DEXCOM, INC. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This document, including the following Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that are not purely historical regardingDexcom's or its management's intentions, beliefs, expectations and strategies for the future. These forward-looking statements fall within the meaning of the federal securities laws that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "expect," "plan," "anticipate," "believe," "estimate," "intend," "potential" or "continue" or the negative of these terms or other comparable terminology. Forward-looking statements are made as of the date of this report, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward-looking statements. The risks and uncertainties include, among other things, impacts on our business due to health pandemics or other contagious outbreaks, such as the current COVID-19 pandemic. The risks and uncertainties that could cause actual results to differ materially are more fully described under "Risk Factors" in Part II, Item 1A of this Quarterly Report, elsewhere in this Quarterly Report, and in our other reports filed with theSEC . We assume no obligation to update any of the forward-looking statements after the date of this report or to conform these forward-looking statements to actual results. You should read the following discussion and analysis together with our consolidated financial statements and related notes in Part I, Item 1 of this Quarterly Report. Overview WHO WE ARE 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 by patients, caregivers, and clinicians around the world. We received approval from theFood and Drug Administration , or FDA, and [[Image Removed:
dxcm-20210930_g2.jpg]]
commercialized our first product in 2006.
We launched our latest generation system,
the Dexcom G6® integrated Continuous
Glucose Monitoring System, or G6, in
2018.
Unless the context requires otherwise,
the terms "we," "us," "our," the
"company," or "Dexcom" refer to DexCom,
Inc. and its subsidiaries.
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[[Image Removed: dxcm-20210930_g3.jpg]] Global Presence
We have built a direct sales organization
in the United States , Australia , Canada ,
New Zealand , and certain countries in
Europe to call on health care
professionals, such as endocrinologists,
physicians and diabetes educators, who
can educate and influence patient
adoption of continuous glucose
monitoring. To complement our direct
sales efforts, we have entered into
distribution arrangements in the United
States , and certain countries in Africa ,
Asia , Europe , Latin America , and the
Middle East , as well as Australia ,
Canada , and New Zealand that allow
distributors to sell our products.
[[Image Removed: dxcm-20210930_g4.jpg]][[Image Removed: dxcm-20210930_g5.jpg]] Future Developments
Product Development: We plan to develop
future generations of technologies that
are focused on improved performance and
convenience and that will enable
intelligent insulin administration. Over
the longer term, we plan to continue to
develop and improve networked platforms
with open architecture, connectivity and
transmitters capable of communicating
with other devices. We also intend to
expand our efforts to accumulate CGM
patient data and metrics and apply
predictive modeling and machine learning
to generate interactive CGM insights that
can inform patient behavior.
Partnerships: We also continue to pursue
and support development partnerships with
insulin pump companies and companies or
institutions developing insulin delivery
systems, including automated insulin
delivery systems.
New Opportunities: We are also exploring
how to extend our offerings to other
opportunities, including for people with
Type 2 diabetes that are non-insulin
using, people with pre-diabetes, people
who are obese, people who are pregnant,
and people in the hospital setting.
Eventually, we may apply our
technological expertise to products
beyond glucose monitoring.
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[[Image Removed: dxcm-20210930_g7.jpg]] Impact of COVID-19 Pandemic
During 2020 and 2021, we have been
subject to challenging social and
economic conditions created as a
result of the novel strain of
coronavirus, SARS-CoV-2 (COVID-19).
These conditions continue to create
various financial impacts to our
operations by necessitating
precautions for our personnel to
operate safely both in person as
well as remotely. Costs incurred
include items like incremental
payroll costs, consulting support,
IT infrastructure and
facilities-related costs.
As the result of the COVID-19
pandemic, we made Dexcom CGM systems
available for use in hospital
settings and other healthcare
facilities to assist frontline
workers. The extent of the impact of
the COVID-19 outbreak on our
operational and financial
performance will depend on certain
developments, including the duration
and spread of the outbreak, impact
on our customers and our sales
cycles, employee or industry events,
and effect on our vendors, all of
which are uncertain and cannot be
predicted. The COVID-19 pandemic and
its adverse effects have become more
prevalent in the locations where we,
our customers, suppliers or
third-party business partners
conduct business and as a result, we
have experienced moderate
disruptions in our global
operations. We have experienced and
may experience constrained supply or
curtailed customer demand, including
due to customer loss of private
health insurance coverage for our
products, that could materially
adversely impact our business,
results of operations and overall
financial performance in future
periods. We currently utilize third
parties to, among other things,
manufacture components and materials
for our devices, and to provide
services such as sterilization
services and we purchase these
materials and services from numerous
suppliers worldwide.
The global COVID-19 pandemic has and
may continue to have an adverse
impact on our manufacturing and
distribution capabilities.
Disruptions relating to the COVID-19
pandemic, including shelter-in-place
orders in the U.S. and other
countries, could prevent employees,
suppliers, distributors, and others
from accessing manufacturing
facilities and from transporting our
products or the components required
to manufacture our products. For
example, we have experienced some
supply chain disruption due to the
global restrictions resulting from
the COVID-19 pandemic in the
manufacturing of our next-generation
CGM product. Further, worldwide
supply chain disruption relating to
the COVID-19 pandemic has resulted
in product shortages that has and
may continue to impact our ability
to manufacture our devices. As of
the filing date of this Form 10-Q,
the extent to which COVID-19 may
impact our financial condition or
results of operations or guidance is
uncertain. The effect of the
COVID-19 pandemic will not be fully
reflected in our results of
operations and overall financial
performance until future periods.
See "Risk Factors" in Part II, Item
1A of this Quarterly Report for
further discussion of the possible
impact of the COVID-19 pandemic on
our business.
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Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations
are based on our consolidated financial statements, which we have prepared in
accordance with U.S. GAAP. The preparation of these consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements as
well as the reported revenue and expenses during the reporting periods. On an
ongoing basis, we evaluate our estimates and judgments. We base our estimates on
historical experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 1 to the consolidated
financial statements included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2020 . The accounting policies and estimates that are
most critical to a full understanding and evaluation of our reported financial
results are described in Management's Discussion and Analysis of Financial
Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2020 . There were no material changes to
our critical accounting policies during the nine months ended September 30,
2021 .
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Results of Operations
Key Highlights for the Three Months Ended September 30, 2021
Revenues Gross Profit Operating Income
$650.2 million $446.9 million $118.3 million
up 30% from up 31% from up 26% from the
the same the same same period 2020
period 2020 period 2020
Cash, Cash
Operating Cash Equivalents, &
Net Income Flow Short-Term
Marketable
Securities
$70.9 million $247.3 million $2.70 billion
down 2% from up 68% from down .4% from
the same the same fiscal year 2020
period 2020 period 2020
Financial Overview
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Financial Overview
Three Months Ended
September 30, 2021 - 2020
(In millions, except per share amounts) 2021 2020 $ Change % Change
Revenues $ 650.2 $ 500.9 $ 149.3 30 %
Cost of sales 203.3 160.5 42.8 27 %
Gross profit $ 446.9 $ 340.4 $ 106.5 31 %
Gross profit as a percent of total revenue 68.7 % 68.0 %
Operating income $ 118.3 $ 94.1 $ 24.2 26 %
Net income 70.9 72.2 (1.3) (2) %
Basic net income per share 0.73 0.75 (0.02) (3) %
Diluted net income per share $ 0.71 $ 0.73 $ (0.02) (3) %
Nine Months Ended
September 30, 2021 - 2020
(In millions, except per share amounts) 2021 2020 $ Change % Change
Revenues $ 1,750.3 $ 1,357.8 $ 392.5 29 %
Cost of sales 542.4 476.8 65.6 14 %
Gross profit $ 1,207.9 $ 881.0 $ 326.9 37 %
Gross profit as a percent of total revenue 69.0 % 64.9 %
Operating income $ 265.2 $ 195.5 $ 69.7 36 %
Net income 174.1 138.4 35.7 26 %
Basic net income per share 1.80 1.48 0.32 22 %
Diluted net income per share $ 1.74 $ 1.43 $ 0.31 22 %
Revenue, Cost of Sales and Gross Profit
We expect that revenues we generate from the sales of our products will fluctuate from quarter to quarter. We typically experience seasonality, with lower sales in the first quarter of each year compared to the immediately preceding fourth quarter. This seasonal sales pattern relates toU.S. annual insurance deductible resets and unfunded flexible spending accounts. Three Months EndedSeptember 30, 2021 Compared to Three Months EndedSeptember 30, 2020 The revenue increase was primarily driven by increased sales volume of our disposable sensors due to the continued growth of our worldwide customer base, partially offset by increased volumes in theU.S. pharmacy channel at a lower price aligned with the evolution of ourU.S. channel strategy. Disposable sensor and other revenue comprised approximately 84% of total revenue and Reusable Hardware revenue comprised approximately 16% of total revenue for the three months endedSeptember 30, 2021 . Disposable sensor and other revenue comprised approximately 81% of total revenue and Reusable Hardware revenue comprised approximately 19% of total revenue for the three months endedSeptember 30, 2020 . Cost of sales increased primarily due to increased sales volume. The increase in gross profit and gross profit margin in the third quarter of 2021 compared to the third quarter of 2020 were primarily driven by increased revenues and cost savings associated with incremental improvements to product design and manufacturing efficiencies. Nine Months EndedSeptember 30, 2021 Compared to Nine Months EndedSeptember 30, 2020 The revenue increase was primarily driven by increased sales volume of our disposable sensors due to the continued growth of our worldwide customer base, partially offset by increased volumes in theU.S. pharmacy channel at a lower price aligned with the evolution of ourU.S. channel strategy. Disposable sensor and other revenue comprised approximately 84% of total revenue and Reusable Hardware revenue comprised approximately 16% of total revenue for the nine months ended 29 -------------------------------------------------------------------------------- Table of ContentsSeptember 30, 2021 . Disposable sensor and other revenue comprised approximately 81% of total revenue and Reusable Hardware revenue comprised approximately 19% of total revenue for the nine months endedSeptember 30, 2020 . Cost of sales increased primarily due to increased sales volume. The increase in gross profit and gross profit margin in the first nine months of 2021 compared to the first nine months of 2020 were primarily driven by increased revenues and cost savings associated with incremental improvements to product design and manufacturing efficiencies. Operating Expenses Quarter EndedSeptember 30, 2021 Compared to Quarter EndedSeptember 30, 2020 Three Months Ended September 30, 2021 - 2020 (In millions) 2021 2020 $ Change % Change Research and development$ 128.8 $ 87.7 $ 41.1 47 % as a % of total revenue 20 % 18 % Selling, general and administrative 199.8 158.6 41.2 26 % as a % of total revenue 31 % 32 % Total operating expenses$ 328.6 $ 246.3 $ 82.3 33 % as a % of total revenue (1) 51 %
49 % (1) The sum of the individual percentages may not equal the total due to rounding.
Research and Development Expense Research and development expense increased primarily due to$20.0 million in additional third party and consulting fees primarily related to software,$14.1 million in additional salaries, bonuses, and payroll-related costs, and$2.6 million in additional clinical trials costs. We continue to believe that focused investments in research and development are critical to our future growth and competitive position in the marketplace, and to the development of new and updated products and services that are central to our core business strategy. Selling, General and Administrative Expense Selling, general and administrative expense increased primarily due to$13.4 million in additional salaries, bonuses, and payroll-related costs,$12.1 million in additional advertising and marketing costs, and$5.2 million in additional legal costs partially offset by$4.7 million in lower third party service provider fees. Nine Months EndedSeptember 30, 2021 Compared to Nine Months EndedSeptember 30, 2020 Nine Months Ended September 30, 2021 - 2020 (In millions) 2021 2020 $ Change % Change Research and development$ 367.3 $ 240.7 $ 126.6 53 % as a % of total revenue 21 % 18 % Selling, general and administrative 575.4 444.8 130.6 29 % as a % of total revenue 33 % 33 % Total operating expenses$ 942.7 $ 685.5 $ 257.2 38 % as a % of total revenue 54 %
50 % (1) The sum of the individual percentages may not equal the total due to rounding.
Research and Development Expense Research and development expense increased primarily due to$51.3 million in additional third party and consulting fees primarily related to software,$42.1 million in additional salaries, bonuses, and payroll-related costs, and$11.7 million in additional clinical trials costs. We continue to believe that focused investments in research and development are critical to our future growth and competitive position in the marketplace, and to the development of new and updated products and services that are central to our core business strategy. 30 -------------------------------------------------------------------------------- Table of Contents Selling, General and Administrative Expense Selling, general and administrative expense increased primarily due to$56.5 million in additional advertising and marketing costs,$46.7 million in additional salaries, bonuses, and payroll-related costs,$8.7 million of investments in customer experience, partially offset by$9.2 million in lower third party service provider fees. Non-Operating Income and Expenses Interest Expense Interest expense is comprised primarily of costs related to our senior convertible notes. Interest expense increased$0.7 million to$25.1 million for the three months endedSeptember 30, 2021 compared to$24.4 million for the same period of 2020. Interest expense increased$15.0 million to$75.1 million for the nine months endedSeptember 30, 2021 compared to$60.1 million for the nine months endedSeptember 30, 2020 . The increase in interest expense for the periods presented is primarily due to theMay 2020 issuance of our 2025 Notes. Loss on Extinguishment of Debt We recorded a$0.8 million loss on extinguishment of debt during the three and nine months endedSeptember 30, 2021 in connection with the conversions of a portion of our 2023 Notes. We recorded losses on extinguishment of debt of$0.5 million and$5.9 million during the three and nine months endedSeptember 30, 2020 , respectively, in connection with the repurchase and conversions of our 2022 Notes. See Note 4 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more information about these transactions. Interest and Other Income (Expense), Net Interest and other income (expense), net consists primarily of interest income on our marketable debt securities portfolio and foreign currency transaction gains and losses due to the effects of foreign currency fluctuations. Interest income was$0.3 million and$1.2 million for the three and nine months endedSeptember 30, 2021 , respectively, compared to$2.4 million and$12.0 million for the three and nine months endedSeptember 30, 2020 , respectively. The decrease in interest income for the three months endedSeptember 30, 2021 was primarily related to a decrease in average invested balances compared to the same period in 2020. The decrease in interest income for the nine months endedSeptember 30, 2021 was primarily related to a decline in market interest rates, partially offset by an increase in average invested balances compared to the same period in 2020. Income Tax Expense We recorded income tax expense of$19.8 million on pre-tax income of$90.7 million for the three months endedSeptember 30, 2021 compared to income tax expense of$2.9 million on pre-tax income of$75.1 million for the three months endedSeptember 30, 2020 . We recorded income tax expense of$14.5 million on pre-tax income of$188.6 million for the nine months endedSeptember 30, 2021 and income tax expense of$5.3 million on pre-tax income of$143.7 million for the nine months endedSeptember 30, 2020 . Our estimated annual effective tax rate from normal, recurring operations did not change materially during the three months endedSeptember 30, 2021 . Our income tax expense for the three months endedSeptember 30, 2021 also includes the discrete impact of excess tax benefits from stock compensation. Our income tax expense for the prior period is attributable to foreign and state income tax expense in taxable jurisdictions with no net operating losses. We maintained a valuation allowance on our deferred tax assets during the prior period, most of which was released in the fourth quarter of 2020. Our income tax expense for the nine months endedSeptember 30, 2021 is primarily attributable to income tax expense from normal, recurring operations at an estimated annual effective tax rate of 27.8%, offset by excess tax benefits from stock compensation net of disallowed executive compensation and a one-time tax benefit related to the revaluation of ourU.K. net operating loss deferred tax asset resulting from the increase in theU.K. corporate tax rate from 19% to 25%, effectiveApril 2023 . Income tax expense in the prior period is primarily related to foreign income taxes in jurisdictions with current taxable income. We maintained a valuation allowance on our deferred tax assets during the prior period, most of which was released in the fourth quarter of 2020. 31
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Liquidity and Capital Resources
Overview, Capital Resources, and Capital Requirements
Our principal sources of liquidity are our existing cash, cash equivalents and
marketable securities, cash generated from operations, proceeds from our senior
convertible notes issuances, and access to our revolving line of credit. Our
primary uses of cash have been for research and development programs, selling
and marketing activities, capital expenditures, acquisitions of businesses, and
debt service costs.
We expect that cash provided by our operations may fluctuate in future periods
as a result of a number of factors, including fluctuations in our operating
results, working capital requirements and capital deployment decisions. We have
historically invested our cash primarily in U.S. dollar-denominated, investment
grade, highly liquid obligations of U.S. government-sponsored enterprises,
commercial paper, corporate debt, and money market funds. Certain of these
investments are subject to general credit, liquidity and other market risks. The
general condition of the financial markets and the economy may increase those
risks and may affect the value and liquidity of investments and restrict our
ability to access the capital markets.
Our future capital requirements will depend on many factors, including but not
limited to:
The revenue generated by sales Our ability to efficiently The success of our research and
of our approved products and scale our operations to meet development efforts;
other future products; demand for our currentand any
future products;
The expenses we incur in The costs, timing and risks of The emergence of competing or
manufacturing, developing, delays of additional complementary technological
selling and marketing our regulatory approvals; developments;
products;
The quality levels of our The costs of filing, The terms and timing of any
products and services; prosecuting, defending and collaborative, licensing and
enforcing any patent claims other arrangements that we may
and other intellectual establish; and
property rights;
The third-party reimbursement of The rate of progress and cost The acquisition of businesses,
our products for our customers; of our clinical trials and products and technologies and
other development activities; our ability to integrate and
manage any acquired businesses,
products and technologies.
The evolution of the internationalexpansion of our business.
We expect that existing cash and cash flows from our future operations will generally be sufficient to fund our ongoing core business. As current borrowing sources become due, we may be required to access the capital markets for additional funding. As we assess inorganic growth strategies, we may need to supplement our internally generated cash flow with outside sources. In the event that we are required to access the debt market, we believe that we will be able to secure reasonable borrowing rates. As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow generation as well as our ability to access the market in light of those earning levels. A substantial portion of our operations are located inthe United States , and the majority of our sales since inception have been made inU.S. dollars. Accordingly, our assessment is that we have no material net exposure to foreign currency exchange rate fluctuations at this time. However, as our business in markets outside ofthe United States continues to increase, we will be exposed to foreign currency exchange risk related to our foreign operations. Fluctuations in the rate of exchange between theU.S. dollar and foreign currencies, primarily the Australian Dollar, the British Pound, the Canadian Dollar, and the Euro, could adversely affect our financial results, including our revenues, revenue growth rates, gross margins, income and losses as well as assets and liabilities. We currently engage in hedging transactions to reduce foreign currency risks. We will continue to monitor and manage our financial exposures due to exchange rate fluctuations as an integral part of our overall risk management 32 -------------------------------------------------------------------------------- Table of Contents program. Our cash, cash equivalents and short-term marketable securities totaled$2.70 billion as ofSeptember 30, 2021 . None of those funds were restricted and approximately 95% of those funds were located inthe United States . Our cash, cash equivalents and short-term marketable securities as ofSeptember 30, 2021 decreased by$9.8 million fromDecember 31, 2020 due to the factors described in "Cash Flows" below. We believe that our cash, cash equivalents, and marketable securities balances, projected cash contributions from our commercial operations, and our$200.0 million revolving line of credit, of which$193.6 million remains available, will be sufficient to meet our anticipated seasonal working capital needs, capital expenditure requirements, contractual obligations, commitments, debt service requirements, and other liquidity requirements associated with our operations for at least the next 12 months. Revolving Credit Agreement OnDecember 19, 2018 , we entered into an amended and restated revolving credit agreement which was subsequently amended onMay 11, 2020 (as amended, the Credit Agreement). The Credit Agreement provides for 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. As ofSeptember 30, 2021 , we had no outstanding borrowings,$6.4 million in outstanding letters of credit, and a total available balance of$193.6 million under the Credit Agreement. OnOctober 13, 2021 , we amended and restated the Credit Agreement (as amended and restated, the Amended Credit Agreement). The Amended Credit Agreement also includes a subfacility of up to$25.0 million for letters of credit. Subject to customary conditions and the approval of any lender whose commitment would be increased, we have the option to increase the maximum principal amount available under the Amended Credit Agreement by up to an additional$300.0 million , resulting in a maximum available principal amount of$500.0 million . However, at this time none of the lenders have committed to provide any such increase in their commitments. Revolving loans under the Amended Credit Agreement will be available for general corporate purposes, including working capital and capital expenditures. We monitor counterparty risk associated with the institutional lenders that are providing this credit facility. We currently believe that this credit facility will be available to us should we choose to borrow under it. Senior Convertible Notes The following table summarizes our outstanding senior convertible note obligations as ofSeptember 30, 2021 : Aggregate Initial Conversion Principal Rate per Share of Conversion Price per Issuance Date Coupon Rate (in millions) Maturity Date Common Stock Share of Common Stock November 2018 0.75%$ 817.4 December 1, 2023 6.0869$164.29 May 2020 0.25% 1,207.5 November 15, 2025 1.6655$600.42 $ 2,024.9 We used a portion of the net proceeds from the offering of the 2023 Notes to repurchase 0.8 million shares of our common stock for$100.0 million in 2018. We used$282.6 million of the net proceeds from the offering of the 2025 Notes to repurchase a portion of our 2022 Notes; the remaining 2022 Notes were converted for shares of our common stock during 2020. We intend to use the remainder of the net proceeds from the Notes offerings for general corporate purposes and capital expenditures, including working capital needs. We may also use the net proceeds to expand our current business through in-licensing or acquisitions of, or investments in, other businesses, products or technologies; however, we do not have any significant commitments with respect to any such acquisitions or investments at this time. 2023 Note Hedge In connection with the offering of the 2023 Notes, inNovember 2018 we entered into convertible note hedge transactions (the 2023 Note Hedge) with two of the initial purchasers of the 2023 Notes (the 2023 Counterparties) entitling us to purchase up to 5.2 million shares of our common stock at an initial price of$164.29 per share, each of which is subject to adjustment. The cost of the 2023 Note Hedge was$218.9 million and it will expire onDecember 1, 2023 . The 2023 Note Hedge is expected to reduce the potential equity dilution upon any conversion of the 2023 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2023 Notes if the daily volume-weighted average price per share of our common stock exceeds the strike price of the 2023 Note Hedge. The strike price of the 2023 Note Hedge initially corresponds to the conversion price of the 2023 Notes and is subject to certain adjustments under the terms of the 2023 Note Hedge. See 33 -------------------------------------------------------------------------------- Table of Contents Note 4 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for conversion activity related to the 2023 Notes and shares received as the result of exercising a portion of the 2023 Note Hedge. 2023 Warrants InNovember 2018 , we also sold warrants (the 2023 Warrants) to the 2023 Counterparties to acquire up to 5.2 million shares of our common stock for cash proceeds of$183.8 million . The 2023 Warrants require net share settlement and a pro-rated number of warrants will expire on each of the 60 scheduled trading days starting onMarch 1, 2024 . See Note 4 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more information about the terms of the Credit Agreement, our senior convertible notes, the 2023 Note Hedge, and the 2023 Warrants. Cash Flows [[Image Removed: dxcm-20210930_g9.jpg]] As ofSeptember 30, 2021 , we had$2.70 billion in cash, cash equivalents and short-term marketable securities, which is a decrease of$9.8 million compared to$2.71 billion as ofDecember 31, 2020 . The primary cash flows during the nine months endedSeptember 30, 2021 and 2020 are described below. See the consolidated financial statements in Part I, Item 1 of this Quarterly Report for complete consolidated statements of cash flows for these periods. 34
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Nine Months Ended
September 30, 2021 September 30, 2020
$174.1 million of net $138.4 million of net
income and $255.2 million income and $195.4 million
of net non-cash of net non-cash
adjustments, partially adjustments, partially
offset by $92.6 million of offset by $30.2 million of
net changes in working net changes in working
Operating Cash Flows capital balances capital balances
Net non-cash adjustments Net non-cash adjustments
were primarily related to were primarily related to
share-based compensation, share-based compensation,
non-cash interest expense non-cash interest expense
for our senior convertible for our senior convertible
notes, and depreciation and notes, and depreciation and
amortization. amortization.
$625.1 million net proceeds $844.6 million net
from marketable securities purchases of marketable
securities
$309.0 million capital $138.8 million capital
Investing Cash Flows expenditures expenditures
$31.6 million in
acquisitions, net of cash
acquired
$4.0 million in minority
equity investments
$20.3 million in proceeds $1.19 billion in proceeds
from the issuance of common from issuance of
stock under our employee convertible notes, net of
stock plans issuance costs
$9.1 million in payments $15.3 million in proceeds
Financing Cash Flows for financing leases from the issuance of common
stock under our employee
stock plans
$282.6 million cash outflow
for repurchase of
convertible notes
Contractual Obligations
We presented our contractual obligations as of December 31, 2020 in our Annual
Report on Form 10-K for the twelve months then ended. There were no significant
changes to our 2025 Notes and lease obligations. See Note 4 to the consolidated
financial statements in Part I, Item 1 of this Quarterly Report for conversion
activity related to our 2023 Notes. As of September 30, 2021 , we had
approximately $503.9 million of open purchase orders and contractual obligations
in the ordinary course of business, the majority of which are due within one
year.
Off-Balance Sheet Arrangements
As of
For a description of recently issued accounting guidance that is applicable to our consolidated financial statements, see Note 1 to the consolidated financial statements in Part I, Item 1 of this Quarterly Report.
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