Dexcom (DXCM) risk factors, FY2024 10-K

Risks Related to Pricing and Reimbursement

1. 01We have experienced, and anticipate that we will continue to experience, decreasing prices for our products due to pricing pressure from managed care organizations and other third-party payors
2. 02To the extent these cost containment efforts are not offset by greater patient access to our products, our revenue may be reduced and our business may be harmed
3. 03government insurance programs could significantly influence the purchase of healthcare services and products and may result in lower prices for our products or the exclusion of our products from reimbursement programs

Risks Related to Product Development

1. 04The research and development efforts we undertake independently, and in some instances in connection with our collaborations with third parties, may not result in the development of commercially viable products, the generation of significant future revenues or adequate profitability
2. 05Our products may not achieve or maintain market acceptance

Risks Related to Manufacturing, Commercial Operations and Commercialization

1. 06If our manufacturing capabilities are insufficient to produce an adequate supply of product at appropriate quality levels, our growth could be limited and our business could be harmed
2. 07Manufacturing difficulties and/or any disruption at our facilities may adversely affect our manufacturing operations and related product sales, and increase our expenses
3. 08We depend upon third-party suppliers and outsource to other parties, making us vulnerable to supply disruptions, suboptimal quality, non-compliance and/or price fluctuations, which could harm our business
4. 09either party upon short notice. Our contract manufacturers may also rely on single- or sole-source suppliers to manufacture some of the components used in our products
5. 10If we are unable to establish and maintain adequate sales, marketing and distribution capabilities and/or enter into and maintain arrangements with third parties to sell, market and distribute our products, we may have difficulty achieving market awareness and selling our products in the future
6. 11We operate in a highly competitive market and face competition from large, well-established companies with significant resources, and, as a result, we may not be able to compete effectively
7. 12We are subject to risks associated with public health issues, including pandemics, which could have a material adverse effect on our business, financial condition and results of operations

Risks Related to our International Operations

1. 13We are subject to a variety of risks due to our international operations that could adversely affect our business, our operations or profitability and operating results
2. 14Laws and regulations governing the export of our products could adversely impact our business
3. 15Current uncertainty in global economic and political conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that our actual results could differ materially from expectations
4. 16Failure to obtain any required regulatory authorization in international jurisdictions will prevent us from marketing our products abroad

Risks Related to Privacy and Security

1. 17Security breaches and other disruptions that compromise our information and expose us to liability could cause our business and reputation to suffer and could subject us to substantial liabilities
2. 18We are also subject to laws and regulations in international countries covering data privacy and other protection of health and employee information that may be more onerous than corresponding U.S. laws, including in particular the laws of Europe
3. 19In addition to the laws discussed above, we may see more stringent state and federal privacy legislation in the future. We cannot predict where new legislation might arise, the scope of such legislation, or the potential impact to our business and operations
4. 20Failure to protect our information technology infrastructure against cyberattacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results
5. 21Cyberattacks aimed at accessing our devices, products, and services, or related devices, products, and services, and modifying or using them in a way inconsistent with our FDA clearances and approvals could create risks to users

Risks Related to Non-Compliance with Laws, Regulations and Contractual Requirements and Healthcare Industry Shifts

1. 22We conduct business in a heavily regulated industry and if we fail to comply with applicable laws and government regulations, we could become subject to penalties, be excluded from participation in government programs, and/or be required to make significant changes to our operations
2. 23such laws, and potentially be awarded a share of any damages or penalties ultimately awarded to the applicable government body
3. 24Any action against us alleging a violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s time and attention from the operation of our business, and have a material effect on our business
4. 25If we or our suppliers or distributors fail to comply with ongoing regulatory requirements, or if we have unanticipated problems with our products, the products could be subject to restrictions or withdrawal from the market
5. 26Quality problems could lead to recalls or safety alerts, reputational harm, and could have a material adverse effect on our business, results of operations, financial condition and cash flows
6. 27Potential long-term complications from our current or future products or other CGM systems under development may not be revealed by our clinical experience to date
7. 28We may never receive approval, marketing authorization or clearance from the U.S. FDA and other governmental agencies to market additional CGM systems, expanded indications for use of current and future generation CGM systems, future software platforms, or any other products under development
8. 29Our failure to comply with laws, regulations and contract requirements relating to reimbursement of health care goods and services may subject us to penalties and adversely impact our reputation, business, financial condition and cash flows
9. 30Managed care trends and consolidation in the health care industry could have an adverse effect on our revenues and results of operations
10. 31If we are unable to successfully complete the pre-clinical studies or clinical trials necessary to support additional PMA, de novo, or 510(k) applications or supplements, we may be unable to commercialize our CGM systems under development, which could impair our business, financial condition and operating results
11. 32Changes to the regulatory landscape may impact our ability to obtain marketing authorization for future product developments
12. 33Further, health epidemics could limit or restrict our ability to initiate, conduct or continue our clinical trials. Delays and disruption in our clinical trials could result in delays for expanded FDA clearance or approval of our products
13. 34We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control
14. 35Health care policy changes, including U.S. health care reform legislation, may have a material adverse effect on our business
15. 36As 2025 ushers in a new presidential administration, we expect material changes in health policy, enforcement initiatives, and coverage and reimbursement for health care items and services. As such, our costs to monitor these changes and respond to new requirements will increase

Risks Related to Intellectual Property Protection and Use

1. 37Our inability to adequately protect our intellectual property could allow our competitors and others to produce products based on our technology, which could substantially impair our ability to compete
2. 38We face the risk of product liability claims and may be subject to damages, fines, penalties and injunctions, among other things
3. 39We could become the subject of governmental investigations, claims and litigation
4. 40We may be subject to fines, penalties and injunctions if we are determined to be promoting the use of our products for unapproved or improper off-label uses or determined to have made claims that are untruthful or misleading or not adequately substantiated
5. 41In some instances in our advertising and promotion, we may make claims regarding our product as compared to competing products, which may subject us to heightened regulatory scrutiny, enforcement risk, and litigation risks
6. 42Direct-to-consumer marketing and social media efforts may expose us to additional regulatory scrutiny
7. 43We have incurred significant losses in the past and may incur losses in the future
8. 44Our success will depend on our ability to attract and retain our personnel and manage our human capital, while controlling labor costs
9. 45Each of our officers may terminate their employment at any time without notice and without cause or good reason. Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key employees
10. 46We may conduct additional financings to continue the development or commercialization of our current or future products
11. 47Uncollectible uninsured and patient due accounts could adversely affect our results of operations
12. 48Changes in our business strategy or restructuring of our businesses may increase our costs or otherwise affect the profitability of our businesses or the value of our assets

Risks Relating to Our Public Company Status, Tax Laws and Growth Through Acquisition

1. 49We may face risks associated with acquisitions of companies, products and technologies and our business could be harmed if we are unable to address these risks
2. 50Compliance with regulations relating to public company corporate governance matters and reporting may strain our resources and divert management’s attention
3. 51We could be subject to changes in our tax rates, new U.S. or international tax legislation or additional tax liabilities
4. 52Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability

Risks Related to Our Common Stock

1. 53Our stock price is highly volatile and investing in our stock involves a high degree of risk, which could result in substantial losses for investors
2. 54The issuance of shares by us in the future or sales of shares by our stockholders may cause the market price of our common stock to drop significantly, even if our business is performing well
3. 55We do not intend to pay dividends for the foreseeable future
4. 56Anti-takeover effects of our charter documents and Delaware law could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock
5. 57Notwithstanding the foregoing, our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder

Risks Related to Our Debt

1. 58Increasing our financial leverage could affect our operations and profitability
2. 59Failure to comply with covenants in the Amended Credit Agreement could result in our inability to borrow additional funds and adversely impact our business
3. 60We have indebtedness in the form of convertible senior notes, which could adversely affect our financial health and our ability to respond to changes in our business
4. 61We may still incur substantially more debt or take other actions which would intensify the risks discussed above
5. 62The capped call transactions we entered into in connection with the pricing of the 2028 Notes may affect the value of our 2028 Notes and common stock
6. 63We are subject to counterparty risk with respect to the 2028 Capped Calls
7. 64Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt
8. 65Our Amended Credit Agreement imposes restrictions on us that may adversely affect our ability to operate our business
9. 66Conversion of the Notes will, to the extent we deliver shares upon conversion of such Notes, dilute the ownership interest of existing stockholders, including holders who had previously converted their Notes, or may otherwise depress our stock price
10. 67The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results
11. 68The accounting method for convertible debt securities that may be settled in cash, such as the Notes, may have a material effect on our reported financial results
12. 69The fundamental change repurchase feature of the Notes may delay or prevent an otherwise beneficial attempt to take over Dexcom

Risks Related to Environmental, Social and Governance Matters

1. 70Sustainability (including environmental, social and governance) regulations, policies and provisions could expose us to numerous risks
2. 71Our business could be negatively impacted by evolving expectations and challenges relating to implementing sustainability (including environmental, social and governance) initiatives, setting sustainability-related goals, collecting sustainability-related data, and disclosing sustainability-related information
3. 72Climate change may have a long-term impact on our business
4. 73We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incur additional expense
5. 74Current uncertainty in domestic and global economic and political conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that our actual results could differ materially from expectations
6. 75In addition, the pressure on consumers to absorb more of their own health care costs has resulted in some cases in higher deductibles and limits on durable medical equipment, which may cause seasonality in purchasing patterns
7. 76We may be adversely affected by the effects of inflation
8. 77If we are unable to successfully maintain effective internal control over financial reporting, investors may lose confidence in our reported financial information and our stock price and our business may be adversely impacted
9. 78Changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected revenue and/or expense fluctuations and affect our reported results of operations
10. 79If our financial performance fails to meet the expectations of investors and public market analysts, the market price of our common stock could decline