DXCM

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How DXCM rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

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144

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+1,451

words, now 34,402

New in FY2025

Refer to our disclaimer regarding forward-looking statements at the beginning of this Annual Report on Form 10-K.
We have experienced, and anticipate that we will continue to experience, decreasing prices for our products due to future reimbursement changes under Medicare and pricing pressure from managed care organizations and other third-party payors.
Most of our customers rely on third-party payors, including government programs and private health insurance plans, to cover the cost of the G6, G7, G-7 15 Day, Dexcom One, and Dexcom ONE+.
Additionally, we may experience pricing pressure if our products are increasingly subject to competitive bidding processes, which include substantial costs and managerial time to prepare bids and proposals for contracts that may not be awarded to us or may be split among competitors.
For example, in June 2025, the Centers for Medicare & Medicaid Services published a proposed rule that would subject continuous glucose monitors to the competitive bidding process, which could negatively impact our reimbursement and result in price decreases.
In late 2025, CMS extended the DMEPOS competitive bidding program to include our CGMs and receivers, with contracting beginning in 2027 and payment changes taking effect in 2028.
Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in CBAs.
CMS anticipates that ten (10) contracts will be awarded for CGMs.
However, while the competitive bidding program previously used CBAs for contract awards, CMS determined that for CGMs and certain other DME, a RID CBA was more appropriate.
It remains to be seen whether CGMs will be covered under a single, nationwide RID CBA or whether regional RID CBAs will be established.
In any event, the bid process is expected to result in lower Medicare reimbursement for CGM systems, particularly because CMS is changing the pricing under the RID CBA by setting a single payment amount for covered items at the 75 th percentile of the winning bids, rather than using the maximum winning bid.
Further, CMS has reclassified CGMs and insulin infusion pumps to items that require frequent and substantial servicing and will phase in monthly rental payments for these items.
CMS will bundle the rental amount for the receiver device with payment for the supplies and accessories in the new payment amount.
The bid limit will be monthly fee schedule amounts for the supplies plus the average purchase fee schedule amounts for the CGM receiver device divided by 60 (intended to capture the 5-year useful life of the device.) As a result, we expect that Medicare reimbursement for our CGM systems will decrease beginning in 2028.
CMS is required by law to recompete these contracts at least once every three years and to roll out the competitive bidding process nationally or adjust prices in non-competitive bidding areas to match competitive bidding prices.
The implementation of the competitive bidding program is expected to result in reduced Medicare payment for CGMs in both competitive bidding areas and non-competitive bidding areas.
Additionally, the new bidding system will contain a “country of origin” question to obtain information on where products are manufactured; however, it is unclear how CMS intends to use this information.
Given that we maintain offshore manufacturing facilities, country of origin reporting could have an impact on our business.
Competitive bidding could negatively impact our reimbursement and result in price decreases.
On July 4, 2025, President Trump signed the budget reconciliation bill (entitled “One Big Beautiful Bill Act”, or the Bill) to meet spending targets aimed at funding the Administration’s domestic priorities that includes significant changes to the Medicaid program.
Congressional Budget Office, or CBO, preliminary estimates show that the Medicaid provisions would reduce Medicaid spending by $1 trillion and will increase the number of people without health insurance by at least 11.8 million by 2034.
Some key proposed changes to the Medicaid Program include, but are not limited to: work requirements; cost sharing of up to $35 per service on expansion adults who exceed the official poverty threshold; stricter eligibility requirements for non-U.S. citizens; requirements for states to conduct eligibility redeterminations at least every six months for Medicaid expansion adults; and prohibitions on states from establishing any new provider taxes or from increasing the rates of existing taxes, among other changes.
Decreased federal funding and stricter eligibility requirements may result in more restrictive Medicaid programs at the state level and fewer individuals eligible for coverage, which could have an adverse impact on the number of individuals who seek to use our products and services.
For instance, changes to the ACA included in the Bill, including shortening enrollment periods and eliminating automatic reenrollment, could reduce ACA enrollment.
We expect material changes in health policy, enforcement initiatives, and coverage and reimbursement for health care items and services from the Trump Administration and Congress.
CMS provides coverage for “Therapeutic Continuous Glucose Monitors” as durable medical equipment eligible for coverage under Medicare Part B.
Medicare does not cover any items or services that are not “reasonable and necessary.” In order to be covered under the DME benefit, one component of the CGM system must meet the criteria for a durable medical device.
To date, the receiver satisfied these criteria.
As of December 31, 2025, the eight largest private third-party payors in the United States, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.
In addition, the change in presidential administration in 2025 has caused and may continue to cause shifts in health policy priorities, including potential impacts on Medicare coverage and reimbursement.
As discussed above, the Bill included significant changes to federal Medicaid funding and ACA enrollment requirements, all of which are expected to result in decreased Medicaid reimbursement and loss of coverage for individuals under Medicaid and ACA plans.
Also, the trends toward managed healthcare in the United States, which we expect to continue, and legislative efforts intended to reduce the cost of government 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.
In the ordinary course of business, we enter into collaborative arrangements with third parties to expand into new markets, including with insulin device manufacturers to integrate our CGM technology into the third parties’ insulin delivery systems.
Notwithstanding our prior experience in marketing and selling our products, we might be unable to successfully expand the commercialization of our existing products or begin commercialization of our next-generation CGM systems on a wide-scale for a number of reasons, including the following: • our G6 and G7 systems prompt the user to replace the sensor no later than the tenth day, and our G7 15 Day prompts the user to replace the sensor no later than the fifteenth day, which might make it expensive for users; • widespread market acceptance of our products by health care professionals, people with diabetes and those seeking to optimize metabolic health will largely depend on our ability to demonstrate their relative safety, effectiveness, reliability, cost-effectiveness and ease of use; • the limited size of our sales force; • we may not have sufficient financial or other resources to adequately expand the commercialization efforts for our products; • expanded coverage opportunities for our competitors’ CGM devices and supplies, including coverage for adjunctive CGMs, increasing competition in the marketplace; • loss or reduction of insurance coverage for individuals, resulting in higher cost obligations for users with respect to their purchase of our products; • our FDA and other regulatory authority marketing application submissions and reviews may be delayed, or cleared or approved with limited product indications and labeling; • we may not be able to manufacture our products in commercial quantities commensurate with demand or at an acceptable cost; • the uncertainties associated with establishing and qualifying new manufacturing facilities; • people with diabetes may need to incur the costs of single-point finger stick devices, in addition to our systems; • the relative immaturity of the CGM market internationally, and limited international reimbursement of CGM systems by third-party payors and government healthcare providers outside the United States; • the introduction and market acceptance of competing products and technologies, which may have a lower cost or price, allow for a convenience improvement and/or allow for improved accuracy and reliability; • the introduction and market acceptance of new drug therapies for the treatment and management of diabetes and related conditions, including obesity; • greater name or brand recognition and more established medical product distribution channels by some of our competitors; • our inability to obtain sufficient quantities of supplies timely and at appropriate quality levels from our single- or sole-source and other key suppliers; • our inability to manufacture products that perform in accordance with expectations of consumers; and • rapid technological change may make our technology and our products obsolete.
In addition to the risks outlined above, our CGMs are more invasive than many other self-monitored glucose testing systems, including single-point finger stick devices, and people with diabetes and those seeking to optimize metabolic health may be unwilling to insert a sensor in their body, especially for those with diabetes if their current diabetes management involves no more than two finger sticks per day.
We are also aware of companies outside the traditional medical device sector that are attempting to develop competitive products and services, including for the general health and wellness, or population health space.
Some of the companies developing or marketing competing devices are large and well-known publicly traded companies.
Such competitors may benefit from guidance issued on January 6, 2026 by the FDA’s Center for Devices and Radiological Health that effectively broadens the range of products that may be considered “general wellness devices,” including wearables that provide readings around bodily functions and vital signs such as heart rate, blood pressure, and blood glucose.
Risks Related to Manufacturing, Commercial Operations and Commercialization If we or our suppliers or distributors fail to comply with ongoing regulatory requirements, including responding to the FDA warning letter, or if we have unanticipated problems with our products, the products could be subject to restrictions or withdrawal from the market.
Any products for which we obtain marketing approval, clearance or authorization (and the activities related to its production, distribution, and promotion, sale, and marketing) are subject to continual review and periodic inspections by the FDA and other regulatory bodies, which may include inspection of our manufacturing processes, complaint handling and adverse event reporting, post-approval clinical data and promotional activities for such product.

and 104 more.

Gone since FY2024

Refer to our disclaimer regarding forward-looking statements at the beginning of Part I, Item 1 of this Annual Report on Form 10-K.
We 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.
Most of our customers rely on third-party payors, including government programs and private health insurance plans, to cover the cost of the G6, G7 and Dexcom One.
The Centers for Medicare & Medicaid Services, or CMS, provides coverage for “Therapeutic Continuous Glucose Monitors” as durable medical equipment eligible for coverage under Medicare Part B.
Medicare does not cover any items or services that are not “reasonable and necessary.” Medicare covers the CGM system, which includes supplies necessary for the use of the device, under the Durable Medical Equipment, or DME, benefit category.
In order to be covered under this benefit, one component of the CGM system must meet the criteria for a durable medical device.
To date, the receiver satisfied this criteria.
As of December 31, 2024, the eight largest private third-party payors in the United States, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.
In addition, 2025 will bring a new presidential administration, which may shift health policy priorities, including potential impacts on Medicare coverage and reimbursement.
Also, the trends toward managed healthcare in the United States, which we expect to continue in 2025 and beyond, and legislative efforts intended to reduce the cost of government 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.
In the ordinary course of our business we enter into collaborative arrangements with third parties to expand into new markets, including with insulin device manufacturers to integrate our CGM technology into the third parties’ insulin delivery systems.
Notwithstanding our prior experience in marketing and selling our products, we might be unable to successfully expand the commercialization of our existing products or begin commercialization of our next-generation CGM systems on a wide-scale for a number of reasons, including the following: • our G6 and G7 systems prompt the user to replace the sensor no later than the tenth day, which might make it expensive for users; • widespread market acceptance of our products by health care professionals, people with diabetes and those seeking to optimize metabolic health will largely depend on our ability to demonstrate their relative safety, effectiveness, reliability, cost-effectiveness and ease of use; • the limited size of our sales force; • we may not have sufficient financial or other resources to adequately expand the commercialization efforts for our products; • expanded coverage opportunities for our competitors’ CGM devices and supplies, including coverage for adjunctive CGMs, increasing competition in the marketplace; • our FDA and other regulatory authority marketing application submissions and reviews may be delayed, or cleared or approved with limited product indications and labeling; • we may not be able to manufacture our products in commercial quantities commensurate with demand or at an acceptable cost; • the uncertainties associated with establishing and qualifying new manufacturing facilities; • people with diabetes may need to incur the costs of single-point finger stick devices, in addition to our systems; • the relative immaturity of the CGM market internationally, and limited international reimbursement of CGM systems by third-party payors and government healthcare providers outside the United States; • the introduction and market acceptance of competing products and technologies, which may have a lower cost or price, allow for a convenience improvement and/or allow for improved accuracy and reliability; • the introduction and market acceptance of new drug therapies for the treatment and management of diabetes and related conditions, including obesity; • greater name or brand recognition and more established medical product distribution channels by some of our competitors; • our inability to obtain sufficient quantities of supplies timely and at appropriate quality levels from our single- or sole-source and other key suppliers; • our inability to manufacture products that perform in accordance with expectations of consumers; and • rapid technological change may make our technology and our products obsolete.
In addition to the risks outlined above, our G6, G7, Dexcom One, and Stelo systems are more invasive than many other self-monitored glucose testing systems, including single-point finger stick devices, and people with diabetes and those seeking to optimize metabolic health may be unwilling to insert a sensor in their body, especially for those with diabetes if their current diabetes management involves no more than two finger sticks per day.
Risks Related to Manufacturing, Commercial Operations and Commercialization If 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.
We have recently experienced manufacturing and inventory challenges for G7 that have resulted, and may continue to result from time to time, in disruptions in our ability to supply certain markets, including in the U.S. and other countries.
While we are currently working to remedy such challenges, we cannot predict when such manufacturing and inventory challenges will be remedied.
We will need to adequately predict the market demand for our products, remedy our recent manufacturing challenges, and increase our manufacturing capacity by a significant factor over the current level to meet or exceed the anticipated market demand by product.
We also commenced construction of a new facility in Ireland to scale up manufacturing capacity.
As further described in the risk factor above, we have recently experienced manufacturing and inventory challenges that have resulted, and may continue to result from time to time, in disruptions in our ability to supply certain markets, including in the U.S. and other countries.
Additionally, the majority of our operations are conducted at facilities located in San Diego, California, Mesa, Arizona, and Malaysia.
Earthquakes are of particular significance since our manufacturing facilities in California are located in an earthquake-prone area.
Wildfires are also increasingly common in southern California and present risk to our manufacturing operations.
If we experience manufacturing difficulties or disruptions, or if we fail to remedy our recent manufacturing and inventory challenges, it could result in insufficient inventory, increased costs, immediate shortages in product or component supply, and decreased sales, any of which may harm our business.
If any supplier, service provider or business partner violates laws or implements unethical practices, there could be disruptions to our supply chain, cancellation of our orders, a termination of the relationship with the partner or damage to our reputation, and the FDA or other regulators could seek to hold us responsible for such violations.
Certain of our distribution agreements generated 10% or more of our total revenue during the twelve months ended December 31, 2024.
In selling our G6, G7 and Dexcom One, we compete directly with the Diabetes Care division of Abbott Laboratories; Medtronic plc’s Diabetes Group; Roche Diabetes Care, a division of Roche Diagnostics; privately-held LifeScan, Inc.; and Ascensia Diabetes Care, each of which manufactures and markets products for the single-point finger stick device market.
Medtronic markets and sells one or more standalone glucose monitoring products both internationally and in the United States.
Medtronic and other third parties have developed or are developing insulin pumps integrated with CGM systems that provide, among other things, the ability to suspend insulin administration while the user’s glucose levels are low and to automate basal and bolus insulin dosing.
Our operations in countries outside the United States, which accounted for approximately 28% of our revenue for the twelve months ended December 31, 2024, are accompanied by certain financial and other risks.
We have a significant presence in the European Union, as well as significant sales in the European Union, such that any changes in tax laws in the European Union could impact our business.
The overall impact of such legislation in European Union member states is uncertain, and our business and financial condition could be adversely affected by any laws impacting our tax rate.
Following a 2016 referendum of voters in the United Kingdom, or the U.K, to exit from the European Union, or the E.U., the U.K. left the E.U. on January 31, 2020, which began a transition period that ended on December 31, 2020.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of the trade and cooperation agreement or otherwise, could prevent us from marketing our CGM systems in the U.K. and/or the E.U. and restrict our ability to generate revenue and achieve and sustain profitability.
Under the trade and cooperation agreement, U.K. service suppliers no longer benefit from automatic access to the entire E.U. single market, U.K. goods no longer benefit from the free movement of goods and there is no longer the free movement of people between the U.K. and the E.U.
Depending on the application of the terms of the trade and cooperation agreement, we could face new regulatory costs and challenges which could have a material adverse effect on our business, results of operations, or financial condition.
Some of these laws include the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, the European Union’s General Data Protection Regulation, or GDPR, the UK Data Protection Act and the UK GDPR, the California Consumer Privacy Act as amended, or CCPA, and the Washington My Health My Data Act, among others.
In the U.S., most state data breach notification laws consider violations to be unfair or deceptive trade practices and give the relevant state attorneys general (“AGs”) the authority to levy fines or bring enforcement actions.
In addition, other states have, or may, enact similar legislation.
It remains unclear what, if any, additional modifications will be made to this legislation or how it will be interpreted.
For instance, in the European Union, increasingly stringent data protection and privacy rules that have and will continue to have substantial impact on the use of patient data across the healthcare industry became effective in May 2018.

and 68 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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