Estimated annual effective tax rate (as a percent)

[Table](#i6fa56528b8724eb3888e814d9e0a196b_7) [of](#i6fa56528b8724eb3888e814d9e0a196b_7) [Contents](#i6fa56528b8724eb3888e814d9e0a196b_7)

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| 6. Contingencies |



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| Litigation |

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, intellectual property 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.During the year ended December 31, 2021 and the nine months ended September 30, 2022, we and certain Abbott Diabetes Care, Inc. (“Abbott”) entities served complaints for patent infringement, validity and other patent related actions against each other in multiple jurisdictions, inside and outside the United States. We intend to vigorously pursue our claims and defenses in these cases to protect our intellectual property and to defend against Abbott’s infringement allegations.We do not believe we are party to any other currently pending legal proceedings, the outcome of which could have a material adverse effect on our business, financial condition or results of operations. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition or results of operations.

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| 7. Income Taxes |

We estimate our annual effective tax rate to be 31.1% for the full year 2022, which differs from the U.S. federal statutory rate due to state and foreign income taxes, nondeductible executive compensation, and increases to unrecognized tax benefits offset by federal research tax credits generated. Our effective tax rate of 3.2% for the nine months ended September 30, 2022 was primarily due to income tax expense from normal, recurring operations, partially offset by discrete excess tax benefits recognized for share-based compensation for employees and the Verily milestone payment.

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| 8. Stockholders’ Equity |

Share-Based CompensationOur share-based compensation expense is associated with RSUs, PSUs, and our Employee Stock Purchase Plan, or ESPP. The following table summarizes our share-based compensation expense included in our consolidated statements of operations for the periods shown.

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|  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |
| (In millions) | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Cost of sales | $ | 3.0  |  |  | $ | 2.0  |  |  | $ | 8.1  |  |  | $ | 6.6  |  |
| Research and development | 10.8  |  |  | 9.8  |  |  | 32.0  |  |  | 31.3  |  |
| Selling, general and administrative | 17.0  |  |  | 15.7  |  |  | 52.4  |  |  | 49.2  |  |
| Total share-based compensation expense | $ | 30.8  |  |  | $ | 27.5  |  |  | $ | 92.5  |  |  | $ | 87.1  |  |

At September 30, 2022, unrecognized estimated compensation costs related to RSUs, PSUs and ESPP totaled $201.9 million and is expected to be recognized through 2026.Equity Award ActivityThe total vest date fair value of RSUs and PSUs that vested during the nine months ended September 30, 2022 was $135.2 million and $17.3 million, respectively.27
