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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to        
Commission File Number:  000-51222
dxcm-20220331_g1.jpg
DEXCOM, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0857544
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
6340 Sequence Drive, San Diego, CA 92121
(Address of principal executive offices)
(858200-0200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par Value Per ShareDXCMNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of April 21, 2022, there were 98,125,933 shares of the registrant’s common stock outstanding.

DexCom, Inc.
Table of Contents
Page
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DexCom, Inc.
Consolidated Balance Sheets
(Unaudited)
March 31, 2022December 31, 2021
(In millions, except par value data)
(As Adjusted)*
Assets
Current assets:
Cash and cash equivalents$716.0 $1,052.6 
Short-term marketable securities1,972.2 1,678.6 
Accounts receivable, net544.5 514.3 
Inventory342.2 357.3 
Prepaid and other current assets171.7 81.6 
Total current assets3,746.6 3,684.4 
Property and equipment, net856.5 801.8 
Operating lease right-of-use assets82.3 88.1 
Goodwill26.6 26.5 
Intangibles, net31.4 31.5 
Deferred tax assets290.8 290.5 
Other assets22.8 10.5 
Total assets$5,057.0 $4,933.3 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities$603.1 $573.0 
Accrued payroll and related expenses84.7 125.2 
Short-term operating lease liabilities20.9 20.5 
Deferred revenue2.7 2.1 
Total current liabilities711.4 720.8 
Long-term senior convertible notes1,965.9 1,981.8 
Long-term operating lease liabilities93.3 98.6 
Other long-term liabilities97.1 90.0 
Total liabilities2,867.7 2,891.2 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 5.0 million shares authorized; no shares issued and outstanding at March 31, 2022 and December 31, 2021
  
Common stock, $0.001 par value, 200.0 million shares authorized; 98.2 million and 98.1 million shares issued and outstanding, respectively, at March 31, 2022; and 97.8 million and 97.0 million shares issued and outstanding, respectively, at December 31, 2021
0.1 0.1 
Additional paid-in capital1,996.6 2,109.0 
Accumulated other comprehensive income (loss)
(6.1)0.5 
Retained earnings236.0 138.7 
Treasury stock, at cost; 0.1 million shares at March 31, 2022 and 0.8 million shares at December 31, 2021
(37.3)(206.2)
Total stockholders’ equity2,189.3 2,042.1 
Total liabilities and stockholders’ equity$5,057.0 $4,933.3 
* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis. Refer to Note 1 “Organization and Significant Accounting Policies” for further information.
See accompanying notes
3

DexCom, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
20222021
(In millions, except per share data)
(As Adjusted)*
Revenue$628.8 $505.0 
Cost of sales230.7 161.1 
Gross profit398.1 343.9 
Operating expenses:
Research and development135.9 109.4 
Selling, general and administrative220.9 188.6 
Total operating expenses356.8 298.0 
Operating income41.3 45.9 
Interest expense(4.6)(4.7)
Income from equity investments0.2  
Interest and other income (expense), net(0.8)0.1 
Income before income taxes36.1 41.3 
Income tax benefit(61.2)(15.2)
Net income$97.3 $56.5 
Basic net income per share$1.00 $0.59 
Shares used to compute basic net income per share97.2 96.3 
Diluted net income per share$0.93 $0.56 
Shares used to compute diluted net income per share107.2 104.6 
* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis. Refer to Note 1 “Organization and Significant Accounting Policies” for further information.

See accompanying notes
4

DexCom, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
March 31,
20222021
(In millions)
(As Adjusted)*
Net income$97.3 $56.5 
Other comprehensive income (loss), net of tax:
Translation adjustments and other(1.4)(0.3)
Unrealized gain (loss) on marketable debt securities(5.2) 
Total other comprehensive loss, net of tax(6.6)(0.3)
Comprehensive income$90.7 $56.2 
* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis. Refer to Note 1 “Organization and Significant Accounting Policies” for further information.

See accompanying notes
5

DexCom, Inc.
Consolidated Statements of Stockholders’ Equity
(Unaudited)
Three Months Ended March 31, 2022
(In millions)Common StockAdditional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)Retained EarningsTreasury StockTotal
Stockholders’
Equity
SharesAmount
Balance at December 31, 2021 (As Adjusted)*97.0 $0.1 $2,109.0 $0.5 $138.7 $(206.2)$2,042.1 
Issuance of common stock under equity incentive plans0.4 — — — — — — 
Issuance of common stock for Employee Stock Purchase Plan— — 10.1 — — — 10.1 
Issuance of common stock in connection with achievement of regulatory approval milestone, net of issuance costs0.7 — (189.3)— — 189.2 (0.1)
Conversions of 2023 Notes0.1 — 4.2 — — 13.2 17.4 
Benefit of note hedge upon conversions of 2023 Notes(0.1)— 33.5 — — (33.5) 
Share-based compensation expense— — 29.1 — — — 29.1 
Net income— — — — 97.3 — 97.3 
Other comprehensive loss, net of tax— — — (6.6)— — (6.6)
Balance at March 31, 202298.1 $0.1 $1,996.6 $(6.1)$236.0 $(37.3)$2,189.3 

Three Months Ended March 31, 2021
(In millions)Common StockAdditional
Paid-In
Capital
Accumulated Other Comprehensive IncomeAccumulated DeficitTreasury StockTotal
Stockholders’
Equity
SharesAmount
Balance at December 31, 2020 (As Adjusted)*96.1 $0.1 $1,726.8 $3.2 $(78.2)$(100.0)$1,551.9 
Issuance of common stock under equity incentive plans0.6 — — — — — — 
Issuance of common stock for Employee Stock Purchase Plan— — 8.7 — — — 8.7 
Share-based compensation expense— — 28.0 — — — 28.0 
Net income— — — — 56.5 — 56.5 
Other comprehensive loss, net of tax— — — (0.3)— — (0.3)
Balance at March 31, 2021 (As Adjusted)*96.7 $0.1 $1,763.5 $2.9 $(21.7)$(100.0)$1,644.8 
* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis. Refer to Note 1 “Organization and Significant Accounting Policies” for further information.

See accompanying notes

6

DexCom, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
20222021
(In millions)
(As Adjusted)*
Operating activities
Net income$97.3 $56.5 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization36.8 20.9 
Share-based compensation29.1 28.0 
Non-cash interest expense1.6 2.1 
Realized (gain) loss on equity investment(0.2) 
Deferred income taxes0.1 (0.3)
Other non-cash income and expenses3.8 8.0 
Changes in operating assets and liabilities:
Accounts receivable, net(30.1)(14.9)
Inventory15.6 (55.0)
Prepaid and other assets(97.9)(20.2)
Operating lease right-of-use assets and liabilities, net(0.9)0.7 
Accounts payable and accrued liabilities53.5 33.9 
Accrued payroll and related expenses(40.5)(33.0)
Deferred revenue and other liabilities2.8 1.1 
Net cash provided by operating activities71.0 27.8 
Investing activities
Purchases of marketable securities(546.5)(802.0)
Proceeds from sale and maturity of marketable securities241.8 790.0 
Purchases of property and equipment(101.6)(99.7)
Acquisitions, net of cash acquired(3.2) 
Other investing activities(2.3)(0.5)
Net cash used in investing activities(411.8)(112.2)
Financing activities
Net proceeds from issuance of common stock10.1 8.7 
Other financing activities(4.8)(7.9)
Net cash provided by financing activities5.3 0.8 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1.0)(0.4)
Decrease in cash, cash equivalents and restricted cash(336.5)(84.0)
Cash, cash equivalents and restricted cash, beginning of period1,053.6 818.2 
Cash, cash equivalents and restricted cash, end of period$717.1 $734.2 
Reconciliation of cash, cash equivalents and restricted cash, end of period:
Cash and cash equivalents$716.0 $733.8 
Restricted cash1.1 0.4 
Total cash, cash equivalents and restricted cash$717.1 $734.2 
Supplemental disclosure of non-cash investing and financing transactions:
Shares issued for conversions of 2023 Notes$35.9 $ 
Shares received under note hedge upon conversions of 2023 Notes$(33.5)$ 
Acquisition of property and equipment included in accounts payable and accrued liabilities$26.6 $35.0 
Right-of-use assets obtained in exchange for operating lease liabilities$(1.3)$9.9 
Right-of-use assets obtained in exchange for finance lease liabilities$5.2 $ 
* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis. Refer to Note 1 “Organization and Significant Accounting Policies” for further information.
7

See accompanying notes
8

DexCom, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Significant Accounting Policies
Organization and Business
DexCom, Inc. is a medical device company that develops and markets continuous glucose monitoring, or CGM, systems for the management of diabetes 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
We have prepared the accompanying unaudited consolidated financial statements in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.
Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. We expect that revenues we generate from the sales of our products will fluctuate from quarter to quarter. We experience seasonality that is typical in our industry, with lower sales in the first quarter of each year compared to the fourth quarter of the previous year.
These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2021 included in the Annual Report on Form 10-K that we filed with the SEC on February 14, 2022.
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 amounts previously reported in our financial statements to conform to the current 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 interest and other income (expense), net in our consolidated statements of operations.
Use of Estimates
The preparation of consolidated financial statements in conformity with 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 rebates, transaction price, the collectibility of accounts receivable, excess or obsolete inventories and the valuation of inventory, accruals for litigation contingencies, and the amount of our worldwide tax provision and the realizability of deferred tax assets. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates.
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 significant 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 greater than one year past due are deemed uncollectible.
9

Concentration of Credit Risk
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.
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 and are not reversed until the related inventory is disposed of or sold.
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 goods sold could be required.
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. We also provide free-of-charge software, mobile applications and updates for our Dexcom Share®