connection with the intra-entity transfer of certain intellectual property and the generation of California research and development tax credits.
F-37
The reconciliation between our effective tax rate on income from continuing operations and the statutory rate, after the adoption of ASU 2023-09 on a prospective basis, is as follows:
| Twelve Months Ended December 31, | |||||||||||
| (In millions) | 2025 | ||||||||||
| U.S. Federal Statutory Rate | $ | 228.6 | 21.0 | % | |||||||
| Increase (Decrease) Resulting From: | |||||||||||
| State and Local Income Tax, Net of Federal Income Tax Effect | 16.4 | 1.5 | % | ||||||||
| Foreign Tax Effects | |||||||||||
| Ireland | |||||||||||
| Change in Rate | 63.6 | 5.8 | % | ||||||||
| Change in Valuation Allowance | (74.5) | (6.8) | % | ||||||||
| Other | 5.8 | 0.5 | % | ||||||||
| Malaysia | |||||||||||
| Foreign rate differential | (14.8) | (1.4) | % | ||||||||
| Other | 8.9 | 0.8 | % | ||||||||
| Other foreign jurisdictions | 6.7 | 0.6 | % | ||||||||
| Effect of Cross-Border Taxes | 3.0 | 0.3 | % | ||||||||
| Tax Credits | |||||||||||
| Research and development credits | (13.6) | (1.2) | % | ||||||||
| Changes in Valuation Allowance | 0.4 | — | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Stock and officers compensation | 16.1 | 1.5 | % | ||||||||
| Other | 2.5 | 0.2 | % | ||||||||
| Changes in Unrecognized Tax Benefits | 4.4 | 0.4 | % | ||||||||
| Other | (1.4) | (0.1) | % | ||||||||
| Total | $ | 252.1 | 23.2 | % |
State taxes in Colorado and Florida made up the majority (greater than 50%) of the tax effect in the state and local income tax category.
The reconciliation between our effective tax rate on income from continuing operations and the statutory rate for prior years not impacted by the adoption of ASU 2023-09 is as follows:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2024 | 2023 | |||||||||||||||
| U.S. federal statutory tax rate | $ | 148.9 | $ | 149.2 | |||||||||||||
| State income tax, net of federal benefit | 10.2 | 7.8 | |||||||||||||||
| Permanent items | 10.5 | (2.7) | |||||||||||||||
| Research and development credits | (24.6) | (28.3) | |||||||||||||||
| Foreign tax credit | (1.2) | — | |||||||||||||||
| Foreign rate differential | 1.6 | 15.8 | |||||||||||||||
| Stock and officers compensation | 3.8 | 5.6 | |||||||||||||||
| Collaboration agreement milestone share-based payment | (32.2) | (72.1) | |||||||||||||||
| Change in statutory tax rates | 51.5 | 19.4 | |||||||||||||||
| Intellectual property transfer | — | 63.9 | |||||||||||||||
| Other | 6.7 | 0.3 | |||||||||||||||
| Change in valuation allowance | (42.4) | 10.0 | |||||||||||||||
| Income taxes at effective rates | $ | 132.8 | $ | 168.9 |
F-38
The following table summarizes the activity related to our gross unrecognized tax benefits:
| (In millions) | |||||
| Balance at January 1, 2023 | $ | 52.0 | |||
| Increases related to prior year tax positions | 0.8 | ||||
| Increases related to current year tax positions | 6.6 | ||||
| Balance at December 31, 2023 | 59.4 | ||||
| Increases related to prior year tax positions | 0.1 | ||||
| Increases related to current year tax positions | 6.7 | ||||
| Balance at December 31, 2024 | 66.2 | ||||
| Increases related to prior year tax positions | 0.2 | ||||
| Increases related to current year tax positions | 5.7 | ||||
| Decreases related to prior year tax positions | (3.0) | ||||
| Balance at December 31, 2025 | $ | 69.1 |
Of the total unrecognized tax benefits at December 31, 2025, 2024, and 2023, $40.8 million, $40.7 million and $37.0 million, respectively, would affect our annual effective tax rate if recognized. The indirect effect of the unrecognized tax benefits that, if recognized, would affect our annual effective tax rate is not material for all years presented. Also, the amount of unrecognized tax benefits that, if recognized, would result in adjustments to other tax accounts, is not material for all years presented. Interest and penalties are classified as a component of income tax expense and are not material for all years presented.
Due to our global business activities, we file income tax returns and are subject to routine compliance audits in numerous jurisdictions, including those material jurisdictions listed in the following table. The U.S. net operating losses generated since 2007 and utilized in recent years are open for examination. The years remaining subject to audit, by major jurisdiction, are as follows:
| Jurisdiction | Fiscal Year | ||||
| United States (Federal and state) | 2007 - 2025 | ||||
| United Kingdom | 2022 - 2025 | ||||
| Malaysia | 2020 - 2025 | ||||
| Ireland | 2023 - 2025 |
We currently operate under a Special Corporate Income Tax Preferential rate in the Philippines, which is in effect through 2031. The prior tax holiday ended in 2023. The impact of both the tax holiday and preferential rate is immaterial for all years presented. We have been granted a tax incentive by the Malaysian Investment Development Authority (MIDA) in Malaysia, which provides for a 0% tax holiday of up to 15 years based on our ability to meet certain conditions. The tax incentive had no effect on foreign taxes during 2023. In July 2025, the Malaysia Investment Development Authority, or MIDA, certified our achievement of the milestones and conditions related to our Malaysia income tax holiday. We have recorded a tax benefit related to the retroactive application of the tax holiday back to January 1, 2024.
We assert that any foreign earnings will be indefinitely reinvested, and accordingly, we have not recorded a liability for taxes associated with these undistributed earnings. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes.
On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law in the U.S., and includes a broad range of tax reform provisions which did not have a significant impact to the effective tax rate. The primary impact of this legislation is a reduction in our U.S. income tax liability and deferred tax asset related to the ability to currently deduct U.S.-based research expenses against U.S. income.
The Organization for Economic Co-operation and Development’s, or OECD, Pillar Two Initiative introduced a 15% global minimum tax for certain multinational groups exceeding minimum annual global revenue thresholds. As of December 31, 2025, the global minimum tax rules enacted in countries in which we operate, including the transitional safe harbor provisions, does not have a material impact on our consolidated financial statements.
F-39
| 8. Employee Benefit Plans and Stockholders’ Equity |
Defined Contribution Plans
We offer various defined contribution plans for U.S. and international employees. The largest defined contribution plan is the 401(k) retirement plan (the 401(k) Plan) covering substantially all employees in the United States that meet certain age requirements. Employees who participate in the 401(k) Plan may contribute up to 90% of their compensation each year, subject to Internal Revenue Service limitations and the terms and conditions of the plan. Under the terms of the 401(k) Plan, we may elect to match a discretionary percentage of contributions. We match 50% of contributions up to 6% of eligible compensation. Total matching contributions under the 401(k) Plan were $17.2 million, $17.6 million and $14.9 million for the twelve months ended December 31, 2025, 2024 and 2023, respectively. Our contributions for other defined contribution plans are not significant for the twelve months ended December 31, 2025, 2024 and 2023.
Employee Stock Purchase Plan (“ESPP”)
The Amended and Restated 2015 Employee Stock Purchase Plan, “A&R 2015 ESPP”, amended and restated in May 2025, permits eligible employees to purchase shares of our common stock at semi-annual intervals through periodic payroll deductions during defined Offering Periods. Payroll deductions may not exceed 15% of the participant’s cash compensation subject to certain limitations, and the purchase price will be 85% of the lower of the fair market value of the common stock at either the beginning of the applicable Offering Period or the Purchase Date.
A total of 14.0 million shares of common stock are authorized for issuance under the A&R 2015 ESPP, which includes an additional 8.0 million shares approved by stockholders in May 2025. We issued approximately 0.4 million, 0.4 million and 0.3 million shares of common stock under the A&R 2015 ESPP during the twelve months ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, approximately 9.7 million shares remained available for future issuance under the A&R 2015 ESPP.
Equity Incentive Plans
The Amended and Restated 2015 Equity Incentive Plan, “Amended A&R 2015 EIP”, amended and restated in May 2025, provides for the grant of incentive and nonstatutory stock options, restricted stock, stock bonuses, stock appreciation rights, RSUs, and PSUs to employees, directors or consultants of the Company.
A total of 42.6 million shares of common stock are authorized for issuance under the Amended A&R 2015 EIP, which includes an additional 3.4 million shares approved by stockholders in May 2025. As of December 31, 2025, approximately 14.1 million shares remained available for future issuance under the Amended A&R 2015 EIP.
RSU awards typically vest in annual installments over three or four years and vesting is subject to continued service. PSUs are granted to a group of senior officers and the number of shares of our common stock to be received at vesting will range from 0% to 200% of the target award based on the achievement of pre-established performance and market goals. PSUs vest approximately three years from the date of grant, subject to continued employment through that date and certification by the Compensation Committee. We issue new shares of common stock to satisfy RSU and PSU vestings.
Share Repurchase Program and Treasury Shares
Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceeds from the sale are more than the average price we paid to acquire the shares we record an increase in additional paid-in capital. Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount.
We have not yet determined the ultimate disposition of repurchased shares and consequently we continue to hold them as treasury shares rather than retiring them. Authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.
F-40
The following table summarizes our treasury share activity:
| Twelve Months Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Shares received from Note Hedge | — | — | 12.2 | |||||||||||||||||
| Shares issued in connection with the Restated Collaboration Agreement | — | (1.5) | (3.7) | |||||||||||||||||
| Shares repurchased under share repurchase programs | 7.7 | 10.4 | 4.7 | |||||||||||||||||
| Shares repurchased with 2028 Notes proceeds | — | — | 1.6 | |||||||||||||||||
| Shares issued in connection with 2023 Warrants | — | (12.5) | — |
2025 Share Repurchase Program
In April 2025, our Board of Directors authorized and approved a share repurchase program of up to $750.0 million of our outstanding common stock, with a repurchase period ending no later than June 30, 2026, or the 2025 Share Repurchase Program. Repurchases of our common stock under the 2025 Share Repurchase Program may be made from time to time in the open market, in privately negotiated transactions or by other methods, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, at our discretion, and in accordance with the limitations set forth in Rule 10b-18 promulgated under the Exchange Act and other applicable federal and state laws and regulations. The timing of any repurchases will depend on market conditions and will be made at our discretion. The 2025 Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares of our common stock, and the program may be extended, modified, suspended, or discontinued at any time.
For the twelve months ended months ended December 31, 2025, we repurchased 7.7 million shares of our common stock for $500.0 million under the 2025 Share Repurchase Program.
2024 Share Repurchase Program
In July 2024, our Board of Directors authorized and approved a share repurchase program of up to $750.0 million of our outstanding common stock, with a repurchase period ending no later than June 30, 2025 (the “2024 Share Repurchase Program”). Repurchases of our common stock under the 2024 Share Repurchase Program were permitted to be made from time to time in the open market, in privately negotiated transactions or by other methods, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, at our discretion, and in accordance with the limitations set forth in Rule 10b-18 promulgated under the Exchange Act and other applicable federal and state laws and regulations. The 2024 Share Repurchase Program was completed in August 2024. We repurchased 10.4 million shares of our common stock for $750.0 million under the 2024 Share Repurchase Program.
2023 Share Repurchase Program
In October 2023, our Board of Directors authorized and approved a share repurchase program of up to $500.0 million of our outstanding common stock, with a repurchase period ending no later than October 31, 2024 (the “2023 Share Repurchase Program”). On October 31, 2023, we entered into an accelerated share repurchase agreement (“2023 ASR”) with Bank of America, N.A. to repurchase $500.0 million of our common stock. The final notional amount under the 2023 ASR was $500.0 million or approximately 4.7 million shares of our common stock based on the daily average volume-weighted average price of our common stock during the term of the 2023 ASR, less a discount. The 2023 ASR concluded on December 14, 2023. The 2023 Share Repurchase Program was completed in December 2023.
The 2023 ASR was a forward contract indexed to our own common stock. The forward contracts met all of the applicable criteria for equity classification, so we did not account for them as a derivative instrument. We have reflected the shares delivered to us by the financial institution as treasury shares as of the dates they were delivered to us in computing weighted average shares outstanding for both basic and diluted net income per share.
F-41
Equity Award Activity
A summary of RSU and PSU activity under the Amended A&R 2015 EIP is as follows:
| Nonvested RSU and PSU Activity | |||||||||||||||||||||||
| (In millions, except weighted average grant date fair value) | Shares Available for Grant | Shares | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | |||||||||||||||||||
| Balance at December 31, 2022 | 15.3 | 2.9 | $ | 94.08 | |||||||||||||||||||
| Granted | (1.6) | 1.6 | 112.01 | ||||||||||||||||||||
| Vested | — | (1.4) | 88.57 | ||||||||||||||||||||
| Forfeited | 0.2 | (0.2) | 106.34 | ||||||||||||||||||||
| Balance at December 31, 2023 | 13.9 | 2.9 | 105.98 | $ | 361.2 | ||||||||||||||||||
| Granted | (1.7) | 1.7 | 131.17 | ||||||||||||||||||||
| Vested | — | (1.3) | 102.09 | ||||||||||||||||||||
| Forfeited | 0.3 | (0.3) | 115.59 | ||||||||||||||||||||
| Balance at December 31, 2024 | 12.5 | 3.0 | 121.17 | 234.1 | |||||||||||||||||||
| Additional shares authorized | 3.4 | — | — | ||||||||||||||||||||
| Granted | (2.5) | 2.5 | 78.75 | ||||||||||||||||||||
| Vested | — | (1.4) | 114.95 | ||||||||||||||||||||
| Forfeited | 0.7 | (0.7) | 113.04 | ||||||||||||||||||||
| Balance at December 31, 2025 | 14.1 | 3.4 | $ | 94.48 | $ | 226.3 |
The total vest-date fair value of RSUs and PSUs that vested during the twelve months ended December 31, 2025, 2024 and 2023 was $106.1 million, $174.5 million and $157.8 million, respectively. As of December 31, 2025, 3.1 million unvested RSUs and 0.3 million unvested PSUs were outstanding under the Amended A&R 2015 EIP.
Share-Based Compensation
Our share-based compensation expense is associated with RSUs, PSUs, and ESPP. The following table summarizes our share-based compensation expense included in our consolidated statements of operations:
| Twelve Months Ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cost of sales | $ | 10.9 | $ | 14.4 | $ | 14.6 | |||||||||||
| Research and development | 49.2 | 52.2 | 45.5 | ||||||||||||||
| Selling, general and administrative | 99.5 | 103.8 | 90.7 | ||||||||||||||
| Total share-based compensation expense | $ | 159.6 | $ | 170.4 | $ | 150.8 | |||||||||||
| Total tax benefit related to share-based compensation expense | $ | 24.9 | $ | 43.8 | $ | 40.0 |
As of December 31, 2025, unrecognized estimated compensation costs related to RSUs and PSUs totaled $190.7 million and are expected to be recognized over a weighted-average period of approximately 1.7 years.
We value RSUs at the date of grant using the intrinsic value method. We estimate the fair value of PSUs at the date of grant using the intrinsic value method and the probability that the specified performance criteria will be met. We estimate the fair value of ESPP purchase rights on the date of grant using the Black-Scholes option pricing model and the assumptions below:
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| Twelve Months Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk free interest rate | 3.99% - 4.31% | 4.80% - 5.27% | 5.20% - 5.47% | ||||||||||||||
| Dividend yield | — | % | — | % | — | % | |||||||||||
| Expected volatility of Dexcom common stock | 32% - 48% | 42% - 85% | 34% - 48% | ||||||||||||||
| Expected life (in years) | 0.5 | 0.5 | 0.5 |
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| 9. Business Segment and Geographic Information |
We manage our business on a global consolidated basis within one operating and one reportable segment, which is consistent with how our chief operating decision maker (CODM) reviews our business, makes investment and resource allocation decisions, and assesses operating performance. The majority of our revenue is generated in the United States. Our reportable segment derives revenues from the sale of disposable sensors and our Reusable Hardware. Effective September 14, 2025 through December 31, 2025, our President and Chief Operating Officer, assumed the role of interim principal executive officer and CODM. This did not result in a change to our segments.
The measures of segment profit or loss that are most consistent with U.S. GAAP used by the CODM to assess performance and allocate resources are operating income and net income. Our CODM also reviews total assets, as reported on our consolidated balance sheets, and purchases of property and equipment, as reported on our consolidated statements of cash flows.
Our CODM uses operating income and net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the Company, monitor budget versus actual results, acquire companies, or invest in other companies.
The following table sets forth our segment information for revenue, measures of segment profit or loss, and significant expenses:
| Twelve Months Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Revenue | $ | 4,662.0 | $ | 4,033.0 | $ | 3,622.3 | ||||||||||||||
| Less: | ||||||||||||||||||||
| Cost of sales (1) | 1,860.1 | 1,594.8 | 1,333.4 | |||||||||||||||||
| Payroll related expenses | 885.0 | 767.1 | 726.9 | |||||||||||||||||
| Stock-based compensation expense | 148.7 | 156.0 | 136.2 | |||||||||||||||||
| Marketing expense | 310.3 | 298.7 | 264.6 | |||||||||||||||||
| Travel related expenses | 64.4 | 64.8 | 55.3 | |||||||||||||||||
| Supply expenses and clinical trials | 61.6 | 64.5 | 46.5 | |||||||||||||||||
| Consulting & professional fees | 139.0 | 227.8 | 222.2 | |||||||||||||||||
| Equipment, office & facility expenses | 92.2 | 83.8 | 84.7 | |||||||||||||||||
| IT software and data | 144.3 | 130.6 | 106.6 | |||||||||||||||||
| Depreciation and amortization | 39.5 | 39.9 | 41.9 | |||||||||||||||||
| Other segment items (2) | 5.1 | 5.0 | 6.3 | |||||||||||||||||
| Operating income | 911.8 | 600.0 | 597.7 | |||||||||||||||||
| Other income, net | 176.6 | 109.0 | 112.7 | |||||||||||||||||
| Income tax expense | 252.1 | 132.8 | 168.9 | |||||||||||||||||
| Net income | $ | 836.3 | $ | 576.2 | $ | 541.5 | ||||||||||||||
| (1) Includes amounts stated in other significant expense captions. | ||||||||||||||||||||
| (2) Other segment items are primarily composed of impairment of assets and bad debt expense. |
| Twelve Months Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Other segment disclosures | ||||||||||||||||||||
| Depreciation and amortization (1) | $ | 251.8 | $ | 217.7 | $ | 186.0 | ||||||||||||||
| Expenditures for long-lived assets | $ | 363.5 | $ | 358.8 | $ | 236.6 | ||||||||||||||
| Significant noncash items other than depreciation and amortization expense: | ||||||||||||||||||||
| Deferred income tax expense (benefit) | $ | 182.2 | $ | (43.8) | $ | (55.0) | ||||||||||||||
| Net (gains) losses on equity investments | $ | (78.1) | $ | 1.4 | $ | (1.9) | ||||||||||||||
| (1) Includes depreciation and amortization recorded in both cost of sales and operating expenses. |
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See Note 3 “Balance Sheet Details and Other Financial Information—Other Income, Net” for information about our interest income and interest expense.
See Note 8 “Employee Benefit Plans and Stockholders’ Equity—Share-Based Compensation” for information about our share-based compensation expense.
Disaggregation of Revenue
We disaggregate revenue by major sales channel and by geographic region. We have determined that disaggregating revenue into these categories achieves the ASC Topic 606 disclosure objectives of depicting how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
See Note 1 “Organization and Significant Accounting Policies—Concentration of Credit Risk and Significant Customers” for information about our major customers that represent 10% or more of our total revenue.
Revenue by Customer Sales Channel and Geographic Region
We sell our CGM systems through a direct sales organization and through distribution arrangements that allow distributors to sell our products. We also disaggregate our revenue by our two primary geographical markets, the United States and International, based on the geographic location to which we deliver the components.
The following table presents our revenue disaggregated by major sales channel and geographic region:
| Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | United States | International | Total | United States | International | Total | United States | International | Total | ||||||||||||||||||||||||||||||||||||||||||||
| Distributor | $ | 3,195.7 | $ | 763.3 | $ | 3,959.0 | $ | 2,824.4 | $ | 605.7 | $ | 3,430.1 | $ | 2,587.2 | $ | 508.4 | $ | 3,095.6 | |||||||||||||||||||||||||||||||||||
| Direct | 139.2 | 563.8 | 703.0 | 65.4 | 537.5 | 602.9 | 38.1 | 488.6 | 526.7 | ||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 3,334.9 | $ | 1,327.1 | $ | 4,662.0 | $ | 2,889.8 | $ | 1,143.2 | $ | 4,033.0 | $ | 2,625.3 | $ | 997.0 | $ | 3,622.3 |
During the twelve months ended December 31, 2025, 2024 and 2023, no individual country outside the United States generated revenue that represented more than 10% of our total revenue.
Long-Lived Assets by Geographic Region
The following table presents our long-lived assets, which consists of property and equipment, net, and operating lease right-of-use assets by geographic region:
| December 31, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Ireland | $ | 438.8 | $ | 185.7 | |||||||
| Malaysia | 684.4 | 632.1 | |||||||||
| United States | 406.1 | 464.6 | |||||||||
| Other countries | 108.0 | 120.3 | |||||||||
| Total long-lived assets | $ | 1,637.3 | $ | 1,402.7 |
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| DexCom, Inc. | ||||||||||||||
| SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||
| (In millions) |
| Twelve Months Ended December 31, | |||||||||||||||||
| Allowance for doubtful accounts | 2025 | 2024 | 2023 | ||||||||||||||
| Beginning Balance | $ | 9.2 | $ | 9.3 | $ | 7.3 | |||||||||||
| Provision for doubtful accounts | 3.3 | (0.1) | 2.0 | ||||||||||||||
| Write-offs and adjustments | — | — | — | ||||||||||||||
| Recoveries | — | — | — | ||||||||||||||
| Ending Balance | $ | 12.5 | $ | 9.2 | $ | 9.3 |
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Previous: Item 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES