Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 26, 2018 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | DXCM | |
Entity Registrant Name | DEXCOM INC | |
Entity Central Index Key | 1,093,557 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 88,355,733 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 300.2 | $ 441.5 |
Short-term marketable securities | 305.9 | 107.1 |
Accounts receivable, net | 162 | 134.3 |
Inventory | 46.2 | 45.2 |
Prepaid and other current assets | 21.7 | 16.6 |
Total current assets | 836 | 744.7 |
Property and equipment, net | 156.8 | 145.6 |
Goodwill | 11.9 | 12.1 |
Other assets | 2.8 | 1.7 |
Total assets | 1,007.5 | 904.1 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 117.9 | 87.2 |
Accrued payroll and related expenses | 46.1 | 48.5 |
Deferred revenue | 6.8 | 3.2 |
Total current liabilities | 170.8 | 138.9 |
Other liabilities | 19.6 | 18.2 |
Long term senior convertible notes | 335 | 327.6 |
Total liabilities | 525.4 | 484.7 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5.0 shares authorized; no shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 0 | 0 |
Common stock, $0.001 par value, 200.0 authorized; 88.7 and 88.4 issued and outstanding, respectively, at June 30, 2018; and 87.3 and 87.0 shares issued and outstanding, respectively, at December 31, 2017 | 0.1 | 0.1 |
Additional paid-in capital | 1,149.1 | 1,093.7 |
Accumulated other comprehensive loss | (1.3) | (2.6) |
Accumulated deficit | (665.8) | (671.8) |
Total stockholders’ equity | 482.1 | 419.4 |
Total liabilities and stockholders’ equity | $ 1,007.5 | $ 904.1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 88,700,000 | 87,300,000 |
Common stock, shares outstanding | 88,400,000 | 87,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues | $ 242.5 | $ 170.6 | $ 426.9 | $ 312.9 |
Cost of sales | 88.9 | 53.1 | 154.4 | 101.3 |
Gross profit | 153.6 | 117.5 | 272.5 | 211.6 |
Operating expenses | ||||
Research and development | 47.2 | 45.3 | 92 | 93.4 |
Selling, general and administrative | 111.3 | 85.8 | 216.1 | 172.2 |
Total operating expenses | 158.5 | 131.1 | 308.1 | 265.6 |
Operating loss | (4.9) | (13.6) | (35.6) | (54) |
Income from equity investments | 42.7 | 0 | 50.1 | 0 |
Other income (expense) | (5.6) | 1.8 | (3) | 2.2 |
Interest income | 2.2 | 0.5 | 3.7 | 0.7 |
Interest expense | (4.8) | (3.1) | (9.6) | (3.6) |
Income (loss) before income taxes | 29.6 | (14.4) | 5.6 | (54.7) |
Income tax benefit | (0.6) | (17.3) | (0.4) | (15.9) |
Net income (loss) | $ 30.2 | $ 2.9 | $ 6 | $ (38.8) |
Basic net income (loss) per share | $ 0.34 | $ 0.03 | $ 0.07 | $ (0.45) |
Shares used to compute basic net income (loss) per share | 88.2 | 86.4 | 87.7 | 85.8 |
Diluted net income (loss) per share | $ 0.34 | $ 0.03 | $ 0.07 | $ (0.45) |
Shares used to compute diluted net income (loss) per share | 89.4 | 87.4 | 88.8 | 85.8 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income (loss) | $ 30.2 | $ 2.9 | $ 6 | $ (38.8) |
Foreign currency translation gain (loss) | 3.6 | (0.3) | 1.3 | (0.6) |
Comprehensive income (loss) | $ 33.8 | $ 2.6 | $ 7.3 | $ (39.4) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating activities | ||
Net income (loss) | $ 6 | $ (38.8) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation and amortization | 12.7 | 7.6 |
Share-based compensation | 50.2 | 55.9 |
Non-cash interest expense | 7.5 | 2.1 |
Unrealized income on equity investment | (50.1) | 0 |
Deferred tax | 0 | (17.1) |
Other non-cash income and expenses | 4.7 | 6.1 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (28.1) | 0.5 |
Inventory | (1) | 2.8 |
Prepaid and other assets | (5) | (6.2) |
Accounts payable and accrued liabilities | 32.9 | 1.8 |
Accrued payroll and related expenses | (2) | (2.1) |
Deferred revenue | 3.6 | 0.5 |
Deferred rent and other liabilities | 1.3 | 1.5 |
Net cash provided by operating activities | 32.7 | 14.6 |
Investing activities | ||
Purchase of available-for-sale marketable securities | (224.1) | (91.4) |
Proceeds from the maturity of available-for-sale marketable securities | 75.4 | 19.6 |
Purchase of other equity investments | 1 | 0 |
Purchase of property and equipment | (25.6) | (34.9) |
Net cash used in investing activities | (175.3) | (106.7) |
Financing activities | ||
Net proceeds from issuance of common stock | 5.2 | 5.7 |
Payments on acquisition related contingent consideration liability | (1.8) | 0 |
Proceeds from issuance of convertible debt, net of issuance costs | 0 | 389 |
Proceeds from short-term borrowings | 0 | 75 |
Repayment of short-term borrowings | 0 | (75) |
Net cash provided by financing activities | 3.4 | 394.7 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1.8) | (1.2) |
Increase (decrease) in cash, cash equivalents and restricted cash | (141) | 301.4 |
Cash, cash equivalents and restricted cash, beginning of period | 441.5 | 94.5 |
Cash, cash equivalents and restricted cash, end of period | 300.5 | 395.9 |
Cash | 300.2 | 395.9 |
Restricted cash | 0.3 | 0 |
Supplemental disclosure of non-cash investing and financing transactions: | ||
Acquisition of property and equipment included in accounts payable and accrued liabilities | $ 6.3 | $ 4.9 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Organization and Business DexCom, Inc. is a medical device company focused on the design, development and commercialization of continuous glucose monitoring (“CGM”) systems for ambulatory use by people with diabetes and by healthcare providers for the treatment of people with diabetes. 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 incurred operating losses since our inception and have an accumulated deficit of $665.8 million at June 30, 2018 . As of June 30, 2018 , we had available cash, cash equivalents and marketable securities totaling $606.1 million and working capital of $665.2 million . Our ability to transition to, and maintain, profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to reduce planned increases in compensation expenses and other operating expenses needed to support the growth of our business which could have an adverse impact on our ability to achieve our intended business objectives. We believe our working capital resources will be sufficient to fund our operations through at least August 1, 2019 . We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. 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 and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2017 included in the Annual Report on Form 10-K filed by us with the Securities and Exchange Commission on February 27, 2018. The 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. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Significant estimates include excess or obsolete inventories, valuation of inventory, warranty accruals, convertible debt, employee bonus, clinical trial expenses, allowance for bad debt, refunds, rebates, including pharmacy rebates and self-funded insurance liabilities. Share-Based Compensation On March 8, 2018, the Compensation Committee of the Board of Directors of the Company approved a grant of 43,370 performance restricted stock units (PSUs) to our CEO, Kevin Sayer, that vest based on a performance condition, 2018 sensor unit sales, and a market condition, our 3 -year relative Total Shareholder Return (“TSR”) performance versus the Nasdaq Composite Index from January 1, 2018 to December 31, 2020 (the “Performance Period”). This grant of PSUs is also subject to continuing employment requirements. The actual number of shares that vest can range from 0% to 200% of target shares awarded depending upon the level of achievement of the respective market and performance conditions during the Performance Period. The fair value of the PSUs is estimated on the grant date using a Monte Carlo simulation model due to the market condition for the TSR component. This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the PSUs. The maximum share-based compensation expense related to this grant over the Performance Period is approximately $4.5 million . Share-based compensation expense is updated based on the expected achievement of the related performance conditions at the end of each reporting period. We recorded $25.6 million and $50.2 million in share-based compensation expense during the three and six months ended June 30, 2018 , compared to $25.3 million and $55.9 million during the three and six months ended June 30, 2017 . At June 30, 2018 , unrecognized estimated compensation costs related to unvested restricted stock units and PSUs totaled $172.6 million and is expected to be recognized through 2021. Revenue Recognition We adopted ASC Topic 606, effective January 1, 2018 using the modified retrospective method. Our revenue policy prior to the adoption of ASC Topic 606 is stated in Note 1 of the audited financial statements and related notes thereto for the year ended December 31, 2017 included in the Annual Report on Form 10-K filed by us with the Securities and Exchange Commission on February 27, 2018. Revenue for periods after January 1, 2018 We generate our revenue from the sale of our durable systems and disposable units (the "Components"). Our durable system includes a reusable transmitter, a receiver, a power cord and a USB cable. Disposable sensors for use with the durable system are sold separately. We also provide free of charge software and mobile applications for use with our durable systems and disposable sensors. The initial durable system price is generally not dependent upon the subsequent purchase of any amount of disposable sensors. We sell our durable systems and disposable units through two main sales channels: 1) directly to customers who use our products or organizations (the "Direct Channel") and 2) to distribution partners who resell our products (the "Distributor Channel"). Under the Direct Channel, we sell our durable systems and disposable units to customers who use our products and we receive payment directly from customers who use our products, organizations and third-party payors. Third-party payors primarily include commercial insurance companies and federal and state agencies (under Medicare and Medicaid programs). With respect to customers who directly pay for products, the products are generally paid for at the time of shipment using a customer’s credit card. We also receive a prescription or statement of medical necessity and, for insurance reimbursement customers, an assignment of benefits prior to shipment. Under our Distributor Channel, we have entered into distribution agreements with Byram Healthcare and its subsidiaries (“Byram”), Cardinal Health and affiliates (including Edgepark Medical Supplies) and other distributors that allow the distributors to sell our durable systems and disposable units. The majority of our distributors stock our products, and we refer to these distributors as Stocking Distributors, whereby the Stocking Distributors fulfill orders for our product from their inventory. We also have contracts with certain distributors that do not stock our products, but rather products are shipped directly to the customer by us on behalf of our distributor, and we refer to these distributors as Drop-Ship Distributors. We determine revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation Contracts and performance obligations We account for a contract with a customer when there is an approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. 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 performance obligations. Components are individually priced and can be purchased separately or bundled in a contract. For bundled contracts, we account for individual components as a separate performance obligation as the components are separately identifiable from each other and the customer can benefit from each component on its own or with other resources that are readily available to the customer. We also provide free-of-charge software, mobile applications and updates for our DexCom Share ® remote monitoring system. Transaction price Transaction prices of the Components are typically based on contracted rates. In determining the transaction price, we evaluate whether the price is subject to variable consideration such as sales incentives, rebates, price adjustments or return provisions, to determine the consideration to which we expect to be entitled. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is estimated at contract inception and updated at each reporting period as additional information becomes available if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Standalone selling price of our free-of-charge software, mobile applications and updates are based on an expected cost plus a margin approach. We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. We report revenue net of taxes collected from customers, which are subsequently remitted to governmental authorities. We account for shipping and handling charges billed to customers as costs to fulfill our promise to transfer the products to the customer and as such, shipping and handling costs billed to customers are included in revenue while related costs are included as cost of sales. We generally provide a “ 30 -day money back guarantee” program whereby first-time end-user customers in most of our sales channels who purchase a durable system and a package of four disposable sensors may return the durable system for any reason within thirty days of purchase and receive a full refund of the purchase price of the durable system. Our returns have historically been immaterial. Most distributors do not have rights of return per their distribution agreement outside of our limited warranty. The distributors typically have a limited time frame to notify us of any missing, damaged, defective or non-conforming products. For any such products, we shall either, at our option, replace the portion of defective or non-conforming product at no additional cost to the distributor or cancel the order and refund any portion of the price paid to us at that time for the sale in question. We contract with various pharmacy benefit managers and private payor organizations, primarily insurance companies, for the payment of rebates based on contracted discounts after the final dispensing of the product by a distributor or retail pharmacy to a pharmacy benefit plan participant based upon contractual agreements with private sector benefit providers. We estimate these pharmacy rebates using the expected value method and record such estimates in the same period the related revenue is recognized, resulting in a reduction of revenue and the establishment of a current liability. The pharmacy rebate liability is based on contractual discount rates, expected utilization under each contract and our estimate of the amount of inventory in the distribution channel that will become subject to such rebates. Our estimates for expected utilization for rebates are based on historical rebate claims and to a lesser extent third party market research data. Pharmacy rebates are generally invoiced and paid monthly or quarterly in arrears so that our accrual consists of an estimate of the amount expected to be incurred for the current month's or quarter’s activity, plus an accrual for unpaid rebates from prior periods, and an accrual for inventory in the distribution channel. Refer to Note 2 for additional revenue related disclosures. Revenue recognition Revenue is recognized when control is transferred to our customers, in an amount that reflects the net consideration we expect to be entitled. The timing of revenue recognition is based on the satisfaction of performance obligations, which can be satisfied at a point in time or over time, depending on the nature of the performance obligation. Substantially all of our performance obligations associated with our durable systems and disposable units are satisfied at a point in time, which typically occurs at shipment of our products. Terms of direct and distributor orders are generally Freight on Board (or Free Carrier (“FCA”) shipping point for international orders. For certain of our distributors, control transfers at delivery of the product to the customer. We recognize revenue from contracted insurance payors and distributors based on the contracted rate and estimate of any variable consideration. For non-contracted insurance payors, we obtain prior authorization from the payor and recognize revenue based on the estimated collectible amount and historical experience. In cases where our free of charge software, mobile applications and updates, are deemed to be separate performance obligations, revenue is recognized over time on a ratable basis over the estimated life of the related product component. Our sales of receiver and transmitter components of our CGM system include an assurance-type warranty which is accounted for based on the cost accrual method recognized as expense when the products are sold and is not considered a separate performance obligation. Self-Funded Health Insurance Effective January 1, 2018, we are self-insured for claims under our U.S. health benefit plans subject to stop loss policies. We established an accrual for this self-insured program with the assistance of outside actuaries based on claims experience and an estimate of claims incurred but not yet reported (“IBNR”) and other relevant factors. The projections involved in this process are subject to uncertainty related to the timing and amount of claims filed, levels of IBNR, fluctuations in health care costs and changes to regulatory requirements. Actual claims may differ from the estimate and any difference could be significant. The accrued obligation for our self-insured program is included in “Accounts payable and accrued liabilities” in the consolidated balance sheets was $2.7 million as of June 30, 2018 . We also have a restricted cash account for claim payments associated with our self-insured program, included in the "Prepaid and other current assets" line item in the consolidated balance sheets. Recent Accounting Guidance Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued authoritative guidance for Revenue from Contracts with Customers ASC Topic 606 ("ASU 2014-09"), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the guidance is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The guidance defines a five step process to achieve this core principle and it is possible when the five step process is applied, more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. We have applied this standard electing the modified retrospective method. The company applied the practical expedient permitted under ASC Topic 606 to those contracts that were not completed, as of January 1, 2018. Our analysis of open contracts as of January 1, 2018, resulted in no material cumulative effect from applying ASU 2014-09. In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes - Intra-Entity Asset Transfer other than Inventory (Topic 740) (“ASU 2016-16”), which would require the recognition of the tax expense from the sale of an asset other than inventory when the transfer occurs, rather than when the asset is sold to a third party or otherwise recovered through use. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning period of adoption. Due to the full valuation allowance on the U.S. deferred tax assets, we have determined that none of the provisions of ASU 2016-16 have a significant impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01 to amend the guidance on the classification and measurement of financial instruments, which was further amended in February 2018 by ASU No. 2018-03. The new guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The new guidance also amends certain disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this guidance did not have a significant impact on our financial statements. In December 2016, the FASB issued Accounting Standards Update No. 2016-18, Restricted Cash (ASU 2016-18). This update requires additional disclosure and that the Statement of Cash Flow explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash should be included with cash & cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 with early adoption permitted. The adoption of this ASU impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. Recently issued accounting pronouncements not yet adopted In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ( “ ASU 2018-07 ”) , which simplifies the accounting for share-based payments made to nonemployees so the accounting for such payments is substantially the same as those made to employees. Under ASU 2018-07, share based awards to nonemployees will be measured at fair value on the grant date of the awards, entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classified according to Accounting Standards Codification 718 upon vesting which eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We are in the process of evaluating the impact of adoption of ASU 2018-07 on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which require a lessee to recognize a lease payment liability and a corresponding right of use asset on their balance sheet for all lease terms longer than 12 months, lessor accounting remains largely unchanged. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2018 and early adoption is permitted. We will adopt ASU 2016-02 in the first quarter of 2019. We have started the process of gathering and assessing our lease contracts and implementing changes to our systems. We expect the adoption will lead to an increase in the assets and liabilities recorded on our Consolidated Balance Sheets. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Adoption of ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers On January 1, 2018 we adopted ASC Topic 606 electing the modified retrospective method. We applied the practical expedient permitted under ASC Topic 606 to those contracts which were not completed as of the date of initial adoption. Results for reporting periods after January 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with legacy accounting guidance under ASC Topic 605. The impact of applying ASC Topic 606 was not material, as such we did not record a cumulative adjustment to retained earnings. Practical expedients and exemptions Under the practical expedients in ASC Topic 606, we generally expense incentive compensation associated with our internal sales force when incurred because the amortization period is less than one year. These costs are recorded within selling, general and administrative expense. Disaggregation of Revenue We sell our durable systems and disposable units through a direct sales force in the United States, Canada and some countries of Europe, and through distribution arrangements in the United States, Canada, Australia, New Zealand, and in some countries of Europe, Asia, Latin America, the Middle East and Africa. During the three and six months ended June 30, 2018 , no individual country, outside the United States, generated revenue that represented more than 10% of our total revenue. We disaggregate our revenue from contracts by major sales channel and geography as we believe they best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors. Revenues by geographic region The following table sets forth revenues by our two primary geographical markets, United States and outside of the United States, based on the geographic location to which we deliver the product (in millions): Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 Revenues: United States $ 189.6 $ 335.0 Outside of the United States 52.9 91.9 Total $ 242.5 $ 426.9 Revenues by customer sales channel The following table sets forth revenues disaggregated by customer sales channel (in millions): Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 Revenues: Distributor $ 158.4 $ 276.7 Direct 84.1 150.2 Total $ 242.5 $ 426.9 Contract Balances The timing of revenue recognition, billing and cash collections results in trade receivables and deferred revenue on the consolidated balance sheet. A receivable is recognized in the period our right to the consideration is unconditional. We generally do not have any contracts or performance obligations with a term of more than one year. Our contracts with customers do not typically include extended payment terms. Payment terms vary by contract type and type of customer and generally range from 30 to 60 days. Substantially all of our deferred revenue as of June 30, 2018 is associated with an upgrade promotional program related to our G6 system and certain of our free of charge software and mobile applications which will be recognized during 2018. During the three months ended June 30, 2018 , we recognized revenue of $2.0 million that was recorded as deferred revenue as of March 31, 2018 . During the six months ended June 30, 2018 , we recognized revenue of $1.9 million that was recorded as deferred revenue as of December 31, 2017 . |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Net Income (Loss) Per Common Share Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and, when dilutive, potential common share equivalents from outstanding options and unvested RSUs settleable in shares of common stock (using the treasury-stock method), and potential common shares from convertible securities (using the if-converted method). The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share data): Three Months Ended Six Months Ended 2018 2017 2018 2017 Net income (loss) $ 30.2 $ 2.9 $ 6.0 $ (38.8 ) Net income (loss) per common share: Basic $ 0.34 $ 0.03 $ 0.07 $ (0.45 ) Diluted $ 0.34 $ 0.03 $ 0.07 $ (0.45 ) Basic weighted average shares outstanding 88.2 86.4 87.7 85.8 Effect of potentially dilutive stock options 0.2 0.4 0.3 — Effect of potentially dilutive share-based awards 1.0 0.6 0.8 — Diluted weighted average shares outstanding 89.4 87.4 88.8 85.8 Outstanding anti-dilutive securities not included in diluted net income (loss) per share attributable to common stockholders calculation (in millions): Three Months Ended Six Months Ended 2018 2017 2018 2017 Options outstanding to purchase common stock — — — 0.4 Unvested restricted stock units — 0.1 0.4 3.0 Senior convertible notes 4.0 4.0 4.0 4.0 Total 4.0 4.1 4.4 7.4 |
Financial Statement Details
Financial Statement Details | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Financial Statement Details [Abstract] | |
Financial Statement Details | Financial Statement Details (in millions) Short-Term Marketable Securities Short-term marketable securities, consisting of equity and debt securities, were as follows: June 30, 2018 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value Equity investment in Tandem Diabetes Care, Inc $ 5.0 $ 50.1 $ — $ 55.1 Debt securities, available for sale U.S. government agencies $ 199.6 $ — $ (0.2 ) $ 199.4 Commercial paper 49.3 — — 49.3 Corporate debt 2.1 — — 2.1 Total available-for-sale debt securities $ 251.0 $ — $ (0.2 ) $ 250.8 Total marketable securities $ 256.0 $ 50.1 $ (0.2 ) $ 305.9 Gross unrealized gain on our equity investment in Tandem Diabetes Care, Inc. of $42.7 million and $50.1 million for three and six months ended June 30, 2018 , respectively is included in our Consolidated Statements of Operations under " Income from equity investments ." December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value U.S. government agencies $ 87.5 $ — $ (0.2 ) $ 87.3 Corporate debt 14.7 — — 14.7 Commercial paper 5.1 — — 5.1 Total marketable securities $ 107.3 $ — $ (0.2 ) $ 107.1 As of June 30, 2018 , the estimated market value of available-for-sale marketable securities with contractual maturities of up to one year and up to 13 months were $249.8 million and $1.0 million , respectively. We do not generally intend to sell the 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. Inventory June 30, 2018 December 31, 2017 Raw materials $ 21.7 $ 20.0 Work-in-process 9.7 8.2 Finished goods 14.8 17.0 Total $ 46.2 $ 45.2 During the three and six months ended June 30, 2018 we recorded excess and obsolete inventory charges of $3.5 million and $5.5 million , respectively, in cost of goods sold primarily related to the approval and launch of our G6 System and the continuous improvement and innovation of our products . Property and Equipment June 30, 2018 December 31, 2017 Building (1) $ 6.0 $ 6.0 Furniture and fixtures 8.4 5.7 Computer equipment 27.7 25.6 Machinery and equipment 61.9 33.8 Leasehold improvements 79.1 41.7 Construction in progress 39.2 87.6 Total 222.3 200.4 Accumulated depreciation and amortization (65.5 ) (54.8 ) Property and equipment, net $ 156.8 $ 145.6 (1) As described in Footnote 6 “Commitments and Contingencies,” although we do not legally own these premises, we were deemed the owner of the construction project during the construction period of our new manufacturing facility in Mesa, Arizona under a build-to-suit lease arrangement. Accounts Payable and Accrued Liabilities June 30, 2018 December 31, 2017 Accounts payable trade $ 59.9 $ 46.7 Accrued tax, audit, and legal fees 15.4 7.1 Accrued rebates 19.9 13.9 Accrued warranty 7.5 8.8 Accrued other 15.2 10.7 Total $ 117.9 $ 87.2 Accrued Warranty Warranty costs are reflected in the consolidated statements of operations as product cost of sales. A reconciliation of our accrued warranty costs for the three and six months ended June 30, 2018 and 2017 were as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 Beginning balance $ 8.9 $ 9.9 $ 8.8 $ 9.8 Charges to costs and expenses 3.4 3.4 7.9 8.4 Costs incurred (4.8 ) (5.0 ) (9.2 ) (9.9 ) Ending balance $ 7.5 $ 8.3 $ 7.5 $ 8.3 Other Liabilities June 30, 2018 December 31, 2017 Financing lease obligations $ 7.3 $ 6.7 Deferred rent 8.1 8.7 Other 4.2 2.8 Total $ 19.6 $ 18.2 |
Debt Debt
Debt Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt [Abstract] | |
Debt Disclosure [Text Block] | Debt 0.75% Senior Convertible Notes due 2022 (in millions) June 30, 2018 December 31, 2017 0.75% Senior convertible notes due 2022: Principal amount $ 400.0 $ 400.0 Unamortized debt discount (57.8 ) (64.4 ) Unamortized debt issuance costs (7.2 ) (8.0 ) Net carrying amount of senior convertible notes $ 335.0 $ 327.6 Fair value of outstanding notes $ 465.8 $ 381.3 Amount by which the notes' if-converted value exceeds their principal amount $ 55.4 $ — In May 2017, we completed an offering of $350.0 million aggregate principal amount of 0.75% convertible senior notes due 2022 (the "2022 Notes") and, in June 2017 the initial purchasers exercised their option to purchase an additional $50.0 million aggregate principal amount of 2022 Notes. The 2022 Notes have a stated interest rate of 0.75% and a maturity date of May 15, 2022 . The net proceeds from the offering, after deducting initial purchasers' discounts and costs directly related to the offering, were approximately $389.0 million . The 2022 Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. The initial conversion rate of the 2022 Notes is 10.0918 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $99.09 per share, subject to adjustments. We use the if-converted method for assumed conversion of the 2022 Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share. As upon conversion by the holders, we may elect to settle such conversion in shares of our common stock, cash, or a combination thereof, we accounted for the cash conversion option as an equity instrument classified to stockholders’ equity, which resulted in recognizing $72.6 million in additional paid-in-capital during 2017. The interest expense recognized on the 2022 Notes during the three months ended June 30, 2018 includes $0.7 million , $3.3 million and $0.4 million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The interest expense recognized on the 2022 Notes during the six months ended June 30, 2018 includes $1.5 million , $6.6 million and $0.8 million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The interest expense recognized on the 2022 Notes during the three and six months ended June 30, 2017 includes $0.4 million , $1.8 million and $0.2 million for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The effective interest rate on the 2022 Notes is 5.1% , which includes the interest on the notes, amortization of the debt discount and debt issuance costs. The discount on the 2022 Notes is amortized through May 15, 2022. Interest on the 2022 Notes began accruing upon issuance and is payable semi-annually on May 15 and November 15 of each year. Holders of the Notes who convert their Notes in connection with a make-whole fundamental change (as defined in the Indenture) or following the delivery by DexCom of a notice of redemption are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change (as defined in the Indenture), holders of the Notes may require us to repurchase all or a portion of their Notes at a price equal to 100% of the principal amount of Notes, plus any accrued and unpaid interest, including any additional interest, to, but excluding, the repurchase date. Holders of the Notes may convert all or a portion of their Notes at their option prior to 5:00 p.m., New York City time, on the business day immediately preceding February 15, 2022, in multiples of $ 1,000 principal amount, only under the following circumstances: • during any calendar quarter commencing after September 30, 2017 (and only during such calendar quarter), if the last reported sale price of 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 of the Notes on each such trading day; • 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 day of that five day consecutive trading day period was less than 98% of the product of the last reported sale price of common stock and the applicable conversion rate of the Notes on such trading day; • if we call any or all of the Notes for redemption, at any time prior to the close on business on the scheduled trading day immediately preceding the redemption date; or • upon the occurrence of specified corporate transactions. On or after February 15, 2022, until 5:00 p.m., New York City time, on the business day immediately preceding the maturity date, holders of the Notes may convert all or a portion of their Notes regardless of the foregoing circumstances. The redemption price will be equal to 100% of the principal amount of such 2022 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. No principal payments are due on the 2022 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the Indenture includes customary terms and covenants, including certain events of default after which the Notes may be due and payable immediately. We are unaware of any current events or market conditions that would allow holders to convert the 2022 Notes as of June 30, 2018 . Revolving Credit Agreement In June 2016, we entered into a $200.0 million revolving credit agreement (the “Credit Agreement”), as amended in May 2017, with JPMorgan Chase Bank, NA, as administrative agent, Bank of America, Silicon Valley Bank, Union Bank and Bank of the West. In addition to allowing borrowings in US dollars, the Credit Agreement provides a $25.0 million sublimit for borrowings in Canadian Dollars, Euros, British Pounds, Swedish Krona, Japanese Yen and any other currency that is subsequently approved by JPMorgan Chase and each lender. The Credit Agreement also provides a sub-facility of up to $10.0 million for letters of credit, of which $5.6 million is still available. The interest rate under the Credit Agreement ranges from 0.75% to 2.75% plus our choice of one of two base rates, LIBOR or a rate based on the publicly announced JPMorgan Chase prime rate, the federal funds rate or the overnight bank funding rate. We will also pay a commitment fee of between 0.25% and 0.45% , payable quarterly in arrears, on the average daily unused amount of the revolving facility based on our leverage ratio. The aggregate debt issuance costs and fees incurred with respect to entering into the Credit Agreement were $0.7 million , which have been capitalized on our Consolidated Balance Sheet within “Other Assets” and will be amortized through the maturity date of June 2021 on a straight line basis. Our obligations under the 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). Short-term borrowings In March 2017 we drew $75.0 million on the Credit Agreement under a six month term. We repaid the entire principal balance in May 2017. As of June 30, 2018 we had no outstanding borrowings under the Credit Agreement, and $195.6 million under the Credit Agreement remains available, which is reduced by outstanding letters of credit. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases Under the office lease agreement, as amended (the “Office Lease”), with John Hancock Life Insurance Company (U.S.A.) (the “Landlord”) we lease approximately 219,000 square feet of space in the buildings at 6340 Sequence Drive, 6310 Sequence Drive and 6290 Sequence Drive. The amended Office Lease term extends through March 2022 and we have an option to renew the lease upon the expiration of the initial term for two additional five -year terms by giving notice to the Landlord prior to the end of the initial term of the lease and any extension period, if applicable. Provided we are not in default under the Office Lease and the Office Lease is still in effect, we generally have the right to terminate the lease starting at the 55 th month of the Office Lease. We have received $3.6 million of tenant improvement allowance associated with the Office Lease, which is recorded as a deferred rent obligation and amortized over the term of the lease and reflected as a reduction to rent expense. Leasehold improvements associated with the tenant improvement allowance are included in Property and equipment, net in our consolidated balance sheets. On February 1, 2016, we entered into a Sublease (the “Sublease”) with Entropic Communications, LLC with respect to the building at 6350 Sequence Drive in San Diego, California (the “6350 Building”). Under the Sublease, we have leased approximately 132,600 square feet of space in the 6350 Building. The Sublease term extends through January 2022. On April 28, 2016, we entered into a certain Industrial Net Lease (the “Mesa Lease”) with PRA/LB, L.L.C. with respect to facilities in the building at 232 South Dobson Road in Mesa, Arizona (the “Mesa Building"). Under the Mesa Lease, we have leased approximately 148,797 square feet of space in the Mesa Building, of which approximately 78,000 square feet was available to us on May 1, 2016 and the remaining portion of the Mesa Building became available to us in January 2018. The term of the Mesa Lease extends through March 2028 with four options to extend the Mesa Lease term, each for five -year periods. The Mesa Lease arrangement involves the construction of our new manufacturing facility where we are involved in the design and construction of the leased space, including non-standard tenant improvements paid for by us. This arrangement is referred to as a build-to suit lease and for accounting purposes, we were considered the owner of the construction project during the construction period. During the second quarter of 2016, we capitalized the fair value of the Mesa Building of $6.0 million within “Property and Equipment, net,” and recorded a corresponding financing lease obligation liability of $6.0 million within “Other Liabilities” in the Consolidated Balance Sheet. We have concluded that the Mesa Lease does not qualify for “sale-leaseback” treatment due to prohibited continuing involvement, accordingly the Mesa Lease will be treated as a financing arrangement. We have also entered into other operating lease agreements, primarily for office and warehouse space, that expire at various times through July 2026. These facility leases have annual rental increases ranging from approximately 2.5% to 4% . The difference between the straight-line expense over the term of the lease and actual amounts paid are recorded as deferred rent. Rental obligations, excluding real estate taxes, operating costs, and tenant improvement allowances, under all lease agreements as of June 30, 2018 were as follows (in millions): Fiscal Year Ending Remainder of 2018 $ 5.1 2019 11.1 2020 11.5 2021 11.7 2022 3.7 Thereafter 9.4 Total $ 52.5 Total rent expense for the three and six months ended June 30, 2018 was $2.9 million and $5.7 million , compared to $2.8 million and $5.6 million for the same periods in 2017. Litigation On March 28, 2016, AgaMatrix, Inc. filed a patent infringement lawsuit against us in the United States District Court for the District of Oregon, asserting that certain of our products infringe certain patents held by AgaMatrix. On June 6, 2016, AgaMatrix filed a First Amended Complaint asserting the same three patents. On February 24, 2017, the Court granted AgaMatrix’s motion to substitute WaveForm Technologies, Inc. (“WaveForm”) as the new plaintiff following AgaMatrix’s transfer of the three patents to its newly formed entity. On August 25, 2016, we filed petitions for inter partes review with the Patent Trial and Appeal Board ("PTAB") of the U.S. Patent and Trademark Office seeking a determination that two of the three asserted patents are invalid under U.S. patent law and those petitions were granted on March 6, 2017. On March 8, 2017, we filed a petition for inter partes review with the PTAB seeking a determination that the third of the three asserted patents is invalid under U.S. patent law. This petition was granted on September 15, 2017. Based on the PTAB’s orders granting these petitions, most activity in the patent infringement lawsuit against us in the District of Oregon has been stayed until the inter partes review by the PTAB is completed. The PTAB issued a Final Written Decision for each of the first two patents on February 28, 2018, where the PTAB found the majority of asserted claims from the first patent unpatentable and the remaining claims under review not unpatentable. The PTAB found all claims under review from the second patent not unpatentable. We believe the PTAB erred in finding any claims of the first two patents not unpatentable, and appealed the PTAB’s decision to the United States Court of Appeals for the Federal Circuit ("Federal Circuit") on March 30, 2018. The inter partes review of the third patent is ongoing. It is our position that Waveform’s assertions of infringement have no merit. DexCom has also filed several lawsuits against AgaMatrix. DexCom filed a patent infringement lawsuit against Agamatrix in the United States District Court for the Central District of California ("C.D. Cal."), which is currently on appeal to the Federal Circuit based on a Final Judgment of non-infringement entered by the C.D. Cal. judge on February 23, 2018. On September 15, 2017, DexCom filed a patent infringement lawsuit against AgaMatrix in the United States District Court for the District of Delaware, asserting certain single-point blood glucose monitoring products of AgaMatrix infringe two patents held by DexCom. In addition, on September 18, 2017, Dexcom filed a Complaint against AgaMatrix in the International Trade Commission (“ITC”) requesting the ITC institute an investigation and issue an order excluding certain products of AgaMatrix from importation into or sale in the United States based on AgaMatrix’s infringement of the same two patents asserted in the Delaware litigation. On January 19, 2018, Arbmetrics, LLC filed a patent infringement lawsuit against us in the United States Southern District of California. On April 4, 2018, Arbmetrics filed a First Amended Complaint asserting the same patent. It is our position that Arbmetric’s assertions of infringement have no merit. Neither the outcome of these lawsuits nor the amount and range of potential fees associated with the lawsuits can be assessed at this time. As of June 30, 2018 , no amounts have been accrued in respect of these suits. 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 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. 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 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. We do not expect that the resolution of these matters would, or will, have a material adverse effect or material impact on our consolidated financial position. Purchase Commitments We are party to various purchase arrangements related to our manufacturing and development activities including materials used in our CGM systems. As of June 30, 2018 , we had purchase commitments with vendors totaling $87.2 million due within one year. There are no material purchase commitments due beyond one year. |
Development and Other Agreement
Development and Other Agreements | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Development Agreements Additional Information [Abstract] | |
Development and Other Agreements | Development and Other Agreements Collaboration with Verily Life Sciences On August 10, 2015, we entered into a Collaboration and License Agreement (the “ Verily Collaboration Agreement ”) with Google Life Sciences LLC , now renamed Verily Life Sciences (“ Verily ”). Pursuant to the Verily Collaboration Agreement , we and Verily have agreed to jointly develop a series of next-generation CGM products. The Verily Collaboration Agreement provides us with an exclusive license to use certain intellectual property of Verily related to the development, manufacture and commercialization of the products contemplated under the Verily Collaboration Agreement . The Verily Collaboration Agreement provides for the establishment of a joint steering committee, joint development committee and joint commercialization committee to oversee and coordinate the parties’ activities under the collaboration. We and Verily have agreed to make committee decisions by consensus. Certain aspects of this collaboration were clarified and amended on October 25, 2016. Under the terms of Verily Collaboration Agreement we paid an upfront fee of $35.0 million through the issuance of 404,591 shares of our common stock. We recorded $36.5 million in research and development expense in our consolidated statement of operations during 2015 related to the issuance of the 404,591 shares of our common stock, based on our stock price of $90.29 per share as of the date of Verily Collaboration Agreement . In addition, we will pay Verily up to $65.0 million in additional milestones upon achievement of various development and regulatory objectives, which payments may be paid in cash or shares of our common stock at our sole election, calculated based on the volume weighted average trading price during a period of twenty consecutive trading days ending on the trading day prior to the date on which the applicable objective has been achieved. In addition, Verily is eligible to receive tiered royalty payments associated with the commercialization of the products contemplated under the Verily Collaboration Agreement , which are subject to regulatory approval. Unless we attain annual product sales subject to the Verily Collaboration Agreement in excess of $750.0 million , there will be no royalty paid by us to Verily . Above this range, and upon marketing approval of the initial product contemplated by the Verily Collaboration Agreement , or upon commercialization of any other DexCom product that incorporates Verily intellectual property, we will pay to Verily a royalty percentage starting in the high single digits and declining to the mid-single digits based on our annual aggregate product sales. The Verily Collaboration Agreement shall be terminable by either party (a) upon uncured material breach of the Verily Collaboration Agreement by the other party, (b) if the second product contemplated by the Verily Collaboration Agreement has not been submitted to the FDA for approval by a specified date and (c) if the annual net sales for the products developed with Verily under the Verily Collaboration Agreement are less than a specified aggregate dollar amount. Additionally, we have the right to terminate the Verily Collaboration Agreement upon the expiration of the last to expire patent that covers a product developed under the Verily Collaboration Agreement . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurements We base the fair value of our Level 1 financial instruments that are in active markets using quoted market prices for identical instruments. We obtain the fair value of our Level 2 financial instruments, which are not in active markets, from a primary professional pricing source using quoted market prices for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Fair value obtained from this professional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlement date, 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 validate the quoted market prices provided by our primary pricing service by comparing the fair values of our Level 2 marketable securities portfolio balance provided by our primary pricing service against the fair values of our Level 2 marketable securities portfolio balance provided by our investment managers. The following table represents our fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of June 30, 2018 (in millions): Fair Value Measurements Using Level 1 Level 2 Level 3 Total Cash equivalents $ 149.0 $ 24.9 $ — $ 173.9 Equity investment in Tandem Diabetes Care, Inc. 55.1 — — 55.1 Debt securities, available for sale U.S. government agencies — 199.4 — 199.4 Commercial paper — 49.3 — 49.3 Corporate debt — 2.1 — 2.1 Total debt securities, available for sale $ — $ 250.8 $ — $ 250.8 The following table represents our fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of December 31, 2017 (in millions): Fair Value Measurements Using Level 1 Level 2 Level 3 Total Cash equivalents $ 306.6 $ 38.0 $ — $ 344.6 Marketable securities, available for sale U.S. government agencies — 87.3 — 87.3 Corporate debt — 5.1 — 5.1 Commercial paper — 14.7 — 14.7 Total marketable securities, available for sale $ — $ 107.1 $ — $ 107.1 There were no transfers between Level 1 and Level 2 securities during the three and six months ended June 30, 2018 and 2017 . There were no transfers into or out of Level 3 securities during the three and six months ended June 30, 2018 and 2017 . The fair value of our outstanding 2022 Note was $465.8 million at June 30, 2018 and is a Level 2 measurement. See Note 5 to the Unaudited Consolidated Financial Statements for further discussion on the carrying value of our 2022 Notes. Any additional investments are included in “Other Assets” in the consolidated balance sheets. It is impracticable for us to estimate the fair value of these investments on a recurring basis d ue to the fact that these entities are often privately-held and limited information is available if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value. |
Income Taxes Income Taxes
Income Taxes Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate for the three and six months ended June 30, 2018 was a negative of 2% and 7% compared to 120% and 29% for the same periods of 2017 . Our effective tax rate was impacted primarily by a $1.2 million tax benefit for refunds of foreign withholding tax, partially offset by state and foreign tax expense. We maintain a full valuation allowance against our net deferred tax assets as of June 30, 2018 based on our assessment that it is not more likely than not these future benefits will be realized before expiration. We made provisional estimates related to certain provisions of the Tax Cuts and Jobs Act of 2017 in the fourth quarter of 2017, including a reduction in our net deferred tax assets by $105.7 million offset by an increase in the valuation allowance related to the revaluation of our net deferred tax assets from 35% to 21%, and a zero transition tax on the mandatory deemed repatriation of foreign earnings due to our estimated net deficit in foreign earnings of $41.2 million at December 31, 2017. Additional work is necessary to finalize the calculation of our gross balances of U.S. deferred tax assets and liabilities, as well as the analysis of our net deficit in foreign earnings in connection with the transition tax. Any subsequent adjustment to these amounts is expected to have no tax effect due to our valuation allowance against net deferred tax assets. This analysis will be completed by the fourth quarter of 2018. |
Organization and Summary of S16
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Organization and Business DexCom, Inc. is a medical device company focused on the design, development and commercialization of continuous glucose monitoring (“CGM”) systems for ambulatory use by people with diabetes and by healthcare providers for the treatment of people with diabetes. Unless the context requires otherwise, the terms “we,” “us,” “our,” the “company,” or “DexCom” refer to DexCom, Inc. and its subsidiaries. |
Business Description and Basis of Presentation | Basis of Presentation and Principles of Consolidation We have incurred operating losses since our inception and have an accumulated deficit of $665.8 million at June 30, 2018 . As of June 30, 2018 , we had available cash, cash equivalents and marketable securities totaling $606.1 million and working capital of $665.2 million . Our ability to transition to, and maintain, profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to reduce planned increases in compensation expenses and other operating expenses needed to support the growth of our business which could have an adverse impact on our ability to achieve our intended business objectives. We believe our working capital resources will be sufficient to fund our operations through at least August 1, 2019 . We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. 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 and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2017 included in the Annual Report on Form 10-K filed by us with the Securities and Exchange Commission on February 27, 2018. The 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. |
Consolidation, Policy | Basis of Presentation and Principles of Consolidation We have incurred operating losses since our inception and have an accumulated deficit of $665.8 million at June 30, 2018 . As of June 30, 2018 , we had available cash, cash equivalents and marketable securities totaling $606.1 million and working capital of $665.2 million . Our ability to transition to, and maintain, profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to reduce planned increases in compensation expenses and other operating expenses needed to support the growth of our business which could have an adverse impact on our ability to achieve our intended business objectives. We believe our working capital resources will be sufficient to fund our operations through at least August 1, 2019 . We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. 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 and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2017 included in the Annual Report on Form 10-K filed by us with the Securities and Exchange Commission on February 27, 2018. The 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. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Significant estimates include excess or obsolete inventories, valuation of inventory, warranty accruals, convertible debt, employee bonus, clinical trial expenses, allowance for bad debt, refunds, rebates, including pharmacy rebates and self-funded insurance liabilities. |
Share-Based Compensation | Share-Based Compensation On March 8, 2018, the Compensation Committee of the Board of Directors of the Company approved a grant of 43,370 performance restricted stock units (PSUs) to our CEO, Kevin Sayer, that vest based on a performance condition, 2018 sensor unit sales, and a market condition, our 3 -year relative Total Shareholder Return (“TSR”) performance versus the Nasdaq Composite Index from January 1, 2018 to December 31, 2020 (the “Performance Period”). This grant of PSUs is also subject to continuing employment requirements. The actual number of shares that vest can range from 0% to 200% of target shares awarded depending upon the level of achievement of the respective market and performance conditions during the Performance Period. The fair value of the PSUs is estimated on the grant date using a Monte Carlo simulation model due to the market condition for the TSR component. This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the PSUs. The maximum share-based compensation expense related to this grant over the Performance Period is approximately $4.5 million . Share-based compensation expense is updated based on the expected achievement of the related performance conditions at the end of each reporting period. We recorded $25.6 million and $50.2 million in share-based compensation expense during the three and six months ended June 30, 2018 , compared to $25.3 million and $55.9 million during the three and six months ended June 30, 2017 . At June 30, 2018 , unrecognized estimated compensation costs related to unvested restricted stock units and PSUs totaled $172.6 million and is expected to be recognized through 2021. |
Revenue Recognition | Revenue Recognition We adopted ASC Topic 606, effective January 1, 2018 using the modified retrospective method. Our revenue policy prior to the adoption of ASC Topic 606 is stated in Note 1 of the audited financial statements and related notes thereto for the year ended December 31, 2017 included in the Annual Report on Form 10-K filed by us with the Securities and Exchange Commission on February 27, 2018. Revenue for periods after January 1, 2018 We generate our revenue from the sale of our durable systems and disposable units (the "Components"). Our durable system includes a reusable transmitter, a receiver, a power cord and a USB cable. Disposable sensors for use with the durable system are sold separately. We also provide free of charge software and mobile applications for use with our durable systems and disposable sensors. The initial durable system price is generally not dependent upon the subsequent purchase of any amount of disposable sensors. We sell our durable systems and disposable units through two main sales channels: 1) directly to customers who use our products or organizations (the "Direct Channel") and 2) to distribution partners who resell our products (the "Distributor Channel"). Under the Direct Channel, we sell our durable systems and disposable units to customers who use our products and we receive payment directly from customers who use our products, organizations and third-party payors. Third-party payors primarily include commercial insurance companies and federal and state agencies (under Medicare and Medicaid programs). With respect to customers who directly pay for products, the products are generally paid for at the time of shipment using a customer’s credit card. We also receive a prescription or statement of medical necessity and, for insurance reimbursement customers, an assignment of benefits prior to shipment. Under our Distributor Channel, we have entered into distribution agreements with Byram Healthcare and its subsidiaries (“Byram”), Cardinal Health and affiliates (including Edgepark Medical Supplies) and other distributors that allow the distributors to sell our durable systems and disposable units. The majority of our distributors stock our products, and we refer to these distributors as Stocking Distributors, whereby the Stocking Distributors fulfill orders for our product from their inventory. We also have contracts with certain distributors that do not stock our products, but rather products are shipped directly to the customer by us on behalf of our distributor, and we refer to these distributors as Drop-Ship Distributors. We determine revenue recognition through the following steps: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, we satisfy a performance obligation Contracts and performance obligations We account for a contract with a customer when there is an approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. 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 performance obligations. Components are individually priced and can be purchased separately or bundled in a contract. For bundled contracts, we account for individual components as a separate performance obligation as the components are separately identifiable from each other and the customer can benefit from each component on its own or with other resources that are readily available to the customer. We also provide free-of-charge software, mobile applications and updates for our DexCom Share ® remote monitoring system. Transaction price Transaction prices of the Components are typically based on contracted rates. In determining the transaction price, we evaluate whether the price is subject to variable consideration such as sales incentives, rebates, price adjustments or return provisions, to determine the consideration to which we expect to be entitled. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is estimated at contract inception and updated at each reporting period as additional information becomes available if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Standalone selling price of our free-of-charge software, mobile applications and updates are based on an expected cost plus a margin approach. We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. We report revenue net of taxes collected from customers, which are subsequently remitted to governmental authorities. We account for shipping and handling charges billed to customers as costs to fulfill our promise to transfer the products to the customer and as such, shipping and handling costs billed to customers are included in revenue while related costs are included as cost of sales. We generally provide a “ 30 -day money back guarantee” program whereby first-time end-user customers in most of our sales channels who purchase a durable system and a package of four disposable sensors may return the durable system for any reason within thirty days of purchase and receive a full refund of the purchase price of the durable system. Our returns have historically been immaterial. Most distributors do not have rights of return per their distribution agreement outside of our limited warranty. The distributors typically have a limited time frame to notify us of any missing, damaged, defective or non-conforming products. For any such products, we shall either, at our option, replace the portion of defective or non-conforming product at no additional cost to the distributor or cancel the order and refund any portion of the price paid to us at that time for the sale in question. We contract with various pharmacy benefit managers and private payor organizations, primarily insurance companies, for the payment of rebates based on contracted discounts after the final dispensing of the product by a distributor or retail pharmacy to a pharmacy benefit plan participant based upon contractual agreements with private sector benefit providers. We estimate these pharmacy rebates using the expected value method and record such estimates in the same period the related revenue is recognized, resulting in a reduction of revenue and the establishment of a current liability. The pharmacy rebate liability is based on contractual discount rates, expected utilization under each contract and our estimate of the amount of inventory in the distribution channel that will become subject to such rebates. Our estimates for expected utilization for rebates are based on historical rebate claims and to a lesser extent third party market research data. Pharmacy rebates are generally invoiced and paid monthly or quarterly in arrears so that our accrual consists of an estimate of the amount expected to be incurred for the current month's or quarter’s activity, plus an accrual for unpaid rebates from prior periods, and an accrual for inventory in the distribution channel. Refer to Note 2 for additional revenue related disclosures. Revenue recognition Revenue is recognized when control is transferred to our customers, in an amount that reflects the net consideration we expect to be entitled. The timing of revenue recognition is based on the satisfaction of performance obligations, which can be satisfied at a point in time or over time, depending on the nature of the performance obligation. Substantially all of our performance obligations associated with our durable systems and disposable units are satisfied at a point in time, which typically occurs at shipment of our products. Terms of direct and distributor orders are generally Freight on Board (or Free Carrier (“FCA”) shipping point for international orders. For certain of our distributors, control transfers at delivery of the product to the customer. We recognize revenue from contracted insurance payors and distributors based on the contracted rate and estimate of any variable consideration. For non-contracted insurance payors, we obtain prior authorization from the payor and recognize revenue based on the estimated collectible amount and historical experience. In cases where our free of charge software, mobile applications and updates, are deemed to be separate performance obligations, revenue is recognized over time on a ratable basis over the estimated life of the related product component. Our sales of receiver and transmitter components of our CGM system include an assurance-type warranty which is accounted for based on the cost accrual method recognized as expense when the products are sold and is not considered a separate performance obligation. |
Self-Funded Health Insurance | Self-Funded Health Insurance Effective January 1, 2018, we are self-insured for claims under our U.S. health benefit plans subject to stop loss policies. We established an accrual for this self-insured program with the assistance of outside actuaries based on claims experience and an estimate of claims incurred but not yet reported (“IBNR”) and other relevant factors. The projections involved in this process are subject to uncertainty related to the timing and amount of claims filed, levels of IBNR, fluctuations in health care costs and changes to regulatory requirements. Actual claims may differ from the estimate and any difference could be significant. The accrued obligation for our self-insured program is included in “Accounts payable and accrued liabilities” in the consolidated balance sheets was $2.7 million as of June 30, 2018 . We also have a restricted cash account for claim payments associated with our self-insured program, included in the "Prepaid and other current assets" line item in the consolidated balance sheets. |
Recent Accounting Guidance | Recent Accounting Guidance Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued authoritative guidance for Revenue from Contracts with Customers ASC Topic 606 ("ASU 2014-09"), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the guidance is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The guidance defines a five step process to achieve this core principle and it is possible when the five step process is applied, more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. We have applied this standard electing the modified retrospective method. The company applied the practical expedient permitted under ASC Topic 606 to those contracts that were not completed, as of January 1, 2018. Our analysis of open contracts as of January 1, 2018, resulted in no material cumulative effect from applying ASU 2014-09. In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes - Intra-Entity Asset Transfer other than Inventory (Topic 740) (“ASU 2016-16”), which would require the recognition of the tax expense from the sale of an asset other than inventory when the transfer occurs, rather than when the asset is sold to a third party or otherwise recovered through use. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning period of adoption. Due to the full valuation allowance on the U.S. deferred tax assets, we have determined that none of the provisions of ASU 2016-16 have a significant impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01 to amend the guidance on the classification and measurement of financial instruments, which was further amended in February 2018 by ASU No. 2018-03. The new guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The new guidance also amends certain disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this guidance did not have a significant impact on our financial statements. In December 2016, the FASB issued Accounting Standards Update No. 2016-18, Restricted Cash (ASU 2016-18). This update requires additional disclosure and that the Statement of Cash Flow explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash should be included with cash & cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 with early adoption permitted. The adoption of this ASU impacted the presentation of cash flows with inclusion of restricted cash flows for each of the presented periods. Recently issued accounting pronouncements not yet adopted In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ( “ ASU 2018-07 ”) , which simplifies the accounting for share-based payments made to nonemployees so the accounting for such payments is substantially the same as those made to employees. Under ASU 2018-07, share based awards to nonemployees will be measured at fair value on the grant date of the awards, entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classified according to Accounting Standards Codification 718 upon vesting which eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We are in the process of evaluating the impact of adoption of ASU 2018-07 on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which require a lessee to recognize a lease payment liability and a corresponding right of use asset on their balance sheet for all lease terms longer than 12 months, lessor accounting remains largely unchanged. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2018 and early adoption is permitted. We will adopt ASU 2016-02 in the first quarter of 2019. We have started the process of gathering and assessing our lease contracts and implementing changes to our systems. We expect the adoption will lead to an increase in the assets and liabilities recorded on our Consolidated Balance Sheets. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from External Customers by Geographic Areas [Table Text Block] | The following table sets forth revenues by our two primary geographical markets, United States and outside of the United States, based on the geographic location to which we deliver the product (in millions): Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 Revenues: United States $ 189.6 $ 335.0 Outside of the United States 52.9 91.9 Total $ 242.5 $ 426.9 |
Disaggregation of Revenue [Table Text Block] | The following table sets forth revenues disaggregated by customer sales channel (in millions): Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 Revenues: Distributor $ 158.4 $ 276.7 Direct 84.1 150.2 Total $ 242.5 $ 426.9 |
Net Income (Loss) Per Common 18
Net Income (Loss) Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share data): Three Months Ended Six Months Ended 2018 2017 2018 2017 Net income (loss) $ 30.2 $ 2.9 $ 6.0 $ (38.8 ) Net income (loss) per common share: Basic $ 0.34 $ 0.03 $ 0.07 $ (0.45 ) Diluted $ 0.34 $ 0.03 $ 0.07 $ (0.45 ) Basic weighted average shares outstanding 88.2 86.4 87.7 85.8 Effect of potentially dilutive stock options 0.2 0.4 0.3 — Effect of potentially dilutive share-based awards 1.0 0.6 0.8 — Diluted weighted average shares outstanding 89.4 87.4 88.8 85.8 |
Historical Outstanding Anti-Dilutive Securities | Outstanding anti-dilutive securities not included in diluted net income (loss) per share attributable to common stockholders calculation (in millions): Three Months Ended Six Months Ended 2018 2017 2018 2017 Options outstanding to purchase common stock — — — 0.4 Unvested restricted stock units — 0.1 0.4 3.0 Senior convertible notes 4.0 4.0 4.0 4.0 Total 4.0 4.1 4.4 7.4 |
Financial Statement Details (Ta
Financial Statement Details (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Financial Statement Details [Abstract] | |
Financial Statement Details | Financial Statement Details (in millions) Short-Term Marketable Securities Short-term marketable securities, consisting of equity and debt securities, were as follows: June 30, 2018 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value Equity investment in Tandem Diabetes Care, Inc $ 5.0 $ 50.1 $ — $ 55.1 Debt securities, available for sale U.S. government agencies $ 199.6 $ — $ (0.2 ) $ 199.4 Commercial paper 49.3 — — 49.3 Corporate debt 2.1 — — 2.1 Total available-for-sale debt securities $ 251.0 $ — $ (0.2 ) $ 250.8 Total marketable securities $ 256.0 $ 50.1 $ (0.2 ) $ 305.9 Gross unrealized gain on our equity investment in Tandem Diabetes Care, Inc. of $42.7 million and $50.1 million for three and six months ended June 30, 2018 , respectively is included in our Consolidated Statements of Operations under " Income from equity investments ." December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value U.S. government agencies $ 87.5 $ — $ (0.2 ) $ 87.3 Corporate debt 14.7 — — 14.7 Commercial paper 5.1 — — 5.1 Total marketable securities $ 107.3 $ — $ (0.2 ) $ 107.1 As of June 30, 2018 , the estimated market value of available-for-sale marketable securities with contractual maturities of up to one year and up to 13 months were $249.8 million and $1.0 million , respectively. We do not generally intend to sell the 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. Inventory June 30, 2018 December 31, 2017 Raw materials $ 21.7 $ 20.0 Work-in-process 9.7 8.2 Finished goods 14.8 17.0 Total $ 46.2 $ 45.2 During the three and six months ended June 30, 2018 we recorded excess and obsolete inventory charges of $3.5 million and $5.5 million , respectively, in cost of goods sold primarily related to the approval and launch of our G6 System and the continuous improvement and innovation of our products . Property and Equipment June 30, 2018 December 31, 2017 Building (1) $ 6.0 $ 6.0 Furniture and fixtures 8.4 5.7 Computer equipment 27.7 25.6 Machinery and equipment 61.9 33.8 Leasehold improvements 79.1 41.7 Construction in progress 39.2 87.6 Total 222.3 200.4 Accumulated depreciation and amortization (65.5 ) (54.8 ) Property and equipment, net $ 156.8 $ 145.6 (1) As described in Footnote 6 “Commitments and Contingencies,” although we do not legally own these premises, we were deemed the owner of the construction project during the construction period of our new manufacturing facility in Mesa, Arizona under a build-to-suit lease arrangement. Accounts Payable and Accrued Liabilities June 30, 2018 December 31, 2017 Accounts payable trade $ 59.9 $ 46.7 Accrued tax, audit, and legal fees 15.4 7.1 Accrued rebates 19.9 13.9 Accrued warranty 7.5 8.8 Accrued other 15.2 10.7 Total $ 117.9 $ 87.2 Accrued Warranty Warranty costs are reflected in the consolidated statements of operations as product cost of sales. A reconciliation of our accrued warranty costs for the three and six months ended June 30, 2018 and 2017 were as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 Beginning balance $ 8.9 $ 9.9 $ 8.8 $ 9.8 Charges to costs and expenses 3.4 3.4 7.9 8.4 Costs incurred (4.8 ) (5.0 ) (9.2 ) (9.9 ) Ending balance $ 7.5 $ 8.3 $ 7.5 $ 8.3 Other Liabilities June 30, 2018 December 31, 2017 Financing lease obligations $ 7.3 $ 6.7 Deferred rent 8.1 8.7 Other 4.2 2.8 Total $ 19.6 $ 18.2 |
Short Term Marketable Securities, Available for Sale | Short-Term Marketable Securities Short-term marketable securities, consisting of equity and debt securities, were as follows: June 30, 2018 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value Equity investment in Tandem Diabetes Care, Inc $ 5.0 $ 50.1 $ — $ 55.1 Debt securities, available for sale U.S. government agencies $ 199.6 $ — $ (0.2 ) $ 199.4 Commercial paper 49.3 — — 49.3 Corporate debt 2.1 — — 2.1 Total available-for-sale debt securities $ 251.0 $ — $ (0.2 ) $ 250.8 Total marketable securities $ 256.0 $ 50.1 $ (0.2 ) $ 305.9 Gross unrealized gain on our equity investment in Tandem Diabetes Care, Inc. of $42.7 million and $50.1 million for three and six months ended June 30, 2018 , respectively is included in our Consolidated Statements of Operations under " Income from equity investments ." December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value U.S. government agencies $ 87.5 $ — $ (0.2 ) $ 87.3 Corporate debt 14.7 — — 14.7 Commercial paper 5.1 — — 5.1 Total marketable securities $ 107.3 $ — $ (0.2 ) $ 107.1 As of June 30, 2018 , the estimated market value of available-for-sale marketable securities with contractual maturities of up to one year and up to 13 months were $249.8 million and $1.0 million , respectively. We do not generally intend to sell the 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. |
Inventory | Inventory June 30, 2018 December 31, 2017 Raw materials $ 21.7 $ 20.0 Work-in-process 9.7 8.2 Finished goods 14.8 17.0 Total $ 46.2 $ 45.2 |
Property, Plant and Equipment | Property and Equipment June 30, 2018 December 31, 2017 Building (1) $ 6.0 $ 6.0 Furniture and fixtures 8.4 5.7 Computer equipment 27.7 25.6 Machinery and equipment 61.9 33.8 Leasehold improvements 79.1 41.7 Construction in progress 39.2 87.6 Total 222.3 200.4 Accumulated depreciation and amortization (65.5 ) (54.8 ) Property and equipment, net $ 156.8 $ 145.6 (1) As described in Footnote 6 “Commitments and Contingencies,” although we do not legally own these premises, we were deemed the owner of the construction project during the construction period of our new manufacturing facility in Mesa, Arizona under a build-to-suit lease arrangement. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities June 30, 2018 December 31, 2017 Accounts payable trade $ 59.9 $ 46.7 Accrued tax, audit, and legal fees 15.4 7.1 Accrued rebates 19.9 13.9 Accrued warranty 7.5 8.8 Accrued other 15.2 10.7 Total $ 117.9 $ 87.2 |
Accrued Warranty | Accrued Warranty Warranty costs are reflected in the consolidated statements of operations as product cost of sales. A reconciliation of our accrued warranty costs for the three and six months ended June 30, 2018 and 2017 were as follows: Three Months Ended Six Months Ended 2018 2017 2018 2017 Beginning balance $ 8.9 $ 9.9 $ 8.8 $ 9.8 Charges to costs and expenses 3.4 3.4 7.9 8.4 Costs incurred (4.8 ) (5.0 ) (9.2 ) (9.9 ) Ending balance $ 7.5 $ 8.3 $ 7.5 $ 8.3 |
Other Liabilities | Other Liabilities June 30, 2018 December 31, 2017 Financing lease obligations $ 7.3 $ 6.7 Deferred rent 8.1 8.7 Other 4.2 2.8 Total $ 19.6 $ 18.2 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | 0.75% Senior Convertible Notes due 2022 (in millions) June 30, 2018 December 31, 2017 0.75% Senior convertible notes due 2022: Principal amount $ 400.0 $ 400.0 Unamortized debt discount (57.8 ) (64.4 ) Unamortized debt issuance costs (7.2 ) (8.0 ) Net carrying amount of senior convertible notes $ 335.0 $ 327.6 Fair value of outstanding notes $ 465.8 $ 381.3 Amount by which the notes' if-converted value exceeds their principal amount $ 55.4 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Rental Obligations | Rental obligations, excluding real estate taxes, operating costs, and tenant improvement allowances, under all lease agreements as of June 30, 2018 were as follows (in millions): Fiscal Year Ending Remainder of 2018 $ 5.1 2019 11.1 2020 11.5 2021 11.7 2022 3.7 Thereafter 9.4 Total $ 52.5 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Hierarchy for Financial Assets | The following table represents our fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of June 30, 2018 (in millions): Fair Value Measurements Using Level 1 Level 2 Level 3 Total Cash equivalents $ 149.0 $ 24.9 $ — $ 173.9 Equity investment in Tandem Diabetes Care, Inc. 55.1 — — 55.1 Debt securities, available for sale U.S. government agencies — 199.4 — 199.4 Commercial paper — 49.3 — 49.3 Corporate debt — 2.1 — 2.1 Total debt securities, available for sale $ — $ 250.8 $ — $ 250.8 The following table represents our fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of December 31, 2017 (in millions): Fair Value Measurements Using Level 1 Level 2 Level 3 Total Cash equivalents $ 306.6 $ 38.0 $ — $ 344.6 Marketable securities, available for sale U.S. government agencies — 87.3 — 87.3 Corporate debt — 5.1 — 5.1 Commercial paper — 14.7 — 14.7 Total marketable securities, available for sale $ — $ 107.1 $ — $ 107.1 |
Organization and Summary of S23
Organization and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | Mar. 08, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||||
Accumulated deficit | $ 665,800,000 | $ 665,800,000 | $ 671,800,000 | |||
Accrued Healthcare Obligations | 2,700,000 | 2,700,000 | ||||
Cash, cash equivalents and short-term investments | 606,100,000 | 606,100,000 | ||||
Working capital | 665,200,000 | 665,200,000 | ||||
Share-based compensation | 25,600,000 | $ 25,300,000 | 50,200,000 | $ 55,900,000 | ||
Stock-based compensation, unvested restricted stock units | $ 172,600,000 | $ 172,600,000 | ||||
Sales returns coverage period | 30 days | |||||
Performance Shares [Member] | ||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 43,370 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||
Performance Shares [Member] | Minimum | ||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 0.00% | |||||
Performance Shares [Member] | Maximum | ||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 200.00% | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | $ 4,500,000 |
Revenue - Additional Informatio
Revenue - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 242.5 | $ 426.9 |
Deferred Revenue, Revenue Recognized | 2 | $ 1.9 |
Minimum [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Receivables, Payment Terms | 30 days | |
Maximum [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Receivables, Payment Terms | 60 days | |
Distributor [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 158.4 | $ 276.7 |
Direct [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 84.1 | $ 150.2 |
Individual Country [Member] | Maximum [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, Percentage | 10.00% | |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | 189.6 | $ 335 |
Outside of the United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 52.9 | $ 91.9 |
Net Income (Loss) Per Common 25
Net Income (Loss) Per Common Share Net Income per Common Share - Basic and Diluted Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Net Income (Loss) Attributable to Parent | $ 30.2 | $ 2.9 | $ 6 | $ (38.8) |
Earnings Per Share, Basic | $ 0.34 | $ 0.03 | $ 0.07 | $ (0.45) |
Earnings Per Share, Diluted | $ 0.34 | $ 0.03 | $ 0.07 | $ (0.45) |
Weighted Average Number of Shares Outstanding, Basic | 88.2 | 86.4 | 87.7 | 85.8 |
Diluted weighted average shares outstanding | 89.4 | 87.4 | 88.8 | 85.8 |
Effect of potentially dilutive stock options | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0.2 | 0.4 | 0.3 | 0 |
Effect of potentially dilutive share-based awards | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 1 | 0.6 | 0.8 | 0 |
Net Income (Loss) Per Common 26
Net Income (Loss) Per Common Share Schedule of Antidilutive Securities (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 4 | 4.1 | 4.4 | 7.4 |
Options outstanding to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 0 | 0 | 0 | 0.4 |
Unvested restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 0 | 0.1 | 0.4 | 3 |
Senior convertible notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 4 | 4 | 4 | 4 |
Financial Statement Details - S
Financial Statement Details - Short Term Marketable Securities, Available for Sale (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Financial Statement Details [Line Items] | |||||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax | $ 0 | $ 0 | |||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | 0.2 | 0.2 | |||
Available-for-sale Securities, Debt Securities | 250.8 | 250.8 | |||
Available-for-sale Debt Securities, Amortized Cost Basis | 251 | 251 | |||
Estimated Market Value | 305.9 | 305.9 | $ 107.1 | ||
Gross Unrealized Losses | (0.2) | (0.2) | (0.2) | ||
Gross Unrealized Gains | 50.1 | 50.1 | 0 | ||
Cost or Amortized Cost | 256 | 256 | 107.3 | ||
Available-for-sale Equity Securities, Gross Unrealized Gain | 42.7 | $ 0 | 50.1 | $ 0 | |
Available-for-sale Securities, Current | 249.8 | 249.8 | |||
Available-for-sale securities, noncurrent | 1 | 1 | |||
U.S. government agencies | |||||
Financial Statement Details [Line Items] | |||||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | 0 | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | 0.2 | 0.2 | 0.2 | ||
Available-for-sale Securities, Debt Securities | 199.4 | 199.4 | 87.3 | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 199.6 | 199.6 | 87.5 | ||
Commercial paper | |||||
Financial Statement Details [Line Items] | |||||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | 0 | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 | 0 | ||
Available-for-sale Securities, Debt Securities | 49.3 | 49.3 | 5.1 | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 49.3 | 49.3 | 5.1 | ||
Corporate debt | |||||
Financial Statement Details [Line Items] | |||||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | 0 | 0 | ||
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 | 0 | ||
Available-for-sale Securities, Debt Securities | 2.1 | 2.1 | 14.7 | ||
Available-for-sale Debt Securities, Amortized Cost Basis | 2.1 | 2.1 | $ 14.7 | ||
Equity investment in Tandem Diabetes Care, Inc | |||||
Financial Statement Details [Line Items] | |||||
Available-for-sale Equity Securities, Amortized Cost Basis | 5 | 5 | |||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax | 50.1 | 50.1 | |||
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 | |||
Available-for-sale Securities, Equity Securities, Current | $ 55.1 | 55.1 | |||
Available-for-sale Equity Securities, Gross Unrealized Gain | $ 50.1 |
Financial Statement Details - I
Financial Statement Details - Inventory (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Work-in-process | $ 21.7 | $ 21.7 | $ 20 |
Work-in-process | 9.7 | 9.7 | 8.2 |
Finished goods | 14.8 | 14.8 | 17 |
Total | 46.2 | 46.2 | $ 45.2 |
Customer Notification Related Inventory Reserve [Member] | |||
Inventory Write-down | $ 3.5 | $ 5.5 |
Financial Statement Details Fin
Financial Statement Details Financial Statement Details - Property and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 222.3 | $ 200.4 |
Accumulated depreciation and amortization | (65.5) | (54.8) |
Property and equipment, net | 156.8 | 145.6 |
Building (1) | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 6 | 6 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 8.4 | 5.7 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 27.7 | 25.6 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 61.9 | 33.8 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 79.1 | 41.7 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 39.2 | $ 87.6 |
Financial Statement Details - A
Financial Statement Details - Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Disclosure of Financial Statement Details [Abstract] | ||||||
Accounts payable trade | $ 59.9 | $ 46.7 | ||||
Accrued tax, audit, and legal fees | 15.4 | 7.1 | ||||
Accrued rebates | 19.9 | 13.9 | ||||
Accrued warranty | 7.5 | $ 8.9 | 8.8 | $ 8.3 | $ 9.9 | $ 9.8 |
Accrued other | 15.2 | 10.7 | ||||
Total | $ 117.9 | $ 87.2 |
Financial Statement Details -31
Financial Statement Details - Accrued Warranty (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Beginning balance | $ 8.9 | $ 9.9 | $ 8.8 | $ 9.8 |
Charges to costs and expenses | 3.4 | 3.4 | 7.9 | 8.4 |
Costs incurred | (4.8) | (5) | (9.2) | (9.9) |
Ending balance | $ 7.5 | $ 8.3 | $ 7.5 | $ 8.3 |
Financial Statement Details F32
Financial Statement Details Financial Statement Details - Other Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Financial Statement Details [Abstract] | ||
Financing lease obligations | $ 7.3 | $ 6.7 |
Deferred rent | 8.1 | 8.7 |
Other | 4.2 | 2.8 |
Total | $ 19.6 | $ 18.2 |
Debt Revolving Credit Agreement
Debt Revolving Credit Agreement (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 17, 2016 | |
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 195.6 | |||
Line of Credit, Current | 0 | |||
Proceeds from Lines of Credit | $ 75 | |||
Debt Instrument, Term | 6 months | |||
Proceeds from issuance of convertible debt, net of issuance costs | 0 | $ 389 | ||
Line of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Long-term Line of Credit | $ 200 | |||
Debt Issuance Costs, Line of Credit Arrangements, Gross | 0.7 | |||
Line of Credit [Member] | Letter of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | 10 | |||
Line of Credit Facility, Remaining Borrowing Capacity | $ 5.6 | |||
Foreign Currency Line of Credit [Member] | Letter of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 25 | |||
Maximum | Line of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 2.75% | |||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.45% | |||
Minimum | Line of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 0.75% | |||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.25% |
Debt 0.75% Senior convertible n
Debt 0.75% Senior convertible notes due 2022 (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Current Fiscal Year End Date | --12-31 | |
Principal amount | $ 400 | $ 400 |
Unamortized debt discount | (57.8) | (64.4) |
Unamortized debt issuance costs | (7.2) | (8) |
Net carrying amount of senior convertible notes | 335 | 327.6 |
Fair value of outstanding notes | 465.8 | 381.3 |
Amount by which the notes' if-converted value exceeds their principal amount | $ 55.4 | $ 0 |
Debt 0.75% Senior convertible35
Debt 0.75% Senior convertible notes due 2022 Narrative (Details) | May 13, 2017 | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)d | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Jun. 12, 2017USD ($) | May 12, 2017USD ($)$ / shares |
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 400,000,000 | $ 400,000,000 | $ 400,000,000 | |||||
Proceeds from Convertible Debt | $ 0 | $ 389,000,000 | ||||||
Current Fiscal Year End Date | --12-31 | |||||||
Non-cash interest expense | $ 7,500,000 | 2,100,000 | ||||||
0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Initial conversion rate adjustment, shares | 0.0100918 | |||||||
Senior Notes [Member] | 0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 50,000,000 | $ 350,000,000 | ||||||
Interest rate on convertible notes | 0.75% | |||||||
Proceeds from Convertible Debt | $ 389,000,000 | |||||||
Initial conversion price of convertible notes (in dollars per share) | $ / shares | $ 99.09 | |||||||
Contractual coupon interest rate | 700,000 | 400,000 | 1,500,000 | 400,000 | ||||
Non-cash interest expense | 3,300,000 | 1,800,000 | 6,600,000 | 1,800,000 | ||||
Amortization of debt issuance costs | $ 400,000 | 200,000 | $ 800,000 | $ 200,000 | ||||
Effective interest rate | 5.14% | 5.14% | ||||||
Conversion price in event of fundamental change | 100.00% | 100.00% | ||||||
Conversion multiple | $ 1,000 | $ 1,000 | ||||||
Debt Instrument, Redemption Price, Percentage | 100.00% | |||||||
Senior Notes [Member] | Additional Paid-in Capital | 0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Amount reclassified to stockholders' equity | $ 72,600,000 | |||||||
Senior Notes [Member] | Debt Instrument Conversion Term One | Minimum | 0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Threshold consecutive trading days | d | 20 | |||||||
Threshold percentage of stock price trigger | 130.00% | |||||||
Senior Notes [Member] | Debt Instrument Conversion Term One | Maximum | 0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Threshold consecutive trading days | d | 30 | |||||||
Senior Notes [Member] | Debt Instrument Conversion Term Two | 0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Threshold consecutive trading days | d | 5 | |||||||
Senior Notes [Member] | Debt Instrument Conversion Term Two | Maximum | 0.75% Senior Convertible Notes | Convertible Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Threshold consecutive trading days | d | 5 | |||||||
Threshold percentage of stock price trigger | 98.00% |
Commitments and Contingencies -
Commitments and Contingencies - Rental Obligations (Detail) $ in Millions | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)renewal_term | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | May 01, 2016USD ($)ft² | Apr. 28, 2016ft² | Feb. 01, 2016ft² | Oct. 01, 2014ft² | |
Proceeds from tenant improvement allowance | $ (3.6) | ||||||||
Property, Plant and Equipment, Gross | $ 222.3 | 222.3 | $ 200.4 | ||||||
Financing lease obligation | 7.3 | 7.3 | 6.7 | ||||||
Operating Leases, Rent Expense | 2.9 | $ 2.8 | 5.7 | $ 5.6 | |||||
Remainder of 2018 | 5.1 | 5.1 | |||||||
Operating Leases, Future Minimum Payments, 2019 | 11.1 | 11.1 | |||||||
Operating Leases, Future Minimum Payments, 2020 | 11.5 | 11.5 | |||||||
Operating Leases, Future Minimum Payments, 2021 | 11.7 | 11.7 | |||||||
Operating Leases, Future Minimum Payments, 2022 | 3.7 | 3.7 | |||||||
Thereafter | 9.4 | 9.4 | |||||||
Total | 52.5 | 52.5 | |||||||
Building (1) | |||||||||
Property, Plant and Equipment, Gross | $ 6 | $ 6 | $ 6 | ||||||
Property, Plant and Equipment | Building (1) | |||||||||
Property, Plant and Equipment, Gross | $ 6 | ||||||||
Leased Buildings -232 South Dobson Road | |||||||||
Lessee Leasing Arrangements, Operating Leases, Number of Renewal Term | renewal_term | 4 | ||||||||
Lessee, Operating Lease, Renewal Term | 5 years | ||||||||
Leased Buildings -6340 Sequence Drive, 6310 Sequence Drive, 6290 Sequence drive | |||||||||
Lessee Leasing Arrangements, Operating Leases, Number of Renewal Term | renewal_term | 2 | ||||||||
Lessee, Operating Lease, Renewal Term | 5 years | ||||||||
Leased Buildings -6340 Sequence Drive, 6310 Sequence Drive, 6290 Sequence drive | |||||||||
Leased Square Footage | ft² | 219,000 | ||||||||
Leased Buildings -6350 Sequence Drive | |||||||||
Leased Square Footage | ft² | 132,600 | ||||||||
Leased Buildings -232 South Dobson Road | |||||||||
Leased Square Footage | ft² | 78,000 | 148,797 | |||||||
Leased Buildings -232 South Dobson Road | Other Noncurrent Liabilities | |||||||||
Financing lease obligation | $ 6 | ||||||||
Maximum | |||||||||
Annual rent potential rate adjustment | 4.00% | ||||||||
Minimum | |||||||||
Annual rent potential rate adjustment | 2.50% |
Commitments and Contingencies C
Commitments and Contingencies Commitment and Contingencies - Litigation (Details) | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated Litigation Liability | $ 0 |
Commitments and Contingencies L
Commitments and Contingencies Litigation (Details) | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated Litigation Liability | $ 0 |
Commitments and Contingencies P
Commitments and Contingencies Purchase Commitments (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase commitments due within one year | $ 87.2 |
Purchase commitments maximum term | 1 year |
Development and Other Agreeme40
Development and Other Agreements - Additional Information (Detail) - Google Life Sciences LLC - Collaborative Arrangement - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Jun. 30, 2018 | Dec. 31, 2015 | Aug. 10, 2015 | |
Development Agreements [Line Items] | ||||
Sales Revenue, Goods, Net | $ 750 | |||
Commitment Amount, Royalty Eligible Sales Threshold Not Achieved | $ 0 | |||
Collaborative Arrangement, Milestone Payments | ||||
Development Agreements [Line Items] | ||||
Development & Regulatory Milestone Payments | 65 | |||
Collaborative Arrangement, Initial Payment | ||||
Development Agreements [Line Items] | ||||
Upfront Fee | $ 35 | |||
Shares, Issued | 404,591 | |||
Share Price | $ 90.29 | |||
Research and Development Expense | Collaborative Arrangement, Initial Payment | ||||
Development Agreements [Line Items] | ||||
R&D expense through issuance of common stock | $ 36.5 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 173,900,000 | $ 344,600,000 |
Short-term marketable securities, available-for-sale | 250,800,000 | 107,100,000 |
Fair Value, Assets, Level 1 to Level 2 Transfers | 0 | |
Fair Value, Assets, Level 3 Transfers | 0 | |
Fair value of outstanding notes | 465,800,000 | 381,300,000 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 149,000,000 | 306,600,000 |
Short-term marketable securities, available-for-sale | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 24,900,000 | 38,000,000 |
Short-term marketable securities, available-for-sale | 250,800,000 | 107,100,000 |
Fair value of outstanding notes | 465,800,000 | |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Short-term marketable securities, available-for-sale | 0 | 0 |
U.S. government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 199,400,000 | 87,300,000 |
U.S. government agencies | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 0 | 0 |
U.S. government agencies | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 199,400,000 | 87,300,000 |
U.S. government agencies | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 0 | 0 |
Corporate debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 2,100,000 | 5,100,000 |
Corporate debt | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 0 | 0 |
Corporate debt | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 2,100,000 | 5,100,000 |
Corporate debt | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 0 | 0 |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 49,300,000 | 14,700,000 |
Commercial paper | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 0 | 0 |
Commercial paper | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 49,300,000 | 14,700,000 |
Commercial paper | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term marketable securities, available-for-sale | 0 | $ 0 |
Equity investment in Tandem Diabetes Care, Inc | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 55,100,000 | |
Equity investment in Tandem Diabetes Care, Inc | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 55,100,000 | |
Equity investment in Tandem Diabetes Care, Inc | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 0 | |
Equity investment in Tandem Diabetes Care, Inc | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | (2.00%) | 120.00% | (7.00%) | 29.00% | |
Tax benefit for refunds of foreign withholding tax, partially offset by state and foreign tax expense | $ 1,200,000 | ||||
Reduction in net deferred tax assets due to Tax Cuts And Jobs Act Of 2017 | $ 105,700,000 | ||||
Transaction tax on mandatory deemed repatriation of foreign earnings | 0 | ||||
Net deficit in foreign earnings | $ 41,200,000 |