10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 000-30755

CEPHEID

(Exact Name of Registrant as Specified in its Charter)

California	77-0441625
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
904 Caribbean Drive, Sunnyvale, California	94089-1189
(Address of Principal Executive Office)	(Zip Code)

(408) 541-4191

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨  (Do not check if smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

As of July 23, 2015, there were 72,080,557 shares of the registrant’s common stock outstanding.

REPORT ON FORM 10-Q FOR THE

QUARTER ENDED JUNE 30, 2015

INDEX

		Page
Part I.	Financial Information
Item 1.	Financial Statements		3
	Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014		3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014		4
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2015 and 2014		5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		31
Item 4.	Controls and Procedures		32
Part II.	Other Information
Item 1.	Legal Proceedings		33
Item 1A	Risk Factors		33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51
Item 3.	Defaults Upon Senior Securities		51
Item 4.	Mine Safety Disclosures		51
Item 5.	Other Information		51
Item 6.	Exhibits		51
Signatures			53

Cepheid^®, the Cepheid logo, GeneXpert^®, Xpert^®, and SmartCycler are trademarks of Cepheid.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CEPHEID

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30,			December 31,
	2015			2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	110,569		$	96,663
Short-term investments		189,375			196,729
Accounts receivable, less allowance for doubtful accounts of $300 as of June 30, 2015 and $237 as of December 31, 2014		77,758			68,809
Inventory, net		142,050			132,635
Prepaid expenses and other current assets		28,596			24,274
Total current assets		548,348			519,110
Property and equipment, net		120,226			115,765
Investments		79,665			79,731
Other non-current assets		7,776			7,847
Intangible assets, net		28,180			31,440
Goodwill		39,681			39,681
Total assets	$	823,876		$	793,574
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	60,700		$	50,435
Accrued compensation		31,245			33,760
Accrued royalties		5,309			5,443
Accrued and other liabilities		30,815			34,761
Current portion of deferred revenue		13,722			13,447
Total current liabilities		141,791			137,846
Long-term portion of deferred revenue		5,248			4,532
Convertible senior notes, net		282,979			278,213
Other liabilities		19,376			18,768
Total liabilities		449,394			439,359
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, no par value; 5,000,000 shares authorized, none issued or outstanding		—			—
Common stock, no par value; 150,000,000 shares authorized, 72,057,132 and 70,904,388 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		443,209			422,151
Additional paid-in capital		241,528			225,529
Accumulated other comprehensive income (loss), net		(719	)		247
Accumulated deficit		(309,536	)		(293,712	)
Total shareholders’ equity		374,482			354,215
Total liabilities and shareholders’ equity	$	823,876		$	793,574

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

CEPHEID

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenue	$	132,475		$	116,503		$	265,112		$	223,410
Costs and operating expenses:
Cost of sales		69,377			59,568			130,578			112,651
Collaboration profit sharing		1,326			649			2,593			1,940
Research and development		28,092			23,998			52,078			45,738
Sales and marketing		28,078			23,502			54,014			46,960
General and administrative		16,352			14,340			31,994			28,007
Total costs and operating expenses		143,225			122,057			271,257			235,296
Loss from operations		(10,750	)		(5,554	)		(6,145	)		(11,886	)
Other income (expense):
Interest income		416			306			789			459
Interest expense		(3,646	)		(3,500	)		(7,250	)		(5,363	)
Foreign currency exchange loss and other, net		(1,496	)		(176	)		(2,440	)		(757	)
Other expense, net		(4,726	)		(3,370	)		(8,901	)		(5,661	)
Loss before income taxes		(15,476	)		(8,924	)		(15,046	)		(17,547	)
Provision for income taxes		(1,254	)		(919	)		(778	)		(1,599	)
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)
Diluted net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)
Shares used in computing basic net loss per share		71,861			69,968			71,563			69,622
Shares used in computing diluted net loss per share		71,861			69,968			71,563			69,622

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

CEPHEID

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Other comprehensive loss, before tax:
Change in unrealized gains and losses related to cash flow hedges:
Loss recognized in other comprehensive income		(1,455	)		(472	)		(1,051	)		(291	)
Loss reclassified from accumulated comprehensive income to the statement of operations		22			216			45			503
Change in unrealized gains and losses related to available-for-sale investments:
Gain recognized in other comprehensive income		1			104			143			30
Gain reclassified from accumulated comprehensive income to the statement of operations		(3	)		(25	)		(3	)		(27	)
Other comprehensive loss, before tax		(18,165	)		(10,020	)		(16,690	)		(18,931	)
Income tax benefit (expense) related to items of accumulated comprehensive income, net		375			—			(100	)		—
Comprehensive loss	$	(18,540	)	$	(10,020	)	$	(16,590	)	$	(18,931	)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

CEPHEID

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(15,824	)	$	(19,146	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment		13,435			10,340
Amortization of intangible assets		3,334			1,841
Unrealized foreign exchange differences		1,338			122
Amortization of debt discount and transaction costs		5,044			3,642
Impairment of acquired intangible assets, licenses, property and equipment		224			—
Stock-based compensation expense		15,799			15,930
Excess tax benefits from stock-based compensation expense		(53	)		—
Loss on the disposal of property, equipment and intangible assets		28			—
Changes in operating assets and liabilities:
Accounts receivable		(8,949	)		(3,167	)
Inventory, net		(9,267	)		(19,809	)
Prepaid expenses and other current assets		(5,151	)		(5,867	)
Other non-current assets		(207	)		(42	)
Accounts payable and other current and non-current liabilities		9,695			1,916
Accrued compensation		(2,514	)		2,821
Deferred revenue		991			2,864
Net cash provided by (used in) operating activities		7,923			(8,555	)
Cash flows from investing activities:
Capital expenditures		(19,308	)		(25,745	)
Cost of acquisitions, net		(3,000	)		—
Proceeds from sale of equipment and an intangible asset		834			—
Proceeds from sales of marketable securities and investments		44,873			67,739
Proceeds from maturities of marketable securities and investments		118,497			21,326
Purchases of marketable securities and investments		(156,401	)		(334,800	)
Transfer from restricted cash		1,328			—
Net cash used in investing activities		(13,177	)		(271,480	)
Cash flows from financing activities:
Net proceeds from the issuance of common shares and exercise of stock options		20,592			24,498
Excess tax benefits from stock-based compensation expense		53			—
Proceeds from borrowings of convertible senior notes, net of issuance costs		—			335,789
Purchase of convertible note capped call hedge		—			(25,082	)
Principal payment of notes payable		(80	)		(95	)
Net cash provided by financing activities		20,565			335,110
Effect of foreign exchange rate change on cash and cash equivalents		(1,405	)		(166	)
Net increase in cash and cash equivalents		13,906			54,909
Cash and cash equivalents at beginning of period		96,663			66,072
Cash and cash equivalents at end of period	$	110,569		$	120,981

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6

CEPHEID

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Summary of Significant Accounting Policies

Organization and Basis of Presentation

Cepheid (the “Company”) was incorporated in the State of California on March 4, 1996. The Company is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for testing in the Clinical market, as well as for application in the Company’s Non-Clinical legacy market. The Company’s systems enable rapid, sophisticated molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures.

The Condensed Consolidated Balance Sheet at June 30, 2015, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014, the Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2015 and 2014 and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 are unaudited. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments that management considers necessary for a fair presentation of the Company’s financial position at such dates, and the operating results and cash flows for those periods. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations for such periods are not necessarily indicative of the results expected for the remainder of 2015 or for any future period. The Condensed Consolidated Balance Sheet as of December 31, 2014 is derived from audited financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates.

Cash, Cash Equivalents, Restricted Cash, Short-Term Investments and Non-Current Investments

Cash and cash equivalents consist of cash on deposit with banks and money market instruments. Interest income includes interest, dividends, amortization of purchase premiums and discounts and realized gains and losses on sales of securities.

Restricted cash consists of cash contractually restricted for use to develop the Xpert Ebola test in accordance with the Company’s agreements with the Bill and Melinda Gates Foundation (“BMGF”) and the National Philanthropic Trust (“NPT”). At June 30, 2015 and December 31, 2014, prepaid expense and other current assets included $0.5 million and $1.9 million of restricted cash, respectively.

The Company’s marketable debt securities have been classified and accounted for as available-for-sale. The Company determines the appropriate classification of its investments at the time of purchase and re-evaluates the designations at each balance sheet date. The Company classifies its marketable debt securities as cash equivalents, short-term investments or non-current investments based on each instrument’s underlying effective maturity date. All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Marketable debt securities with effective maturities of 12 months or less are classified as short-term, and marketable debt securities with effective maturities greater than 12 months are classified as non-current. The Company’s marketable debt securities are carried at fair value, with the unrealized gains and losses reported within accumulated other comprehensive income (loss), a component of shareholders’ equity. The cost of securities sold is based upon the specific identification method.

The Company assesses whether an other-than-temporary impairment loss on its investments has occurred due to declines in fair value or other market conditions. With respect to the Company’s debt securities, this assessment takes into account the severity and duration of the decline in value, the Company’s intent to sell the security, whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and whether or not the Company expects to recover the entire amortized cost basis of the security (that is, a credit loss exists).

7

See Note 3, “Investments,” for information and related disclosures regarding the Company’s investments.

Concentration of Credit Risks and Other Uncertainties

The carrying amounts for financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to their short maturities. Derivative instruments and investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s derivative instruments consist of large financial institutions of high credit standing.

The Company’s main financial institution for banking operations held 59% and 58% of the Company’s cash and cash equivalents as of June 30, 2015 and December 31, 2014, respectively.

The Company’s accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has not experienced significant losses to date. There was one direct customer whose accounts receivable balance represented 15% and 26% of total accounts receivable as of June 30, 2015 and December 31, 2014, respectively.

See Note 10, “Segment and Significant Concentrations,” for disclosure regarding total sales to direct customers and single countries.

Inventory, Net

Inventory is stated at the lower of standard cost (which approximates actual cost) or market value, with cost determined on the first-in-first-out method. Allocation of fixed production overheads to conversion costs is based on normal capacity of production. Abnormal amounts of idle facility expense, freight, handling costs, and spoilage are expensed as incurred, and not included in overhead. The Company maintains provisions for excess and obsolete inventory based on management’s estimates of forecasted demand and, where applicable, product expiration.

The components of inventories were as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw Materials	$	31,080	$	36,287
Work in Process		58,369		51,691
Finished Goods		52,601		44,657
Inventory	$	142,050	$	132,635

In addition, capitalized stock-based compensation expense of $1.7 million and $1.6 million were included in inventory as of June 30, 2015 and December 31, 2014, respectively.

Revenue Recognition

The Company recognizes revenue from sales when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. No right of return exists for the Company’s products except in the case of damaged goods. The Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of sales. In those cases where the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue.

The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. In situations with multiple deliverables, revenue is recognized upon the delivery of the separate elements. The Company sells service contracts for which revenue is deferred and recognized ratably over the contract period.

The Company may place an instrument at a customer site under a reagent rental. Under a reagent rental, the Company retains title to the instrument and earns revenue for the usage of the instrument and related maintenance services through the amount charged for reagents and other disposables. Under a reagent rental, a customer may commit to purchasing minimum quantities of reagents at stated prices over a defined contract term, which is typically between three to five years. Revenue is recognized over the term of a reagent rental as reagents and other disposables are shipped and all other revenue recognition criteria have been met.

8

For multiple element arrangements, the total consideration for an arrangement is allocated among the separate elements in the arrangement based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on: (1) vendor specific objective evidence (“VSOE”), if available; (2) third party evidence of selling price if VSOE is not available; or (3) an estimated selling price, if neither VSOE nor third party evidence is available. Estimated selling price is the Company’s best estimate of the selling price of an element in a transaction. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services or other future performance obligations. The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance.

Revenue includes fees for research and development services, including research and development under grants and government sponsored research and collaboration agreements. Revenue and profit under cost-plus service contracts are recognized as costs are incurred plus negotiated fees. Fixed fees on cost-plus service contracts are recognized ratably over the contract performance period as services are performed. Contract costs include labor and related employee benefits, subcontracting costs and other direct costs, as well as allocations of allowable indirect costs. For contract change orders, claims or similar items, judgment is required for estimating the amounts, assessing the potential for realization, and determining whether realization is probable. From time to time, facts develop that require revisions of revenue recognized or cost estimates. To the extent that a revised estimate affects the current or an earlier period, the cumulative effect of the revision is recognized in the period in which the facts requiring the revision become known. Advance payments received in excess of amounts earned, such as funds received in advance of products to be delivered or services to be performed, are classified as deferred revenue until earned.

Earnings per Share

Basic earnings per share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options, employee stock purchases, restricted stock awards, restricted stock units and shares issuable upon a potential conversion of the convertible senior notes using the treasury stock method. In loss periods, the earnings per share calculation excludes all common equivalent shares because their inclusion would be antidilutive. Antidilutive common equivalent shares totaled 8,847,000 and 9,845,000 for the three months ended June 30, 2015 and 2014, respectively, and 8,655,000 and 9,237,000 for the six months ended June 30, 2015 and 2014, respectively.

The following summarizes the computation of basic and diluted earnings per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Basic:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)
Diluted:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Effect of dilutive securities:
Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes		—			—			—			—
Diluted weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)

9

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principal of ASU 2014-09 is to recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective transition methods. The Company has not yet selected a transition method nor has it determined the potential effects on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends limited sections within ASC Subtopic 835-30. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company will adopt ASU 2015-03 on January 1, 2016, at which time the Company will reclassify approximately $6 million of debt issuance costs associated with the Company’s long-term debt from other noncurrent assets to long-term debt. A reclassification will also be applied retrospectively to each prior period presented.

10

2. Fair Value

The following table summarizes the fair value hierarchy for the Company’s financial assets (cash, cash equivalents, short-term investments, non-current investments and foreign currency derivatives) and financial liabilities (foreign currency derivatives) measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

Balance as of June 30, 2015:
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	83,071	$	27,498	$	—	$	110,569
Short-term investments:
Asset-backed securities		—		47,547		—		47,547
Corporate debt securities		—		65,662		—		65,662
Commercial Paper		—		47,033		—		47,033
Government agency securities		—		21,007		—		21,007
Other securities		—		8,126		—		8,126
Total short-term investments		—		189,375		—		189,375
Foreign currency derivatives		—		3,444		—		3,444
Investments:
Asset-backed securities		—		18,383		—		18,383
Corporate debt securities		—		44,567		—		44,567
Government agency securities		—		8,005		—		8,005
Other securities		—		8,710		—		8,710
Total investments		—		79,665		—		79,665
Total	$	83,071	$	299,982	$	—	$	383,053
Liabilities:
Foreign currency derivatives	$	—	$	3,205	$	—	$	3,205
Total	$	—	$	3,205	$	—	$	3,205

Balance as of December 31, 2014:
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	76,065	$	20,598	$	—	$	96,663
Short-term investments:
Asset-backed securities				52,220				52,220
Corporate debt securities		—		64,202		—		64,202
Commercial paper		—		56,096		—		56,096
Government agency securities				15,003				15,003
Other securities		—		9,208		—		9,208
Total short-term investments		—		196,729		—		196,729
Foreign currency derivatives		—		3,887		—		3,887
Investments:
Asset-backed securities		—		12,713		—		12,713
Corporate debt securities		—		22,679		—		22,679
Government agency securities		—		39,532		—		39,532
Other securities		—		4,807		—		4,807
Total investments		—		79,731		—		79,731
Total	$	76,065	$	300,945	$	—	$	377,010
Liabilities:
Foreign currency derivatives	$	—	$	3,812	$	—	$	3,812
Total	$	—	$	3,812	$	—	$	3,812

The estimated fair values of the Company’s other financial instruments which are not measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 were as follows (in thousands):

Balance as of June 30, 2015:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible senior notes	$	—	$	399,344	$	—	$	399,344
Total	$	—	$	399,344	$	—	$	399,344

11

Balance as of December 31, 2014:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible senior notes	$	—	$	382,232	$	—	$	382,232
Total	$	—	$	382,232	$	—	$	382,232

The Company utilized levels 1 and 2 to value its financial assets on a recurring basis. Level 1 instruments use quoted prices in active markets for identical assets or liabilities, which include the Company’s cash accounts, short-term deposits, and money market funds as these specific assets are liquid. Level 2 instruments are valued using the market approach which uses quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 instruments include commercial paper, corporate debt securities, United States government securities, government agency securities, asset-backed securities, and other securities as similar or identical instruments can be found in active markets.

The Company recorded derivative assets and liabilities at fair value. The Company’s derivatives consist of foreign exchange forward contracts. The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact.

Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically foreign currency spot rate and forward points) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR rates, credit default spot rates, and company specific LIBOR spread). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. The estimated fair value of the convertible senior notes, which we have classified as Level 2 financial instruments, was determined based on the quoted price of the convertible senior notes on June 30, 2015.

Level 3 assets and liabilities are valued by applying the income approach and are based on significant unobservable inputs that are supported by little or no market activity. The Company had no level 3 financial assets as of June 30, 2015 and December 31, 2014.

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3. Investments

The Company’s marketable securities as of June 30, 2015, were classified as available-for-sale securities, with changes in fair value recognized in accumulated other comprehensive income (loss), net, a component of shareholders’ equity. Classification of marketable securities as a current asset is based on the intended holding period and realizability of the investment. The following tables summarize available-for-sale marketable securities (in thousands):

Balance as of June 30, 2015:
	Cost			Gross Unrealized Gain			Gross Unrealized Loss			Estimated Fair Value
Short-term investments:
Asset-backed securities	$	47,549		$	4		$	(6	)	$	47,547
Commercial paper		74,511			20			—			74,531
Corporate debt securities		65,683			4			(25	)		65,662
Government agency securities		21,000			7			—			21,007
Other securities		8,118			8			—			8,126
Amounts classified as cash equivalents		(27,494	)		(4	)		—			(27,498	)
Total short-term investments	$	189,367		$	39		$	(31	)	$	189,375
Investments:
Asset-backed securities	$	18,373		$	10		$	—		$	18,383
Corporate debt securities		44,596			7			(36	)		44,567
Government agency securities		8,001			4			—			8,005
Other securities		8,711			3			(4	)		8,710
Total investments	$	79,681		$	24		$	(40	)	$	79,665

Balance as of December 31, 2014:
	Cost			Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
Short-term investments:
Asset-backed securities	$	52,240		$	3	$	(23	)	$	52,220
Commercial paper		76,683			12		—			76,695
Corporate debt securities		64,244			2		(45	)		64,201
Government agency securities		15,000			3		—			15,003
Other securities		9,206			2		—			9,208
Amounts classified as cash equivalents		(20,598	)		—		—			(20,598	)
Total short-term investments	$	196,775		$	22	$	(68	)	$	196,729
Investments:
Asset-backed securities	$	12,724		$	—	$	(12	)	$	12,712
Corporate debt securities		22,709			—		(29	)		22,680
Government agency securities		39,583			—		(51	)		39,532
Other securities		4,815			—		(8	)		4,807
Total investments	$	79,831		$	—	$	(100	)	$	79,731

For the six months ended June 30, 2015 and 2014, $44.9 million and $67.7 million, respectively, of proceeds from sales of marketable securities were collected. The Company determines gains and losses from sales of marketable securities based on specific identification of the securities sold. Gross realized gains and losses from sales of marketable securities, all of which are reported as a component of “Interest income” in the Condensed Consolidated Statements of Operations, were for the three and six months ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Gross realized gains	$	3	$	25	$	3	$	27
Gross realized losses		—		—		—		—
Realized gains, net	$	3	$	25	$	3	$	27

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The fair value of the Company’s marketable securities with unrealized losses at June 30, 2015 and December 31, 2014, and the duration of time that such losses had been unrealized (in thousands) were:

Balance at June 30, 2015:
	Less Than 12 months					More than 12 months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Asset-backed securities	$	24,297	$	(5	)	$	3,592	$	(1	)	$	27,889	$	(6	)
Corporate debt securities		72,814		(51	)		4,464		(10	)		77,278		(61	)
Other securities		6,898		(4	)		—		—			6,898		(4	)
Total	$	104,009	$	(60	)	$	8,056	$	(11	)	$	112,065	$	(71	)

Balance at December 31, 2014:
	Less Than 12 months					More than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Asset-backed securities	$	54,580	$	(35	)	$	—	$	—	$	54,580	$	(35	)
Corporate debt securities		79,360		(74	)		—		—		79,360		(74	)
Government agency securities		39,532		(51	)		—		—		39,532		(51	)
Other securities		4,807		(8	)		—		—		4,807		(8	)
Total	$	178,279	$	(168	)	$	—	$	—	$	178,279	$	(168	)

The Company has evaluated such securities, which consist of investments in asset-backed securities, corporate debt securities, government agency securities, and other securities as of June 30, 2015, and has determined that there was no indication of other-than-temporary impairments. This determination was based on several factors, including the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the debt issuer, and the Company’s intent and ability to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

The following table summarizes the amortized cost and estimated fair value of available-for-sale debt securities at June 30, 2015 and December 31, 2014, by contractual maturity (in thousands):

	June 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Mature in one year or less	$	157,642	$	157,654	$	150,133	$	150,105
Mature after one year through three years		125,417		125,397		135,675		135,566
Mature in more than three years		13,483		13,487		11,396		11,387
Total	$	296,542	$	296,538	$	297,204	$	297,058

4. Derivative Financial Instruments

The Company uses derivatives to partially offset its business exposure to foreign currency exchange risk. The Company may enter into foreign currency forward contracts generally up to twelve months to offset some of the foreign exchange risk on expected future cash flows on certain forecasted revenue, cost of sales, operating expenses and on certain existing assets and liabilities.

The Company may also enter into foreign currency forward contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities. However, the Company may choose not to hedge certain foreign currency exchange exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures.

The Company records all derivatives in the Condensed Consolidated Balance Sheet at fair value. The Company’s accounting treatment of these instruments is based on whether the instruments are designated as hedge or non-hedge instruments. For derivative instruments that are designated and qualify as cash flow hedges, the Company initially records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss (“AOCI”), a separate component of shareholders’ equity and subsequently reclassifies these amounts into earnings within the same financial statement line item as the hedged item in the period during which the hedged transaction is recognized in earnings. The ineffective portions of cash flow hedges are recorded in foreign currency exchange loss and other, net.

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The Company had a net deferred loss of $0.8 million and a net deferred gain of $0.2 million associated with cash flow hedges recorded in AOCI as of June 30, 2015 and December 31, 2014, respectively. Deferred gains and losses associated with cash flow hedges of forecasted foreign currency revenue are recognized as a component of revenues in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of forecasted expenses are recognized as a component of cost of sales, research and development expense, sales and marketing expense and general and administrative expense in the same period as the related expenses are recognized. The Company’s hedged transactions as of June 30, 2015 are expected to occur within twelve months.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into foreign currency exchange loss and other, net. Any subsequent changes in fair value of such derivative instruments are reflected in foreign currency exchange loss and other, net unless they are re-designated as hedges of other transactions. The Company did not recognize any significant net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during the three and six months ended June 30, 2015 and 2014.

Gains or losses on derivatives not designated as hedging instruments are recorded in foreign currency exchange loss and other, net. During the three months ended June 30, 2015 and 2014, the Company recognized a loss of $0.3 million and $0.2 million, respectively, as a component of foreign currency exchange loss and other, net, related to derivative instruments not designated as hedging instruments. During the six months ended June 30, 2015 and 2014, the Company recognized a gain of $1.7 million and a loss of $0.5 million, respectively, as a component of foreign currency exchange loss and other, net, related to derivative instruments not designated as hedging instruments. These amounts represent the net gain or loss on the derivative contracts and do not include changes in the related exposures or ineffective portion or amounts excluded from the effectiveness testing of cash flow hedges.

The notional principle amounts of the Company’s outstanding derivative instruments designated as cash flow hedges are $152.8 million and $117.2 million as of June 30, 2015 and December 31, 2014, respectively. The notional principle amounts of the Company’s outstanding derivative instruments not designated as cash flow hedges is $35.1 million and $30.4 million as of June 30, 2015 and December 31, 2014, respectively.

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, respectively (in thousands):

	June 30, 2015
	Fair Value of Derivatives Designated as Hedge Instruments			Fair Value of Derivatives Not Designated as Hedge Instruments			Total Fair Value
Derivative Assets (a):
Foreign exchange contracts	$	3,396		$	48		$	3,444
Derivative Liabilities (b):
Foreign exchange contracts		(3,014	)		(191	)		(3,205	)

	December 31, 2014
	Fair Value of Derivatives Designated as Hedge Instruments			Fair Value of Derivatives Not Designated as Hedge Instruments			Total Fair Value
Derivative Assets (a):
Foreign exchange contracts	$	3,887		$	—		$	3,887
Derivative Liabilities (b):
Foreign exchange contracts		(3,685	)		(127	)		(3,812	)

^(a)  The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

^(b)  The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued and other liabilities in the Condensed Consolidated Balance Sheets.

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The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended
	Loss Recognized in OCI - Effective Portion						Loss Reclassified from AOCI into Income - Effective Portion						Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2015			June 30, 2014			June 30, 2015 (a)			June 30, 2014 (b)			Location	June 30, 2015			June 30, 2014
Cash flow hedges:
Foreign exchange contracts	$	(1,455	)	$	(472	)	$	(22	)	$	(216	)	Foreign currency exchange loss and other, net	$	(38	)	$	20
Total	$	(1,455	)	$	(472	)	$	(22	)	$	(216	)		$	(38	)	$	20

^(a)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $2.4 million loss within costs and operating expenses and a $2.4 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2015.

^(b)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $0.4 million loss within costs and operating expenses and a $0.2 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2014.

	Six Months Ended
	Loss Recognized in OCI - Effective Portion						Loss Reclassified from AOCI into Income - Effective Portion						Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2015			June 30, 2014			June 30, 2015 (a)			June 30, 2014 (b)			Location	June 30, 2015			June 30, 2014
Cash flow hedges:
Foreign exchange contracts	$	(1,051	)	$	(291	)	$	(45	)	$	(503	)	Foreign currency exchange loss and other, net	$	(124	)	$	33
Total	$	(1,051	)	$	(291	)	$	(45	)	$	(503	)		$	(124	)	$	33

^(a)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $4.7 million loss within costs and operating expenses and a $4.7 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2015.

^(b)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $0.9 million loss within costs and operating expenses and a $0.4 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2014.

5. Intangible Assets

Intangible assets related to licenses are recorded at cost, less accumulated amortization. Intangible assets related to technology and other intangible assets acquired in acquisitions are recorded at fair value at the date of acquisition, less accumulated amortization. Intangible assets are amortized over their estimated useful lives, ranging from 3 to 15 years, on a straight-line basis. Amortization of intangible assets is primarily included in cost of sales, research and development and sales and marketing in the Condensed Consolidated Statements of Operations.

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The recorded value and accumulated amortization of major classes of intangible assets were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Balance, June 30, 2015
Licenses	$	11,454	$	(6,747	)	$	4,707
Technology acquired in acquisitions		8,613		(8,613	)		—
Customer relationships and other intangible assets acquired in acquisitions		35,849		(12,376	)		23,473
	$	55,916	$	(27,736	)	$	28,180
Balance, December 31, 2014
Licenses	$	13,594	$	(8,477	)	$	5,117
Technology acquired in acquisitions		8,613		(8,613	)		—
Customer relationships and other intangible assets acquired in acquisitions		36,582		(10,259	)		26,323
	$	58,789	$	(27,349	)	$	31,440

Intangible asset amortization expense was $1.7 million and $0.9 million for the three months ended June 30, 2015 and 2014, respectively, and $3.3 million and $1.8 million for the six months ended June 30, 2015 and 2014, respectively. The following table summarizes the expected future annual amortization expense of intangible assets recorded on the Company’s Condensed Consolidated Balance Sheet as of June 30, 2015, assuming no impairment charges (in thousands):

For the Years Ending December 31,	Amortization Expense
2015 (remaining six months)	$	3,001
2016		5,822
2017		5,460
2018		5,080
2019		4,181
Thereafter		4,636
Total expected future annual amortization	$	28,180

6. Income Taxes

For the three and six months ended June 30, 2015, the Company recorded an income tax provision of $1.3 million and $0.8 million, respectively, comprised primarily of ordinary tax expense of the Company’s foreign subsidiaries, and the tax effect of items in accumulated other comprehensive income (loss), net. For the three and six months ended June 30, 2014, the Company recorded an income tax provision of $0.9 million and $1.6 million, respectively, primarily related to ordinary tax expense of the Company’s foreign subsidiaries.

The Company’s effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014 differs from the statutory federal income tax rate of 34%, primarily due to the impact of operations in foreign jurisdictions, as well as income or loss in the United States federal and state jurisdictions for which no tax expense or benefit is recorded. The difference in the effective tax rate for the three and six months ended June 30, 2015, compared to the three and six months ended June 30, 2014 is primarily due to increased United States income, or decreased United States losses, for the three and six months ended June 30, 2015, for which no income tax expense or benefit is recorded in the United States federal and state tax jurisdictions.

The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. The Company’s position is to record a valuation allowance when it is more likely than not that some of the deferred tax assets will not be realized. Based on all available objective evidence, the Company believes that it is more likely than not that the net United States deferred tax assets will not be fully realized. Accordingly, the Company continues to maintain a full valuation allowance on its United States deferred tax assets and will do so until there is sufficient evidence to support the reversal of all or some portion of this valuation allowance.

The Company or one of its subsidiaries files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company’s United States and state income tax return years 1996 through 2014 remain open to examination. In addition, the Company files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from 2009 to 2014.

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The Company anticipates that the total unrecognized tax benefits will not significantly change within the next 12 months due to the settlement of audits and the expiration of statutes of limitations. The Company is currently under examination in Sweden. Although the outcome of any tax audit is uncertain, the Company believes that it has adequately provided in its consolidated financial statements for any additional taxes that the Company may be required to pay as a result of such examination.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the three and six months ended June 30, 2015 and 2014, the Company did not recognize any significant interest or penalties related to uncertain tax positions. As of June 30, 2015 and December 31, 2014, the Company had not accrued significant interest or penalties.

7. Convertible Senior Notes

In February 2014, the Company issued $345 million aggregate principal amount of 1.25% convertible senior notes (the “Notes”) due February 1, 2021, unless earlier repurchased by the Company or converted by the holder pursuant to their terms. Interest is payable semiannually in arrears on February 1 and August 1 of each year, commencing on August 1, 2014.

The Notes are governed by an Indenture between the Company, as issuer, and Wells Fargo Bank, National Association, as trustee. The Notes are unsecured and rank: senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated; effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

The Notes have an initial conversion rate of 15.3616 shares of common stock per $1,000 principal amount of Notes. This represents an initial effective conversion price of approximately $65.10 per share of common stock and approximately 5,300,000 shares upon conversion. Throughout the term of the Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by the cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a Note.

Prior to the close of business on the business day immediately preceding August 1, 2020, the Notes will be convertible at the option of holders during certain periods, only upon satisfaction of certain conditions set forth below. On or after August 1, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time regardless of whether the conditions set forth below have been met.

Holders may convert all or a portion of their Notes prior to the close of business on the business day immediately preceding August 1, 2020, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a 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 conversion price on each applicable trading day;

• during the five business day period after any five consecutive trading day period (the “Notes Measurement Period”) in which the “trading price” (as the term is defined in the Indenture) per $1,000 principal amount of notes for each trading day of such Notes Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock on such trading day and the conversion rate on each such trading day; or

• upon the occurrence of specified corporate events.

As of June 30, 2015, the Notes are not yet convertible.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its Notes to be approximately 5.0%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the

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liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Notes, which resulted in a fair value of the liability component of $270 million upon issuance, calculated as the present value of implied future payments based on the $345 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the Notes. The $75 million difference between the aggregate principal amount of $345 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the Notes were not considered redeemable.

In accounting for the transaction costs related to the issuance of the Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $7.2 million, are being amortized to expense over the term of the Notes, and transaction costs attributable to the equity component, totaling $2.0 million, and were netted with the equity component in shareholders’ equity.

The Notes consist of the following (in thousands):

	June 30, 2015			December 31, 2014
Liability component:
Principal		345,000			345,000
Less: debt discount, net of amortization		(62,021	)		(66,787	)
Net carrying amount		282,979			278,213
Equity component (a)		73,013			73,013

(a) Recorded in the condensed consolidated balance sheets within additional paid-in capital, net of $2.0 million issuance costs in equity

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The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2015		2014		2015		2014
1.25% coupon	$	1,078	$	1,078	$	2,156	$	1,653
Amortization of debt issuance costs		144		100		278		150
Amortization of debt discount		2,398		2,284		4,766		3,491
		3,620		3,462		7,200		5,294

As of June 30, 2015 and December 31, 2014, the fair value of the Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands):

	June 30, 2015				December 31, 2014
	Fair Value		Carrying Value		Fair Value		Carrying Value
Convertible Senior Notes	$	399,344	$	282,979	$	382,232	$	278,213

In connection with the issuance of the Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and others. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the Notes, with an initial strike price of approximately $65.10 per share, which corresponds to the initial conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, and have a cap price of approximately $78.61. The cost of the purchased capped calls of $25.1 million was recorded to shareholders’ equity and will not be re-measured.

Based on the closing price of our common stock of $61.15 on June 30, 2015, the if-converted value of the Notes was less than their respective principal amounts.

8. Commitments, Contingencies and Legal Matters

Purchase Commitments

The following table summarizes the Company’s purchase commitments at June 30, 2015 (in thousands):

Years Ending December 31,	Purchase Commitments
2015 (remaining six months)	$	36,177
2016		—
2017		—
2018		—
2019		—
Thereafter		—
Total minimum payments	$	36,177

Purchase commitments include non-cancellable purchase orders or contracts for the purchase of raw materials used in the manufacturing of the Company’s systems and reagents.

Legal Matters

In May 2005, the Company entered into a license agreement with F. Hoffman-La Roche Ltd. and Roche Molecular Systems, Inc. (“Roche”) that provided us with rights under a broad range of Roche patents, including patents relating to the PCR process,

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reverse transcription-based methods, nucleic acid quantification methods, real-time PCR detection process and composition, and patents relating to methods for detection of viral and cancer targets. A number of the licensed patents expired in the United States prior to the end of August of 2010 and in Europe prior to the end of August of 2011. In August 2010, the Company terminated the Company’s license to United States Patent No. 5,804,375 (the “375 Patent”) and ceased paying United States-related royalties. The Company terminated the entire license agreement in the fourth quarter of 2011. In August 2011, Roche initiated an arbitration proceeding against the Company in the International Chamber of Commerce pursuant to the terms of the terminated agreement. The Company filed an answer challenging arbitral jurisdiction over the issues submitted by Roche and denying that the Company violated any provision of the agreement. A three-member panel has been convened to address these issues in confidential proceedings. On July 30, 2013, the panel determined that it had jurisdiction to decide the claims, a determination that the Company appealed to the Swiss Federal Supreme Court. On October 2, 2013, the arbitration panel determined that it would proceed with the arbitration while this appeal was pending. On February 27, 2014 the Swiss Federal Supreme Court upheld the jurisdiction of the arbitration panel to hear the case, and the case is continuing. The Company believes that it has not violated any provision of the agreement and that the asserted claim of the 375 Patent is expired, invalid, unenforceable, and not infringed.

Based on its ongoing evaluation of the facts and circumstances of the case, the Company believes that it is probable that this arbitration proceeding could result in a material loss. Accordingly, the Company recorded an estimated charge of $20 million as its best estimate of the potential loss in the fourth quarter of 2014, which was included in accrued and other liabilities in the Company’s condensed consolidated balance sheets and the Company has not changed its estimate of this potential loss. If the Company were to incur a loss in the arbitration proceeding, depending on the ruling of the arbitrator, the Company could also be responsible for certain attorneys’ fees and interest; however, at this time, the Company is unable to estimate these potential amounts. Given the inherent uncertainty of arbitration and the nature of the claims in this matter, it is possible that the Company may incur an additional material charge, but an estimate of such a charge cannot be made at this time. The Company continues to strongly dispute Roche’s claims and intends to vigorously defend against them.

On August 21, 2012 the Company filed a lawsuit against Roche in the United States District Court for the Northern District of California (“the Court”), for a declaratory judgment of (a) invalidity, expiration, and non-infringement of the 375 Patent; and (b) invalidity, unenforceability, expiration and non-infringement of United States Patent No. 6,127,155 (the “155 Patent”). On January 17, 2013, the Court issued an order granting a motion by Roche to stay the suit with respect to the 375 Patent pending resolution of the above noted arbitration proceeding. In the same order, the Court dismissed the Company’s suit with respect to the 155 Patent for lack of subject matter jurisdiction, without considering or ruling on the merits of the Company’s case. The Court left open the possibility that the Company could re-file its case against the 155 Patent in the future. The Company believes that the possibility that these legal proceedings will result in a material adverse effect on the Company’s business is remote.

On July 16, 2014 Roche filed a lawsuit in the Court, alleging that the Company’s Xpert MTB-RIF product infringes United States Patent No. 5,643,723 (the “723 Patent”), which expired on July 1, 2014. On September 15, 2014, the Company filed its answer and counterclaims denying Roche’s allegations of infringement and asking the Court to find the 723 Patent invalid, unenforceable, and not infringed. On November 10, 2014, the Company filed a petition for inter partes review (“IPR”) of certain claims of the 723 Patent in the United States Patent and Trademark Office (“USPTO”) and filed a motion with the Court to stay this lawsuit pending the outcome of the IPR. On January 7, 2015, the Court issued an order staying the lawsuit pending the outcome of the IPR. On March 16, 2015, the Company filed a second petition for IPR of an additional claim of the 723 Patent. On June 11, 2015, the USPTO issued a decision declining to institute the first requested IPR. On July 13, 2015, the Company filed a request for reconsideration of the first petition for IPR with respect to certain challenged claims. The Company believes that the possibility that these legal proceedings will result in a material loss is remote.

The Company may be subject to additional various claims, complaints and legal actions that arise from time to time in the normal course of business. Other than as described above, the Company does not believe it is party to any currently pending legal proceedings that will result in a material adverse effect on its business. 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 the Company’s business, consolidated financial position, results of operations or cash flows.

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9. Employee Equity Incentive Plans and Stock-Based Compensation Expense

The following table is a summary of the major categories of stock-based compensation expense recognized in accordance with ASC 718, “Compensation—Stock Compensation” (“ASC 718”) for the three and six months ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Cost of sales	$	1,008	$	1,473	$	2,049	$	1,854
Research and development		2,277		2,481		4,475		4,609
Sales and marketing		1,743		1,926		3,193		3,542
General and administrative		3,241		3,268		6,110		5,925
Total stock-based compensation expense	$	8,269	$	9,148	$	15,827	$	15,930

The following table summarizes option activity under all plans (in thousands, except weighted average exercise price and weighted average remaining contractual term):

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Intrinsic Value
Outstanding, December 31, 2014		5,581		$	33.20
Granted		1,141		$	56.46
Exercised		(912	)	$	22.84
Forfeited		(144	)	$	41.29
Outstanding, June 30, 2015		5,666		$	39.35		4.57	$	123,503
Exercisable, June 30, 2015		2,955		$	31.05		3.34	$	88,962
Vested and expected to vest, June 30, 2015		5,431		$	38.87		4.50	$	120,996

The following table summarizes all award activity, which consists of restricted stock awards and restricted stock units (in thousands, except weighted average grant date fair value):

	Shares			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2014		698		$	40.30
Granted		447			56.31
Vested		(186	)		39.07
Cancelled		(50	)		44.37
Outstanding, June 30, 2015		909		$	48.20

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The following table summarizes the assumptions used in determining the fair value of the Company’s stock options granted to employees and shares purchased by employees under the Company’s 2012 Employee Stock Purchase Plan (“ESPP”):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
OPTION SHARES:
Expected Term (in years)		4.46			4.40			4.46			4.40
Volatility		0.36			0.38			0.36			0.38
Expected Dividends		—	%		—	%		—	%		—	%
Risk Free Interest Rates		1.45	%		1.73	%		1.45	%		1.73	%
Estimated Forfeitures		6.14	%		6.75	%		6.14	%		6.79	%
Weighted Average Fair Value Per Share	$	18.05		$	15.29		$	18.07		$	15.64
ESPP SHARES:
Expected Term (in years)		1.22			1.25			1.22			1.25
Volatility		0.32			0.32			0.32			0.32
Expected Dividends		—	%		—	%		—	%		—	%
Risk Free Interest Rates		0.26	%		0.17	%		0.26	%		0.17	%
Weighted Average Fair Value Per Share	$	16.43		$	14.54		$	16.43		$	14.54

10. Segment and Significant Concentrations

The Company and its wholly owned subsidiaries operate in one business segment.

The following table summarizes revenue in the Clinical and Non-Clinical markets (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue by market:
Clinical Systems	$	21,783	$	28,334	$	38,084	$	45,619
Clinical Reagents		103,227		83,006		212,233		166,166
Total Clinical		125,010		111,340		250,317		211,785
Non-Clinical		7,465		5,163		14,795		11,625
Total revenue	$	132,475	$	116,503	$	265,112	$	223,410

The Company currently sells product through its direct sales force and through third-party distributors. No customers accounted for more than 10% of total revenue for the three and six months ended June 30, 2015, and for the six months ended June 30, 2014. One distributor represented greater than 10% of the Company’s total revenue for the three months ended June 30, 2014. Revenue from this distributor for the three months ended June 30, 2015 and 2014 were 0.1% and 13.1% of total revenue, respectively, and for the six months ended June 30, 2015 and 2014 were 0.1% and 6.8% of total revenue, respectively.

The following table summarizes revenue by geographic region (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Geographic revenue information:
North America
Clinical	$	69,056	$	57,649	$	144,529	$	114,935
Non-Clinical		7,131		3,926		13,963		9,475
Total North America		76,187		61,575		158,492		124,410
International
Clinical	$	55,953	$	53,691	$	105,787	$	96,850
Non-Clinical		335		1,237		833		2,150
Total International		56,288		54,928		106,620		99,000
Total revenue	$	132,475	$	116,503	$	265,112	$	223,410

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No single country outside of the United States represented more than 10% of the Company’s total revenue for the three and six months ended June 30, 2015 and the six months ended June 30, 2014. For the three months ended June 30, 2014, revenue from China customers represented more than 10% of the Company’s total revenue.

The Company recognized revenue of $72.6 million and $60.0 million for sales to United States customers for the three months ended June 30, 2015 and 2014, respectively, and $149.6 million and $121.6 million for the six months ended June 30, 2015 and 2014, respectively. The Company recognized revenue of $1.3 million and $15.4 million to China customers for the three months ended June 30, 2015 and 2014, respectively, and $1.8 million and $15.5 million for the six months ended June 30, 2015 and 2014, respectively.

As of June 30, 2015 and December 31, 2014, the Company has long lived-assets (excluding intangible assets and goodwill) of $100.5 million and $96.0 million, respectively, which reside in the United States. As of June 30, 2015 and December 31, 2014, the Company has long-lived assets of $19.7 million and $19.8 million, respectively, located outside of the United States, which reside primarily in Sweden and countries in the European Monetary Union.

11. Related party transaction

The Company sells its products and provides services to Geisinger Health System (“Geisinger”), a physician-led health care system serving multiple regions of Pennsylvania. A director of the Company was the President and Chief Executive Officer of Geisinger until the second quarter of 2015. Net revenues recorded from sales to Geisinger were approximately $0.5 million and $0.4 million for the three months ended June 30, 2015 and 2014, respectively, and $1.3 million and $0.8 million for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015 and December 31, 2014, the Company had accounts receivable of approximately $0.2 million and $0.2 million due from Geisinger, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “potential”, “project” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements are based upon current expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in our forward-looking statements as a result of many factors, including, but not limited to, the following: consistency of product availability and delivery; sales organization productivity; speed and extent of test menu expansion and utilization; improving gross margins; execution of manufacturing operations; our success in increasing product sales under the High Burden Developing Country (“HBDC”) program; our success in commercial test and commercial system sales and our ability to sell directly to the smaller hospital market and the independent reference laboratory market; the performance and market acceptance of our new products; test performance in the field; testing volumes for our products; unforeseen supply, development and manufacturing problems; our ability to manage our inventory levels; our ability to scale up manufacturing; our research and development budget; the potential need for intellectual property licenses for tests and other products and the terms of such licenses; the environment for capital spending by hospitals and other customers for our diagnostic systems; the effectiveness of our sales personnel and our ability to successfully expand and effectively manage increased sales and marketing operations, including expansion of our direct sales force to address the smaller hospital market and the independent reference laboratory market; lengthy sales cycles in certain markets, including the HBDC program and the smaller hospital market; variability in systems placements and reagent pull-through in our HBDC program and the smaller hospital market; the impact of competitive products and pricing; sufficient customer demand; customer confidence in product availability and available customer budgets; the level of testing at clinical customer sites, including for healthcare associated infections; our ability to consolidate customer demand through volume pricing; our ability to develop new products and complete clinical trials successfully in a timely manner for new products; our ability to obtain regulatory approvals for new products; uncertainties related to FDA regulatory and international regulatory processes; our ability to respond to changing laws and regulations affecting our industry and changing enforcement practices related thereto; our reliance on distributors in some regions to market, sell and support our products in certain geographic locations; the occurrence of unforeseen expenditures, asset impairments, acquisitions or other transactions; costs of litigation, including settlement costs; our ability to manage geographically-dispersed operations; the scope and timing of actual United States Postal Service (“USPS”) funding of the Biohazard Detection System (“BDS”) in its current configuration; the rate of environmental testing using the BDS conducted by the USPS, which will affect the amount of consumable products sold; underlying market conditions worldwide; protection of our intellectual property and proprietary information; and the other risks set forth under “Risk Factors” and elsewhere in this report. We neither undertake, nor assume any obligation to update any of the forward-looking statements after the date of this report or to conform these forward-looking statements to actual results.

OVERVIEW

We are a molecular diagnostics company that develops, manufactures and markets fully-integrated systems for testing in the Clinical and Non-Clinical markets. Our systems enable rapid, sophisticated molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. Our objective is to become the leading supplier of integrated systems and tests for molecular diagnostics. Key elements of our strategy to achieve this objective include:

• Provide a fully-integrated molecular testing solution to the Clinical market. We are focusing our investments on selling our systems and tests to the Clinical market and we believe our GeneXpert system will continue to significantly expand our presence in the Clinical market due to its ability to deliver accurate and rapid results, ease of use, flexibility and scalability. Features of the GeneXpert system and Xpert tests include:

• an approach by which the reagents are typically prepackaged in a single vessel (the test cartridge) into which the specimen is added;

• no further user intervention once the Xpert cartridge is loaded into the GeneXpert system;

• all three phases of PCR: 1) sample preparation, 2) amplification and 3) detection, are performed within the single sealed test cartridge automatically;

• primarily moderate complexity Clinical Laboratory Improvement Amendments (“CLIA”) categorized, amplified molecular tests, which means the GeneXpert system can be operated without the need for highly-trained laboratory technologists, Additionally, we are targeting entry to the CLIA Waived market in late 2015, which would initially enable our Xpert Flu/RSV test to be run in certain point-of-care testing environments;

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• commercial availability in a variety of configurations ranging from one to 80 individual test modules, which enables testing in environments ranging from low volume testing to high volume, point-of-care, core or central lab testing, and system capacity that can be expanded in support of growing test volumes by adding additional modules;

• notably, to our knowledge, the only truly scalable real-time PCR system that operates entirely within a closed system architecture, reducing hands-on time, reducing the likelihood of human error and contamination, and enabling nested PCR capability, a proven process for maximizing real-time PCR sensitivity; and

• full random access whereby different tests for different targets may be run simultaneously in different modules in the same GeneXpert system, which increases potential utilization and throughput of the system and also enables on-demand or “STAT” testing, whereby the user can add a new test to the system at any time without regard to the stage of processing of any other test on the system.

• Continue to develop and market new tests. We plan to capitalize on our strengths in nucleic acid chemistry and molecular biology to continue to develop new tests for our systems and offer our customers the broadest menu of Xpert tests designed to address many of the highest volume molecular test opportunities. Our strategy is to offer a portfolio of Xpert tests spanning healthcare-associated infections, critical infectious disease, sexual health, women’s health, virology, oncology and genetics. For example, Xpert HPV, Xpert Carba-R, Xpert Norovirus, Xpert Flu/RSV XC, and Xpert Trichomonas were all made commercially available in all markets that recognize the CE Mark during 2014 and Xpert HIV-1 Viral Load achieved CE Mark in December, 2014. Thus far in 2015, Xpert Ebola received Emergency Use Authorization from the FDA and was listed as eligible for procurement to Ebola affected countries by the World Health Organization, and Xpert HIV-1 Qual and Xpert HCV Viral Load all achieved CE Mark.

• Obtain additional target rights. We expect to continue to expand our collaborations with academic institutions and commercial organizations to develop and obtain target rights to various infectious disease and oncology targets. In addition, we expect to focus key business development activities on identifying infectious disease and oncology targets held by academic institutions or commercial organizations for potential license or acquisition.

• Extend geographic reach. Our European sales and marketing operations are headquartered in France. As of June 30, 2015, we had direct sales forces in Australia, the Benelux region, France, Germany, Hong Kong, Italy, South Africa and the United Kingdom, and we have offices in Brazil, China, Dubai, India and Japan. We expect to continue to expand our international commercial operations capability on both a direct and distributor basis during the remainder of 2015 and in future years.

• Extend High Burden Developing Countries sales programs. We are developing and expect to continue to expand our presence in HBDCs based on the World Health Organization’s endorsement of the Xpert MTB/RIF test in late 2010 to deliver GeneXpert systems and Xpert tests to areas of greatest disease burden at a discount to our standard commercial prices. We believe that the HBDC program broadens the geographic reach of our products and increases recognition of the Cepheid brand and product portfolio.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ASSUMPTIONS

The items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operation in our 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission remain unchanged. For a description of those critical accounting policies, please refer to our 2014 Annual Report on Form 10-K.

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Recent Accounting Pronouncements

Refer to Note 1, “Organization and Summary of Significant Accounting Policies – Recent Accounting Pronouncements” for a discussion of new and recently adopted accounting guidance.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2015 and 2014

Revenue

The following table illustrates revenue in the Clinical and Non-Clinical markets (in thousands, except percentages):

	Three Months Ended June 30,										Six Months Ended June 30,
	2015		2014		$ Change			% Change			2015		2014		$ Change			% Change
Revenue by market:
Clinical Systems	$	21,783	$	28,334	$	(6,551	)		-23	%	$	38,084	$	45,619	$	(7,535	)		-17	%
Clinical Reagents		103,227		83,006		20,221			24	%		212,233		166,166		46,067			28	%
Total Clinical		125,010		111,340		13,670			12	%		250,317		211,785		38,532			18	%
Non-Clinical		7,465		5,163		2,302			45	%		14,795		11,625		3,170			27	%
Total revenue	$	132,475	$	116,503	$	15,972			14	%	$	265,112	$	223,410	$	41,702			19	%

Clinical systems revenue decreased $6.6 million, or 23%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and decreased $7.5 million, or 17%, for the six months ended June 30, 2015 as compared to the same period in the prior year, driven by lower system sales to customers participating in our HBDC program as the second quarter of 2014 included a large system order for China. Clinical reagent revenue increased $20.2 million, or 24%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $46.1 million, or 28%, for the six months ended June 30, 2015, in each case, due to our growing installed base of GeneXpert instruments and our expanding menu of Xpert tests. Additionally, the increase for the six months ended June 30, 2015, also reflects increased sales volumes of our Xpert Flu and Xpert Flu RSV tests during the first quarter of 2015 due to the strong flu season.

Non-Clinical revenue increased $2.3 million, or 45%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $3.2 million, or 27%, for the six months ended June 30, 2015 as compared to the same period in prior year, in each case, primarily due to increased grant and collaboration revenues.

Our sales do not reflect any significant degree of seasonality, other than with respect to sales of our Xpert Flu, Xpert Flu/RSV XC and Xpert EV for Enterovirus products that have demonstrated seasonal fluctuations consistent with the onset and decline of respective illnesses.

The following table provides a breakdown of our revenue by geographic regions (in thousands, expect percentages):

	Three Months Ended June 30,										Six Months Ended June 30,
	2015		2014		$ Change			% Change			2015		2014		$ Change			% Change
Geographic revenue information:
North America
Clinical	$	69,056	$	57,649	$	11,407			20	%	$	144,529	$	114,935	$	29,594			26	%
Non-Clinical		7,131		3,926		3,205			82	%		13,963		9,475		4,488			47	%
Total North America		76,187		61,575		14,612			24	%		158,492		124,410		34,082			27	%
International
Clinical		55,953		53,691	$	2,262			4	%		105,787		96,850	$	8,937			9	%
Non-Clinical		335		1,237		(902	)		-73	%		833		2,150		(1,317	)		-61	%
Total International		56,288		54,928		1,360			2	%		106,620		99,000		7,620			8	%
Total revenue	$	132,475	$	116,503	$	15,972			14	%	$	265,112	$	223,410	$	41,702			19	%

North American Clinical revenue increased $11.4 million, or 20%, for the three months ended June 30, 2015 as compared to the same period in the prior year, driven by higher sales of Xpert tests in sexual health, hospital acquired infections and

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critical infectious disease. North American Clinical revenue increased $29.6 million, or 26%, for the six months ended June 30, 2015 as compared to the same period in prior year, in each case, driven by higher sales of Xpert tests. Additionally, the increase for the six months ended June 30, 2015 also reflects increased sales volumes of our Xpert Flu and Xpert Flu RSV tests during the first quarter of 2015 due to the strong flu season. North American Non-Clinical revenue increased $3.2 million, or 82%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $4.5 million, or 47%, for the six months ended June 30, 2015 as compared to the same period in prior year, in each case, primarily due to increased grant and collaboration revenues.

International revenue increased $1.4 million, or 2%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $7.6 million, or 8%, for the six months ended June 30, 2015 as compared to the same period in the prior year, in each case, driven by higher revenue from Clinical reagents partially offset by lower sales of Clinical systems to customers participating in our HBDC program as the second quarter of 2014 included a large system order for China. Additionally, the increase for the six months ended June 30, 2015, also reflects increased sales volumes of our Xpert Flu and Xpert Flu RSV tests during the first quarter of 2015 due to the strong flu season. Some of our international revenue is denominated in foreign currencies. Due to the recent strengthening of the United States dollar, the relative value of those sales has declined. We use foreign currency exchange forward contracts to hedge a portion of our forecasted revenue. For the three months ended June 30, 2015, the foreign currency movements relative to the United States dollar negatively impacted net revenue by approximately $2.6 million, inclusive of a positive impact of approximately $2.9 million from hedging activities included in revenue, compared to the three months ended June 30, 2014. For the six months ended June 30, 2015, the foreign currency movements relative to the United States dollar negatively impacted net revenue by approximately $3.0 million, inclusive of a positive impact of approximately $5.2 million from hedging activities included in revenue, compared to the six months ended June 30, 2014.

We expect that foreign currency rates will continue to negatively impact our international revenue. Some of this will be offset by our cash flow hedging program; however, a significant portion of our expected international revenue in the remainder of 2015 was not hedged prior to the strengthening of the United States dollar.

Costs and Operating Expenses

The following table illustrates the changes in operating expenses (in thousands, except percentages):

	Three Months Ended June 30,									Six Months Ended June 30,
	2015		2014		$ Change		% Change			2015		2014		$ Change		% Change
Costs and operating expenses:
Cost of sales	$	69,377	$	59,568	$	9,809		16	%	$	130,578	$	112,651	$	17,927		16	%
Collaboration profit sharing		1,326		649		677		104	%		2,593		1,940		653		34	%
Research and development		28,092		23,998		4,094		17	%		52,078		45,738		6,340		14	%
Sales and marketing		28,078		23,502		4,576		19	%		54,014		46,960		7,054		15	%
General and administrative		16,352		14,340		2,012		14	%		31,994		28,007		3,987		14	%
Total costs and operating expenses	$	143,225	$	122,057	$	21,168		17	%	$	271,257	$	235,296	$	35,961		15	%

Cost of Sales

Cost of sales consists of raw materials, direct labor and stock-based compensation expense, manufacturing overhead, facility costs and warranty costs. Cost of sales also includes royalties on sales and amortization of intangible assets related to technology licenses and intangible assets acquired in business combinations.

Cost of sales increased $9.8 million, or 16%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $17.9 million, or 16%, for the six months ended June 30, 2015 as compared to the same period in the prior year. These increases were primarily attributable to increased shipments of our Clinical Reagent products.

Our gross margin percentage was 48% and 49% for the three months ended June 30, 2015 and 2014, respectively, and 51% and 50% for the six months ended June 30, 2015 and 2014, respectively. The decrease period-over-period for the three months ended June 30, 2015, was primarily attributable to an unfavorable mix of products sold. The increase period-over-period for the six months ended June 30, 2015, was primarily attributable to reduced manufacturing costs.

We currently expect that our gross margin will increase modestly in the second half of 2015 driven by favorable customer and product mix and reduced manufacturing costs.

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Collaboration Profit Sharing

Collaboration profit sharing represents the amount that we pay to Life Technologies Corporation (acquired by Thermo Fisher Scientific) under our collaboration agreement to develop and manufacture reagents for use in the USPS BDS program. Under the agreement, computed gross margin on anthrax cartridge sales are shared equally between the two parties. Collaboration profit sharing expenses were comparable to the prior year. We currently expect our collaboration profit sharing expenses will increase slightly in the remainder of 2015 due to the timing of anthrax cartridge sales to the USPS.

Research and Development Expenses

Research and development expenses consist of salaries and employee-related expenses, including stock-based compensation, clinical trials, research and development materials, facility costs, and depreciation and amortization of certain intangible assets. Research and development expenses increased $4.1 million, or 17%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $6.3 million, or 14%, for the six months ended June 30, 2015 as compared to the same period in the prior year. These increases were primarily due to an increase in our clinical trial costs for products currently under development, increased headcount and an increase in engineering costs related primarily to our high-level multiplexing initiative and the development of our GeneXpert Omni for the point of care market.

We currently expect an increase in our research and development expenses as a percentage of sales in the remainder of 2015 driven primarily by an increase in our clinical trial costs, and an increase in engineering costs related primarily to our high-level multiplexing initiative and the development of our GeneXpert Omni for the point of care market.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of salaries and employee-related expenses, including commissions and stock-based compensation, travel, facility-related costs and marketing and promotion expenses. Sales and marketing expenses increased $4.6 million, or 19%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $7.1 million, or 15%, for the six months ended June 30, 2015 as compared to the same period in the prior year. These increases were primarily due to increased headcount, increased travel, and higher commissions driven by increase in revenue, expansion of our sales force, and sales and marketing program costs.

We currently expect an increase in our sales and marketing expenses as a percentage of revenues in the remainder of 2015 to support the ongoing expansion of our sales force and commercial operations.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and employee-related expenses, which include stock-based compensation, travel, facility costs and legal, accounting and other professional fees. General and administrative expenses increased $2.0 million, or 14%, for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $4.0 million, or 14%, for the six months ended June 30, 2015 as compared to the same period in the prior year. These increases were primarily due to increased headcount, increased stock-based compensation expense, and higher legal and consulting fees.

We currently expect our general and administrative expenses to grow modestly slower than our revenue for the remainder of 2015.

Other Income (Expense)

The following table illustrates the changes in our other income (expense), net (in thousands, except percentages):

	Three Months Ended June 30,												Six Months Ended June 30,
	2015			2014			$ Change			% Change			2015			2014			$ Change			% Change
Other Income (Expense)
Interest income	$	416		$	306		$	110			36	%	$	789		$	459		$	330			72	%
Interest expense		(3,646	)		(3,500	)		(146	)		4	%		(7,250	)		(5,363	)		(1,887	)		35	%
Foreign currency exchange loss and other, net		(1,496	)		(176	)		(1,320	)		750	%		(2,440	)		(757	)		(1,683	)		222	%
Other expense, net	$	(4,726	)	$	(3,370	)	$	(1,356	)		40	%	$	(8,901	)	$	(5,661	)	$	(3,240	)		57	%

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Other income (expense) primarily consists of interest income earned from our cash, cash equivalent or investment balances, interest expense related to senior convertible notes, or notes payable balances outstanding during the period and the net effect of foreign currency exchange transactions, including the net effect of non-qualifying derivative activities. Interest income increased by $0.1 million for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased by $0.3 million for the six months ended June 30, 2015 as compared to the same period in the prior year. These increases were primarily a result of an increase in asset balances in our investment portfolio. Interest expense increased $0.1 million for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased $1.9 million for the six months ended June 30, 2015 as compared to the same period in the prior year, in each case, due to increased accretion of convertible note discount into interest expense from the issuance of senior convertible notes in February 2014. Foreign currency exchange loss and other, net increased by $1.3 million for the three months ended June 30, 2015 as compared to the same period in the prior year, and increased by $1.7 million for the six months ended June 30, 2015 as compared to the same period in prior year, due to strengthening of the United States dollar.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Flow

	Six Months Ended June 30,
	2015			2014			Increase/ (Decrease)
	(In thousands)
Net cash provided by (used in) operating activities	$	7,923		$	(8,555	)	$	16,478
Net cash used in investing activities		(13,177	)		(271,480	)		258,303
Net cash provided by financing activities		20,565			335,110			(314,545	)

The net cash provided by operating activities was $7.9 million in the first six months of 2015. It was primarily comprised of net loss adjusted for the effects of non-cash expenses and working capital uses of cash. Non-cash expenses were comprised of stock-based compensation, depreciation and amortization of property and equipment, amortization of debt discount and debt issuance costs, amortization of intangible assets, and unrealized foreign currency exchange differences. The primary working capital uses of cash for the six months ended June 30, 2015 were increases in inventory, accounts receivable, prepaid expenses and other current assets and decrease in accrued compensation partially offset by increases in accounts payable and other current liabilities and deferred revenue.

The net cash used in operating activities was $8.6 million in the first six months of 2014. It was primarily comprised of net loss and the net effect of cash provided by non-cash expenses and working capital uses of cash. Non-cash expenses were comprised of stock-based compensation, depreciation and amortization of property and equipment, amortization of debt discount and debt issuance costs and amortization of intangible assets. The primary working capital uses of cash for the six months ended June 30, 2014 were increases in inventory, prepaid expenses and other current assets and accounts receivable partially offset by increases in deferred revenue, accrued compensation and accounts payable and other current liabilities.

The net cash used in investing activities was $13.2 million in the first six months of 2015. It was primarily comprised of capital expenditures, cost of acquisitions and purchases of marketable securities, partially offset by sales and maturities of investments.

The net cash used in investing activities was $271.5 million in the first six months of 2014. It was primarily comprised of purchases of marketable securities following the issuance of our convertible senior notes issued in February 2014, and investments and capital expenditures, partially offset by proceeds from the sale and maturity of marketable securities.

The net cash provided by financing activities was $20.6 million in the first six months of 2015. It was primarily comprised of proceeds from exercises of stock options.

The net cash provided by financing activities was $335.1 million in the first six months of 2014. It was primarily comprised of net proceeds from the issuance of $345 million in principal amount of our convertible senior notes in February 2014 and, to a lesser extent, the proceeds from issuance of common shares and exercises of stock options, partially offset by the purchase of a capped call transaction for approximately $25.1 million.

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Off-Balance-Sheet Arrangements

As of June 30, 2015, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1933.

Financial Condition Outlook

We plan to continue to make expenditures to expand our manufacturing capacity and to support our activities in sales and marketing and research and development. These expenditures may vary from quarter to quarter. We plan to continue to support our working capital needs and anticipate that our existing cash resources will enable us to maintain currently planned operations. Based on past performance and current expectations, we believe that our current available sources of funds will be adequate to finance our operations for at least the next year. This expectation is based on our current and long-term operating plan and may change as a result of many factors, including our future capital requirements and our ability to increase revenues and reduce expenses, which depend on a number of factors outside our control, including general global economic conditions. For example, our future cash use will depend on, among other things, market acceptance of our new products, the resources we devote to developing and supporting our products, continued progress of our research and development of potential products, our ability to gain FDA clearance for our new products, the need to acquire licenses to new technology or to use our technology in new markets, expansion through acquisitions and the availability of other financing.

In the future, we may seek additional funds to support our strategic business needs and may seek to raise such additional funds through private or public sales of securities, strategic relationships, bank debt, lease financing arrangements, or other available means. If additional funds are raised through the issuance of equity or equity-related securities, shareholders may experience additional dilution, or such equity securities may have rights, preferences, or privileges senior to those of the holders of our common stock. If adequate funds are not available or are not available on acceptable terms to meet our business needs, our business may be harmed.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

Our investment portfolio is exposed to market risk from changes in interest rates. The fair market value of fixed rate securities may be adversely impacted by fluctuations in interest rates while income earned on floating rate securities may decline as a result of decreases in interest rates. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We attempt to ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in investment grade securities. We have historically maintained a relatively short average maturity for our investment portfolio, and we believe a hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would change the fair value of our interest sensitive financial instruments by approximately $1.4 million as of June 30, 2015. In addition, if a 100 basis point change in overall interest rates were to occur in 2015, our interest income would not change significantly in relation to amounts we would expect to earn, based on our cash, cash equivalents, and investments as of June 30, 2015.

Changes in interest rates may also impact gains or losses from the conversion of our outstanding convertible senior notes. In February 2014, we issued $345 million in aggregate principal amount of our 1.25% convertible senior notes due 2021. At our election, the notes are convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock in each case under certain circumstances, including trading price conditions related to our common stock. If the trading price of our common stock reaches a price for a sustained period at 130% above the conversion price of $65.10, the notes will become convertible. Upon conversion, we are required to record a gain or loss for the difference between the fair value of the debt to be extinguished and its corresponding net carrying value. The fair value of the debt to be extinguished depends on our then-current incremental borrowing rate. If our incremental borrowing rate at the time of conversion is higher or lower than the implied interest rate of the notes, we will record a gain or loss in our consolidated statement of operations during the period in which the notes are converted. The implicit interest rate for the notes is 5.0%. An incremental borrowing rate that is a hypothetical 100 basis points lower than the implicit interest rate upon conversion of $100 million aggregate principal amount of the notes would result in a loss of approximately $5.0 million.

Foreign Currency Risk

We operate primarily in the United States and a majority of our revenue, cost, expense and capital purchasing activities for the three months ended June 30, 2015 were transacted in United States dollars. As a corporation with international and domestic operations, we are exposed to changes in foreign exchange rates. Our international revenue is predominantly in European

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countries and South Africa and is denominated in a number of currencies, primarily the Euro, U.S. dollar, British Pound and South African Rand. In our international operations, we pay payroll and other expenses in local currencies. Our exposures to foreign currency risks may change over time and could have a material adverse impact on our financial results.

We expect to continue to hedge our foreign currency exposure in the future and may use currency forward contracts, currency options, and/or other common derivative financial instruments to reduce foreign currency risk. A sizeable portion of our 2015 forecasted international revenue was not hedged prior to the strengthening of the United States dollar and therefore, we expect a greater foreign currency impact on revenue in the second half of 2015. A 10% change in the exchange rates upward or downward in our portfolio of foreign currency contracts would have decreased or increased, respectively our unrealized loss by approximately $5.1 million at June 30, 2015 and unrealized loss by approximately $5.0 million at December 31, 2014. We do not hold or purchase any currency contracts for trading purposes.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2015, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the first quarter of 2015, we had a change in our internal control over financial reporting that occurred as a result of our implementation of a new enterprise resource planning (“ERP”) system that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the first quarter of 2015, our new ERP system replaced our legacy system in which a significant portion of our business transactions originate, are processed and recorded. Our new ERP system is intended to provide us with enhanced transactional processing and management tools compared to our legacy system, and is intended to enhance internal controls over financial reporting.

Except as described above in connection with the changes implementing our ERP system, during the quarter ended June 30, 2015, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In May 2005, we entered into a license agreement with F. Hoffman-La Roche Ltd. and Roche Molecular Systems, Inc. (“Roche”) that provided us with rights under a broad range of Roche patents, including patents relating to the PCR process, reverse transcription-based methods, nucleic acid quantification methods, real-time PCR detection process and composition, and patents relating to methods for detection of viral and cancer targets. A number of the licensed patents expired in the United States prior to the end of August of 2010 and in Europe prior to the end of August of 2011. In August 2010, we terminated our license to United States Patent No. 5,804,375 (the “375 Patent”) and ceased paying United States-related royalties. We terminated the entire license agreement in the fourth quarter of 2011. In August 2011, Roche initiated an arbitration proceeding against us in the International Chamber of Commerce pursuant to the terms of the terminated agreement. We filed an answer challenging arbitral jurisdiction over the issues submitted by Roche and denying that we violated any provision of the agreement. A three-member panel has been convened to address these issues in confidential proceedings. On July 30, 2013, the panel determined that it had jurisdiction to decide the claims, a determination that we appealed to the Swiss Federal Supreme Court. On October 2, 2013, the arbitration panel determined that it would proceed with the arbitration while this appeal was pending. On February 27, 2014 the Swiss Federal Supreme Court upheld the jurisdiction of the arbitration panel to hear the case, and the case is continuing. We believe that we have not violated any provision of the agreement and that the asserted claim of the 375 Patent is expired, invalid, unenforceable and not infringed.

Based on our ongoing evaluation of the facts and circumstances of the case, we believe that it is probable that this arbitration proceeding could result in a material loss to Cepheid. Accordingly, we recorded an estimated charge of $20 million as our best estimate of the potential loss in the fourth quarter of 2014, which was included in accrued and other liabilities in our condensed consolidated balance sheets and we have not changed our estimate of this potential loss. If we were to incur a loss in the arbitration proceeding, depending on the ruling of the arbitrator, we could also be responsible for certain attorneys’ fees and interest; however, at this time, we are unable to estimate these potential amounts. Given the inherent uncertainty of arbitration and the nature of the claims in this matter, it is possible that we may incur an additional material charge, but an estimate of such a charge cannot be made at this time. We continue to strongly dispute Roche’s claims and intend to vigorously defend against them.

On August 21, 2012, we filed a lawsuit against Roche in the United States District Court for the Northern District of California (“the Court”), for a declaratory judgment of (a) invalidity, expiration, and non-infringement of the 375 Patent; and (b) invalidity, unenforceability, expiration and non-infringement of United States Patent No. 6,127,155 (the “155 Patent”). On January 17, 2013, the Court issued an order granting a motion by Roche to stay the suit with respect to the 375 Patent pending resolution of the above noted arbitration proceeding. In the same order, the Court dismissed our suit with respect to the 155 Patent for lack of subject matter jurisdiction, without considering or ruling on the merits of our case. The Court left open the possibility that we could re-file our case against the 155 Patent in the future. We believe that the possibility that these legal proceedings will result in a material adverse effect on our business is remote.

On July 16, 2014, Roche filed a lawsuit in the Court, alleging that our Xpert MTB-RIF product infringes United States Patent No. 5,643,723 (the “723 Patent”), which expired on July 1, 2014. On September 15, 2014, we filed our answer and counterclaims denying Roche’s allegations of infringement and asking the Court to find the 723 Patent invalid, unenforceable and not infringed. On November 10, 2014, we filed a petition for inter partes review (“IPR”) of certain claims of the 723 Patent in the USPTO and the Company filed a motion with the Court to stay this lawsuit pending the outcome of the IPR. On January 7, 2015, the Court issued an order staying the lawsuit pending the outcome of the IPR. On March 16, 2015, we filed a second petition for IPR of an additional claim of the 723 Patent. On June 11, 2015, the USPTO issued a decision declining to institute the first requested IPR. On July 13, 2015, we filed a request for reconsideration of the first petition for IPR with respect to certain challenged claims. We believe that the possibility that these legal proceedings will result in a material loss is remote.

We may be subject to additional various claims, complaints and legal actions that arise from time to time in the normal course of business. Other than as described above, we do not believe we are party to any currently pending legal proceedings that will result in a material adverse effect on our business. 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, consolidated financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

You should carefully consider the risks and uncertainties described below, together with all of the other information included in this Report, in considering our business and prospects. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. The occurrence of any of the following risks could harm our business, financial condition or results of operations.

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We have a history of operating losses and may not achieve profitability again.

We incurred operating losses in each annual fiscal year since our inception, except for 2011. For the six months ended June 30, 2015, we had a net loss of $15.8 million, and in 2014 and 2013 we experienced a net loss of $50.1 million and $18.0 million, respectively. As of June 30, 2015, we had an accumulated deficit of approximately $309.5 million. We do not expect to be profitable for fiscal 2015 and our ability to be profitable in the future will likely depend on our ability to continue to increase our revenues, which is subject to a number of factors including our ability to continue to successfully penetrate the Clinical market, our ability to successfully market the GeneXpert system and develop and market additional GeneXpert tests, our ability to sell directly to the smaller hospital (hospitals with less than 150 beds) and independent reference laboratory markets, our ability to secure regulatory approval of additional GeneXpert tests, our ability to gain FDA regulatory and international regulatory clearance for our new products, our ability to continue to grow sales of GeneXpert tests, our ability to compete effectively against current and future competitors, the increasing number of competitors in our market that could reduce the average selling price of our products, the development of our HBDC program, the amount of products sold through the HBDC program and the extent of global funding for such program, our ability to penetrate new geographic markets, global economic and political conditions and our ability to increase manufacturing throughput. Our ability to be profitable also depends on our expense levels and product gross margin, which are also influenced by a number of factors, including: the mix of revenues from Clinical reagent sales and GeneXpert system sales as opposed to GeneXpert Infinity system sales and sales under our HBDC program, both of which have lower gross margins; the resources we devote to developing and supporting our products; increases in manufacturing costs associated with our operations; our ability to improve manufacturing efficiencies, our ability to manage our inventory levels; third-party freight costs; the resources we devote to our research and development of and compliance with regulatory processes for potential products; license fees or royalties we may be required to pay; the potential need to acquire licenses to new technology or to use our technology in new markets, which could require us to pay unanticipated license fees and royalties in connection with these licenses; and the prices at which we are able to sell our GeneXpert systems and tests. Our manufacturing expansion efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenues to offset higher expenses These expenses or a reduction in the prices at which we are able to sell our products, among other things, may cause our net income and working capital to decrease. If we fail to grow our revenue, manage our expenses and improve our gross margin, we may never achieve profitability again. If we fail to do so, the market price of our common stock will likely decline.

Our operating results may fluctuate significantly, our customers’ future purchases are difficult to predict and any failure to meet financial expectations may result in a decline in our stock price.

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Our quarterly operating results may fluctuate in the future as a result of many factors, such as those described elsewhere in this section, many of which are beyond our control. Because our revenue and operating results are difficult to predict, we believe that period-to-period comparisons of our results of operations are not a good indicator of our future performance. Our operating results may be affected by the inability of some of our customers to consummate anticipated purchases of our products, whether due to adverse economic conditions, changes in internal priorities or, in the case of governmental customers, problems with the appropriations process, concerns over future United States federal government budgetary negotiations, variability and timing of orders and delays in our customer billing and collection processes related to our recent implementation of an enterprise resource planning system. Additionally, we have experienced, and expect to continue to experience, meaningful variability in connection with our commercial system placements and system placements and reagent pull-through in our HBDC program. This variability may cause our revenues and operating results to fluctuate significantly from quarter to quarter. Additionally, because of the limited visibility into the actual timing of future system placements, our operating results are difficult to forecast from quarter to quarter. Additionally, we expect moderate fluctuations from quarter to quarter in gross margin depending on product, geography and channel mix, as well as the revenue contribution from our HBDC program, which has lower margin than our other products. If revenue declines in a quarter, whether due to a delay in recognizing expected revenue, adverse economic conditions and unexpected costs or otherwise, our results of operations will be harmed because many of our expenses are relatively fixed. In particular, research and development, sales and marketing and general and administrative expenses are not significantly affected by variations in revenue. However, if we have an unexpected increase in costs and expenses in a quarter, our quarterly operating results will be affected. For example, for the year ended December 31, 2013, we incurred certain costs and inventory reserve provisions related to our manufacturing scale up and restructuring activities. Additionally, in July 2014, we began to self-insure for a portion of employee health insurance coverage and we estimate the liabilities associated with the risks retained by us, in part, by considering actuarial assumptions which, by their nature, are subject to a high degree of variability. If the number or severity of claims for which we are self-insured increases, or if we are required to accrue or pay additional amounts because the claims prove to be more severe than our original assessments, our operating results may be affected. If our quarterly operating results fail to meet or exceed the expectations of securities analysts or investors, our stock price could drop suddenly and significantly.

If we are unable to manufacture our products in sufficient quantities and in a timely manner, our operating results will be harmed, our ability to generate revenues could be diminished, and our gross margin may be negatively impacted.

Our revenues and other operating results will depend in large part on our ability to manufacture and assemble our products in sufficient quantities and in a timely manner. In the past, we have experienced lower than expected revenue due to intermittent interruptions in our supply chain, which also negatively impacted the efficiency of our manufacturing operations and our resulting gross margin.

We presently outsource the assembly of our systems to a contract manufacturer. We create estimates in order to schedule production runs with the contract manufacturer. To the extent system orders materially vary from our estimates, we may experience constraints in our systems production and delivery capacity.

Any future interruptions we, or our contract manufacturer, experience in the manufacturing or shipping of our products could delay our ability to recognize revenues in a particular quarter and could also adversely affect our relationships with our customers and erode customer confidence in our product availability. Manufacturing problems can and do arise, and as demand for our products increases, any such problems could have an increasingly significant impact on our operating results. In the past, we have experienced problems and delays in production that have impacted our product yield and the efficiency of our manufacturing operations and caused delays in our ability to ship finished products, and we, or our contract manufacturer, may experience such delays in the future. We may not be able to react quickly enough to ship products and recognize anticipated revenues for a given period if we experience significant delays in the manufacturing process. In addition, we must maintain sufficient production capacity and inventory in order to minimize such delays, which carry fixed costs that we may not be able to offset if orders slow, which would adversely affect our operating margins. If we, or our contract manufacturer, are unable to manufacture our products consistently, in sufficient quantities, and on a timely basis, our revenues from product sales, gross margins and our other operating results will be materially and adversely affected.

We have a limited number of suppliers for critical product components and a contract manufacturer for the manufacture and assembly of our systems, and our reliance on such suppliers and contract manufacturer exposes us to increased risks associated with quality control, production delays and costs.

We depend on a limited number of suppliers that supply some of the components used in the manufacture of our systems and our disposable reaction tubes and cartridges, and a contract manufacturer for the manufacture and assembly of our systems. We recently expanded our existing relationship with a contract manufacturer, which was previously responsible for the manufacture of a substantial portion of our systems, to cover the manufacture and final assembly of all of our systems. We expect to complete this transition to the contract manufacturer in the third quarter of 2015. Strategic purchases of components are necessary for our

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business, but our reliance on a limited number of suppliers and a single contract manufacturer could expose us to reduced control over product quality, which could lead to product reliability issues and/or lower revenue, and product shortages as a result of manufacturing capacity issues at our contract suppliers or manufacturer or failure to adequately forecast demand for our components or systems. In addition, we cannot be certain that our suppliers or contract manufacturer will continue to be willing and able to meet our requirements according to existing terms or at all. If alternative suppliers or contract manufacturers are not immediately available, we will have to identify and qualify alternative suppliers or contract manufacturers and we could experience production delays and additional costs. We may not be able to find adequate alternative suppliers or contract manufacturers in a reasonable time period or on commercially acceptable terms, if at all. Shipments of affected products have been limited or delayed as a result of such problems in the past, and similar problems could occur in the future. For example, in the past, we have experienced intermittent interruptions in the supply of Xpert cartridge parts, which negatively impacted our product sales. In addition, some companies continue to experience financial difficulties, partially resulting from continued economic uncertainty. We cannot be assured that our suppliers or contract manufacturer will not be adversely affected by this uncertainty or that they will be able to continue to provide us with the components we need or manufacture and assemble our systems. Our inability to obtain our key source supplies for the manufacture of our products or interruptions in the manufacture and assembly of our systems may require us to delay shipments of products, harm customer relationships or force us to curtail or cease operations.

Our sales cycle can be lengthy, which can cause variability and unpredictability in our operating results.

The sales cycles for our systems can be lengthy, particularly during uncertain economic and political conditions, which makes it more difficult for us to accurately forecast revenues in a given period, and may cause revenues and operating results to vary significantly from period to period. For example, sales of our products often involve purchasing decisions by large public and private institutions and any purchases can require many levels of pre-approval. Additionally, because we only recently began selling directly to independent reference laboratories, the sales cycle to independent reference laboratories may be unpredictable for a period of time. In addition, certain Non-Clinical sales may depend on these institutions receiving research grants from various federal agencies, which grants vary considerably from year to year, in both amount and timing, due to the political process. Additionally, participants in our HBDC program may be dependent on funding from governmental agencies and/or non-governmental organizations and, accordingly, such customers’ purchase decisions may not be within their direct control and may be subject to lengthy administrative processes, the result of which is that the sales cycle in our HBDC program is lengthy and unpredictable. As a result, we may expend considerable resources on unsuccessful sales efforts or we may not be able to complete transactions on the schedule anticipated.

If we cannot successfully commercialize our products, our business could be harmed.

If our tests for use on our systems do not continue to gain market acceptance, we will be unable to generate significant sales, which will prevent us from achieving profitability. While we have received FDA clearance for a number of tests, these products may not experience increased sales. Many factors may affect the market acceptance and commercial success of our products, including:

• the timely expansion of our menu of tests;

• our ability to fulfill orders;

• the results of clinical trials needed to support any regulatory approvals of our tests;

• our ability to obtain requisite FDA or other regulatory clearances or approvals for our tests under development on a timely basis;

• the demand for the tests we introduce;

• the timing of market entry for various tests for the GeneXpert systems;

• our ability to convince our potential customers of the advantages and economic value of our systems and tests over competing technologies and products;

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• the breadth of our test menu relative to competitors;

• changes to policies, procedures or what are considered best practices in clinical diagnostics, including practices for detecting and preventing healthcare associated infections;

• the extent and success of our marketing and sales efforts;

• the functionality of new products that address market requirements and customer demands;

• the pricing of our products;

• the level of reimbursement for our products by third-party payers; and

• the publicity concerning our systems and tests.

In particular, we believe that the success of our business will depend in large part on our ability to continue to increase sales of our Xpert tests and our ability to introduce additional tests for the Clinical market. We believe that successfully expanding our business in the Clinical market is critical to our long-term goals and success. We have limited ability to forecast future demand for our products in this market. In addition, we have committed substantial funds to licenses that are required for us to compete in the Clinical market. If we cannot successfully penetrate the Clinical market to fully exploit these licenses, these investments may not yield significant returns, which could harm our business.

The regulatory processes applicable to our products and operations are expensive, time-consuming and uncertain, and may prevent us from obtaining required approvals for the commercialization of some of our products.

In the Clinical market, our products are regulated as medical device products by the FDA and comparable agencies of other countries. In particular, FDA regulations govern activities such as product development, product testing, product labeling, product storage, premarket clearance or approval, manufacturing, advertising, promotion, product sales, reporting of certain product failures and distribution. Some of our products, depending on their intended use, will require premarket approval (“PMA”) or 510(k) clearance from the FDA prior to marketing. The 510(k) clearance process usually takes approximately 90 days from submission but can take longer. The PMA process is much more costly, lengthy and uncertain, and generally takes from six months to one year or longer from submission, depending on whether an advisory panel meeting is necessary. Clinical studies are generally required to support both PMA and 510(k) submissions. Certain of our products for use on our GeneXpert and SmartCycler systems, when used for clinical purposes in the United States, may require PMA, and all such tests will most likely, at a minimum, require 510(k) clearance. We are planning clinical studies for other proposed products. Products intended for use in a non-waived physician office laboratory will require an additional submission known as a CLIA waiver. CLIA waiver applications typically take approximately 180 days for approval, and require additional studies. Clinical trials are expensive and time-consuming, as are human factors studies required for CLIA waiver. In addition, the commencement or completion of any clinical trials may be delayed or halted for any number of reasons, including product performance, changes in intended use, changes in medical practice and the opinion of evaluator Institutional Review Boards. Additionally, since 2009, the FDA has significantly increased the scrutiny applied to its oversight of companies subject to its regulations, including 510(k) submissions, by hiring new investigators and increasing inspections of manufacturing facilities. We continue to monitor the CDRH’s implementation of its plan of action and analyze how its decisions will impact the approval or clearance of our products and our ability to improve our systems and tests. The CDRH also deferred action on several other initiatives, including the creation of a new class of devices that would be subject to heightened review processes, until the Institute of Medicine issues a related report on the 510(k) regulatory process, which was released in late July 2011. Many of the actions proposed by the CDRH could result in significant changes to the 510(k) process, which could complicate the product approval process, although we cannot predict the effect of such changes and cannot ascertain if such changes will have a substantive impact on the approval of our products. If we fail to adequately respond to the increased scrutiny and streamlined 510(k) submission process, our business may be adversely impacted. In 2014, the FDA issued several important guidance documents on assessing risks and benefits associated with use of 510(k) for PMA products, pre- and post-market balance, expedited PMA, and on oversight of laboratory developed tests. While the overall goal of these guidance documents was to streamline the regulatory process by applying a risk-based approach to the requirements for data collection in the pre- and post-market periods, it is uncertain how the guidance documents will actually be implemented. Likewise, the oversight of laboratory developed tests would require laboratories that compete with high risk (PMA) tests to go through FDA review. It is unclear if this guidance will be finalized. If it is, competition for PMA tests from laboratories would be reduced.

                Further, our manufacturing facilities located in Sunnyvale and Lodi, California, Seattle, Washington and Stockholm, Sweden, where we assemble and produce cartridges and other molecular diagnostic kits and reagents, are subject to periodic regulatory inspections by the FDA and other federal and state and foreign regulatory agencies, as are the manufacturing facilities of our contract manufacturer. For example, these facilities are subject to Quality System Regulations (“QSR”) of the FDA and are subject to annual inspection and licensing by the States of California and Washington and European regulatory agencies. If we, or our contract manufacturer, fail to maintain these facilities in accordance with the QSR requirements, international quality standards or other regulatory requirements, the manufacture of our systems and tests could be suspended or terminated, and, in the case of a failure by our contract manufacturer, we could be required to find a suitable replacement for the manufacture and supply of our systems, which would prevent us from being able to provide products to our customers in a timely fashion, or at all, and therefore harm our business.

Failure to comply with the applicable regulatory requirements can result in, among other things, warning letters, administrative or judicially imposed sanctions such as injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal to grant premarket clearance or PMA for devices, withdrawal of marketing clearances or approvals, or criminal prosecution. For example, on July 27, 2015 Cepheid received a warning letter from the FDA regarding the Xpert Norovirus test describing deficiencies in the production quality system at Cepheid’s Stockholm, Sweden manufacturing facility. The Company is working with the FDA on resolution of the deficiencies. The Xpert Norovirus test manufactured in Sweden is not sold or distributed in the United States. As a result, it is the Company’s expectation that routine production and sale of the Xpert Norovirus test in the United States will not be affected. International sales of this test are not subject to FDA regulation. Until the Company successfully resolves the issues raised in the warning letter, the FDA will not approve any Cepheid Class III product. Cepheid’s Class III products are currently in development and are not currently expected to be available until 2017.

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With regard to future products for which we seek 510(k) clearance, PMA approval, or CLIA waiver from the FDA, any failure or material delay to obtain such clearance or approval could harm our business. If the FDA were to disagree with our regulatory assessment and conclude that approval or clearance is necessary to market the products, we could be forced to cease marketing the products and seek approval or clearance. In addition, it is possible that the current regulatory framework could change or additional regulations could arise at any stage during our product development or marketing, which may adversely affect our ability to obtain or maintain approval of our products and could harm our business.

Recently enacted healthcare legislation reforming the United States healthcare system, as well as future reforms, may have a material adverse effect on our financial condition and results of operations.

In March 2010, the United States President signed the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “PPACA”), which makes changes that are expected to significantly impact the pharmaceutical and medical device industries. One of the principal aims of the PPACA as currently enacted is to expand health insurance coverage to approximately 32 million Americans who were previously uninsured. The PPACA contains a number of provisions designed to generate the revenues necessary to fund the coverage expansions among other things. This includes new fees or taxes on certain health-related industries, including medical device manufacturers. Beginning in 2013, medical device manufacturers were required to pay an excise tax (or sales tax) of 2.3% of certain United States medical device revenues. Though there are some exceptions to the excise tax, this excise tax does apply to all or most of our products sold within the United States.

The taxes imposed by the PPACA and the expansion in the government’s role in the United States healthcare industry may result in decreased profits to us, lower reimbursement by payors for our products, and/or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. More recently, on August 2, 2011, the United States President signed into law the Budget Control Act of 2011, which, among other things, creates the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013, and will remain in effect through 2024 unless additional congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, which could mean that such providers have less available funds to purchase our products.

We expect that additional state and federal health care reform measures may be adopted in the future, any of which could have a material adverse effect on our industry generally and our ability to successfully commercialize our products. For example, the United States government has in the past considered, is currently considering and may in the future consider healthcare policies and proposals intended to curb rising healthcare costs, including those that could significantly affect both private and public reimbursement for healthcare services. Further, state and local governments, as well as a number of foreign governments, are also considering or have adopted similar types of policies. Future significant changes in the healthcare systems in the United States or elsewhere, and current uncertainty about whether and how changes may be implemented, could have a negative impact on the demand for our products. We are unable to predict whether other healthcare policies, including policies stemming from legislation or regulations affecting our business may be proposed or enacted in the future; what effect such policies would have on our business; or the effect ongoing uncertainty about these matters will have on the purchasing decisions of our customers.

Our HBDC program exposes us to increased risks of variability and unpredictable operating results.

Our HBDC program exposes us to risks that are additional and different from the risks associated with our commercial operations, including among other things:

• the participants in our HBDC program are located in less developed countries, exposing us to customers in countries that may have less political, social or economic stability and less developed infrastructure and legal systems;

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• the sales cycle in our HBDC program is lengthy and unpredictable, as HBDC program participants are frequently dependent upon governmental agencies and/or non-governmental organizations with additional administrative processes, causing variability and unpredictability in our operating results and timing of cash collection;

• our HBDC program has lower gross margins and, therefore, growth in our HBDC program negatively impacts our gross margins as a whole; and

• our collaborative partners and other supporters, such as Foundation for Innovative New Diagnostics, BMGF, USAID, UNITAID and the World Health Organization, may cease to devote financial resources to or otherwise cease to support our HBDC program.

Continued unpredictable sales cycle and lower gross margins and/or an adverse development relating to one or more of these risks could negatively impact our business, results of operations and financial condition. Additionally, our HBDC program facilitates the expansion of our commercial operations into additional geographic locations and, to the extent that our HBDC program is ineffective as a result of one or more of these risks, the international expansion of our commercial operations could suffer.

We rely on licenses of key technology from third parties and may require additional licenses for many of our new product candidates.

We rely on third-party licenses to be able to sell many of our products, and we could lose these third-party licenses for a number of reasons, including, for example, early terminations of such agreements due to breaches or alleged breaches by either party to the agreement. If we are unable to enter into a new agreement for licensed technologies, either on terms that are acceptable to us or at all, we may be unable to sell some of our products or access some geographic or industry markets. We also need to introduce new products and product features in order to market our products to a broader customer base and grow our revenues, and many new products and product features could require us to obtain additional licenses and pay additional license fees and royalties. Furthermore, for some markets, we intend to manufacture reagents and tests for use on our systems. We believe that manufacturing reagents and developing tests for our systems is important to our business and growth prospects but may require additional licenses, which may not be available on commercially reasonable terms or at all. Our ability to develop, manufacture and sell products, and our strategic plans and growth, could be impaired if we are unable to obtain these licenses or if these licenses are terminated or expire and cannot be renewed. We may not be able to obtain or renew licenses for a given product or product feature or for some reagents on commercially reasonable terms, if at all. Furthermore, some of our competitors have rights to technologies and reagents that we do not have which may put us at a competitive disadvantage in certain circumstances and could adversely affect our performance.

We may face risks associated with acquisitions of companies, products and technologies and our business could be harmed if we are unable to address these risks.

In order to remain competitive, obtain key competencies, consolidate our supply chain or sales force, acquire complementary products or technologies, or for other reasons, we may seek to acquire additional businesses, products or technologies. Even if we identify an appropriate acquisition or are presented with appropriate opportunities to acquire or make other investments, we may not be successful in negotiating the terms of the acquisition, financing the acquisition, consummating the acquisition or effectively integrating the acquired business, product or technology into our existing business and operations. For example, in 2012, we acquired one of our plastic molders, in 2013, we acquired distributors in two of our international locations, and in 2014, we re-acquired certain product distribution rights and acquired customer relationship assets from a former distributor in the United States. We have limited experience in successfully acquiring and integrating businesses, products and technologies, and even if we are able to consummate an acquisition or other investment, we may not realize the anticipated benefits of such acquisitions or investments, including our recent acquisitions. We may face risks, uncertainties and disruptions, including difficulties in the integration of the operations and services of these acquisitions or any other acquired company, integration of acquired technology with our products, diversion of our management’s attention from other business concerns, the potential loss of key employees or customers of the acquired businesses and impairment charges if future acquisitions are not as successful as we originally anticipate. If we fail to successfully integrate companies, assets, products or technologies that we acquire or if we fail to successfully exploit acquired product distribution rights and maintain acquired relationships with customers, our business could be harmed. Furthermore, we may have to incur debt or issue equity securities to pay for any additional future acquisitions or investments or issue shares of common stock as consideration in the acquisition, the issuance of which could be dilutive to our existing shareholders. In addition, our operating results may suffer because of acquisition-related costs or amortization expenses or charges relating to acquired intangible assets. Furthermore, identifying, contemplating, negotiating or completing an acquisition and integrating an acquired business, product or technology could significantly divert management and employee time and resources.

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The current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that our actual results could differ materially from expectations.

Our operations and performance depend on global economic conditions, which have been adversely impacted by continued global economic uncertainty, political instability and military hostilities in multiple geographies, the recent rapid strengthening of the United States dollar compared to foreign currencies and monetary and international financial uncertainties. These conditions have and may continue to make it difficult for our customers and potential customers to accurately forecast and plan future business activities, and have caused our customers and potential customers to slow or reduce spending, particularly for systems. Furthermore, during economic uncertainty, our customers have experienced and may continue to experience issues gaining timely access to sufficient credit, which could result in their unwillingness to purchase products or an impairment of their ability to make timely payments to us. If that were to continue to occur, we might experience decreased sales, be required to increase our allowance for doubtful accounts and our days sales outstanding would be negatively impacted. Even with improved global economic conditions, it may take time for our customers to establish new budgets and return to normal purchasing patterns. We cannot predict the reoccurrence of any economic slowdown or the sustainability of improved economic conditions, worldwide, in the United States or in our industry. These and other economic factors could have a material adverse effect on demand for our products and on our financial condition and operating results.

If certain of our products fail to obtain an adequate level of reimbursement from third-party payers, our ability to sell products in the Clinical market would be harmed.

Our ability to sell our products in the Clinical market will depend in part on the extent to which reimbursement for tests using our products will be available from government health administration authorities, private health coverage insurers, managed care organizations and other organizations. There are efforts by governmental and third-party payers to contain or reduce the costs of healthcare through various means and the continuous growth of managed care, together with efforts to reform the healthcare delivery system in the United States and Europe, has increased pressure on healthcare providers and participants in the healthcare industry to reduce costs. Consolidation among healthcare providers and other participants in the healthcare industry has resulted in fewer, more powerful healthcare groups, whose purchasing power gives them cost containment leverage. Additionally, third-party payers are increasingly challenging the price of medical products and services. If purchasers or users of our products are not able to obtain adequate reimbursement for the cost of using our products, they may forego or reduce their use. Significant uncertainty exists as to the reimbursement status of newly approved healthcare products and whether adequate third-party coverage will be available.

The life sciences industry is highly competitive and subject to rapid technological change, if our competitors and potential competitors develop superior products and technologies, our competitive position and results of operations would suffer.

We face intense competition from a number of companies that offer products in our target markets, some of which have substantially greater financial resources and larger, more established marketing, sales and service organizations than we do. These competitors include:

• companies developing and marketing sequence detection systems for industrial research products;

• diagnostic and pharmaceutical companies;

• companies developing drug discovery technologies; and

• companies developing or offering biothreat detection technologies.

Several companies provide systems and reagents for DNA amplification or detection. Life Technologies Corporation (acquired by Thermo Fisher Scientific) and Roche sell systems integrating DNA amplification and detection (sequence detection systems) to the commercial market. Roche, Abbott Laboratories, Becton Dickinson and Company, Qiagen N.V., Hologic Inc., Luminex Corporation, Meridian Bioscience Inc., bioMerieux SA, and Quidel Corporation sell sequence detection systems, some with separate robotic batch DNA purification systems and sell reagents to the Clinical market. Other companies such as Nanosphere Inc., Alere Inc., and GenMark Diagnostics, Inc. offer molecular tests. Additionally, we anticipate that in the future, additional competitors will emerge that offer a broad range of competing products.

The life sciences industry is characterized by rapid and continuous technological innovation. We may need to develop new technologies for our products to remain competitive. One or more of our current or future competitors could render our present or future products technologically obsolete or uneconomical by reducing the prices of their competing products. In addition, the introduction or announcement of new products by us or others could result in a delay of or decrease in sales of existing products, as we await regulatory approvals and as customers evaluate these new products. We may also encounter other problems in the process of delivering new products to the marketplace such as problems related to design, development or manufacturing of such products, and as a result we may be unsuccessful in selling such products. Our future success depends on our ability to compete effectively against current technologies, as well as to respond effectively to technological advances by developing and marketing products that are competitive in the continually changing technological landscape.

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If our products do not perform as expected or the reliability of the technology on which our products are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products, increased costs and damage to our reputation.

Our success depends on the market’s confidence that we can provide reliable, high-quality molecular test systems. We believe that customers in our target markets are likely to be particularly sensitive to product defects and errors. Our reputation and the public image of our products or technologies may be impaired if our products fail to perform as expected or our products are perceived as difficult to use. Despite testing, defects or errors could occur in our products or technologies. Furthermore, with respect to the USPS BDS program, our products are incorporated into larger systems that are built and delivered by others and we cannot control many aspects of the final system.

In the future, if our products experience a material defect or error, this could result in loss or delay of revenues, delayed market acceptance, damaged reputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm our business. Such defects or errors could also prompt us to amend certain warning labels or narrow the scope of the use of our products, either of which could hinder our success in the market. Furthermore, any product failure in the overall USPS BDS program, even if it is unrelated to our products, could harm our business. Even after any underlying concerns or problems are resolved, any widespread concerns regarding our technology or any manufacturing defects or performance errors in our products could result in lost revenue, delayed market acceptance, damaged reputation, increased service and warranty costs and claims against us.

If product liability lawsuits are successfully brought against us, we may face reduced demand for our products and incur significant liabilities.

We face an inherent risk of exposure to product liability claims if our technologies or systems are alleged to have caused harm or do not perform in accordance with specifications, in part because our products are used for sensitive applications. We cannot be certain that we would be able to successfully defend any product liability lawsuit brought against us. Regardless of merit or eventual outcome, product liability claims may result in:

• decreased demand for our products;

• injury to our reputation;

• increased product liability insurance costs;

• costs of related litigation; and

• substantial monetary awards to plaintiffs.

Although we carry product liability insurance, if we become the subject of a successful product liability lawsuit, our insurance may not cover all substantial liabilities, which could harm our business.

If our direct selling efforts for our products fail, our business expansion plans could suffer and our ability to generate sales will be diminished.

We have a relatively small sales force compared to some of our competitors. Further, we recently consolidated our global commercial operations under a single executive to emphasize end-to-end accountability, eliminate duplication and clarify decision responsibilities, and reduce organizational complexity. Our former Executive Vice President, International Commercial Operations, who joined us in June 2014, transitioned into the new role of Executive Vice President, Worldwide Commercial Operations in October 2014, where he is responsible for his prior duties and for our North American commercial operations, including the planned expansion of our United States sales organization. Our former Executive Vice President, North American Commercial Operations transitioned out of Cepheid in October 2014. If the size of our sales force, recent changes to the organization of our sales force or other issues cause our direct selling efforts to fail, our business expansion plans could suffer and our ability to generate sales could be diminished, which would harm our business.

If our distributor relationships are not successful, our ability to market and sell our products would be harmed and our financial performance will be adversely affected.

We depend on relationships with distributors for the marketing and sales of our products in the Clinical and Non-Clinical markets in various geographic regions, and we have a limited ability to influence their efforts. We expect to continue to rely substantially on our distributor relationships for sales into other markets or geographic regions, that are key to our long-term growth strategy. Relying on distributors for our sales and marketing could harm our business for various reasons, including:

• agreements with distributors may terminate prematurely due to disagreements or may result in litigation between the partners;

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• we may not be able to renew existing distributor agreements on acceptable terms;

• our distributors may not devote sufficient resources to the sale of our products;

• our distributors may be unsuccessful in marketing our products;

• our existing relationships with distributors may preclude us from entering into additional future arrangements with other distributors; and

• we may not be able to negotiate future distributor agreements on acceptable terms.

If any of our distribution agreements are terminated or if we elect to distribute new products directly, we will have to invest in additional sales resources, including additional field sales personnel, which would increase future selling, general and administrative expenses. For example, in October 2014, we terminated our distribution agreement with the Laboratory Supply Company and transitioned the smaller hospital market from a distributor sales model to a direct sales model. As a result, we are investing in additional sales resources to sell directly to the smaller hospital market and are exposed to risks as a result of transitioning the smaller hospital market from a distributor sales model to a direct sales model, such as difficulties maintaining relationships with specific customers and hiring appropriately trained personnel, any of which could result in lower revenues than we previously received from our distributor in that market. If we elect to distribute new products directly in other markets or in new geographic regions, then we would be exposed to similar risks.

If we desire to enter into other distribution arrangements, we may not be able to enter into new distribution agreements on satisfactory terms, or at all. If we fail to enter into acceptable distribution agreements or fail to successfully market our products, our product sales may decrease.

We may be subject to third-party claims that require additional licenses for our products and we could face costly litigation, which could cause us to pay substantial damages and limit our ability to sell some or all of our products.

Our industry is characterized by a large number of patents, claims of which appear to overlap in many cases. As a result, there is a significant amount of uncertainty regarding the extent of patent protection and infringement. Companies may have pending patent applications, which are typically confidential for the first eighteen months following filing that cover technologies we incorporate in our products. Accordingly, we may be subjected to substantial damages for past infringement or be required to modify our products or stop selling them if it is ultimately determined that our products infringe a third party’s proprietary rights. Moreover, from time to time, we are subject to patent litigation and receive correspondence and other communications from companies that ask us to evaluate the need for a license of patents they hold, and indicating or suggesting that we need a license to their patents in order to offer our products and services or to conduct our business operations. For example, we are currently engaged in litigation as further described in Part II, Item 1 “Legal Proceedings.” At this point in time we believe that it is probable that the Roche arbitration proceeding disclosed in Part II, Item 1 “Legal Proceedings” could result in a material loss. Accordingly, we recorded an estimated charge of $20 million as our best estimate of the potential loss as of December 31, 2014, which was included in our consolidated balance sheet. Further, if we were to incur a loss in the arbitration proceeding, depending on the ruling, we could also be responsible for certain attorney’s fees and interest. Given the inherent uncertainty of arbitration and the nature of the claims in this matter, it is possible that we may incur additional material losses but an estimate of such a charge cannot be made at this time. Additionally, in September 2012, we entered into an agreement with Abaxis pursuant to which, in exchange for a one-time payment by us to Abaxis of $17.3 million, all present and future litigation relating to the alleged infringement of certain Abaxis patents by us and our counterclaims against Abaxis were resolved. Even if we are successful in defending against any current or future patent claims, we would likely incur substantial costs in doing so. Any litigation related to existing claims and others that may arise in the future would likely consume our resources and could lead to significant damages, royalty payments or an injunction on the sale of certain products. Any additional licenses to patented technology could obligate us to pay substantial additional royalties, which could adversely impact our product costs and harm our business.

If we fail to maintain and protect our intellectual property rights, our competitors could use our technology to develop competing products and our business will suffer.

Our competitive success will be affected in part by our continued ability to obtain and maintain patent protection for our inventions, technologies and discoveries, including our intellectual property that includes technologies that we license. Our ability to do so will depend on, among other things, complex legal and factual questions. We have patents related to some of our technology and have licensed some of our technology under patents of others. Our patents and licenses may not successfully preclude others from using our technology. Our pending patent applications may lack priority over applications submitted by third parties or may not result in the issuance of patents. Even if issued, our patents may not be sufficiently broad to provide protection against competitors with similar technologies and may be challenged, invalidated or circumvented.

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In addition, there are numerous recent changes to the patent laws and proposed changes to the rules of the United States Patent and Trademark Office, which may have a significant impact on our ability to protect our technology and enforce our intellectual property rights. For example, in September 2011, the United States enacted sweeping changes to the United States patent system under the Leahy-Smith America Invents Act, including changes that would transition the United States from a “first-to-invent” system to a “first-to-file” system and alter the processes for challenging issued patents. These changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, nondisclosure agreements, licenses and other contractual provisions and technical measures to maintain and develop our competitive position with respect to intellectual property. Nevertheless, these measures may not be adequate to safeguard the technology underlying our products. For example, employees, consultants and others who participate in the development of our products may breach their agreements with us regarding our intellectual property or otherwise act improperly in relation to our propriety information, and we may not have adequate remedies for the breach or improper actions. We also may not be able to effectively protect our intellectual property rights in some foreign countries, as many countries do not offer the same level of legal protection for intellectual property as the United States. Furthermore, for a variety of reasons, we may decide not to file for patent, copyright or trademark protection outside of the United States. Our trade secrets could become known through other unforeseen means. Notwithstanding our efforts to protect our intellectual property, our competitors may independently develop similar or alternative technologies or products that are equal or superior to our technology. Our competitors may also develop similar products without infringing on any of our intellectual property rights or design around our proprietary technologies. Furthermore, any efforts to enforce our proprietary rights could result in disputes and legal proceedings that could be costly and divert attention from our business.

For example, the America Invents Act enacted proceedings involving various forms of post-issuance patent review proceedings, such as IPR and covered business method review. These proceedings are conducted before the Patent Trial and Appeal Board (“PTAB”) of the USPTO. Each has different eligibility criteria and different types of challenges that can be raised. The IPR process permits any person (except a party who has been litigating the patent for more than a year) to challenge the validity of a patent on the grounds that it was known from the prior art. Recently, entities associated with hedge funds have begun challenging valuable pharmaceutical patents through IPR proceedings. The filing of such proceedings or the issuance of an adverse decision in such proceedings could result in the loss of valuable patent rights that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Data breaches and cyber-attacks could compromise our intellectual property or other sensitive information and cause significant damage to our business and reputation.

In the ordinary course of our business, we maintain sensitive data on our networks, including our intellectual property and proprietary or confidential information relating to our business and that of our customers and business partners. The secure maintenance of this information is critical to our business and reputation. We believe that companies have been increasingly subject to a wide variety of security incidents, cyber-attacks and other attempts to gain unauthorized access. These threats can come from a variety of sources, ranging in sophistication from an individual hacker to malfeasance by employees, consultants or other service providers to state-sponsored attacks. Cyber threats may be generic, or they may be custom-crafted against our information systems. Over the past year, cyber-attacks have become more prevalent and much harder to detect and defend against. Our network and storage applications may be vulnerable to cyber-attack, malicious intrusion, malfeasance, loss of data privacy or other significant disruption and may be subject to unauthorized access by hackers, employees, consultants or other service providers. For example, an individual, whose association with the Company has since been terminated, recently accessed our system and downloaded material in an unauthorized manner. Such data breaches and any unauthorized access or disclosure of our information or intellectual property could compromise our intellectual property and expose other confidential information and sensitive business information. Cyber-attacks could also cause us to incur significant remediation costs, result in product development delays, disrupt key business operations and divert attention of management and key information technology resources. These incidents could also subject us to liability, expose us to significant expense and cause significant harm to our reputation and business. It is often difficult to anticipate or immediately detect such incidents and the damage caused by such incidents. There can be no assurance that our systems and data protection efforts will prevent future business interruptions or loss or corruption of data.

The United States Government has certain rights to use and disclose some of the intellectual property that we license and could exclusively license it to a third party if we fail to achieve practical application of the intellectual property.

Aspects of the technology licensed by us under agreements with third party licensors may be subject to certain government rights. Government rights in inventions conceived or reduced to practice under a government-funded program may

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include a non-exclusive, royalty-free worldwide license to practice or have practiced such inventions for any governmental purpose. In addition, the United States federal government has the right to require us or our licensors (as applicable) to grant licenses which would be exclusive under any of such inventions to a third party if they determine that: (1) adequate steps have not been taken to commercialize such inventions in a particular field of use; (2) such action is necessary to meet public health or safety needs; or (3) such action is necessary to meet requirements for public use under federal regulations. Further, the government rights include the right to use and disclose, without limitation, technical data relating to licensed technology that was developed in whole or in part at government expense. At least one of our technology license agreements contains a provision recognizing these government rights.

We may need to initiate lawsuits to protect or enforce our patents, which would be expensive and, if we lose, may cause us to lose some, if not all, of our intellectual property rights and thereby impair our ability to compete.

We rely on patents to protect a large part of our intellectual property. To protect or enforce our patent rights, we may initiate patent litigation against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time and divert management’s attention from other business concerns. They would also put our patents at risk of being invalidated or interpreted narrowly, and our patent applications at risk of not issuing. We may also provoke these third parties to assert claims against us. Patent law relating to the scope of claims in the technology fields in which we operate is still evolving and, consequently, patent positions in our industry are generally uncertain. We cannot be assured that we would prevail in any of these suits or that the damages or other remedies awarded, if any, would be commercially valuable. During the course of these suits, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation. Any public announcements related to such patent suits could cause our stock price to decline.

Our international operations subject us to additional risks and costs.

We conduct operations on a global basis. These operations are subject to a number of difficulties and special costs, including:

• compliance with multiple, conflicting and changing governmental laws and regulations, including United States laws such as the Foreign Corrupt Practices Act and local laws that prohibit bribes and certain payments to governmental officials such as the UK Bribery Act 2010, data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, and export requirements;

• increased regulatory risk, including additional regulatory requirements different or more stringent than those in the United States;

• laws and business practices favoring local competitors;

• foreign exchange and currency risks;

• exposure to risks associated with sovereign debt uncertainties in Europe and other foreign countries;

• difficulties in collecting accounts receivable or longer payment cycles;

• import and export restrictions and tariffs;

• difficulties staffing and managing foreign operations;

• difficulties and expense in enforcing intellectual property rights;

• business risks, including fluctuations in demand for our products and the cost and effort to conduct international operations and travel abroad to promote international distribution and overall global economic conditions;

• multiple conflicting tax laws and regulations; and

• political and economic instability and outbreak of military hostilities.

We intend to expand our international sales and marketing activities, including through our direct sales operations and through relationships with additional international distribution partners. We may not be able to attract international distribution partners that will be able to market our products effectively or may have trouble entering geographic markets that are less receptive to sales from foreign entities.

Additionally, our continued expansion into less developed countries in connection with our HBDC program, which may have less political, social or economic stability and less developed infrastructure and legal systems, heightens the exposure of the risks set forth above. An adverse development relating to one or more of these risks, or any other risks associated with our operations in less developed countries, could adversely affect our ability to conduct and expand our business, which could negatively impact our business, results of operations and financial condition.

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Our international operations could also increase our exposure to international laws and regulations. If we cannot comply with foreign laws and regulations, which are often complex and subject to variation and unexpected changes, we could incur unexpected costs and potential litigation. For example, the governments of foreign countries might attempt to regulate our products and services or levy sales or other taxes relating to our activities. In addition, foreign countries may impose tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers, any of which could make it more difficult for us to conduct our business.

Further, as we continue to expand our operations worldwide and potentially sell our products and services to governmental institutions, compliance with Foreign Corrupt Practices Act and local laws that also prohibit corrupt payments to governmental officials such as the UK Bribery Act 2010 will become more important and we will need to continue to enhance our internal controls to ensure compliance with applicable laws and regulations.

A significant portion of our sales are denominated in foreign currencies and currency fluctuations and hedging expenses may cause our revenue and earnings to fluctuate and our foreign currency hedging program may not adequately offset foreign currency exposure.

A significant percentage of our product sales are denominated in foreign currencies, primarily the Euro. When the United States dollar strengthens against these foreign currencies, as it has recently, the relative value of sales made in the respective foreign currency decreases. Overall, we are a net receiver of foreign currencies and, therefore, benefit from a weaker United States dollar and are adversely affected by a stronger United States dollar relative to those foreign currencies in which we transact significant amounts of business.

We use foreign currency exchange forward contracts to hedge a portion of our forecasted revenue. We also hedge certain monetary assets and liabilities denominated in foreign currencies, which reduces but does not eliminate our exposure to currency fluctuations between the date a transaction is recorded and the date that cash is collected or paid. We cannot predict future fluctuations in the foreign currency exchange rate. If the United States dollar appreciates significantly against certain currencies and our hedging program does not sufficiently offset the effects of such appreciation, our results of operations will be adversely affected and our stock price may decline.

Additionally, the expenses that we recognize in relation to our hedging activities can cause our earnings to fluctuate. The changes in interest rate spreads between the foreign currencies that we hedge and the United States dollar impact the level of hedging expenses that we recognize in a particular period.

We intend to expand our business into new geographic markets, and this expansion may be costly and may not be successful.

We plan to make substantial investments of both time and money as part of our continued and existing expansion into new geographic markets. When we expand into new geographic markets, we incur set up costs for new personnel, facilities, travel, inventory and related expenses in advance of securing new customer contracts. We may face challenges operating in new business climates with which we are unfamiliar, including facing difficulties in staffing and managing our new operations, fluctuations in currency exchange rates, exposure to additional regulatory requirements including additional regulatory filing and approval requirements for our products, changes in political and economic conditions, and exposure to additional and potentially adverse tax regimes. Our success in any new markets will depend, in part, on our ability to anticipate and effectively manage these and other risks. It is also possible that we will face increased competition in any new markets as other companies attempt to take advantage of the new market opportunities, and any such competitors could have substantially more resources than we do and may have better relationships and a greater understanding of the region. If we fail to manage the risks inherent in our geographic expansion, we could incur substantial capital and operating costs without any related increase in revenue, which would harm our operating results. Further, even if our geographic expansion is successful, failure to effectively manage our growth in a cost-effective manner could result in declines in customer satisfaction, increased costs or disruption of our operations.

The nature of some of our products may also subject us to export control regulation by the United States Department of State and the Department of Commerce. Violations of these regulations can result in monetary penalties and denial of export privileges.

Our sales to customers outside the United States are subject to government export regulations that require us to obtain licenses to export such products. If the United States government was to amend its export control regulations, such amendments

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could create uncertainty in our industry, result in increased costs of compliance, and further restrict our ability to sell our products abroad. In particular, we are required to obtain a new license for each purchase order of our biothreat products that are exported outside the United States. Delays or denial of the grant of any required license, or changes to the regulations that make such delays or denials more likely or frequent, could make it difficult to make sales to foreign customers and could adversely affect our revenue. In addition, we could be subject to fines and penalties for violation of these export regulations if we were found in violation. Such violation could result in penalties, including prohibiting us from exporting our products to one or more countries, and could materially and adversely affect our business.

If we fail to retain key members of our staff, our ability to conduct and expand our business would be impaired.

We are highly dependent on the principal members of our management and scientific staff and on the development of adequate succession plans for such employees. If we lose the services of any of these persons and we are unable to find a suitable replacement in a timely manner, we may be challenged to effectively manage our business and execute our strategy, which could seriously harm our product development and commercialization efforts. In addition, we require skilled personnel in areas such as microbiology, clinical, sales, marketing and finance. We generally do not enter into employment agreements requiring these employees to continue in our employment for any period of time. Attracting, retaining, developing and training personnel, including management, with the requisite skills remains challenging, particularly in the Silicon Valley, where our main office is located. For example, in February 2015, our Chief Financial Officer since April 2008 left our company to pursue an opportunity with another company. In April 2015, we announced the appointment of our new Chief Financial Officer. If at any point we are unable to hire, train, develop and retain a sufficient number of qualified employees to match our growth, our ability to conduct and expand our business could be seriously reduced.

We may face issues in connection with our recent implementation of an ERP system.

In order to support our growth, we recently implemented a new ERP system that became operational at the beginning of the first quarter of 2015. This process has been and continues to be complex and time-consuming and in connection with the implementation, we expect to incur additional expenses. Our ERP system implementation may not result in improvements that outweigh its costs and may disrupt our operations. For example, since implementation we have experienced delays in our customer billing and collection processes. Many companies have experienced delays and difficulties with the implementation of new or changed ERP systems that have had a negative effect on their business. If we are unable to successfully implement the new ERP system, it could have a material adverse effect on our financial position, results of operations and cash flows. Although the implementation has not to date had a material negative impact on our overall ability to operate, we are very early in the implementation, and are still subject to significant operational risks. There are many costs and risks associated with ERP system implementation, including:

• inability to fill customer orders accurately and on a timely basis, or at all;

• delays in our billing and collection processes;

• inability to process payments to vendors accurately and in a timely manner;

• disruption of our internal control structure;

• inability to fulfill our SEC or other governmental reporting requirements in a timely or accurate manner;

• inability to fulfill federal, state and local tax filing requirements in a timely or accurate manner;

• increased demands on management and staff time to the detriment of other corporate initiatives; and

• significant capital and operating expenditures.

If we become subject to claims relating to improper handling, storage or disposal of hazardous materials, we could incur significant cost and time to comply.

Our research and development processes involve the controlled storage, use and disposal of hazardous materials, including biological hazardous materials. We are subject to foreign, federal, state and local regulations governing the use, manufacture, storage, handling and disposal of materials and waste products. We may incur significant costs complying with both existing and future environmental laws and regulations. In particular, we are subject to regulation by the Occupational Safety and Health Administration (“OSHA”) and the Environmental Protection Agency (“EPA”), and to regulation under the Toxic Substances Control Act and the Resource Conservation and Recovery Act in the United States OSHA or the EPA may adopt regulations that may affect our research and development programs. We are unable to predict whether any agency will adopt any regulations that would have a material adverse effect on our operations.

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The risk of accidental contamination or injury from hazardous materials cannot be eliminated completely. In the event of an accident, we could be held liable for any damages that result, and any liability could exceed the limits or fall outside the coverage of our workers’ compensation insurance. We may not be able to maintain insurance on acceptable terms, if at all.

If a catastrophe strikes our manufacturing or warehousing facilities, we may be unable to manufacture or distribute our products for a substantial amount of time and we may experience inventory shortfalls, which would cause us to experience lost revenues.

Our manufacturing facilities are located in Sunnyvale and Lodi, California, Seattle, Washington, and Stockholm, Sweden. Although we have business interruption insurance, our facilities and some pieces of manufacturing equipment are difficult to replace and could require substantial replacement lead-time. Various types of disasters, including earthquakes, fires, floods and acts of terrorism, may affect our manufacturing facilities or the manufacturing facilities of our contract manufacturer. Earthquakes are of particular significance since our primary manufacturing facilities in California are located in an earthquake-prone area. In the event our existing manufacturing facilities or equipment, or the manufacturing facilities or equipment of our key contract manufacturer, are affected by man-made or natural disasters, we may be unable to manufacture products for sale or meet customer demands or sales projections. If our manufacturing operations were curtailed or ceased, it would seriously harm our business.

We might require additional capital to respond to business challenges or acquisitions, and such capital might not be available.

Though we completed a sale of $345 million of convertible senior notes in February 2014, we may in the future need to obtain additional equity or debt financing to respond to business challenges or acquire complementary businesses and technologies. Any additional equity or debt financing, however, might not be available when needed or, if available, might not be available on terms satisfactory to us. In addition, to the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in dilution to our shareholders. In addition, these securities may be sold at a discount from the market price of our common stock and may include rights, preferences or privileges senior to those of our common stock. If additional equity or debt financing is needed and we are unable to obtain adequate financing or financing on terms satisfactory to us, our ability to continue to support our business growth and to respond to business challenges could be significantly limited.

We rely on relationships with collaborative partners and other third parties for development, supply and marketing of certain products and potential products, and such collaborative partners or other third parties could fail to perform sufficiently.

We believe that our success in penetrating our target markets depends in part on our ability to develop and maintain collaborative relationships with other companies. Relying on collaborative relationships is risky to our future success for our products because, among other things:

• our collaborative partners may not devote sufficient resources to the success of our collaborations;

• our collaborative partners may not obtain regulatory approvals necessary to continue the collaborations in a timely manner;

• our collaborative partners may be acquired by other companies and decide to terminate our collaborative partnership or become insolvent;

• our collaborative partners may develop technologies or components competitive with our products;

• components developed by collaborators could fail to meet specifications, possibly causing us to lose potential projects and subjecting us to liability;

• disagreements with collaborators could result in the termination of the relationship or litigation;

• collaborators may not have sufficient capital resources;

• collaborators may pursue tests or other products that will not generate significant volume for us, but may consume significant research and development and manufacturing resources; and

• we may not be able to negotiate future collaborative arrangements, or renewals of existing collaborative agreements, on acceptable terms

Because these and other factors may be beyond our control, the development or commercialization of our products involved in collaborative partnerships may be delayed or otherwise adversely affected.

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If we or any of our collaborative partners terminate a collaborative arrangement, we may be required to devote additional resources to product development and commercialization or we may need to cancel some development programs, which could adversely affect our product pipeline and business.

We enter into collaborations with third parties that may not result in the development of commercially viable products or the generation of significant future revenues.

In the ordinary course of our business, we enter into collaborative arrangements to develop new products or to pursue new markets. These collaborations may not result in the development of products that achieve commercial success, and these collaborations could be terminated prior to developing any products. In addition, our collaboration partners may not necessarily purchase the volume of products that we expect. Accordingly, we cannot be assured that any of our collaborations will result in the successful development of a commercially viable product or result in significant additional revenues in the future.

The “conflict minerals” rule of the Securities and Exchange Commission, or SEC, has caused us to incur additional expenses, could limit the supply and increase the cost of certain metals used in manufacturing our products, and could make us less competitive in our target markets.

On August 22, 2012, the SEC adopted a rule requiring disclosure by public companies of the origin, source and chain of custody of specified minerals, known as conflict minerals, that are necessary to the functionality or production of products manufactured or contracted to be manufactured. The rule requires companies to obtain sourcing data from suppliers, engage in supply chain due diligence, and file annually with the SEC a specialized disclosure report on Form SD covering the prior calendar year. The rule could limit our ability to source at competitive prices and to secure sufficient quantities of certain minerals used in the manufacture of our products, specifically tantalum, tin, gold and tungsten, as the number of suppliers that provide conflict-free minerals may be limited. We may incur material costs associated with complying with the rule, such as costs related to the determination of the origin, source and chain of custody of the minerals used in our products, the adoption of conflict minerals-related governance policies, processes and controls, and possible changes to products or sources of supply as a result of such activities. Within our supply chain, we may not be able to sufficiently verify the origins of the relevant minerals used in our products through the data collection and due diligence procedures that we implement, which may harm our reputation. Furthermore, we may encounter challenges in satisfying those customers that require that all of the components of our products be certified as conflict free, and if we cannot satisfy these customers, they may choose a competitor’s products. We continue to investigate the presence of conflict materials within our supply chain.

We maintain cash balances in our bank accounts that exceed the FDIC insurance limitation.

We maintain our cash assets at commercial banks in amounts in excess of the Federal Deposit Insurance Corporation insurance limit of $250,000. In the event of the commercial banks failing, we may lose the amount of our deposits over any federally-insured amount, which could have a material adverse effect on our financial conditions and our results of operations.

Our participation in the USPS BDS program may not result in predictable revenues in the future.

Our participation in the USPS BDS program involves significant uncertainties related to governmental decision-making and timing of purchases and is highly sensitive to changes in national priorities and budgets. The USPS continued to report significant losses for the 2014 and 2013 fiscal years. Budgetary pressures may result in reduced allocations to projects such as the BDS program, sometimes without advance notice. We cannot be certain that actual funding and operating parameters, or product purchases, will occur at currently expected levels or in the currently expected timeframe.

Compliance with laws and regulations governing public company corporate governance and reporting is complex and expensive.

We are subject to laws and regulations affecting our domestic and international operations in a number of areas. Many laws and regulations, notably those adopted in connection with the Sarbanes-Oxley Act of 2002 by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act and The NASDAQ Stock Market, impose obligations on public companies, such as ours, which have increased the scope, complexity, and cost of corporate governance, reporting, and disclosure practices. Compliance with these laws, regulations and similar requirements can be onerous and inconsistent from jurisdiction to jurisdiction, which has required and will continue to require substantial management time and oversight and requires us to incur significant additional accounting, legal and compliance costs. Any such costs, that may arise in the future as a result of changes in these laws and regulations or in their interpretation could individually or in the aggregate make our products and services more expensive to our customers, delay the introduction of new products in one or more regions or cause us to change or limit our business practices. We have implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations or our policies and procedures.

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Additionally, changes to existing accounting rules and standards and the implementation of new accounting rules or standards, such as the new lease accounting or revenue recognition rules, may adversely impact our reported financial results and business, and may further require us to incur greater accounting fees.

Our operating results could be materially affected by unanticipated changes in our tax provisions or exposure to additional income tax liabilities.

Our determination of our tax liability (like any company’s determination of its tax liability) is subject to review by applicable tax authorities. Any adverse outcome of such a review could have an adverse effect on our operating results and financial condition. In addition, the determination of our provision for income taxes and other tax liabilities requires significant judgment including our determination of whether a valuation allowance against deferred tax assets is appropriate. We expect to maintain such valuation allowance as long as there is insufficient evidence that we will be able to realize the benefit of our deferred tax assets. We reassess the realizability of the deferred tax assets as facts and circumstances dictate. If after future assessments of the realizability of the deferred tax assets, we determine that a lesser or greater allowance is required, or that no such allowance is appropriate, we will record a corresponding change to the income tax expense and the valuation allowance in the period of such determination. The uncertainty surrounding the future realization of our net deferred tax assets could adversely impact our results of operations. Although we believe our estimates and judgments are reasonable, including those related to our valuation allowance, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines, and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment and fair value determinations, inventories, convertible debt, business combinations and intangible asset valuations, and litigation, are highly complex and involve many subjective assumptions, estimates, and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or expected financial performance or financial condition.

We have indebtedness in the form of convertible senior notes.

In February 2014, we completed an offering of $345 million of convertible senior notes due in 2021 (the “Notes”).

As a result of the issuance of the Notes, we incurred $345 million principal amount of indebtedness, the principal amount of which we may be required to pay at maturity in 2021, or upon the occurrence of a make-whole fundamental change (as defined in the applicable indenture). There can be no assurance that we will be able to repay this indebtedness when due, or that we will be able to refinance this indebtedness on acceptable terms or at all. In addition, this indebtedness could, among other things:

• make it difficult for us to pay other obligations;

• make it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;

• require us to dedicate a substantial portion of our cash flow from operations to service the indebtedness, reducing the amount of cash flow available for other purposes; and

• limit our flexibility in planning for and reacting to changes in our business.

Conversion of the Notes may affect the price of our common stock.

The conversion of some or all of our Notes may dilute the ownership interest of existing shareholders to the extent we deliver shares of common stock upon conversion. Holders of the outstanding Notes will be able to convert them only upon the satisfaction of certain conditions prior to August 1, 2020. Upon conversion, holders of the Notes will receive cash, shares of common stock or a combination of cash and shares of common stock, at our election. Any sales in the public market of shares of common stock issued upon conversion of such notes could adversely affect the trading price of our common stock.

We have broad discretion in the use of the net proceeds from the issuance of our Notes and may not use them effectively.

We have broad discretion in the application of the net proceeds that we received from the issuance of the Notes, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest these proceeds in a

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way with which our investors disagree. The failure by our management to apply these funds effectively could adversely affect our business and financial condition. We may invest the net proceeds from our Notes in a manner that does not produce income or that loses value. These investments may not yield a favorable return to our investors, and may negatively impact the price of our securities.

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments of the principal, to pay interest on or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt obligations and make necessary capital expenditures. If we are unable to generate the necessary cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

We may not have the ability to raise the funds necessary to settle conversions of the Notes or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

Holders of the Notes will have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or Notes being converted. In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase Notes at a time when the repurchase is required by the indenture governing the Notes or to pay any cash payable on future conversions of the Notes as required by the indenture governing the Notes would constitute a default under the indenture governing the Notes. A default under the indenture governing the Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the future indebtedness were to be accelerated after any applicable notice or grace periods, we might not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

The Notes contain a conditional conversion feature, which, if triggered, may adversely affect our financial condition and operating results.

The Notes contain a conditional conversion feature. If such feature is triggered, holders of Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than non-current liability, which would result in a material reduction of our net working capital.

Our stock price is highly volatile and investing in our stock involves a high degree of risk, which could result in substantial losses for investors.

The market price of our common stock, like the securities of many other medical product companies, fluctuates over a wide range, and will continue to be highly volatile in the future. During the six months ended June 30, 2015, the closing sale price of our common stock on The NASDAQ Global Select Market ranged from $52.19 and $61.15 per share. Because our stock price has been volatile, investing in our common stock is risky. Furthermore, volatility in the stock price of other companies has often led to securities class action litigation against those companies. Any future securities litigation against us could result in substantial costs and divert management’s attention and resources, which could seriously harm our business, financial condition and results of operations.

Our charter documents may impede or discourage a takeover, which could reduce the market price of our common stock.

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Our board of directors or a committee thereof has the power, without shareholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock. The ability of our board of directors or a committee thereof to create and issue a new series of preferred stock and certain provisions of our articles of incorporation and bylaws, including, without limitation, a classified board, advance notice requirements for shareholder proposals and nominations, and no cumulative voting, could impede a merger, takeover or other business combination involving us or discourage a potential acquiror from making a tender offer for our common stock, which, under certain circumstances, could reduce the market price of our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 9, 2015, we granted 10,000 restricted stock units (the “RSUs”) to the Company’s Chief Financial Officer, Ilan Daskal, as a non-plan inducement grant pursuant to his offer letter with Cepheid. Additional information relating to the issuance of such RSUs was disclosed in Current Report on Form 8-K, dated April 7, 2015. Additionally, on April 28, 2015, an aggregate of 13,500 RSUs were automatically granted to our non-employee directors pursuant to our 2015 Equity Incentive Plan. Additional information relating to the automatic non-employee director grants under our 2015 Equity Incentive Plan was disclosed in our definitive Proxy Statement for our 2015 Annual Meeting of the Shareholders, dated March 19, 2015. These issuance were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving any public offering. The grant of these securities was made without general solicitation or advertising and did not result in any proceeds to us.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number		Incorporated by Reference			Filing	Filed
	Exhibit Description	Form	File No.	Exhibit	Date	Herewith
10.1	Offer Letter dated April 2, 2014 by and between Cepheid and Ilan Daskal.	8-K	000-30755	10.01	April 7, 2015
10.2	2015 Equity Incentive Plan and related forms of agreement for stock options and restricted stock units.					X
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X

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Exhibit Number		Incorporated by Reference			Filing	Filed
	Exhibit Description	Form	File No.	Exhibit	Date	Herewith
101	The following materials from Cepheid’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Condensed Consolidated Balance Sheets, (ii) the unaudited Condensed Consolidated Statements of Operations, (iii) the unaudited Condensed Consolidated Statements of Comprehensive Loss, (iv) the unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.					X

* As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Cepheid under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, in the City of Sunnyvale, State of California on this 6^th day of August 2015.

CEPHEID

(Registrant)

/S/    JOHN L. BISHOP

John L. Bishop

Chairman and Chief Executive Officer

(Principal Executive Officer)

/S/    ILAN DASKAL        

Ilan Daskal

Executive Vice President, Chief Financial Officer

(Principal Financial and Accounting Officer)

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Exhibit Index

Exhibit Number	Exhibit Description
10.1	Offer Letter dated April 2, 2014 by and between Cepheid and Ilan Daskal.
10.2	2015 Equity Incentive Plan and related forms of agreement for stock options and restricted stock units.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Cepheid’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Condensed Consolidated Balance Sheets, (ii) the unaudited Condensed Consolidated Statements of Operations, (iii) the unaudited Condensed Consolidated Statements of Comprehensive Loss, (iv) the unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

* As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Cepheid under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

EX-10.2

Exhibit 10.2

CEPHEID

2015 EQUITY INCENTIVE PLAN

(adopted February 10, 2015)

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 28.

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available. Subject to Sections 2.5 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan is 4,600,000 Shares plus (i) any reserved shares not issued or subject to outstanding grants under the Company’s 2006 Equity Incentive Plan (the “Prior Plan”) on the Effective Date (as defined below) (ii) shares that are subject to options or other awards granted under the Prior Plan that cease to be subject to Awards by forfeiture or otherwise after the Effective Date for any reason; (iii) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of options or stock appreciation rights that are, after the Effective Date, forfeited, (iv) shares issued under the Prior Plan that are repurchased by the Company at the original issue price; and (v) shares that are subject to options or other awards granted under the Prior Plan that otherwise terminate without Shares being issued. Any Award other than an Option or a SAR shall reduce the number of Shares available for issuance by 2.17 Shares. Awards issued as an Option or a SAR shall reduce the number of Shares available for issuance by the number of Shares underlying the Award, regardless of the number of Shares actually issued upon exercise of the Award. The Company may issue Shares that are authorized but unissued shares pursuant to the Awards granted under the Plan. The Company will reserve and keep available a sufficient number of Shares to satisfy the requirements of all outstanding Awards granted under the Plan.

2.2 Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. The following Shares may not again be made available for future grant and issuance as Awards under the Plan: (i) Shares that are withheld to pay the exercise or purchase price of an Award or to satisfy any tax withholding obligations in connection with an Award; (ii) Shares not issued or delivered as a result of the net settlement of an outstanding Option or SAR; or (iii) shares of the Company’s Common Stock repurchased on the open market with the proceeds of an Option exercise price. To the extent that a Performance Award in the form of a cash bonus has been made, such Award will not reduce the number of Shares available for issuance under the Plan.

2.3 Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

2.4 Limitations. No more than 5,000,000 Shares shall be issued pursuant to the exercise of ISOs.

2.5 Adjustment of Shares. If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off, split-off or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Sections 2.1 or 2.2, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.4, (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3, and (f) the number of Shares that are granted as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the shareholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors of the Company or any Parent or Subsidiary of the Company; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive more than one million five hundred thousand (1,500,000) Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive up to a maximum of two million (2,000,000) Shares in the calendar year in which they commence their employment.

4. ADMINISTRATION.

4.1 Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

(c) select persons to receive Awards;

(d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria), and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;

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(e) determine the number of Shares or other consideration subject to Awards;

(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary;

(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

(h) grant waivers of Plan or Award conditions;

(i) determine the vesting, exercisability and payment of Awards;

(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

(k) determine whether an Award has been earned;

(l) subject to Section 18, determine the terms and conditions of any, and to institute any Exchange Program;

(m) reduce or waive any criteria with respect to Performance Factors;

(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code;

(o) adopt terms and conditions, rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside the United States;

(p) determine whether any Termination of any Participant shall constitute Cause; and

(q) make all other determinations necessary or advisable for the administration of this Plan.

4.2 Committee Interpretation and Discretion; Delegation. Except with respect to automatic grants to Non-Employee Directors made pursuant to Section 12, any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. To the extent permitted by applicable law, the Committee may delegate to one or more Directors the authority to grant an Award under this Plan to Participants who are not Insiders, in which case references to “Committee” in this Section 4.2 will refer to such delegate(s).

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4.3 Section 162(m) of the Code and Section 16 of the Exchange Act. When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.

4.4 Documentation. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.

5. OPTIONS. The Committee may grant Options to Participants and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option shall vest and may be exercised, and all other terms and conditions of the Option, subject to the following:

5.1 Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NQSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each Option, provided that, subject to Section 27 below, the Performance Period shall be a minimum of one year; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria. If the Option is not being earned upon the satisfaction of Performance Factors, then the Committee will determine the vesting period of such Option which shall have a minimum of a three year period.

5.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

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5.3 Exercise Period. Options may be exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of seven (7) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

5.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.

5.5 Method of Exercise. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.5 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

5.6 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee). The exercise of an Option will be subject to the following (except as may be otherwise provided in an Award Agreement):

(a) If the Participant is Terminated for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the Termination Date no later than three (3) months after the Termination Date (or such shorter time period or longer time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be the exercise of an NQSO), but in any event no later than the expiration date of the Options.

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(b) If the Participant is Terminated because of the Participant’s death (or the Participant dies within three (3) months after a Termination other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the Termination Date (or such shorter time period not less than six (6) months or longer time period not exceeding five (5) years as may be determined by the Committee), but in any event no later than the expiration date of the Options.

(c) If the Participant is Terminated because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than six (6) months after the Termination Date (with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in any event no later than the expiration date of the Options.

(d) If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options. Unless otherwise provided in the Award Agreement or determined by the Committee, Cause will have the meaning set forth in the Plan.

5.7 Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

5.8 Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.

5.10 No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

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6. RESTRICTED STOCK AWARDS.

6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”), including vesting restrictions that, subject to Section 27 below, if earned upon completion of Performance Factors, shall have a Performance Period of a minimum of one year, or if not earned upon completion of Performance Factors, shall have a vesting period of a minimum of three years. The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan.

6.2 Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.

6.3 Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, the Award Agreement and in accordance with any procedures established by the Company.

6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. The Committee shall determine the extent to which such Restricted Stock Awards have been earned. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

6.5 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

7. STOCK BONUS AWARDS.

7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of Shares for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.

7.2 Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as

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set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award, provided, that, subject to Section 27 below, all Stock Bonus Awards with vesting restrictions based upon completion of performance goals based on Performance Factors shall have a minimum one-year Performance Period; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. The Committee shall determine the extent to which such Stock Bonus Awards have been earned. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria. If the Stock Bonus Award is not being earned upon the satisfaction of Performance Factors, then the Committee will determine the vesting period of such Stock Bonus Award which, subject to Section 27, shall have a minimum of a three year period.

7.3 Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.

7.4 Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

8. STOCK APPRECIATION RIGHTS.

8.1 Awards of SARs. A Stock Appreciation Right (“SAR”) is an award to a Participant that may be settled in cash or Shares, having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.

8.2 Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR, provided that, subject to Section 27 below, the Performance Period shall be a minimum of one year; (y) select from among the Performance Factors to be used to measure the performance goals; and (z) determine the extent to which such SAR has been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria. If the SAR is not being earned upon the satisfaction of Performance Factors, then the Committee will determine the vesting period of such SAR which, subject to Section 27, shall have a minimum of a three year period.

8.3 Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of seven years from the date the SAR is granted. The Committee may

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also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

8.4 Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.

8.5 Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

9. RESTRICTED STOCK UNITS.

9.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to a Participant covering a number of Shares that may be settled in cash, or by issuance of those Shares. All RSUs shall be made pursuant to an Award Agreement.

9.2 Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; (d) the timing of settlement of a RSU, provided, that, subject to Section 27 below, a RSU with settlement restrictions based upon satisfaction of performance goals based on Performance Factors shall have a minimum one-year Performance Period; and (e) the effect of the Participant’s Termination on each RSU. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors (if any) during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance goals, if any; and (z) determine the extent to which such RSU has been earned. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. If the RSU is not being earned upon the satisfaction of Performance Factors, then the Committee will determine the vesting period of such RSU which, subject to Section 27, shall have a minimum of a three year period.

9.3 Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.

9.4 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

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10. PERFORMANCE AWARDS.

10.1 Performance Awards. A Performance Award is an award to a Participant of a cash bonus or a Performance Share bonus. Grants of Performance Awards shall be made pursuant to an Award Agreement.

10.2 Terms of Performance Awards. The Committee will determine, and each Award Agreement will set forth, the terms of each award of Performance Award including, without limitation: (a) the amount of any cash bonus; (b) the number of Shares deemed subject to a Performance Share bonus; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each Performance Award will be settled, provided that, subject to Section 27 below, the Performance Period shall be a minimum of one year; (d) the consideration to be distributed on settlement; and (e) the effect of the Participant’s Termination on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period, provided that, subject to Section 27 below, the Performance Period shall be a minimum of one year; and (y) select from among the Performance Factors to be used to measure performance goals. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. No Participant will be eligible to receive more than five million dollars ($5,000,000) in Performance Awards in any calendar year under this Plan.

10.3 Value, Earning and Timing of Performance Shares. Any Performance Share bonus will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of a Performance Share bonus will be entitled to receive a payout of the number of Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay an earned Performance Share bonus in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof. Performance Share bonuses may also be settled in Restricted Stock.

10.4 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

11. PAYMENT FOR SHARE PURCHASES. Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

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(c) by waiver of compensation due or accrued to the Participant for services rendered to the Company or a Parent or Subsidiary of the Company;

(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;

(e) by any combination of the foregoing; or

(f) by any other method of payment as is permitted by applicable law.

12. AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.

12.1 Types of Options and Shares. Options granted under this Plan and subject to this Section 12 shall be NQSOs.

12.2 Eligibility. Options and RSUs subject to this Section 12 shall be granted only to Non-Employee Directors. A Non-Employee Director who is elected or reelected as a member of the Board will be eligible to receive an Award under this Section 12.

12.3 Grant for Initial Election or Appointment. Each Non-Employee Director who is first elected or appointed as a member of the Board on or after the 2014 annual meeting of shareholders will automatically be granted, on the date such Non-Employee Director is first elected or appointed as a member of the Board, Options and/or RSUs that, in the aggregate, equals 32,500 Option equivalents (an “Initial Election Grant”), with the mix of Options and RSUs and the equivalency ratio of Options and RSUs to be determined from time to time in the discretion of the Board.

12.4 Annual Grants. On the date of the first meeting of the Board immediately following each annual meeting of shareholders of the Company beginning with the 2015 annual meeting (even if held on the same day as the meeting of shareholders), the Company shall grant each Non-Employee Director then in office for longer than six months Options and/or RSUs that, in the aggregate, equals 21,700 Option equivalents (an “Annual Grant”), with the mix of Options and RSUs and the equivalency ratio of Options and RSUs to be determined from time to time in the discretion of the Board.

12.5 Discretionary Grant. The Board may make discretionary grants to any Non-Employee Director (a “Discretionary Grant”).

12.6 Vesting, Exercisability and Settlement. The date a Non-Employee Director receives an Initial Election Grant or an Annual Grant is referred to in this Plan as the “Start Date” for such Award(s).

(a) Initial Election Grants. Except as set forth in Section 21.4, each Initial Election Grant will vest, and become exercisable or be settled as to one-third of the Shares subject to such Initial Election Grant on each one-year anniversary of the Start Date, so long as the Non-Employee Director continuously remains a director of the Company.

(b) Annual Grants. Except as set forth in Section 21.4, each Annual Grant will vest, become exercisable or be settled as to 100% of the Shares subject to such Annual Grant on the one-year anniversary of the Start Date, so long as the Non-Employee Director continuously remains a director of the Company.

(c) Discretionary Grants. Except as set forth in Section 21.4, Discretionary Grants shall vest, and become exercisable or be settled as determined by the Board.

12.7 Exercise Price. With respect to Options granted to a Non-Employee Director, the exercise price shall not be less than the Fair Market Value of the Shares at the time that such Option is granted.

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13. WITHHOLDING TAXES.

13.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company, or to the Parent or Subsidiary employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant.

13.2 Stock Withholding. The Committee or its delegate(s), as permitted by applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

14. TRANSFERABILITY.

14.1 Transfer Generally. Unless determined otherwise by the Committee or its delegate(s) or pursuant to this Section 14, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, other than by (i) a will or (ii) by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or domestic relations order to a Permitted Transferee, such Award may contain such additional terms and conditions as the Committee or its delegate(s) deems appropriate. All Awards will be exercisable: (A) during the Participant’s lifetime only by (x) the Participant, or (y) the Participant’s guardian or legal representative; (B) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (C) in the case of all awards except ISOs, by a Permitted Transferee (for awards made transferable by the Committee) or such person’s guardian or legal representative.

14.2 Award Transfer Program. Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and will have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (i) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (ii) amend or remove any provisions of the Award relating to the Award holder’s continued service to the Company or one of its Subsidiaries, (iii) amend the permissible payment methods with respect to the

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exercise or purchase of any such Award, (iv) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (v) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion. Notwithstanding anything to the contrary in the Plan, in no event will the Committee have the right to determine and implement the terms and conditions of any Award Transfer Program without shareholder approval.

15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

15.1 Voting and Dividends. No Participant will have any of the rights of a shareholder with respect to any Awards until the Shares subject to the Award are issued to the Participant, except for any dividend equivalent rights permitted by an applicable Award Agreement. After Shares are issued to the Participant, the Participant will be a shareholder and have all the rights of a shareholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.

15.2 Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after the later of the Participant’s Termination Date and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. However, the Committee, in its discretion, may provide in the Award Agreement evidencing any Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares during the period beginning on the date the Award is granted and ending, with respect to each share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which they are forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of additional whole Shares as of the date of payment of such cash dividends on Shares.

16. CERTIFICATES. All Shares or other securities, whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.

17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may

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require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. The repricing of Options or SARs is not permitted without prior shareholder approval. Repricing is defined as the terms of outstanding awards may not be amended to reduce the exercise price of outstanding Options or SARs or cancel, substitute, buyout or exchange outstanding Options or SARs in exchange for cash, other Awards or Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs. In the event that shareholder approval of a repricing of Options or SARs is sought and obtained, the Committee may, by subsequent written notice to affected Participants, reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price. The Committee may, at any time or from time to time authorize the Company, in the case of an Option or SAR exchange with shareholder approval, and with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan or this Section 18), to pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.

19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time for any reason or no reason, with or without cause.

21. CORPORATE TRANSACTIONS.

21.1 Dissolution or Liquidation. Except for automatic grants to Non-Employee Directors pursuant to Section 12 hereof, in the event of the proposed dissolution or liquidation of the Company, the Company shall notify the Participant at least 30 days prior to such proposed action. To the extent it has not been previously exercised, all Awards will terminate immediately prior to the consummation of such proposed action.

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21.2 Corporate Transaction. Except for automatic grants to Non-Employee Directors pursuant to Section 12 hereof, upon the consummation of a Corporate Transaction, unless otherwise determined by the Committee, all Shares acquired under the Plan and all Awards will be subject to the agreement governing such Corporate Transaction. Such agreement need not treat all Awards in an identical manner, and it will provide for one or more of the following with respect to each Award:

(a) The continuation of the Award by the Company (if the Company is the surviving corporation).

(b) The assumption of the Award by the surviving corporation or its parent and, with respect to an Award that is subject to Section 409A of the Code, in a manner that complies with Section 424(a) of the Code (whether or not the Award is an ISO). For the purposes of this subsection (b), the Award shall be considered assumed if, following the Corporate Transaction, the Award confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Corporate Transaction, the consideration (whether stock, cash, or other securities or property) received in the Corporate Transaction by holders of Common Stock for each share held on the effective date of the Corporate Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Corporate Transaction was not solely common stock of the successor corporation or its parent entity, the Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Award, for each Share of Common Stock subject to the Award, to be solely common stock of the successor corporation or its parent entity equal in fair market value to the per share consideration received by holders of Common Stock in the Corporate Transaction.

(c) The substitution by the surviving corporation or its parent of a new Award, and with respect an Award that is subject to Section 409A of the Code, in a manner that complies with Section 424(a) of the Code (whether or not the Award is an ISO).

(d) A payment to the Participant equal to the excess of (i) the Fair Market Value of the Shares subject to the Award as of the effective date of such Corporate Transaction over (ii) the Exercise Price or Purchase Price of Shares, as the case may be, subject to the Award in connection with the cancellation of the Award. Such payment will be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. The successor corporation may provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). Subject to Section 409A of the Code, such payment may be made in installments, may be deferred until the date or dates when the Award would have become exercisable or such Shares would have vested, and such payment may be subject to vesting based on the Participant’s continuing service as an Employee, Consultant or Director. However, the amount of such payment initially will be calculated without regard to whether or not the Award is then exercisable or such Shares are then vested. In addition, any escrow, holdback, earnout or similar provisions in the agreement for such Corporate Transaction may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of Shares. If the Exercise Price of the Shares subject to an Option exceeds the Fair Market Value of such Shares, then the Option may be cancelled without making a payment to the Participant. For purposes of this subsection, the Fair Market Value of any security will be determined without regard to any vesting conditions that may apply to such security.

Notwithstanding the forgoing, if (I) the Award is not continued pursuant to subsection (a) above, (II) the Award is not assumed pursuant to subsection (b) above, (III) the Award is not substituted pursuant to subsection (c) above, or (IV) the payment pursuant to subsection (d) above is only for the portion of an

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Award which is vested as of the closing of such Corporate Transaction, then any Option and/or SAR, and any Shares subject to any Option and/or SAR shall become fully exercisable and fully vested and/or all other Awards shall become fully vested contingent upon the consummation of such Corporate Transaction.

21.3 Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards will not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in any calendar year.

21.4 Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary, in the event of a dissolution or liquidation described in Section 21.1 or upon the consummation of a Corporate Transaction described in Section 21.2, the vesting of all Options and RSUs granted to Non-Employee Directors pursuant to Section 12 of this Plan will accelerate and be fully vested, any Shares that are subject to a Right of Repurchase of the Company shall be released from such Right of Repurchase and shall be fully vested, and any Options will become exercisable in full immediately prior to, and contingent upon, the consummation of such event and upon such other conditions as the Committee determines, and such Options must be exercised, if at all, within three (3) months of the consummation of said event. Any Options not exercised within such three-month period shall expire.

22. ADOPTION AND SHAREHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s shareholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.

23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of laws rules.

24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the shareholders of the Company, amend this Plan in any manner that requires such shareholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.

25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the shareholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional

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compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

27. TIME BASED VESTING RESTRICTIONS. Notwithstanding anything else in this Plan, the Company may grant Options, Restricted Stock Awards, Stock Bonus Awards, RSUs and Performance Share bonuses without taking into account the minimum Performance Period requirements set forth in Sections 5, 6, 7, 8, 9 and 10, respectively; provided, that, the Company does not grant more than 5% of the aggregate Shares reserved and available for grant and issuance pursuant to this Plan without such minimum Performance Periods set forth in Sections 5, 6, 7, 8, 9 and 10 above. For the avoidance of doubt, neither the foregoing sentence nor the minimum Performance Period requirements set forth in Sections 5, 6, 7, 8, 9 and 10 shall restrict the Company from entering into (or continuing to be a party to) individual agreements with Participants that provide for the acceleration of the vesting restrictions or Performance Periods of Awards upon the consummation of a Corporate Transaction, termination of employment, or other specific events.

28. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

“Award” means any award under the Plan, including any Option, Restricted Stock Award, Stock Bonus Award, Stock Appreciation Right, Restricted Stock Unit or Performance Award.

“Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to Participants outside the United States, which shall be in substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award Agreements that are not used by Insiders, the Committee’s delegate(s)) has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.

“Award Transfer Program” means, any program instituted by the Committee that would permit Participants the opportunity to transfer for value any outstanding Awards to a financial institution or other person or entity approved by the Committee. A transfer for “value” shall not be deemed to occur under this Plan where an Award is transferred by a Participant for bona fide estate planning purposes to a trust or other testamentary vehicle approved by the Committee.

“Board” means the Board of Directors of the Company.

“Cause” means (a) the commission of an act of theft, embezzlement, fraud, dishonesty or a misappropriation of funds, (b) a breach of fiduciary duty to the Company or a Parent or Subsidiary, or (c) a failure to materially perform the customary duties of Employee’s employment.

“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

“Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law.

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“Common Stock” means the common stock of the Company.

“Company” means Cepheid Inc., or any successor corporation.

“Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

“Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then-outstanding voting securities; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation or (iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the shareholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company). Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporation Transaction, such amount shall become payable only if the event constituting a Corporate Transaction would also constitute a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company (both as defined in Section 409A of the Code).

“Director” means a member of the Board.

“Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

“Dividend Equivalent Right”means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.

“Effective Date” means the date this Plan is approved by the Company’s shareholders, the date of which shall be within twelve (12) months before or after the date this Plan is adopted by the Board.

“Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Exchange Program” means a program pursuant to which (i) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (ii) the exercise price of an outstanding Award is increased or reduced.

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“Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(a) its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable;

(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable; or

(c) if none of the foregoing is applicable, by the Board or the Committee in good faith.

“Insider” means an executive officer or Director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

“Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.

“Option” means an award of an option to purchase Shares pursuant to Section 5 or Section 12 of the Plan.

“Parent” has the same meaning as “parent corporation” in Section 424(e) of the Code.

“Participant” means a person who holds an Award under this Plan.

“Performance Award” means an Award granted pursuant to Section 10 of the Plan.

“Performance Factors” means the factors selected by the Committee, which may include, but are not limited to the, the following measures (whether or not in comparison to other peer companies) to determine whether the performance goals established by the Committee and applicable to Awards have been satisfied:

• Net revenue and/or net revenue growth;

• Earnings per share and/or earnings per share growth;

• Earnings before income taxes and amortization and/or earnings before income taxes and amortization growth;

• Operating income and/or operating income growth;

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• Net income and/or net income growth;

• Total shareholder return and/or total shareholder return growth;

• Return on equity;

• Operating cash flow return on income;

• Adjusted operating cash flow return on income;

• Economic value added;

• Individual business objectives; and

• Company specific operational metrics.

The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments.

“Performance Period” means the period of service determined by the Committee or its delegate(s) with respect to Participants who are not Insiders, not to exceed five (5) years, during which years of service or performance is to be measured for the Award.

“Performance Share” means a performance share bonus granted as a Performance Award pursuant to Section 10 of the Plan.

“Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests.

“Plan” means this Cepheid Inc. 2015 Equity Incentive Plan.

“Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.

“Restricted Stock Award” means an award of Shares pursuant to Section 6 of the Plan, or issued pursuant to the early exercise of an Option.

“Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

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“Shares” means shares of the Company’s Common Stock and the common stock of any successor security.

“Stock Appreciation Right” means an Award granted pursuant to Section 8 of the Plan.

“Stock Bonus” means an Award granted pursuant to Section 7 of the Plan.

“Subsidiary” has the same meaning as “subsidiary corporation” in Section 424(f) of the Code.

“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee; provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military leave, if required by applicable laws, vesting will continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she will be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave. An employee will have terminated employment as of the date he or she ceases to provide services (regardless of whether the termination is in breach of local laws or is later found to be invalid) and employment will not be extended by any notice period or garden leave mandated by local law. The Committee will have sole discretion to determine whether a Participant has ceased to provide services for purposes of the Plan and the effective date on which the Participant ceased to provide services (the “Termination Date”).

“Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

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Final Version

CEPHEID

2015 EQUITY INCENTIVE PLAN

NOTICE OF GLOBAL STOCK OPTION GRANT

Unless otherwise defined herein, the terms defined in the Cepheid 2015 Equity Incentive Plan, as amended from time to time (the “Plan”) shall have the same meanings in this Notice of Global Stock Option Grant (“Notice of Grant”).

%%FIRST_NAME%-% %%LAST_NAME%-%

You (“Optionee”) have been granted an option to purchase Common Stock of the Company (the “Option”), subject to the terms and conditions of the Plan and the attached Global Stock Option Agreement, including any special terms and conditions for Participant’s country set forth in the appendix attached thereto (the “Appendix”) (the Global Stock Option Award Agreement and the Appendix are collectively referred to as the “Agreement”), as follows:

Grant Number	%%OPTION_NUMBER%-%
Date of Grant	%%OPTION_DATE,’MONTH DD, YYYY’%-%
Vesting Commencement Date	%%VEST_DATE_PERIOD1,’MONTH DD, YYYY’%-%
Exercise Price per Share	%%OPTION_PRICE%-%
Total Number of Shares	%%TOTAL_SHARES_GRANTED,’999,999,999’%-%
Total Exercise Price	%%TOTAL_OPTION_PRICE%-%
Type of Option	Non-statutory Stock Option
Expiration Date	%%EXPIRE_DATE_PERIOD1,’MONTH DD, YYYY’%-%

Vesting Schedule. Subject to the limitations set forth in this Notice, the Plan and the Agreement, Shares subject to the Option will vest in accordance with the following schedule:

25% of the Shares will vest and become exercisable one year from the Vesting Commencement Date; then 2.0833% of the Shares will vest and become exercisable on each monthly anniversary of the First Vesting Date until 100% vested.

Optionee understands that Optionee’s employment or consulting relationship or service with the Company or a Parent or Subsidiary of the Company is for an unspecified duration, can be terminated at any time, and that nothing in this Notice of Grant, the Agreement or the Plan changes Optionee’s employment or service relationship. Optionee acknowledges and agrees that the Vesting Schedule may change prospectively in the event that Optionee’s service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. Optionee acknowledges that the vesting of shares pursuant to this Notice of Grant is earned only by the continuing service as an Employee, Non-Employee Director or Consultant. Optionee also understands that this Notice of Grant is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. Optionee acknowledges that he or she has read both the attached Agreement and the Plan. By accepting this Option, Optionee consents to electronic delivery as set forth in the Agreement.

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CEPHEID

2015 EQUITY INCENTIVE PLAN

GLOBAL STOCK OPTION AWARD AGREEMENT

You (“Optionee”) have been granted an option to purchase Shares (the “Option”), subject to the terms and conditions of the Cepheid 2015 Equity Incentive Plan, as amended from time to time (the “Plan”), the Notice of Global Stock Option Grant (“Notice of Grant”) and this Global Stock Option Award Agreement, including any terms and conditions for Optionee’s country set forth in the appendix attached hereto (the “Appendix,” together with the Global Stock Option Award Agreement, the “Agreement”).

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Agreement.

1. Vesting Rights. Subject to the applicable provisions of the Plan and this Agreement, this Option may be exercised, in whole or in part, in accordance with the schedule set forth in the Notice of Grant.

2. Termination Period.

(a) General Rule. Except as provided below in this Section 2, and subject to Section 26 of the Plan, this Option may be exercised for three months after termination of Optionee’s employment with the Company or any Parent or Subsidiary. In no event shall this Option be exercised later than the Term/Expiration Date set forth in the Notice of Grant.

(b) Death; Disability. Upon the termination of Optionee’s employment with the Company or any Subsidiary by reason of his or her Disability or death, or if a Optionee dies within 3 months of the Termination Date, this Option may be exercised for twelve months after the Termination Date, provided that in no event shall this Option be exercised later than the Term/Expiration Date set forth in the Notice of Grant.

(c) Cause. Upon the termination of Optionee’s employment by the Company or any Parent or Subsidiary for Cause, the Option shall expire on such date of Optionee’s Termination Date.

3. Grant of Option. Optionee named in the Notice of Grant has been granted an Option for the number of Shares set forth in the Notice of Grant at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”). In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail.

For U.S. taxpayers, if designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds US$100,000 under Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).

4. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice of Grant and the applicable provisions of the Plan and this Agreement. In the event of Optionee’s death, Disability, Termination for Cause or other Termination, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice of Grant and this Agreement.

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(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with all relevant provisions of law and the requirements of any stock exchange or quotation service upon which the Shares are then listed. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to Optionee on the date the Option is exercised with respect to such Exercised Shares.

5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of Optionee:

(a) cash, check or wire transfer;

(b) certificates for shares of Company stock that Optionee owns, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. Instead of surrendering shares of Company stock, Optionee may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Exercised Shares issued to Optionee. However, Optionee may not surrender, or attest to the ownership of, shares of Company stock in payment of the Exercise Price of the Option if Optionee’s action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;

(c) waiver of compensation due or accrued to Optionee for Optionee’s services rendered to the Company or a Parent or Subsidiary of the Company;

(d) cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares covered by this Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Exercise Price of the Option and any withholding taxes. The balance of the sale proceeds, if any, will be delivered to Optionee; or

(e) any other method authorized by the Company.

6. Non-Transferability of Option. Except as set forth below in this Section 6, this Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of Optionee only by Optionee, Optionee’s guardian, or legal representative, as permitted in the Plan. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

However, if Optionee is in the U.S. and if this Option is designated as an NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow the transfer of this Option as a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing Optionee’s household (other than a tenant or employee), a

24

trust in which one or more of these individuals have more than 50% of the beneficial interest, a foundation in which Optionee or one or more of these persons control the management of assets, and any entity in which Optionee or one or more of these persons own more than 50% of the voting interest. In addition, if Optionee is in the U.S. and if this Option is designated as an NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow Optionee to transfer this Option to Optionee’s spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. The Committee will allow the transfer of this Option only if both Optionee and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement.

7. Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Notice of Grant, the Plan and the terms of this Agreement.

8. Responsibility for Taxes. Regardless of any action the Company or Optionee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax related items related to Optionee’s participation in the Plan and legally applicable to Optionee (“Tax-Related Items”), Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if Optionee has become subject to tax in more than one jurisdiction, Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to the relevant taxable or tax withholding event, as applicable, Optionee will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from Optionee’s wages or other cash compensation paid to Optionee by the Company and/or the Employer; or (ii) withholding from proceeds of the sale of Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on Optionee’s behalf pursuant to this authorization); or (iii) withholding in Shares to be issued at exercise of the Option or (iv) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided however, that if Optionee is a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding from alternatives (i)-(iv) above, and the Committee shall establish the method prior to any taxable or tax withholding event.

To avoid any negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case Optionee will receive a refund of any over-withheld amount in cash and will have no entitlement to the Shares equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Optionee is deemed to have been issued the full number of Shares subject to the exercised Options, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of Optionee’s participation in the Plan.

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Finally, Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items.

9. U.S. Tax Consequences. For Optionees subject to U.S. income tax, some of the U.S. federal and California tax consequences relating to this Option, as of the date of this Option, are set forth below. All other Optionees should consult a tax advisor for tax consequences relating to this Option in their respective jurisdiction. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercising the Option.

(i) Nonstatutory Stock Option. Optionees subject to U.S. income tax may incur regular federal income tax and California income tax liability upon exercise of an NSO. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If Optionee is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

(ii) Incentive Stock Option. For Optionees subject to U.S. income tax, if this Option qualifies as an ISO, Optionee will have no regular federal income tax or California income tax liability upon its exercise, although the excess, if any, of the aggregate Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price will be treated as an adjustment to alternative minimum taxable income for federal tax purposes and may subject Optionee to alternative minimum tax in the year of exercise.

(b) Disposition of Shares.

(i) NSO. If Optionee holds NSO Shares for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes.

(ii) ISO. If Optionee holds ISO Shares for at least one year after exercise and two years after the grant date, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. If Optionee disposes of ISO Shares within one year after exercise or two years after the grant date, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the lesser of (A) the difference between the Fair Market Value of the Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference between the sale price of such Shares and the aggregate Exercise Price.

(c) Notice of Disqualifying Disposition of ISO Shares. If Optionee sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current earnings paid to Optionee.

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10. Entire Agreement; Governing Law; Venue. The Plan is incorporated herein by reference. The Plan, the Notice of Grant, and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to Optionee’s interest except by means of a writing signed by the Company and Optionee.

This agreement is governed by California law except for that body of law pertaining to conflict of laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Santa Clara County, California, or the federal courts for the United States for the Northern District of California and no other courts, where this grant is made and/or to be performed.

11. EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OF THE COMPANY OR ITS PARENT OR SUBSIDIARY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).

12. Nature of Grant. In accepting the Option, Optionee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(c) all decisions with respect to future option grants, if any, will be at the sole discretion of the Company;

(d) Optionee is voluntarily participating in the Plan;

(e) the Option and any Shares acquired under the Plan, and the income and value of same, are extraordinary items and not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(f) unless otherwise agreed with the Company, the Option and the Shares subject to the Option, and the income and value of same, are not granted as consideration for, or in connection with, any service Optionee may provide as a Non-Employee Director;

(g) the Option grant and Optionee’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Parent or Subsidiary of the Company;

(h) the future value of the Shares underlying the Option is unknown and cannot be predicted with certainty;

(i) if the underlying Shares do not increase in value, the Option will have no value;

27

(j) if Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;

(k) in the event of termination of Optionee’s employment (regardless of the reason for such termination and whether or not later found to be invalid or in breach of local labor laws or the terms of Optionee’s employment or service agreement, if any), any right to vest in the Option will terminate and any post-termination exercise period will be measured as of the date of Optionee’s termination of active services and will not be extended by any notice period mandated under local law (e.g., active services would not include any contractual notice period or any period of “garden leave” or similar period pursuant to local law or Optionee’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when Optionee is no longer providing active services for purposes of this Option grant; and

(m) if Optionee resides outside the U.S., the following additional provisions shall apply:

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from termination of Optionee’s employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and in consideration of the grant of the Option to which Optionee is otherwise not entitled, Optionee irrevocably agrees never to institute any claim against the Company or the Employer, waives Optionee’s ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Optionee shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims;

(ii) the Option and any Shares acquired under the Plan, and the income and value of same, are not part of normal or expected compensation or salary for any purpose; and

(iii) neither the Company, the Employer nor any Parent or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between Optionee’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Optionee pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise.

13. Data Privacy. Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and its Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing my participation in the Plan.

Optionee understands that the Company and the Employer may hold certain personal information about Optionee, including, but not limited to, Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Optionee’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Optionee understands that Data will be transferred to E*TRADE Corporate Financial Services, Inc. or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Optionee understands that the recipients of Data may be located in the United States or

28

elsewhere, and that recipients’ country (e.g., the United States) may have different data privacy laws and protections than Optionee’s country. Optionee understands that, if he or she resides outside the United States, Optionee may request a list with the names and addresses of any potential recipients of Data by contacting my local human resources representative. Optionee authorizes the Company, E*TRADE and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purposes of implementing, administering and managing my participation in the Plan. Optionee understands that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. Optionee understands that, if he or she resides outside the United States, Optionee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Optionee’s local human resources representative. Further, Optionee understands that he or she is providing the consents herein on a purely voluntary basis. If Optionee does not consent, or if Optionee later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing Optionee’s consent is that the Company would not be able to grant Optionee the Option or other equity awards or administer or maintain such awards. Therefore, Optionee understands that refusing or withdrawing his or her consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, Optionee understands that Optionee may contact his or her local human resources representative.

14. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Optionee’s participation in the Plan, or my acquisition or sale of the underlying Shares. Optionee is hereby advised to consult with Optionee’s own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Plan.

15. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Optionee hereby consents to the electronic delivery of the Notice of Grant, this Agreement, the Plan, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Option. In addition, Optionee agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. Optionee acknowledges that Optionee may receive from the Company a paper copy of any documents delivered electronically at no cost if Optionee contacts the Company by telephone, through a postal service or electronic mail at stock.admin@cepheid.com. Optionee further acknowledges that Optionee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Optionee understands that Optionee must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Optionee understands that Optionee’s consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if Optionee has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at stock.admin@cepheid.com. Finally, Optionee understands that Optionee is not required to consent to electronic delivery.

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16. Language. If Optionee has received this Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

17. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

18. Appendix. Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special terms and conditions set forth in the Appendix to this Agreement for Optionee’s country. Moreover, if Optionee relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

19. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option and on any Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

20. Adjustment. If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off, split-off or similar change in the capital structure of the Company, the number of Shares covered by the Option and the exercise price per Share may be adjusted pursuant to the Plan.

21. Insider Trading Restrictions/Market Abuse Laws. Optionee acknowledges that Optionee may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell the Shares or rights to the Shares under the Plan during such times as Optionee is considered to have “inside information” regarding the Company (as defined by the laws in Optionee’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Optionee acknowledges that it is Optionee’s responsibility to comply with any applicable restrictions, and Optionee should speak to his or her personal advisor on this matter.

22. Waiver. Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Optionee or any other Participant.

*    *    *    *    *

By Optionee’s electronic acceptance of the Option, Optionee and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice of Grant, and this Agreement. Optionee has reviewed the Plan, the Notice of Grant, and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice of Grant, and fully understands all provisions of the Plan, the Notice of Grant, and this Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice of Grant, and the Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated on the Notice of Grant.

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CEPHEID

2015 EQUITY INCENTIVE PLAN

APPENDIX

COUNTRY-SPECIFIC TERMS TO THE

GLOBAL STOCK OPTION AWARD AGREEMENT

Capitalized terms used but not defined in this Appendix are defined in the Plan, the Notice of Grant, and/or the Global Stock Option Award Agreement, and have the meanings set forth therein.

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Option granted to Optionee under the Plan if Optionee resides in one of the countries listed below. If Optionee is a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which Optionee is currently residing and/or working, or if Optionee transfers to another country after the date of grant, the Committee shall, in its discretion, determine to what extent the terms and conditions contained herein shall be applicable to Optionee.

Notifications

This Appendix also includes information regarding exchange controls and certain other issues of which Optionee should be aware with respect to Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of May 2015. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Optionee not rely on the information noted in this Appendix as the only source of information relating to the consequences of Optionee’s participation in the Plan because the information may be out of date by the time Optionee exercises the Option or sells Shares purchased under the Plan.

In addition, the information contained herein is general in nature and may not apply to Optionee’s particular situation, and the Company is not in a position to assure Optionee of a particular result. Accordingly, Optionee should seek appropriate professional advice as to how the relevant laws in Optionee’s country may apply to Optionee’s situation.

Finally, Optionee understands that if he or she is a citizen or resident of a country other than the one in which Optionee is currently working, transfers employment after the date of grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to Optionee, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.

AUSTRALIA

Terms and Conditions

Exercise of Option. This provision supplements Section 4 of the Global Stock Option Award Agreement:

If the Option vests when the Fair Market Value of the Exercised Shares (by reference to the closing price on the previous trading day) is equal to or less than the Exercise Price, Optionee shall not be permitted to exercise the vested Option. The vested Option may be exercised only starting on the trading day following the first day on which the Fair Market Value of the Exercised Shares exceeds the Exercise

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Price. For the avoidance of doubt, this provision applies also to any unvested Option held by Optionee who transfer to Australia after the grant of the Option, as determined by the Company in its sole discretion.

Expiration of Option. Notwithstanding anything to the contrary in the Agreement, the Option shall expire on the earlier of (i) the Expiration Date set forth in the Notice of Grant, and (ii) one day less than seven years from the date of grant.

Data Privacy. This provision supplements Section 13 of the Global Stock Option Award Agreement:

The Company can be contacted at 904 Caribbean Drive, Sunnyvale, California 94089, United States of America. The Australian Employer can be contacted at Unit 3, 1 Anderson St, Banksmeadow, NSW 2019, Australia.

Optionee’s personal information will be held in accordance with the Company’s privacy policy, a copy of which can be obtained by contacting the Company or the Australian Employer at the address listed above. The Employer’s privacy policy contains, among other things, details of how Optionee can access and seek correction of personal information held in connection with the Agreement.

Optionee understands and agrees that Data may be transferred to recipients located outside of Australia, including the United States and any other country where the Company has operations.

Notifications

Exchange Control Information. Exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on behalf of Optionee.

Securities Law Information. If Optionee acquires Shares pursuant to the Option and offers his or her Shares for sale to a person or entity resident in Australia, Optionee’s offer may be subject to disclosure requirements under Australian law. Optionee should obtain legal advice on his or her disclosure obligations prior to making any such offer.

BELGIUM

Terms and Conditions

Taxation of Option. The Option must only be accepted 60 days after the offer (for tax at exercise). Optionee should consult his or her personal tax advisor regarding the tax consequences of accepting the offer.

Notifications

Foreign Asset/Account Reporting Information. Belgian residents are required to report any taxable income attributable to the Option on their annual tax returns. In addition, Belgian residents are required to report any bank accounts opened and maintained outside Belgium on their annual tax returns. Optionee should consult with his or her personal tax advisor in this regard.

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BRAZIL

Terms and Conditions

Compliance with the Law. In accepting the grant of the Option, Optionee acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable tax associated with the Option, the sale of the Shares acquired under the Plan and the receipt of any dividends paid on such Shares.

Notifications

Exchange Control Information. To remit funds out of Brazil for purposes of exercising the Option, Optionee should remit such funds to the U.S. through a Brazilian commercial bank. The Brazilian commercial bank handling the transaction may request information about the nature of the remittance and may require Participant to provide supporting documentation to the bank in support of the request.

The foregoing requirements will not apply to Optionee if Optionee exercises the Option using a cashless method of exercise.

Foreign Asset Reporting. If Optionee is a resident or domiciled in Brazil, he or she will be required to submit an annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include Shares.

Tax on Financial Transaction (IOF). Cross-border financial transactions relating to the Option may be subject to the IOF (tax on financial transactions). Optionee should consult with his or her personal tax advisor for additional details.

FINLAND

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Global Stock Option Award Agreement:

Notwithstanding anything to the contrary in the Agreement, the Company and/or the Employer will account for Optionee’s Tax-Related Items by withholding from Optionee’s salary.

FRANCE

Terms and Conditions

Language Consent. By accepting the Option, Optionee confirms having read and understood the documents relating to this grant (the Plan, the Agreement and this Appendix ) which were provided in the English language. Optionee accepts the terms of those documents accordingly.

En acceptant l’attribution, vous confirmez ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan, le contrat et cette Annexe A) qui ont été communiqués en langue anglaise. Vous acceptez les termes en connaissance de cause.

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Notifications

Foreign Asset/Account Reporting Information. French residents must annually declare all foreign bank and stock accounts, whether open, current, or closed, together with their personal income tax returns. Optionee should consult with his or her personal tax advisor in this regard.

GERMANY

Notifications

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. Optionee is solely responsible for making the report.

HONG KONG

Terms and Conditions

Restriction on Sale. In the event the Option vests and Optionee exercises the Option within six months of the date of grant, Optionee agrees that he or she will not dispose of any Shares acquired prior to the six-month anniversary of the date of grant.

Notifications

Securities Law Information. Warning: The Option and the Shares issued to Optionee at exercise of the Option do not constitute a public offering of securities and are available only to employees and other service providers of the Company, a Parent or a Subsidiary.

Optionee should be aware that the contents of the Agreement and the Plan are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, nor have they been reviewed by any regulatory authority in Hong Kong. Optionee should exercise caution in relation to participation in the Plan. The Option is intended only for the personal use of each Optionee who meets the eligibility requirements under the Plan and may not be distributed to any other person. If Optionee is in any doubt about any of the contents of the Agreement or the Plan, he or she should obtain independent professional advice.

INDIA

Terms and Conditions

Exercise of Option. The following provision supplements Section 4 of the Global Stock Option Award Agreement:

Optionee will not be permitted to pay the Exercise Price through a cashless sell-to-cover method of exercise, whereby Optionee issues instructions to his or her broker to exercise the Option and to effect the immediate sale of the number of Shares necessary to cover the aggregate Exercise Price payable for the purchased Shares, plus applicable Tax–Related Items and brokerage fees, if any, and remit the remaining Shares to Optionee.

Depending on the development of local law, the Company reserves the right to modify the methods of exercising the Option and, in its sole discretion, to permit cashless sell-to-cover exercise, or any other method of exercise and payment of Tax-Related Items.

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Notifications

Exchange Control Information. Optionee must repatriate any proceeds from the sale of Shares under the Plan or any cash dividends to India within 90 days or 180 days of receipt, respectively. Optionee must obtain a foreign inward remittance certificate (“FIRC”) from the bank where Optionee deposits the foreign currency and must maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, the Company or the Employer requests proof of repatriation.

Foreign Asset/Account Reporting Information. Indian residents are required to declare their foreign bank accounts and any foreign financial assets (including Shares held outside India) in their annual tax returns. Optionee should consult with his or her personal tax advisor in this regard.

JAPAN

Notifications

Exchange Control Information. If Optionee acquires Shares valued at more than ¥100,000,000 in a single transaction, Optionee must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of the Shares.

In addition, if Optionee pays more than ¥30,000,000 in a single transaction for the purchase of Shares when Optionee exercises the Option, Optionee must file a Payment Report with the Ministry of Finance through the Bank of Japan by the 20th day of the month following the month in which the payment was made. The precise reporting requirements vary depending on whether or not the relevant payment is made through a bank in Japan.

A Payment Report is required independently from a Securities Acquisition Report. Therefore, if the total amount that Optionee pays upon a one-time transaction for exercising the Option and purchasing Shares exceeds ¥100,000,000, then Optionee must file both a Payment Report and a Securities Acquisition Report.

Foreign Asset/Account Reporting Information. Japanese residents are required to report assets (including any Shares acquired under the Plan) held outside Japan to the extent such assets have a total net fair market value that exceeds ¥50,000,000 (as of December 31). The report is due by March 15 of the following year. Optionee should consult with his or her personal tax advisor to determine whether the reporting obligation applies to Optionee and whether Optionee is required to report details of any outstanding Options or Shares held by Optionee in the report.

SINGAPORE

Notifications

Securities Law Information. The award of the Option is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. Optionee should note that the award of the Option is subject to section 257 of the SFA and Optionee will not be able to make any subsequent sale in Singapore of the Shares acquired through the exercise of the Option or any offer of such sale in Singapore unless such sale or offer is made more than six months after the date of grant or pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

Chief Executive Officer/Director Notification Obligation. Chief executive officer and directors of a Singapore Parent or Subsidiary are subject to certain notification requirements under the Singapore

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Companies Act. Among these requirements is an obligation to notify the Singaporean Parent or Subsidiary in writing when Optionee receives an interest (e.g., Option, Shares, etc.) in the Company or any Parent or Subsidiary within two business days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest (e.g., when the shares are sold), or (iii) becoming a chief executive officer or director.

SOUTH AFRICA

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Global Stock Option Award Agreement:

By accepting this Option, Optionee agrees to notify the Employer of the amount of any gain realized upon exercise of this Option. If Optionee fails to advise the Employer of the gain realized upon exercise, Optionee may be liable for a fine. Optionee will be responsible for paying any difference between the actual Tax-Related Items liability and the amount withheld.

Exchange Control Compliance Obligations. Optionee is solely responsible for complying with applicable South African exchange control regulations. Since the exchange control regulations change frequently and without notice, Optionee should consult with his or her personal legal advisor prior to the acquisition or sale of Shares under the Plan to ensure compliance with current regulations. Neither the Company nor the Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.

Notifications

Tax Clearance Certificate for Cash Exercises. If Optionee exercises his or her Option with cash, Optionee must first obtain a “Tax Clearance Certificate (in Respect of Foreign Investment)” from the South African Reserve Services (the “SARS”) bearing the official stamp and signature of the Exchange Control Department of the SARS. Optionee must present the Tax Clearance Certificate to a dealer of the Exchange Control Department together with a completed application form in order to transfer funds to exercise the Option. Optionee must renew the Tax Clearance Certificate every 12 months or any other such time period as may be required by the SARS.

Exchange Control Information. Optionee is subject to an overall offshore investment allowance of ZAR10,000,000. The first ZAR1,000,000 annual discretionary allowance requires no prior authorization. The next ZAR9,000,000 requires tax clearance. The allowance is cumulative, and Optionee’s ability to remit funds for the purchase of Shares will be reduced if Optionee’s foreign investment limit is utilized to make a transfer of funds offshore that is unrelated to the Plan. If Optionee exercises his or her Option with cash, Optionee will be subject to this limit. If the remittance of funds for such exercise would exceed the ZAR10,000,000 limit, Optionee may still transfer funds for the exercise; however, the Shares obtained from the exercise must be immediately sold and the full proceeds must be repatriated to South Africa. If Optionee exercises the Option using a cashless exercise, the value of the Shares acquired will not be counted against Optionee’s offshore investment allowance limit of ZAR10,000,000.

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SWEDEN

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Global Stock Option Award Agreement:

Notwithstanding anything to the contrary in the Agreement, the Company and/or the Employer will account for Optionee’s Tax-Related Items by withholding from Optionee’s salary.

UNITED ARAB EMIRATES

Notifications

Securities Law Information. The Plan is only being offered to qualified employees in order to provide equity incentives to employees of the Company and its Parents and Subsidiaries in the United Arab Emirates. The Plan, the Notice of Grant, the Agreement and any other grant documents Optionee may receive from the Company are intended for distribution only to such employees and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered (i.e., Shares) should conduct their own due diligence on the securities. If Optionee does not understand the contents of the Plan, the Notice of Grant or the Agreement, Optionee should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. The Ministry of Economy, the Dubai Department of Economic Development, Emirates Securities and Commodities Authority, Central Bank and the Dubai Financial Services Authority, as applicable depending on Optionee’s Employer’s location in the United Arab Emirates, have not approved the Plan, the Notice of Grant or the Agreement or taken steps to verify the information set out therein, and have no responsibility for such documents.

UNITED KINGDOM

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Global Stock Option Award Agreement:

If payment or withholding of taxes is not made within 90 days of the end of the U.K. tax year (April 6 - April 5) during which the event giving rise to the taxes occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected taxes shall constitute a loan owed by Optionee to the Employer, effective as of the Due Date. Optionee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8 of the Agreement.

Notwithstanding the foregoing, if Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), Optionee shall not be eligible for a loan from the Company to cover the income tax due. In the event that Optionee is a director or executive officer and income tax is not collected from or paid by Optionee by the Due Date, the amount of any uncollected taxes may constitute a benefit to Optionee on which additional income tax and National Insurance contributions (“NICs”) may be payable. Optionee understands that he or she will be responsible for reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of the NICs due on this additional benefit.

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CEPHEID

2015 EQUITY INCENTIVE PLAN

NOTICE OF GLOBAL STOCK OPTION GRANT

DIRECTOR FORM

The terms defined in Cepheid’s 2015 Equity Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Global Stock Option Grant (“Notice of Grant”).

%%FIRST_NAME%-% %%LAST_NAME%-%

You (“Optionee”) have been granted an option to purchase Common Stock of the Company (the “Option”), subject to the terms and conditions of the Plan and the attached Global Stock Option Agreement, including any appendix to the Global Stock Option Agreement for Participant’s country (the “Appendix”) (the Global Stock Option Agreement and the Appendix are collectively referred to as the “Agreement”), as follows:

Grant Number	%%OPTION_NUMBER%-%
Date of Grant	%%OPTION_DATE%-%
Vesting Commencement Date	%%VEST_BASE_DATE%-%
Exercise Price per Share	%%OPTION_PRICE%-%
Total Number of Shares	%%TOTAL_SHARES_GRANTED%-%
Total Exercise Price	%%TOTAL_OPTION_PRICE%-%
Type of Option	Non-statutory Stock Option
Expiration Date	%%EXPIRE_DATE_PERIOD1%-%

Vesting Schedule. Subject to the limitations set forth in this Notice, the Plan and the Agreement, Shares subject to the Option will vest in accordance with the following schedule:

100% of the Shares will vest and become exercisable one year from the Vesting Commencement Date. In the event of a Corporate Transaction, 100% of any then-unvested Shares shall automatically vest on an accelerated basis and become exercisable immediately prior to the effective date of the Corporate Transaction.

Optionee understands that Optionee’s employment or consulting relationship or service with the Company or a Parent or Subsidiary of the Company is for an unspecified duration, can be terminated at any time, and that nothing in this Notice of Grant, the Agreement or the Plan changes Optionee’s employment or service relationship. Optionee acknowledges and agrees that the Vesting Schedule may change prospectively in the event that Optionee’s service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. Optionee acknowledges that the vesting of shares pursuant to this Notice of Grant is earned only by the continuing service as an employee or consultant of the Company or a Parent or Subsidiary of the Company. Optionee also understands that this Notice of Grant is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. Optionee acknowledges that he or she has read both the attached Agreement and the Plan. By accepting this Option, Optionee consents to electronic delivery as set forth in the Agreement.

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CEPHEID

2015 EQUITY INCENTIVE PLAN

GLOBAL STOCK OPTION AWARD AGREEMENT

You (“Optionee”) have been granted an option to purchase Shares (the “Option”), subject to the terms and conditions of the Cepheid 2015 Equity Incentive Plan (the “Plan”), the Notice of Stock Option Grant (“Notice of Grant”) and this Stock Option Award Agreement, including any appendix to this Agreement for Optionee’s country, which includes any applicable country-specific terms (together, the “Agreement”).

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Agreement.

1. Vesting Rights. Subject to the applicable provisions of the Plan and this Agreement, this Option may be exercised, in whole or in part, in accordance with the schedule set forth in the Notice of Grant.

2. Termination Period.

(a) General Rule. Except as provided below in this Section 2, and subject to Section 26 of the Plan, this Option may be exercised for 3 months after termination of Optionee’s service with the Company or any Subsidiary. In no event shall this Option be exercised later than the Term/Expiration Date set forth in the Notice of Grant.

(b) Death; Disability. Upon the termination of Optionee’s service with the Company or any Subsidiary by reason of his or her Disability or death, or if a Optionee dies within 3 months of the Termination Date, this Option may be exercised for twelve months after the Termination Date, provided that in no event shall this Option be exercised later than the Term/Expiration Date set forth in the Notice of Grant.

(c) Cause. Upon the termination of Optionee’s service by the Company or any Parent or Subsidiary for Cause, the Option shall expire on such date of Optionee’s Termination Date.

(d) Corporate Transaction. In the event of a Corporate Transaction, this Option may be exercised for 3 months after the effective date of the Corporate Transaction.

3. Grant of Option. Optionee named in the Notice of Grant has been granted an Option for the number of Shares set forth in the Notice of Grant at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”). In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail. This Option shall be treated as a Nonstatutory Stock Option (“NSO”) for U.S. tax purposes.

4. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice of Grant and the applicable provisions of the Plan and this Agreement. In the event of Optionee’s death, Disability, Termination for Cause or other Termination, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice of Grant and this Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in

39

respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with all relevant provisions of law and the requirements of any stock exchange or quotation service upon which the Shares are then listed. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to Optionee on the date the Option is exercised with respect to such Exercised Shares.

5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of Optionee:

(a) cash, check or wire transfer;

(b) certificates for shares of Company stock that Optionee owns, along with any forms needed to effect a transfer of those shares to the Company; the value of the shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering shares of Company stock, Optionee may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to Optionee. However, Optionee may not surrender, or attest to the ownership of, shares of Company stock in payment of the exercise price of the Option if Optionee’s action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes;

(c) waiver of compensation due or accrued to Optionee for Optionee’s services rendered to the Company or a Parent or Subsidiary of the Company;

(d) cashless exercise through irrevocable directions to a securities broker approved by the Company to sell all or part of the Shares covered by this Option and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The balance of the sale proceeds, if any, will be delivered to Optionee; or

(e) any other method authorized by the Company.

6. Non-Transferability of Option. Except as set forth below in this Section 6, this Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of Optionee only by Optionee, Optionee’s guardian, or legal representative, as permitted in the Plan. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee. However, if this Option is designated as a NSO in the Notice of Grant, then the Committee (as defined in the Plan) may, in its sole discretion, allow the transfer of this Option as a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive relationships), any individual sharing Optionee’s household (other than a tenant or employee), a trust in which one or more of these individuals have more

40

than 50% of the beneficial interest, a foundation in which Optionee or one or more of these persons control the management of assets, and any entity in which Optionee or one or more of these persons own more than 50% of the voting interest. In addition, if this Option is designated as a NSO in the Notice of Grant, then the Committee may, in its sole discretion, allow Optionee to transfer this Option to Optionee’s spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights. The Committee will allow the transfer of this Option only if both Optionee and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be bound by this Agreement.

7. Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Notice of Grant, the Plan and the terms of this Agreement.

8. Responsibility for Taxes. Regardless of any action the Company or Optionee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax related items related to Optionee’s participation in the Plan and legally applicable to Optionee (“Tax-Related Items”), Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if Optionee has become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to the relevant taxable or tax withholding event, as applicable, Optionee will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from Optionee’s wages or other cash compensation paid to Optionee by the Company and/or the Employer; or (ii) withholding from proceeds of the sale of Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on Optionee’s behalf pursuant to this authorization); or (iii) withholding in Shares to be issued at exercise of the Option or (iv) any other arrangement approved by the Company; all under such rules as may be established by the Committee and in compliance with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if applicable; provided however, that if Optionee is a Section 16 officer of the Company under the Exchange Act, then the Committee (as constituted in accordance with Rule 16b-3 under the Exchange Act) shall establish the method of withholding from alternatives (i)-(iv) above, and the Committee shall establish the method prior to the Tax-Related Items withholding event.

To avoid any negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Optionee is deemed to have been issued the full number of Shares subject to the exercised Options, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of Optionee’s participation in the Plan.

Finally, Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares or the proceeds of the sale of Shares, if Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items.

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9. U.S. Tax Consequences. For Optionees subject to U.S. income tax, some of the U.S. federal and California tax consequences relating to this Option, as of the date of this Option, are set forth below. All other Optionees should consult a tax advisor for tax consequences relating to this Option in their respective jurisdiction. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercising the NSO. Optionees subject to U.S. income tax may incur regular federal income tax and California income tax liability upon exercise of a NSO. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If Optionee is a former Employee, the Company will be required to withhold from his or her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

(b) Disposition of Shares. If Optionee holds NSO Shares for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes.

10. Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan, the Notice of Grant, and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by California law except for that body of law pertaining to conflict of laws.

For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Santa Clara, California, or the federal courts for the United States for the Northern District of California and no other courts, where this grant is made and/or to be performed.

11. SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING IN SERVICE WITH THE COMPANY OR ITS PARENT OR SUBSIDIARY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).

12. Nature of Grant. In accepting the Option, Optionee acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past;

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(c) all decisions with respect to future option grants, if any, will be at the sole discretion of the Company;

(d) Optionee is voluntarily participating in the Plan;

(e) the Option and any Shares acquired under the Plan are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of Optionee’s employment or service contract, if any;

(f) the Option grant and Optionee’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary;

(g) the future value of the Shares underlying the Option is unknown and cannot be predicted with certainty;

(h) if the underlying Shares do not increase in value, the Option will have no value;

(i) if Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price;

(j) in the event of termination of Optionee’s employment (whether or not in breach of local labor laws), any right to vest in the option will terminate and any post-termination exercise period will be measured as of the date of Optionee’s termination of active employment and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); the Committee shall have the exclusive discretion to determine when Optionee is no longer providing active employment for purposes of this Option grant;

(k) if Optionee resides outside the U.S., the following additional provisions shall apply:

(i) the Option and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;

(ii) the Option and any Shares acquired under the Plan are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer, or any Subsidiary;

(iii) no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from termination of Optionee’s employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and in consideration of the grant of the Option to which Optionee is otherwise not entitled, Optionee irrevocably agrees never to institute any claim against the Company or the Employer, waives Optionee’s ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Optionee shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and

13. Data Privacy. If Optionee resides outside the U.S., Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and its Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing my participation in the Plan.

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Optionee understands that the Company and the Employer may hold certain personal information about Optionee, including, but not limited to, Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Optionee’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Optionee understands that Data will be transferred to E*Trade Corporate Financial Services, Inc. or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that recipients’ country (e.g., the United States) may have different data privacy laws and protections than Optionee’s country. Optionee understands that Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting my local human resources representative. Optionee authorizes the Company, E*Trade and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing my participation in the Plan. Optionee understands that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. Optionee understands that Optionee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Optionee’s local human resources representative. Optionee understands, however, that refusing or withdrawing my consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, Optionee understands that Optionee may contact my local human resources representative.

14. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Optionee’s participation in the Plan, or my acquisition or sale of the underlying Shares. Optionee is hereby advised to consult with Optionee’s own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Plan.

15. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Optionee hereby consents to the electronic delivery of the Notice of Grant, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Option. In addition, Optionee agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. Optionee acknowledges that Optionee may receive from the Company a paper copy of any documents delivered electronically at no cost if Optionee contacts the Company by telephone, through a postal service or electronic mail at [insert email]. Optionee further acknowledges that Optionee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Optionee understands that Optionee must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Optionee understands that Optionee’s consent may be

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revoked or changed, including any change in the electronic mail address to which documents are delivered (if Optionee has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email]. Finally, Optionee understands that Optionee is not required to consent to electronic delivery.

16. Language. If Optionee has received this Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

17. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

18. Appendix. Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for Optionee’s country. Moreover, if Optionee relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.

19. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option and on any Shares purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require Optionee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

20. Adjustment. In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by this Option and the exercise price per Share may be adjusted pursuant to the Plan.

21. Insider Trading Restrictions/Market Abuse Laws. Optionee acknowledges that, depending on Optionee’s country, Optionee may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell the Shares or rights to the Shares under the Plan during such times as Optionee is considered to have “inside information” regarding the Company (as defined by the laws in Optionee’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Optionee acknowledges that it is Optionee’s responsibility to comply with any applicable restrictions, and Optionee is advised to speak to his or her personal advisor on this matter.

*    *    *    *    *

By Optionee’s electronic acceptance of the Option, Optionee and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice of Grant, and this Agreement. Optionee has reviewed the Plan, the Notice of Grant, and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice of Grant, and fully understands all provisions of the Plan, the Notice of Grant, and this Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice of Grant, and the Agreement. Optionee further agrees to notify the Company upon any change in the residence address indicated on the Notice of Grant.

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CEPHEID

2015 EQUITY INCENTIVE PLAN

APPENDIX

COUNTRY-SPECIFIC TERMS TO THE

GLOBAL STOCK OPTION AWARD AGREEMENT

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Option granted to Optionee under Cepheid’s 2015 Equity Incentive Plan (the “Plan”) if Optionee resides in one of the countries listed below. Capitalized terms used but not defined in this Appendix are defined in the Plan, the Notice of Stock Option Grant (“Notice of Grant”), and/or the Global Stock Option Award Agreement (the “Agreement”), and have the meanings set forth therein.

Notifications

This Appendix also includes information regarding exchange controls and certain other issues of which Optionee should be aware with respect to Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of May 2014. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Optionee not rely on the information noted in this Appendix as the only source of information relating to the consequences of Optionee’s participation in the Plan because the information may be out of date by the time Optionee exercises the Option or sells Shares purchased under the Plan.

In addition, the information contained herein is general in nature and may not apply to Optionee’s particular situation, and the Company is not in a position to assure Optionee of a particular result. Accordingly, Optionee is advised to seek appropriate professional advice as to how the relevant laws in Optionee’s country may apply to Optionee’s situation.

Finally, Optionee understands that if he or she is a citizen or resident of a country other than the one in which Optionee is currently working, transfers employment after the Date of Grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to Optionee, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.

AUSTRALIA

Terms and Conditions

Exercise of Option. This provision supplements Section 4 of the Agreement:

If the Option vests when the Fair Market Value of the Exercised Shares (by reference to the closing price on the previous day) is equal to or less than the Exercise Price, Optionee shall not be permitted to exercise the vested Option. The vested Option may be exercised only starting on the business day following the first day on which the Fair Market Value of the Exercised Shares exceeds the Exercise Price. For the avoidance of doubt, this provision applies also to any unvested Option held by optionees who transfer to Australia after the grant of the Option, as determined by the Company in its sole discretion.

Expiration of Option. Notwithstanding anything to the contrary in the Agreement, the Option shall expire on the earlier of (i) the Expiration Date set forth in the Notice of Grant, and (ii) one day less than seven years from the Date of Grant.

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Data Privacy. This provision supplements Section 13 of the Agreement:

The Company can be contacted at 904 Caribbean Drive, Sunnyvale, California 94089, United States of America. The Australian Employer can be contacted at Unit 3, 1 Anderson St, Banksmeadow, NSW 2019, Australia.

Optionee’s personal information will be held in accordance with the Company’s privacy policy, a copy of which can be obtained by contacting the Company or the Australian Employer at the address listed above. The Employer’s privacy policy contains, among other things, details of how Optionee can access and seek correction of personal information held in connection with the Agreement.

Optionee understands and agrees that Data may be transferred to recipients located outside of Australia, including the United States and any other country where the Company has operations.

Notifications

Exchange Control Information. Exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on behalf of Optionee.

Securities Law Information. If Optionee acquires Shares pursuant to the Option and offers his or her Shares for sale to a person or entity resident in Australia, Optionee’s offer may be subject to disclosure requirements under Australian law. Optionee should obtain legal advice on his or her disclosure obligations prior to making any such offer.

BELGIUM

Terms and Conditions

Taxation of Option. The Option must only be accepted 60 days after the offer (for tax at exercise). Optionee is advised to consult with his or her personal tax advisor regarding the tax consequences of accepting the offer.

Notifications

Tax Compliance. Optionee is required to report any taxable income attributable to the Option on his or her annual tax return. In addition, Optionee is required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return.

BRAZIL

Terms and Conditions

Compliance with the Law. In accepting the grant of the Option, Optionee acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable tax associated with the Option, the sale of the Shares acquired under the Plan and the receipt of any dividends paid on such Shares.

Notifications

Exchange Control Information. To remit funds out of Brazil for purposes of exercising the Option, Optionee should remit such funds to the U.S. through a Brazilian commercial bank. The Brazilian commercial bank handling the transaction may request information about the nature of the remittance and may require Participant to provide supporting documentation to the bank in support of the request.

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The foregoing requirements will not apply to Optionee if Optionee exercises the Option using a cashless method of exercise.

Foreign Asset Reporting. If Optionee is a resident or domiciled in Brazil, he or she will be required to submit an annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include Shares.

CHINA

Terms and Conditions

Method of Payment. Due to regulatory requirements in the People’s Republic of China (the “PRC”), Optionee may pay the aggregate Exercise Price solely by means of a cashless sell-all exercise procedure under which all Shares to be issued upon the exercise of the Option shall be sold immediately and the proceeds of the sale of Shares, less the Exercise Price and any brokerage fees or commissions, will be remitted to Optionee. Optionee will not be permitted to hold Shares after exercise. Optionee understands and agrees that the Tax-Related Items with respect to the exercise of the Options may be taken by the Employer from Optionee’s salary or other cash compensation, or through any other means set forth in the Agreement. The Company reserves the right to permit additional forms of exercise depending on the development of local law.

Exchange Control Requirements. The following provision applies to Optionees who are subject to exchange control regulations in the PRC, as determined by the Company in its sole discretion:

Due to exchange control laws in the PRC, Optionee will be required to repatriate the cash proceeds from the sale of the Shares to the PRC. Optionee further understands that such cash proceeds may need to be repatriated to the PRC through a special exchange control account established by the Company, a Subsidiary, or the Employer, and Optionee hereby consents and agrees that any proceeds from the sale of Shares may be transferred to such special account prior to being delivered to Optionee.

Optionee understands and agrees that there will be a delay between the date the Shares are sold and the date the cash proceeds are distributed to Optionee. Optionee also understands and agrees that the Company is not responsible for any currency fluctuation that may occur between the date the Shares are sold and the date the cash proceeds are distributed to Optionee.

Optionee further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.

FINLAND

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Agreement:

Notwithstanding anything to the contrary in the Agreement, the Company and/or the Employer will account for Optionee’s Tax-Related Items by withholding from Optionee’s salary.

FRANCE

Terms and Conditions

Language Consent. By accepting the Option, Optionee confirms having read and understood the documents relating to this grant (the Plan, the Agreement and this Appendix ) which were provided in the English language. Optionee accepts the terms of those documents accordingly.

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En acceptant l’attribution, vous confirmez ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan, le contrat et cette Annexe A) qui ont été communiqués en langue anglaise. Vous acceptez les termes en connaissance de cause.

Notifications

Exchange Control Information. Optionee may hold Shares purchased under the Plan outside France provided that he or she annually declares all foreign bank and stock accounts, whether open, current, or closed, together with his or her personal income tax returns. It is Optionee’s obligation to comply with the applicable exchange controls.

GERMANY

Notifications

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. Optionee is solely responsible for making the report.

HONG KONG

Terms and Conditions

Restriction on Sale. In the event the Option vests and Optionee exercises the Option within six months of the Date of Grant, Optionee agrees that he or she will not dispose of any Shares acquired prior to the six-month anniversary of the Date of Grant.

Notifications

Securities Law Information. Warning: The Option and the Shares issued to Optionee at exercise of the Option do not constitute a public offering of securities and are available only to employees and other service providers of the Company or a Subsidiary.

Optionee should be aware that the contents of the Agreement and the Plan are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, nor have they been reviewed by any regulatory authority in Hong Kong. Optionee is advised to exercise caution in relation to participation in the Plan. The Option is intended only for the personal use of each Optionee who meets the eligibility requirements under the Plan and may not be distributed to any other person. If Optionee is in any doubt about any of the contents of the Agreement or the Plan, he or she should obtain independent professional advice.

INDIA

Terms and Conditions

Exercise of Option. The following provision supplements Section 4 of the Agreement:

Optionee will not be permitted to pay the Exercise Price through a cashless sell-to-cover method of exercise, whereby Optionee issues instructions to his or her broker to exercise the Option and to effect the immediate sale of the number of Shares necessary to cover the aggregate Exercise Price payable for the purchased Shares, plus applicable Tax–Related Items and brokerage fees, if any, and remit the remaining Shares to Optionee.

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Depending on the development of local law, the Company reserves the right to modify the methods of exercising the Option and, in its sole discretion, to permit cashless sell-to-cover exercise, or any other method of exercise and payment of Tax-Related Items.

Notifications

Exchange Control Information. Optionee understands that he or she must repatriate any proceeds from the sale of Shares under the Plan or any cash dividends to India within 90 days after receipt. Optionee must obtain a foreign inward remittance certificate (“FIRC”) from the bank where Optionee deposits the foreign currency and must maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, the Company or the Employer requests proof of repatriation.

Foreign Asset/Account Reporting Information. Optionee is required to declare his or her foreign bank accounts and any foreign financial assets (including Shares held outside India) in Optionee’s annual tax return. It is Optionee’s responsibility to comply with this reporting obligation and Optionee should consult with his or her personal tax advisor in this regard.

ITALY

Terms and Conditions

Cashless Exercise Restriction. Notwithstanding anything to the contrary in the Agreement, due to regulatory requirements in Italy, Optionee will be required to pay the Exercise Price by a cashless exercise through a licensed securities broker acceptable to the Company, such that all Shares subject to the exercised Option will be sold immediately upon exercise and the proceeds of sale, less the Exercise Price, any Tax-Related Items, and broker’s fees or commissions, will be remitted to Optionee. The Company reserves the right to provide Optionee with additional methods of exercise depending on local developments.

Data Privacy. This provision replaces Section 13 of the Agreement:

Optionee understands that the Employer, the Company and any Subsidiary may hold certain personal information about him or her, including, but not limited to, Optionee’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or any Subsidiary, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Optionee’s favor (“Data”), for the exclusive purpose of implementing, managing and administering the Plan and in compliance with applicable laws and regulations.

Optionee also understands that providing the Company with Data is necessary for the performance of the Plan and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect Optionee’s ability to participate in the Plan. The Controller of personal data processing is Cepheid, with registered offices at 904 Caribbean Drive, Sunnyvale, CA 94089 California 92612, United States of America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is Optionee’s employer in Italy.

Optionee understands that Data will not be publicized, but it may be transferred to banks, other financial institutions, or brokers involved in the management and administration of the Plan. Optionee further understands that the Company and/or any Subsidiary will transfer Data among themselves as necessary for the purpose of implementing, administering and managing Optionee’s participation in the Plan, and that the Company and/or any Subsidiary may each further transfer Data to third parties assisting the Company in the implementation, administration, and management of the Plan, including any requisite transfer of Data to a broker or other third party with whom Optionee may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and

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managing Optionee’s participation in the Plan. Optionee understands that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere and in locations that might not provide the same level of protection as intended under Italian data privacy laws. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.

Optionee understands that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

The processing activity, including communication, the transfer of Data abroad, including outside the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require Optionee’s consent thereto as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. Optionee understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, he or she has the right to, including but not limited to, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Furthermore, Optionee is aware that Data will not be used for direct marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting Optionee’s local human resources representative.

Plan Document Acknowledgment. By accepting the Option, Optionee acknowledges that he or she has received a copy of the Plan, the Notice of Grant, the Agreement and this Appendix and has reviewed the Plan, the Notice of Grant, the Agreement and this Appendix in their entirety and fully accepts all provisions thereof. Optionee further acknowledges that he or she has read and specifically and expressly approves the following provisions of the Agreement: (i) Responsibility for Taxes; (ii) Nature of Grant; (iii) Entire Agreement; Governing Law; (iv) Language; and (v) Imposition of Other Requirements, as well as the Data Privacy section included in this Appendix.

Notifications

Foreign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.

JAPAN

Notifications

Exchange Control Information. If Optionee acquires Shares valued at more than ¥100,000,000 in a single transaction, Optionee must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the purchase of the Shares.

In addition, if Optionee pays more than ¥30,000,000 in a single transaction for the purchase of Shares when Optionee exercises the Option, Optionee must file a Payment Report with the Ministry of Finance through the Bank of Japan by the 20th day of the month following the month in which the payment was made. The precise reporting requirements vary depending on whether or not the relevant payment is made through a bank in Japan.

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A Payment Report is required independently from a Securities Acquisition Report. Therefore, if the total amount that Optionee pays upon a one-time transaction for exercising the Option and purchasing Shares exceeds ¥100,000,000, then Optionee must file both a Payment Report and a Securities Acquisition Report.

Foreign Asset/Account Reporting Information. Optionee is required to report assets (including any Shares acquired under the Plan) held outside Japan to the extent such assets have a total net fair market value that exceeds ¥50,000,000 (as of December 31st). The report is due by March 15th of the following year. Optionee should consult with his or her personal tax advisor to determine whether the reporting obligation applies to Optionee and whether Optionee is required to report details of any outstanding Options or Shares held by Optionee in the report.

NETHERLANDS

No country-specific provisions apply.

SAUDI ARABIA

Notifications

Securities Law Information. This Agreement may not be distributed in the Kingdom except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority. The Capital Market Authority does not make any representation as to the accuracy or completeness of this document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Agreement. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If Optionee does not understand the contents of this document, Optionee should consult an authorized financial advisor.

SINGAPORE

Notifications

Securities Law Information. The award of the Option is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. Optionee should note that the award of the Option is subject to section 257 of the SFA and Optionee will not be able to make any subsequent sale in Singapore of the Shares acquired through the exercise of the Option or any offer of such sale in Singapore unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

Director Notification Obligation. Directors of a Singapore Subsidiary are subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singaporean Subsidiary in writing when Optionee receives an interest (e.g., Option, Shares, etc.) in the Company or any Subsidiary within two business days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest (e.g., when the shares are sold), or (iii) becoming a director.

SOUTH AFRICA

Terms and Conditions

Tax Acknowledgement. This provision supplements Section 8 of the Agreement:

By accepting this Option, Optionee agrees to notify the Employer of the amount of any gain realized upon exercise of this Option. If Optionee fails to advise the Employer of the gain realized upon exercise, Optionee may be liable for a fine. Optionee will be responsible for paying any difference between the actual Tax-Related Items liability and the amount withheld.

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Exchange Control Compliance Obligations. Optionee is solely responsible for complying with applicable South African exchange control regulations. Since the exchange control regulations change frequently and without notice, Optionee is advised to consult with his or her personal legal advisor prior to the acquisition or sale of Shares under the Plan to ensure compliance with current regulations. Neither the Company nor the Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.

Notifications

Tax Clearance Certificate for Cash Exercises. If Optionee exercises his or her Option with cash, Optionee must first obtain a “Tax Clearance Certificate (in Respect of Foreign Investment)” from the South African Reserve Services (“SARS”) bearing the official stamp and signature of the Exchange Control Department of the SARS. Optionee must present the Tax Clearance Certificate to a dealer of the Exchange Control Department together with a completed application form in order to transfer funds to exercise the Option. Optionee must renew the Tax Clearance Certificate every twelve (12) months or any other such time period as may be required by the SARS.

Exchange Control Notification. Optionee is subject to an overall offshore investment allowance of ZAR5,000,000. The first ZAR1,000,000 annual discretionary allowance requires no prior authorization. The next ZAR4,000,000 requires tax clearance. The allowance is cumulative, and Optionee’s ability to remit funds for the purchase of Shares will be reduced if Optionee’s foreign investment limit is utilized to make a transfer of funds offshore that is unrelated to the Plan. If Optionee exercises his or her Option with cash, Optionee will be subject to this limit. If the remittance of funds for such exercise would exceed the ZAR5,000,000 limit, Optionee may still transfer funds for the exercise; however, the Shares obtained from the exercise must be immediately sold and the full proceeds must be repatriated to South Africa. If Optionee exercises the Option using a cashless exercise, the value of the Shares acquired will not be counted against Optionee’s offshore investment allowance limit of ZAR5,000,000.

SPAIN

Terms and Conditions

Nature of Grant. This provision supplements Section 12 of the Agreement:

In accepting the Option, Optionee consents to participation in the Plan and acknowledges that he or she has received a copy of the Plan.

Further, Optionee understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant options under the Plan to individuals who may be employees of the Company or its Subsidiaries throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any award will not economically or otherwise bind the Company or any Subsidiaries on an ongoing basis except as indicated in the Plan and this Agreement. Consequently, Optionee understands that the Option is granted on the assumption and condition that the Option or the Shares acquired upon vesting shall not become a part of any employment or service contract (either with the Company or any Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, Optionee understands that this award would not be made to Optionee but for the assumptions and conditions referred to above; thus, Optionee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then the award of the Options shall be null and void.

Optionee also understands and agrees that, as a condition of the grant and vesting of the Option, the Termination of Optionee’s employment or other business relationship for any reason (including the reasons listed below), the Option will cease vesting immediately, in whole or in part, effective on the

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Optionee’s Termination Date. This will be the case, for example, even in the event of a Termination of Optionee’s employment or other business relationship by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. Optionee acknowledges that he or she has read and specifically accepts the conditions referred to in the “Termination Period” and “Nature of Grant” sections of the Agreement.

Notifications

Securities Law Information. The grant of the Option and the Shares issued pursuant to the exercise of the Option are considered a private placement outside of the scope of Spanish laws on public offerings and issuances of securities.

Exchange Control Information. To participate in the Plan, Optionee must comply with exchange control regulations in Spain. The purchase of Shares upon exercise of the Option and the sale of Shares must be declared for statistical purposes to the Dirección General de Comercio e Inversiones (the “DGCI”) of the Ministry of Industry, Tourism and Commerce. Because Optionee will not purchase or sell the Shares through the use of a Spanish financial institution, Optionee must make the declaration himself or herself by filing a D-6 form with the DGCI. Generally, the D-6 form must be filed each January while the Shares are owned or to report the sale of Shares.

Whenever receiving foreign currency payments derived from the ownership of Shares (i.e., cash dividends or sale proceeds) exceeding €50,000, Optionee must inform the financial institution receiving the payment of the basis upon which such payment is made. Optionee will need to provide the institution with the following information: (i) Optionee’s name, address, and fiscal identification number; (ii) the name and corporate domicile of the Company; (iii) the amount of the payment; (iv) the currency used; (v) the country of origin; (vi) the reasons for the payment; and (vii) any further information that may be required.

Foreign Asset/Account Reporting Information. To the extent that Optionee holds rights or assets (e.g., Shares or cash held in a bank or brokerage account) outside of Spain with a value in excess of €50,000 per type of right or asset (e.g., Shares, cash, etc.) as of December 31 each year, Optionee will be required to report information on such rights and assets on his or her tax return for such year. After such rights and assets are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported rights or assets increases by more than €20,000. The reporting must be completed by March 31 following the end of the relevant year. It is Optionee’s responsibility to comply with these reporting obligations, and Optionee should consult with his or her personal tax and legal advisors in this regard.

In addition, Optionee is required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities (including Shares acquired under the Plan) held in such accounts if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000.

SWEDEN

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Agreement:

Notwithstanding anything to the contrary in the Agreement, the Company and/or the Employer will account for Optionee’s Tax-Related Items by withholding from Optionee’s salary.

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UNITED ARAB EMIRATES

Notifications

Securities Law Information. The Plan is only being offered to qualified employees in order to provide equity incentives to employees of the Company and its Subsidiaries in the United Arab Emirates. The Plan, the Notice of Grant, the Agreement and any other grant documents Optionee may receive from the Company are intended for distribution only to such employees and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered (i.e., Shares) should conduct their own due diligence on the securities. If Optionee does not understand the contents of the Plan, the Notice of Grant or the Agreement, Optionee should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. The Ministry of Economy, the Dubai Department of Economic Development, Emirates Securities and Commodities Authority, Central Bank and the Dubai Financial Services Authority, as applicable depending on Optionee’s Employer’s location in the United Arab Emirates, have not approved the Plan, the Notice of Grant or the Agreement or taken steps to verify the information set out therein, and have no responsibility for such documents.

UNITED KINGDOM

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 8 of the Agreement:

If payment or withholding of taxes is not made within 90 days of the end of the U.K. tax year (April 6 - April 5) during which the event giving rise to the taxes occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected taxes shall constitute a loan owed by Optionee to the Employer, effective as of the Due Date. Optionee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8 of the Agreement.

Notwithstanding the foregoing, if Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), Optionee shall not be eligible for a loan from the Company to cover the income tax due. In the event that Optionee is a director or executive officer and income tax is not collected from or paid by Optionee by the Due Date, the amount of any uncollected taxes may constitute a benefit to Optionee on which additional income tax and National Insurance contributions (“NICs”) may be payable. Optionee understands that he or she will be responsible for reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Employer for the value of the NICs due on this additional benefit.

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Final Version

CEPHEID

2015 EQUITY INCENTIVE PLAN

NOTICE OF GLOBAL RESTRICTED STOCK UNIT AWARD

Unless otherwise defined herein, the terms defined in the Cepheid 2015 Equity Incentive Plan, as amended from time to time (the “Plan”), shall have the same meanings in this Notice of Global Restricted Stock Unit Award (the “Notice”).

%%FIRST_NAME%-% %%LAST_NAME%-%

You (“Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the Global Restricted Stock Unit Award Agreement, including any special terms and conditions for Participant’s country set forth in the appendix attached thereto (the “Appendix”) (the Global Restricted Stock Unit Award Agreement and the Appendix are collectively referred to as the “Agreement”).

Grant Number	%%OPTION_NUMBER%-%
Total Number of RSUs	%%TOTAL_SHARES_GRANTED,’999,999,999’%-%
Date of Grant	%%OPTION_DATE,’MONTH DD, YYYY’%-%
Vesting Commencement Date	%%VEST_DATE_PERIOD1,’MONTH DD, YYYY’%-%
Expiration Date	The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date.

Vesting Schedule. Subject to the limitations set forth in this Notice, the Plan and the Agreement, the RSUs will vest in accordance with the following schedule:

25% on the one-year anniversary of the Vesting Commencement Date and 6.25% on each three-month anniversary thereafter, such that the RSUs will be fully-vested on the four-year anniversary of the Vesting Commencement Date.

You understand that your employment or consulting relationship or service with the Company or a Parent or Subsidiary of the Company is for an unspecified duration, can be terminated at any time, and that nothing in this Notice, the Agreement or the Plan changes your employment or service relationship. You acknowledge and agree that the Vesting Schedule may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing service as an Employee, Non-Employee Director or Consultant. You also understand that this Notice is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. You confirm that you have read both the Agreement and the Plan. By accepting this award of RSUs, you consent to electronic delivery as set forth in the Agreement.

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GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT TO THE

CEPHEID 2015 EQUITY INCENTIVE PLAN

Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and conditions of the Cepheid 2015 Equity Incentive Plan, as amended from time to time (the “Plan”), the Notice of Global Restricted Stock Unit Award (the “Notice”) and this Global Restricted Stock Unit Award Agreement, including any special terms and conditions for Participant’s country set forth in the appendix attached hereto (the “Appendix,” together with the Global Restricted Stock Unit Award Agreement, the “Agreement”).

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Agreement.

1. Settlement. Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in Shares. Settlement means the delivery of the Shares vested under the RSUs. No fractional RSUs or rights for fractional Shares shall be created pursuant to this Agreement.

2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, Participant shall have no ownership of the Shares allocated to the RSUs and shall have no right to dividends or to vote such Shares.

3. No Dividend Equivalents. Dividends, if any (whether in cash or Shares), and dividend equivalents, shall not be credited to Participant on RSUs.

4. No Transfer. RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.

5. Termination. If Participant’s service Terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights of Participant to such RSUs shall immediately terminate. In case of any dispute as to whether Termination has occurred, the Committee shall have sole discretion to determine whether such Termination has occurred and the Termination Date. The details of Termination and its effects are further discussed below in Sections 7(j) and 7(k).

6. Responsibility for Taxes.

(a) Withholding and Net Issuance of Shares. Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer (the “Employer”) the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

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Prior to any relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding Shares to be issued upon settlement of the RSUs having a Fair Market Value (determined on the date that the amount of Tax-Related Items to be withheld is determined) equal to the amount of Tax-Related Items required to be withheld. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by Participant’s acceptance of the RSUs, Participant authorizes and directs the Company and any brokerage firm determined acceptable to the Company to sell on Participant’s behalf a whole number of Shares from those issued to Participant as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

Finally, Participant agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items.

Notwithstanding anything in this Section 6 to the contrary, to avoid a prohibited acceleration under Section 409A of the Code (“Section 409A”), if Shares subject to RSUs will be withheld (or sold on Participant’s behalf) to satisfy any Tax-Related Items arising prior to the date of settlement of the RSUs for any portion of the RSUs that is considered nonqualified deferred compensation subject to Section 409A, then the number of Shares withheld (or sold on Participant’s behalf) shall not exceed the number of Shares that equals the liability for Tax-Related Items.

(b) U.S. Tax Consequences. If Participant is a U.S. taxpayer, he or she acknowledges that there will be tax consequences upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such settlement or disposition. Upon settlement of the RSUs, Participant will include in income the fair market value of the Shares subject to the RSUs. The included amount will be treated as ordinary income by Participant and will be subject to withholding by the Company and/or Employer when required by applicable U.S. law. Upon disposition of the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term capital gain or loss, depending on whether the Shares are held for more than one year from the date of settlement. Further, an RSU may be considered a deferral of compensation that may be subject to Section 409A. Section 409A imposes special rules to the timing of making and effecting certain amendments of the RSUs with respect to distribution of any deferred compensation. Participant should consult with his or her personal tax advisor for more information on the actual and potential tax consequences of the RSUs.

7. Nature of Grant. In accepting the grant, Participant acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

58

(b) the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(c) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;

(d) the RSU grant and Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company, the Employer or any Parent or Subsidiary of the Company;

(e) Participant is voluntarily participating in the Plan;

(f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation;

(g) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration for, or in connection with, any service Participant may provide as a Non-Employee Director;

(i) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(j) unless otherwise expressly provided in this Agreement or determined by the Company, Participant’s right to vest in the RSUs under the Plan, if any, will terminate as of the Termination Date (regardless of the reason for such termination and whether or not later found to be invalid or in breach of labor laws in the jurisdiction where Participant is employed or the terms of his or her employment or service agreement, if any) and will not be extended by any notice period (e.g., Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when Participant has Terminated for purposes of the RSU grant;

(k) unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares of the Company; and

(l) the following provisions apply only if Participant is providing services outside the United States:

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant rendered services or the terms of Participant’s employment agreement, if any), and, in consideration of the grant of the RSUs to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary of the Company (including the Employer), waives his or her ability, if any, to bring any such claim, and releases the Company, its Parent or Subsidiary (including the Employer) from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a

59

court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(ii) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purpose; and

(iii) neither the Company, the Employer nor any Parent or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.

8. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company and its Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to E*TRADE Corporate Financial Services, Inc. or such stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of Data may be located in the United States or elsewhere, and that recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative. Participant authorizes the Company, E*TRADE and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able

60

to grant Participant RSUs or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.

10. Entire Agreement; Enforcement of Rights. This Agreement (including the Appendix), the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the RSUs granted hereunder are superseded. Except as provided in Sections 16 and 17, no modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

11. Compliance with Laws and Regulations. The issuance of the Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable securities and exchange control laws and regulations relevant to the Company and the offer of the RSUs and the underlying Shares and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

12. Governing Law and Venue; Severability. If one or more provisions of this Agreement are held to be unenforceable, the parties agree to renegotiate such provisions in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provisions, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. For purposes of litigating any action, lawsuit or other proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the court of Santa Clara County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

13. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Participant^’s service, for any reason, with or without Cause.

14. Language. If Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

15. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Participant hereby consents to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the SEC, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSUs. In addition, Participant agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the

61

Company’s discretion. Participant acknowledges that Participant may receive from the Company a paper copy of any documents delivered electronically at no cost if Participant contacts the Company by telephone, through a postal service or electronic mail at stock.admin@cepheid.com or another email address selected by the Company in the future. Participant further acknowledges that Participant will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Participant understands that Participant must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Participant understands that Participant’s consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if Participant has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at stock.admin@cepheid.com or another email address selected by the Company in the future. Finally, Participant understands that Participant is not required to consent to electronic delivery.

16. Appendix. Notwithstanding any provisions in this Agreement, the RSU grant shall be subject to any special terms and conditions set forth in the Appendix to this Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

17. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

18. Acknowledgement. The Company and Participant agree that the RSUs are granted under and governed by the Notice, this Agreement (including the Appendix) and the provisions of the Plan. Participant (i) acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

19. Section 409A. If Participant is a U.S. taxpayer, for purposes of this Agreement, a Termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A. Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in connection with Participant’s termination of employment constitute deferred compensation subject to Section 409A, and Participant is deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (a) the expiration of the six-month period measured from Participant’s separation from service or (b) the date of Participant’s death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Participant including, without limitation, the additional tax for which Participant would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this Section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

20. Adjustment. If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, spin-off, split-off or similar change in the capital structure of the Company, the number of Shares covered by the RSUs may be adjusted pursuant to the Plan.

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21. Insider Trading Restrictions/Market Abuse Laws. Participant acknowledges that Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell the Shares or rights to the Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Participant acknowledges that it is Participant’s responsibility to comply with any applicable restrictions, and Participant is advised to speak to his or her personal advisor on this matter.

22. Waiver. Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other Participant.

* * * * *

Upon electronic acceptance by Participant, Participant and the Company agree that the RSUs are granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement (including the Appendix). Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address.

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APPENDIX

GLOBAL RESTRICTED STOCK UNITS AWARD AGREEMENT TO THE

CEPHEID 2015 EQUITY INCENTIVE PLAN

Capitalized terms used but not defined in this Appendix are defined in the Plan, the Notice, and/or the Global Restricted Stock Unit Award Agreement, and have the meanings set forth therein.

Terms and Conditions

This Appendix includes additional terms and conditions that govern the restricted stock units granted to Participant under the Plan if Participant resides in one of the countries listed below. If Participant is a citizen or resident (or is considered as such for local law purposes) of a country other than the country in which Participant is currently residing and/or working, or if Participant transfers to another country after the date of grant, the Committee shall, in its discretion, determine to what extent the terms and conditions contained herein shall be applicable to Participant.

Notifications

This Appendix also includes information regarding securities, exchange controls and certain other issues of which Participant should be aware with respect to participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of May 2015. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Participant not rely on the information in this Appendix as the only source of information relating to the consequences of participation in the Plan because the information may be out of date at the time the RSUs vest or Shares acquired under the Plan are sold.

In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation and the Company is not in a position to assure Participant of a particular result. Accordingly, Participant is advised to seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to his or her situation.

Finally, Participant understands that if he or she is a citizen or resident of a country other than the one in which Participant is currently working, transfers employment after the date of grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.

Australia

Terms and Conditions

Australian Offer Document. The offer of RSUs is intended to comply with the provisions of the Corporations Act 2001, ASIC Regulatory Guide 49 and ASIC Class Order CO 14/1000. Additional details are set forth in the Offer Document for the offer of RSUs to Australian resident Employees, which will be provided to Participant with the Agreement.

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Data Privacy. These sections supplement Section 9 of the Global Restricted Stock Unit Award Agreement:

The Company can be contacted at 904 Caribbean Drive, Sunnyvale, California 94089, United States of America. The Australian Employer can be contacted at Unit 3, 1 Anderson St, Banksmeadow, NSW 2019, Australia.

Participant’s personal information will be held in accordance with the Company’s privacy policy, a copy of which can be obtained by contacting the Company or the Australian Employer at the address listed above. The Company’s privacy policy contains, among other things, details of how Participant can access and seek correction of personal information held in connection with the Agreement.

Participant understands and agrees that Data may be transferred to recipients located outside of Australia, including the United States and any other country where the Company has operations.

Notifications

Exchange Control Information. Exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on behalf of Participant.

Securities Law Information. If Participant acquires Shares pursuant to the RSUs and offers the Shares for sale to a person or entity resident in Australia, Participant’s offer may be subject to disclosure requirements under Australian law. Participant should obtain legal advice on his or her disclosure obligations prior to making any such offer.

Belgium

Notifications

Foreign Asset/Account Reporting Information. Belgian residents are required to report any securities (including the Shares acquired under the Plan) or bank accounts (including brokerage accounts) opened and maintained outside Belgium on their annual tax returns.

Brazil

Terms and Conditions

Nature of Grant. In accepting the grant of the RSUs, Participant agrees that the Shares will be issued to Participant only if the vesting conditions are met and any necessary services are rendered by Participant over the vesting period, and the value of the Shares underlying the RSUs is not fixed and may increase or decrease in value over the vesting period without compensation to Participant.

Compliance with the Law. In accepting the grant of the RSUs, Participant acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the RSUs, the sale of the Shares acquired under the Plan and the receipt of any cash dividends paid on such Shares.

Notifications

Exchange Control Information. If Participant is a resident or domiciled in Brazil, he or she will be required to submit an annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include the Shares acquired under the Plan.

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Tax on Financial Transaction (IOF). Cross-border financial transactions relating to the RSUs may be subject to the IOF (tax on financial transactions). Participant should consult with his or her personal tax advisor for additional details.

Finland

No country-specific provisions apply.

France

Terms and Conditions

Language Consent. By accepting the Agreement providing for the terms and conditions of Participant’s grant, Participant confirms having read and understood the documents relating to this grant (the Plan and the Agreement) which were provided in English language. Participant accepts the terms of those documents accordingly.

En acceptant le Contrat d’Attribution décrivant les termes et conditions de l’attribution, le participant confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan U.S. et le Contrat d’Attribution) qui ont été communiqués en langue anglaise. Le participant accepte les termes en connaissance de cause.

Notifications

Foreign Asset/Account Reporting Information. If Participant holds Shares outside France or maintains a foreign bank account, Participant is required to report such to the French tax authorities when filing his or her annual tax return. It is Participant’s obligation to comply with the applicable exchange controls.

Germany

Notifications

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. Participant is responsible for complying with the reporting requirements.

Hong Kong

Terms and Conditions

Settlement. This provision supplements Section 1 of the Global Restricted Stock Unit Award Agreement:

The grant of the RSUs does not provide any right for Participant to receive a cash payment and the RSUs are payable in Shares only.

Restriction on Sale. In the event Participant’s RSUs vest and Shares are issued to Participant within six months of the date of grant, Participant agrees that he or she will not dispose of any Shares acquired prior to the six-month anniversary of the date of grant.

Nature of Grant. The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”). Notwithstanding the foregoing, if the Plan is deemed to constitute an occupational retirement scheme for the purposes of ORSO, the grant of RSUs shall be void.

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Notifications

Securities Law Information. Warning: The RSUs and the Shares issued to Participant at vesting of the RSUs do not constitute a public offer of securities and are available only to Employees and other service providers of the Company or a Parent or Subsidiary of the Company.

Participant should be aware that the contents of the Agreement and the Plan are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, nor have they been reviewed by any regulatory authority in Hong Kong. Participant is advised to exercise caution in relation to participation in the Plan. The RSUs are intended only for the personal use of each Participant who meets the eligibility requirements under the Plan and may not be distributed to any other person. If Participant is in any doubt about any of the contents of the Agreement or the Plan, he or she should obtain independent professional advice.

India

Notifications

Exchange Control Information. Participant understands that he or she must repatriate any proceeds from the sale of Shares acquired under the Plan and any cash dividends to India within 90 days and 180 days after receipt, respectively. Participant must obtain a foreign inward remittance certificate (“FIRC”) from the bank where Participant deposits the foreign currency and must maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, the Company or the Employer requests proof of repatriation.

Foreign Asset/Account Reporting Information. Participant is required to declare any foreign bank accounts and assets (including Shares acquired under the Plan) on his or her annual tax return. Participant should consult with his or her personal tax advisor to determine his or her reporting requirements.

Japan

Notifications

Foreign Asset/Account Reporting Information. Participant is required to report details of any assets held outside Japan as of December 31st (including Shares acquired under the Plan), to the extent such assets have a total net fair market value exceeding ¥50 million. Such report will be due by March 15 each year. Participant should consult with Participant’s personal tax advisor to determine if the reporting obligation applies to Participant’s personal situation.

Singapore

Notifications

Securities Law Information. The grant of RSUs is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. Participant should note that the grant of RSUs is subject to section 257 of the SFA and Participant will not be able to make any subsequent sale in Singapore of the Shares acquired through the vesting of the RSUs or any offer of such sale in Singapore unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

Chief Executive Officer and Director Notification Obligation. Chief executive officer and directors of a Singapore Parent or Subsidiary are subject to certain notification requirements under the Singapore

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Companies Act. Chief executive officer and directors must notify the Singapore Parent or Subsidiary in writing of an interest (e.g., RSUs, Shares, etc.) in the Company or the Parent or Subsidiary within two business days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a chief executive officer or director.

South Africa

Term and Conditions

Responsibility for Taxes. This provision supplements Section 6 of the Global Restricted Stock Unit Award Agreement:

By accepting the RSUs, Participant agrees to notify his or her Employer of the amount of income realized at vesting of the RSUs. If Participant fails to advise his or her Employer of the income at vesting, he or she may be liable for a fine. Participant will be responsible for paying any difference between the actual Tax-Related Items liability and the amount withheld.

Notifications

Exchange Control Information. Participant should consult his or her personal advisor to ensure compliance with applicable exchange control regulations in South Africa, as such regulations are subject to frequent change. Participant is responsible for ensuring compliance with all exchange control laws in South Africa.

Sweden

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 6 of the Global Restricted Stock Unit Award Agreement:

Notwithstanding anything to the contrary in the Agreement, the Company and/or the Employer will account for Participant’s Tax-Related Items by withholding from Participant’s salary.

United Arab Emirates

Notifications

Securities Law Information. The Plan is being offered only to qualified Employees of the Company and its Parent or Subsidiaries and is in the nature of an “exempt personal offer” of equity incentives to Employees of the Company’s Parent or Subsidiary in the United Arab Emirates. The Plan, the Notice, this Agreement and any other grant documents Participant may receive from the Company are intended for distribution only to such Employees and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered (i.e., Shares) should conduct their own due diligence on the securities. If Participant does not understand the contents of the Plan, the Notice or this Agreement, Participant should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. The Ministry of Economy, the Dubai Department of Economic Development, Emirates Securities and Commodities Authority, Central Bank and the Dubai Financial Services Authority, as applicable depending on Participant’s Employer’s location in the United Arab Emirates, have not approved the Plan, the Notice or this Agreement or taken steps to verify the information set out therein, and have no responsibility for such documents.

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United Kingdom

Terms and Conditions

Responsibility for Taxes. The following provisions supplement Section 6 of the Global Restricted Stock Unit Award Agreement:

Participant agrees that, if Participant does not pay or the Employer or the Company does not withhold from Participant the full amount of income tax that Participant owes at vesting, or the release or assignment of the RSUs for consideration, or the receipt of any other benefit in connection with the RSUs within 90 days of the end of the U.K. tax year (April 6 - April 5) during which the event giving rise to the liability occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), then the amount that should have been withheld shall constitute a loan owed by Participant to the Employer, effective as of the Due Date. Participant agrees that the loan will bear interest at the Her Majesty’s Revenue and Customs (“HMRC”) official rate and will be immediately due and repayable by Participant, and the Company and/or the Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any other funds due to Participant by the Company or Employer, by withholding in Shares issued at settlement or from the cash proceeds from the sale of Shares or by demanding cash or a cheque from Participant. Participant also authorizes the Company to delay the issuance of any Shares unless and until the loan is repaid in full.

Notwithstanding the foregoing, if Participant is an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply. In the event that Participant is an executive officer or director and income tax is not collected from or paid by Participant by the Due Date, the amount of any uncollected income tax may constitute a benefit to Participant on which additional income tax and National Insurance contributions (“NICs”) (including Employer NICs, as defined below) may be payable. Participant acknowledges that the Company or the Employer may recover any such additional income tax and NICs (including Employer NICs, as defined below) at any time thereafter by any of the means referred to in Section 6 of the Agreement, although Participant acknowledges that he or she ultimately will be responsible for reporting any income tax due on this additional benefit directly to the HMRC under the self-assessment regime and for reimbursing the Employer for the value of any NICs due on this additional benefit.

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2015 EQUITY INCENTIVE PLAN

NOTICE OF GLOBAL RESTRICTED STOCK UNIT AWARD

GRANT NUMBER: %%OPTION_NUMBER%-%

DIRECTOR FORM

Unless otherwise defined herein, the terms defined in the Cepheid (the “Company”) 2015 Equity Incentive Plan (the “Plan”), shall have the same meanings in this Notice of Global Restricted Stock Unit Award (the “Notice”).

%%FIRST_NAME%-% %%LAST_NAME%-%

You (“Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the Global Restricted Stock Unit Award Agreement, including any appendix to the Global Restricted Stock Unit Agreement for Participant’s country (the “Appendix”) (the Global Restricted Stock Unit Award and the Appendix are collectively referred to as the “Agreement”).

Number of RSUs:	%%TOTAL_SHARES_GRANTED%-%
Date of Grant:	%%OPTION_DATE%-%
Vesting Commencement Date:	%%VEST_BASE_DATE%-%
Expiration Date:	The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan and the Agreement, the RSUs will vest in accordance with the following schedule: 100% on the one-year anniversary of the Vesting Commencement Date. In the event of a Corporate Transaction, 100% of the total number of then-unvested RSUs shall automatically vest on an accelerated basis immediately prior to the effective date of the Corporate Transaction.

You understand that your employment or consulting relationship or service with the Company or a Parent or Subsidiary of the Company is for an unspecified duration, can be terminated at any time, and that nothing in this Notice, the Agreement or the Plan changes your employment or service relationship. You acknowledge and agree that the Vesting Schedule may change prospectively in the event that your service status changes between full and part-time status in accordance with Company policies relating to work schedules and vesting of awards. You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing service as an employee, director or consultant of the Company or a Parent or Subsidiary of the Company. You also understand that this Notice is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. You confirm that you have read both the Agreement and the Plan. By accepting this RSU, you consent to electronic delivery as set forth in the Agreement.

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GLOBAL RESTRICTED STOCK UNIT AGREEMENT TO THE

CEPHEID 2015 EQUITY INCENTIVE PLAN

Unless otherwise defined herein, the terms defined in the Cepheid (the “Company”) 2015 Equity Incentive Plan, as amended (the “Plan”), shall have the same defined meanings in this Global Restricted Stock Unit Award Agreement (the “Agreement”).

Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and conditions of the Plan, the Notice of Global Restricted Stock Unit Award (the “Notice”) and this Agreement, including any appendix to this Agreement for Participant’s country (the “Appendix”).

1. Settlement. Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice. Settlement of RSUs shall be in Shares. Settlement means the delivery of the Shares vested under an RSU. No fractional RSUs or rights for fractional Shares shall be created pursuant to this Agreement.

2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, Participant shall have no ownership of the Shares allocated to the RSUs and shall have no right to dividends or to vote such Shares.

3. No Dividend Equivalents. Dividends, if any (whether in cash or Shares), shall not be credited to Participant on RSUs.

4. No Transfer. RSUs may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than by will or by the laws of descent or distribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.

5. Termination. If Participant’s service Terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights of Participant to such RSUs shall immediately terminate. In case of any dispute as to whether Termination has occurred, the Committee shall have sole discretion to determine whether such Termination has occurred and the Termination Date. The details of Termination and its effects are further discussed below in Section 7(j).

6. Responsibility for Taxes.

(a) Withholding and Net Issuance of Shares. Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer (the “Employer”) the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSU, including, but not limited to, the grant, vesting or settlement of the RSU, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSU to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction between the date of grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

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Prior to any relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding Shares to be issued upon settlement of the RSU having a Fair Market Value (determined on the date that the amount of Tax-Related Items to be withheld is determined) equal to the amount of Tax-Related Items required to be withheld. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by Participant’s acceptance of the RSU, Participant authorizes and directs the Company and any brokerage firm determined acceptable to the Company to sell on Participant’s behalf a whole number of Shares from those issued to Participant as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested RSU, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

Finally, Participant agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items.

Notwithstanding anything in this Section 6 to the contrary, to avoid a prohibited acceleration under Section 409A of the Code (“Section 409A”), if Shares subject to RSUs will be withheld (or sold on Participant’s behalf) to satisfy any Tax-Related Items arising prior to the date of settlement of the RSUs for any portion of the RSUs that is considered nonqualified deferred compensation subject to Section 409A, then the number of Shares withheld (or sold on Participant’s behalf) shall not exceed the number of Shares that equals the liability for Tax-Related Items.

(b) U.S. Tax Consequences. If Participant is a U.S. taxpayer, he or she acknowledges that there will be tax consequences upon settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such settlement or disposition. Upon settlement of the RSU, Participant will include in income the fair market value of the Shares subject to the RSU. The included amount will be treated as ordinary income by Participant and will be subject to withholding by the Company and/or Employer when required by applicable U.S. law. Upon disposition of the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term capital gain or loss, depending on whether the Shares are held for more than one year from the date of settlement. Further, an RSU may be considered a deferral of compensation that may be subject to Section 409A. Section 409A imposes special rules to the timing of making and effecting certain amendments of this RSU with respect to distribution of any deferred compensation. Participant should consult with his or her personal tax advisor for more information on the actual and potential tax consequences of this RSU.

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7. Nature of Grant. In accepting the grant, Participant acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the RSU is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(c) all decisions with respect to future RSU or other grants, if any, will be at the sole discretion of the Company;

(d) the RSU grant and Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company, the Employer or any Parent or Subsidiary of the Company;

(e) Participant is voluntarily participating in the Plan;

(f) the RSU and the Shares subject to the RSU are not intended to replace any pension rights or compensation;

(g) the RSU and the Shares subject to the RSU, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSU resulting from Participant’s Termination (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), and in consideration of the grant of the RSU to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, any Parent or Subsidiary of the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, its Parent or Subsidiary and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(j) unless otherwise expressly provided in this Agreement or determined by the Company, Participant’s right to vest in the RSU under the Plan, if any, will terminate as of the Termination Date and will not be extended by any notice period (e.g., Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when Participant has Terminated for purposes of the RSU grant;

(k) unless otherwise provided in the Plan or by the Company in its discretion, the RSU and the benefits evidenced by this Agreement do not create any entitlement to have the RSU or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares of the Company; and

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(l) the following provisions apply only if Participant is providing services outside the United States:

(i) the RSU and the Shares subject to the RSU are not part of normal or expected compensation or salary for any purpose; and

(ii) Participant acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSU or of any amounts due to Participant pursuant to the settlement of the RSU or the subsequent sale of any Shares acquired upon settlement.

8. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other RSU grant materials (“Data”) by and among, as applicable, the Employer, the Company and its Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to E*Trade Corporate Financial Services, Inc. or such stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. Participant authorizes the Company, E*Trade and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or

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if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant RSUs or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.

10. Entire Agreement; Enforcement of Rights. This Agreement (including the Appendix), the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the RSUs granted hereunder are superseded. Except as provided in Sections 16 and 17, no modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

11. Compliance with Laws and Regulations. The issuance of the Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable securities and exchange control laws and regulations relevant to the Company and the offer of the RSUs and the underlying Shares and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

12. Governing Law and Venue; Severability. If one or more provisions of this Agreement are held to be unenforceable, the parties agree to renegotiate such provisions in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provisions, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. For purposes of litigating any action, lawsuit or other proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the court of Santa Clara County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

13. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Participant^’s service, for any reason, with or without Cause.

14. Language. If Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

15. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Participant hereby consents to the electronic delivery of the Notice, this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSU. In addition, Participant agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. Electronic delivery may include the delivery of a link to a Company intranet or the internet

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site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. Participant acknowledges that Participant may receive from the Company a paper copy of any documents delivered electronically at no cost if Participant contacts the Company by telephone, through a postal service or electronic mail at [insert email] or another email address selected by the Company in the future. Participant further acknowledges that Participant will be provided with a paper copy of any documents delivered electronically if electronic delivery fails; similarly, Participant understands that Participant must provide on request to the Company or any designated third party a paper copy of any documents delivered electronically if electronic delivery fails. Also, Participant understands that Participant’s consent may be revoked or changed, including any change in the electronic mail address to which documents are delivered (if Participant has provided an electronic mail address), at any time by notifying the Company of such revised or revoked consent by telephone, postal service or electronic mail at [insert email] or another email address selected by the Company in the future. Finally, Participant understands that Participant is not required to consent to electronic delivery.

16. Appendix. Notwithstanding any provisions in this Agreement, the RSU grant shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

17. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the RSU and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

18. Acknowledgement. The Company and Participant agree that the RSUs are granted under and governed by the Notice, this Agreement (including the Appendix) and the provisions of the Plan. Participant: (i) acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

19. Section 409A. For purposes of this Agreement, a Termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A. Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in connection with Participant’s termination of employment constitute deferred compensation subject to Section 409A, and Participant is deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (a) the expiration of the six-month period measured from Participant’s separation from service or (b) the date of Participant’s death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Participant including, without limitation, the additional tax for which Participant would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral. To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A. Payments pursuant to this Section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

20. Adjustment. In the event of a stock split, a stock dividend or a similar change in Company stock, the number of Shares covered by the RSUs may be adjusted pursuant to the Plan.

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21. Insider Trading Restrictions/Market Abuse Laws. Participant acknowledges that, depending on Participant’s country, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell the Shares or rights to the Shares under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Participant acknowledges that it is Participant’s responsibility to comply with any applicable restrictions, and Participant is advised to speak to his or her personal advisor on this matter.

* * * * *

Upon electronic acceptance by Participant, Participant and the Company agree that the RSUs are granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement (including the Appendix). Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address.

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APPENDIX

GLOBAL RESTRICTED STOCK UNITS AWARD AGREEMENT TO THE

CEPHEID 2015 EQUITY INCENTIVE PLAN

Terms and Conditions

This Appendix includes additional terms and conditions that govern the restricted stock units (the “RSUs”) granted to Participant under the Cepheid (the “Company”) 2015 Equity Incentive Plan (the “Plan”) if Participant resides in one of the countries listed below. Unless otherwise defined herein, the terms defined in the Plan and/or the Global Restricted Stock Unit Award Agreement (the “Agreement”), as applicable, shall have the same defined meanings in this Appendix.

Notifications

This Appendix also includes information regarding securities, exchange controls and certain other issues of which Participant should be aware with respect to participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of May 2014. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Participant not rely on the information in this Appendix as the only source of information relating to the consequences of participation in the Plan because the information may be out of date at the time the RSUs vest or Shares acquired under the Plan are sold.

In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation and the Company is not in a position to assure Participant of a particular result. Accordingly, Participant is advised to seek appropriate professional advice as to how the relevant laws in Participant’s country may apply to his or her situation.

Finally, Participant understands that if he or she is a citizen or resident of a country other than the one in which Participant is currently working, transfers employment after the date of grant, or is considered a resident of another country for local law purposes, the information contained herein may not apply to Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.

Australia

Terms and Conditions

Data Privacy. This section supplements Section 9 of the Agreement:

The Company can be contacted at 904 Caribbean Drive, Sunnyvale, California 94089, United States of America. The Australian Employer can be contacted at Unit 3, 1 Anderson St, Banksmeadow, NSW 2019, Australia.

Participant’s personal information will be held in accordance with the Company’s privacy policy, a copy of which can be obtained by contacting the Company or the Australian Employer at the address listed above. The Company’s privacy policy contains, among other things, details of how Participant can access and seek correction of personal information held in connection with the Agreement.

Participant understands and agrees that Data may be transferred to recipients located outside of Australia, including the United States and any other country where the Company has operations.

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Notifications

Exchange Control Information. Exchange control reporting is required for cash transactions exceeding AUD10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on behalf of Participant.

Securities Law Information. If Participant acquires Shares pursuant to the RSUs and offers the Shares for sale to a person or entity resident in Australia, Participant’s offer may be subject to disclosure requirements under Australian law. Participant should obtain legal advice on his or her disclosure obligations prior to making any such offer.

Belgium

Notifications

Tax Reporting Information. Participant is required to report any securities (including the Shares acquired under the Plan) or bank accounts (including brokerage accounts) opened and maintained outside Belgium on his or her annual tax return.

Brazil

Terms and Conditions

Nature of Grant. In accepting the grant of the RSUs, Participant agrees that the Shares will be issued to Participant only if the vesting conditions are met and any necessary services are rendered by Participant over the vesting period, and the value of the Shares underlying the RSUs is not fixed and may increase or decrease in value over the vesting period without compensation to Participant.

Compliance with the Law. In accepting the grant of the RSUs, Participant acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items associated with the RSUs, the sale of the Shares acquired under the Plan and the receipt of any cash dividends paid on such Shares.

Notifications

Exchange Control Information. If Participant is a resident or domiciled in Brazil, he or she will be required to submit an annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include the Shares acquired under the Plan.

China

The following provisions apply to Participants who are subject to exchange control regulations in the People’s Republic of China (the “PRC”), as determined by the Company in its sole discretion:

Notifications

Exchange Control Information. Pursuant to exchange control laws in the PRC, Participant understands that he or she may be required, immediately upon vesting of the RSUs, to sell all Shares issued and immediately repatriate to the PRC any cash proceeds he or she receives upon sale of the Shares. To facilitate this immediate sale, Participant agrees to execute any documents, authorization or forms that the Company or a third-party broker acting for the Company may request. If Participant does not execute such documents, Participant understands that the Company may refuse to issue any Shares to Participant at vesting.

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If immediate sale of the Shares is required, Participant understands that the repatriation of the cash from the sale of Shares may need to be effected through a special exchange control account established by the Company, a Parent or Subsidiary of the Company, or the Employer and Participant hereby consents and agrees that the cash may be transferred to such account on Participant’s behalf prior to being delivered to him or her. Participant understands that there may be a delay between the date of sale and the date the cash proceeds are distributed to Participant, and Participant further understands and agrees that the Company will not be responsible for any currency fluctuation that may occur between the date of sale and the date the cash proceeds are distributed to Participant.

Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in the PRC.

The following provisions apply to all Participants (whether or not subject to exchange control regulations in the PRC):

Notifications

Tax Obligations. If Participant sells Shares acquired upon vesting of the RSUs, Participant will be subject to personal income tax in the proceeds from the sale. Participant understands that he or she is responsible for ensuring that the obligations for Tax-Related Items that arise in connection with the sale of Shares are fulfilled.

Finland

No country-specific provisions apply.

France

Terms and Conditions

French Language Provision. By accepting the Agreement providing for the terms and conditions of Participant’s grant, Participant confirms having read and understood the documents relating to this grant (the Plan and the Agreement) which were provided in English language. Participant accepts the terms of those documents accordingly.

En acceptant le Contrat d’Attribution décrivant les termes et conditions de l’attribution, le participant confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan U.S. et le Contrat d’Attribution) qui ont été communiqués en langue anglaise. Le participant accepte les termes en connaissance de cause.

Notifications

Exchange Control Information. If Participant holds Shares outside France or maintains a foreign bank account, Participant is required to report such to the French tax authorities when filing his or her annual tax return. It is Participant’s obligation to comply with the applicable exchange controls.

Germany

Notifications

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. Participant is responsible for complying with the reporting requirements.

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Hong Kong

Terms and Conditions

Payment of RSUs. This provision supplements Section 1 of the Agreement:

The grant of the RSUs does not provide any right for Participant to receive a cash payment and the RSUs are payable in Shares only.

Restriction on Sale. In the event Participant’s RSUs vest and Shares are issued to Participant within six months of the date of grant, Participant agrees that he or she will not dispose of any Shares acquired prior to the six-month anniversary of the Date of Grant.

Notifications

Securities Law Information. Warning: The RSUs and the Shares issued to Participant at vesting of the RSUs do not constitute a public offer of securities and are available only to employees and other service providers of the Company or a Parent or Subsidiary of the Company.

Participant should be aware that the contents of the Agreement and the Plan are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong, nor have they been reviewed by any regulatory authority in Hong Kong. Participant is advised to exercise caution in relation to participation in the Plan. The RSUs are intended only for the personal use of each Participant who meets the eligibility requirements under the Plan and may not be distributed to any other person. If Participant is in any doubt about any of the contents of the Agreement or the Plan, he or she should obtain independent professional advice.

India

Notifications

Exchange Control Information. Participant understands that he or she must repatriate any proceeds from the sale of Shares acquired under the Plan or any cash dividends to India within 90 days after receipt. Participant must obtain a foreign inward remittance certificate (“FIRC”) from the bank where Participant deposits the foreign currency and must maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India, the Company or the Employer requests proof of repatriation.

Foreign Asset/Account Reporting Information. Participant is required to declare any foreign bank accounts and assets (including Shares acquired under the Plan) on his or her annual tax return. Participant should consult with his or her personal tax advisor to determine his or her reporting requirements.

Italy

Terms and Conditions

Data Privacy. This provision replaces Section 9 of the Agreement:

Participant understands that the Employer, the Company and any Parent or Subsidiary of the Company may hold certain personal information about him or her, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or any Parent or Subsidiary of the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for the exclusive purpose of implementing, managing and administering the Plan and in compliance with applicable laws and regulations.

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Participant also understands that providing the Company with Data is necessary for the performance of the Plan and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect Participant’s ability to participate in the Plan. The Controller of personal data processing is Cepheid, with registered offices at 904 Caribbean Drive, Sunnyvale, CA 94089 California 92612, United States of America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is Participant’s employer in Italy.

Participant understands that Data will not be publicized, but it may be transferred to banks, other financial institutions, or brokers involved in the management and administration of the Plan. Participant further understands that the Company and/or any Parent or Subsidiary of the Company will transfer Data among themselves as necessary for the purpose of implementing, administering and managing Participant‘s participation in the Plan, and that the Company and/or any Parent or Subsidiary of the Company may each further transfer Data to third parties assisting the Company in the implementation, administration, and management of the Plan, including any requisite transfer of Data to a broker or other third party with whom Participant may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing Participant’s participation in the Plan. Participant understands that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere and in locations that might not provide the same level of protection as intended under Italian data privacy laws. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.

Participant understands that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

The processing activity, including communication, the transfer of Data abroad, including outside the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require Participant’s consent thereto as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. Participant understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, he or she has the right to, including but not limited to, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Furthermore, Participant is aware that Data will not be used for direct marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting Participant’s local human resources representative.

Plan Document Acknowledgement. Participant acknowledges that he or she has read and specifically and expressly approves of the following sections of the Agreement: Section 4: No Transfer; Section 6: Responsibility for Taxes; Section 7: Nature of Grant; Section 11: Compliance with Laws and Regulations; Section 12: Governing Law and Venue; Section 16: Appendix; Section 18: Acknowledgement; and the above Data Privacy provision.

Notifications

Foreign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.

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Japan

Foreign Asset/Account Reporting Information. Participant is required to report details of any assets held outside Japan as of December 31st (including Shares acquired under the Plan), to the extent such assets have a total net fair market value exceeding ¥50 million. Such report will be due by March 15th each year. Participant should consult with Participant’s personal tax advisor to determine if the reporting obligation applies to Participant’s personal situation.

Netherlands

No country-specific provisions apply.

Saudi Arabia

Notifications

Securities Law Information. This Agreement may not be distributed in the Kingdom except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority. The Capital Market Authority does not make any representation as to the accuracy or completeness of this document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Agreement. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If Participant does not understand the contents of this document, Participant should consult an authorized financial advisor.

Singapore

Notifications

Securities Law Information. The grant of RSUs is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. Participant should note that the grant of RSUs is subject to section 257 of the SFA and Participant will not be able to make any subsequent sale in Singapore of the Shares acquired through the vesting of the RSUs or any offer of such sale in Singapore unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

Director Notification Obligation. Directors of a Singapore Parent or Subsidiary are subject to certain notification requirements under the Singapore Companies Act. Directors must notify the Singapore Parent or Subsidiary in writing of an interest (e.g., RSUs, Shares, etc.) in the Company or the Parent or Subsidiary within two business days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director.

South Africa

Term and Conditions

Tax Reporting Information. This provision supplements Section 6 of the Agreement:

By accepting the RSUs, Participant agrees to notify his or her Employer of the amount of income realized at vesting of the RSUs. If Participant fails to advise his or her Employer of the income at vesting, he or she may be liable for a fine. Participant will be responsible for paying any difference between the actual Tax-Related Items liability and the amount withheld.

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Notifications

Exchange Control Information. Participant should consult his or her personal advisor to ensure compliance with applicable exchange control regulations in South Africa, as such regulations are subject to frequent change. Participant is responsible for ensuring compliance with all exchange control laws in South Africa.

Spain

Terms and Conditions

Nature of Grant. This provision supplements Section 7 of the Agreement:

In accepting the RSUs, Participant consents to participation in the Plan and acknowledges that he or she has received a copy of the Plan.

Further, Participant understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant RSUs under the Plan to individuals who may be employees of the Company or a Parent or Subsidiary of the Company throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any RSUs will not economically or otherwise bind the Company or any Parent or Subsidiary of the Company on an ongoing basis except as indicated in the Plan and this Agreement. Consequently, Participant understands that the RSUs are granted on the assumption and condition that the RSUs or the Shares acquired upon settlement shall not become a part of any employment contract (either with the Company or any Parent or Subsidiary of the Company) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, Participant understands that the grant of RSUs would not be made to Participant but for the assumptions and conditions referred to above; thus, Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any RSUs shall be null and void.

Participant also understands and agrees that, as a condition of the grant and vesting of the RSUs, the Termination of Participant’s employment for any reason (including the reasons listed below), the RSUs will cease vesting immediately, effective on the Participant’s Termination Date. This will be the case, for example, even in the event of a Termination of Participant’s employment by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. Participant acknowledges that he or she has read and specifically accepts the conditions referred to in the “Termination” and “Nature of Grant” sections of the Agreement.

Notifications

Securities Law Information. The grant of the RSUs and the Shares issued pursuant to the vesting of the RSUs are considered a private placement outside of the scope of Spanish laws on public offerings and issuances of securities.

Exchange Control Information. To participate in the Plan, Participant must comply with exchange control regulations in Spain. The acquisition of Shares upon vesting of the RSUs and the sale of Shares must be declared on Form D-6, for statistical purposes, to the Dirección General de Comercio e Inversiones (the “DGCI”) of the Ministry of Industry, Tourism and Commerce. Generally, the D-6 form must be filed each January while the Shares are owned or to report the sale of Shares.

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Whenever receiving foreign currency payments derived from the ownership of Shares (i.e., cash dividends or sale proceeds) exceeding €50,000, Participant must inform the financial institution receiving the payment of the basis upon which such payment is made. Participant will need to provide the institution with the following information: (i) Participant’s name, address, and fiscal identification number; (ii) the name and corporate domicile of the Company; (iii) the amount of the payment; (iv) the currency used; (v) the country of origin; (vi) the reasons for the payment; and (vii) any further information that may be required.

Foreign Asset/Account Reporting Information. To the extent that Participant holds rights or assets (e.g., Shares or cash held in a bank or brokerage account) outside of Spain with a value in excess of €50,000 per type of right or asset (e.g., Shares, cash, etc.) as of December 31 each year, Participant will be required to report information on such rights and assets on his or her tax return for such year. After such rights and assets are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported rights or assets increases by more than €20,000. The reporting must be completed by March 31 following the end of the relevant year. It is Participant’s responsibility to comply with these reporting obligations, and Participant should consult with his or her personal tax and legal advisors in this regard.

In addition, Participant is required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities (including Shares acquired under the Plan) held in such accounts if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000.

Sweden

Terms and Conditions

Responsibility for Taxes. This provision supplements Section 6 of the Agreement:

Notwithstanding anything to the contrary in the Agreement, the Company and/or the Employer will account for Participant’s Tax-Related Items by withholding from Participant’s salary.

United Arab Emirates

Notifications

Securities Law Information. The Plan is being offered only to qualified employees of the Company and its Parent or Subsidiaries and is in the nature of an “exempt personal offer” of equity incentives to employees of the Company’s Parent or Subsidiary in the United Arab Emirates. The Plan, the Notice, this Agreement and any other grant documents Participant may receive from the Company are intended for distribution only to such employees and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered (i.e., Shares) should conduct their own due diligence on the securities. If Participant does not understand the contents of the Plan, the Notice or this Agreement, Participant should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. The Ministry of Economy, the Dubai Department of Economic Development, Emirates Securities and Commodities Authority, Central Bank and the Dubai Financial Services Authority, as applicable depending on Participant’s Employer’s location in the United Arab Emirates, have not approved the Plan, the Notice or this Agreement or taken steps to verify the information set out therein, and have no responsibility for such documents.

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United Kingdom

Terms and Conditions

Responsibility for Taxes. The following provisions supplement Section 6 of the Agreement:

Participant agrees that, if Participant does not pay or the Employer or the Company does not withhold from Participant the full amount of income tax that Participant owes at vesting, or the release or assignment of the RSUs for consideration, or the receipt of any other benefit in connection with the RSUs within 90 days of the end of the U.K. tax year (April 6 - April 5) during which the event giving rise to the liability occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), then the amount that should have been withheld shall constitute a loan owed by Participant to the Employer, effective as of the Due Date. Participant agrees that the loan will bear interest at the Her Majesty’s Revenue and Customs (“HMRC”) official rate and will be immediately due and repayable by Participant, and the Company and/or the Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any other funds due to Participant by the Company or Employer, by withholding in Shares issued at settlement or from the cash proceeds from the sale of Shares or by demanding cash or a cheque from Participant. Participant also authorizes the Company to delay the issuance of any Shares unless and until the loan is repaid in full.

Notwithstanding the foregoing, if Participant is an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply. In the event that Participant is an executive officer or director and income tax is not collected from or paid by Participant within 90 days of the Due Date, the amount of any uncollected income tax may constitute a benefit to Participant on which additional income tax and National Insurance Contributions (“NICs”) (including Employer NICs, as defined below) may be payable. Participant acknowledges that the Company or the Employer may recover any such additional income tax and NICs (including Employer NICs, as defined below) at any time thereafter by any of the means referred to in Section 6 of the Agreement, although Participant acknowledges that he or she ultimately will be responsible for reporting any income tax due on this additional benefit directly to the HMRC under the self-assessment regime and for reimbursing the Employer for the value of any NICs due on this additional benefit.

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2015 EQUITY INCENTIVE PLAN

NOTICE OF CASH-SETTLED RESTRICTED STOCK UNIT AWARD

FOR CHINESE NATIONAL PARTICIPANTS IN CHINA

GRANT NUMBER:

Unless otherwise defined herein, the terms defined in the Cepheid (the “Company”) 2015 Equity Incentive Plan, as amended (the “Plan”), shall have the same meanings in this Notice of Cash-Settled Restricted Stock Unit Award for Chinese National Participants in China (the “Notice”).

Name:

You (“Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the Cash-Settled Restricted Stock Unit Award Agreement for Chinese National Participants in China (the “Agreement”). Each RSU shall be equal in value to the Fair Market Value of one Share.

Number of RSUs:
Date of Grant:
Vesting Commencement Date:
Expiration Date:	The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan and the RSU Agreement, the RSUs will vest in accordance with the following schedule: 25% on the one-year anniversary of the Vesting Commencement Date and 25% on each one-year anniversary thereafter, such that the RSUs will be fully-vested on the four-year anniversary of the Vesting Commencement Date.

By accepting this grant you understand that your employment or consulting relationship or service with the Company or a Parent or Subsidiary is for an unspecified duration, can be terminated at any time, and that nothing in this Notice, the Agreement or the Plan changes your employment or service relationship. You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing service as an employee, director or consultant of the Company or a Parent or Subsidiary. You also understand that this Notice is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. You confirm that you have read both the RSU Agreement and the Plan.

CEPHEID 2015 EQUITY INCENTIVE PLAN

CASH-SETTLED RESTRICTED STOCK UNIT AWARD AGREEMENT

FOR CHINESE NATIONAL PARTICIPANTS IN CHINA

Unless otherwise defined herein, the terms defined in the Cepheid (the “Company”) 2015 Equity Incentive Plan, as amended (the “Plan”), shall have the same defined meanings in this Cash-Settled Restricted Stock Unit Award Agreement for Chinese National Participants in China (the “Agreement”).

Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and conditions of the Plan, the Notice of Cash-Settled Restricted Stock Unit Award for Chinese National Participants in China (the “Notice”) and this Agreement.

1. Settlement. The Company or Participant’s employer (the “Employer”) shall make a lump sum cash payment (“settlement”) to Participant in an amount equal to the aggregate Fair Market Value (determined on the vesting date) of the number of Shares corresponding to the number of vested RSUs, less any amounts withheld to satisfy Tax-Related Items (as defined in Section 6(b)(ii)). Settlement of RSUs will be made in local currency through payroll on the next payroll date that follows the applicable date of vesting under the vesting schedule set forth in the Notice. The USD/RMB exchange rate will be the exchange rate in effect at the time of settlement. Should Participant leave China on a permanent basis but continue to be employed by the Company or one of its Subsidiaries or Parent, the Company reserves the right to settle the vested RSU in Shares.

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2. No Stockholder Rights. Participant shall have no ownership or rights of ownership of the Shares in connection with

the grant, vesting or settlement of the RSUs.

3. No Dividend Equivalents. Dividends, if any (whether in cash or Shares), and dividend equivalents shall not be

credited to Participant on RSUs.

4. No Transfer. The RSUs and any interest therein shall not be sold, assigned, transferred, pledged, hypothecated, or

otherwise disposed of.

5. Termination. If Participant’s service Terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, and all rights of Participant to such RSUs shall immediately terminate. In case of any dispute as to whether Termination has occurred, the Committee shall have sole discretion to determine whether such Termination has occurred and the Termination Date. The details of Termination and its effects are further discussed below in Section 7(k).

6. Responsibility for Taxes.

(a) Regardless of any action that the Company or the Employer takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains his or her responsibility and may exceed the amount actually withheld by the Company or the Employer. Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs or any settlement upon vesting of the RSUs; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if Participant has become subject to Tax-Related Items in more than one jurisdiction between the date of grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to any relevant taxable or tax withholding event, as applicable, Participant will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by either or a combination of the following:

(i) withholding from Participant’s wages or other cash compensation paid to him or her by the Company and/or the Employer; or

(ii) withholding from the cash payment paid to him or her upon settlement of the vested RSUs.

(c) Notwithstanding the foregoing, the Company may, in its discretion and subject to such conditions as it may determine, require or permit Participant to satisfy any Tax-Related Items through some other means (including, without limitation, by payment of a cash amount equal to the amount of any Tax-Related Items).

(d) Finally, Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to deliver the settlement to Participant if he or she fails to comply with his or her obligations in connection with the Tax-Related Items.

7. Nature of Grant. In accepting the grant of the RSUs, Participant acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Board at any time to the extent permitted by the Plan;

(b) the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(c) all decisions with respect to future RSU grants, if any, will be in the Company’s sole discretion;

88

(d) the RSU grant and Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer or any Parent or Subsidiary and shall not interfere with the ability of the Company, Employer or any Parent or Subsidiary, as applicable, to terminate Participant’s employment or service relationship (if any);

(e) Participant is voluntarily participating in the Plan;

(f) the RSUs and any settlement that Participant receives at vesting are extraordinary items which are outside the scope of Participant’s employment or service contract, if any;

(g) the RSUs and any settlement that Participant receives at vesting are not intended to replace any pension rights or regular compensation;

(h) the RSUs and any settlement that Participant receives at vesting are not part of normal or expected compensation or salary for purposes of, among other things, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Parent or Subsidiary;

(i) the future value of any RSUs at vesting is unknown, indeterminable and cannot be predicted with certainty until the Settlement date;

(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant rendered services or the terms of Participant’s employment or service agreement, if any), and, in consideration of the grant of the RSUs to which Participant otherwise is not entitled, Participant irrevocably agrees never to institute any claim against the Company or any Parent or Subsidiary (including the Employer), waives his or her ability, if any, to bring any such claim, and releases the Company and its Parent or Subsidiary (including the Employer) from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(k) unless otherwise expressly provided in this Agreement or determined by the Company, Participant’s right to vest in the RSU under the Plan, if any, will Terminate as of Termination Date and will not be extended by any notice period (e.g., Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when Participant has Terminated for purposes of the RSU grant;

(l) unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and

(m) neither the Company, the Employer nor any Subsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to Participant pursuant to the settlement of the RSUs.

8. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other RSU grant materials (“Data”) by and among, as applicable, the Employer, the Company and its Parent or Subsidiaries for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social

89

insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all RSUs awarded, canceled, vested, unvested or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to such plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. Participant authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant RSUs or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.

10. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the RSUs granted hereunder are superseded. Except as provided in Section 17, no modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

11. Compliance with Laws and Regulations. The RSUs and any settlement that Participant receives following vesting will be subject to and conditioned upon compliance by the Company and Participant with all applicable tax, securities and exchange control laws and regulations relevant to the Company and the offer of the RSUs.

12. Governing Law and Venue; Severability. If one or more provisions of this Agreement are held to be unenforceable, the parties agree to renegotiate such provisions in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provisions, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. For purposes of litigating any action, lawsuit or other proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the court of Santa Clara County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

13. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary, to terminate Participant’s service, for any reason, with or without Cause.

14. Language. If Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

15. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

90

16. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan and on the RSU and any cash amount that Participant receives in settlement following vesting, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

17. Acknowledgement. The Company and Participant agree that the RSUs are granted under and governed by the Notice, this Agreement and the provisions of the Plan. Participant: (i) acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

*****

By accepting the grant, you and the Company agree that the RSUs are granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address.

91

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, John L. Bishop, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cepheid;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2015

/s/ John L. Bishop

John L. Bishop

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Ilan Daskal, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cepheid;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2015

/s/ Ilan Daskal

Ilan Daskal

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cepheid (the Company) on Form 10-Q for the quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, John L. Bishop, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2015

/s/ John L. Bishop

John L. Bishop

Chairman and Chief Executive Officer

(Principal Executive Officer)

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cepheid (the Company) on Form 10-Q for the quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Ilan Daskal, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2015

/s/ Ilan Daskal

Ilan Daskal

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

XML

Derivative Financial Instruments - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Net deferred gain (loss) associated with cash flow hedges	$ (800,000)		$ (800,000)		$ 200,000
Gain (loss) recognized for foreign currency forward contracts	(300,000)	$ (200,000)	1,700,000	$ (500,000)
Cash Flow Hedges [Member] | Fair Value of Derivatives Designated as Hedge Instruments [Member]
Derivatives, Fair Value [Line Items]
Notional principle amounts of Company's derivative instruments	152,800,000		152,800,000		117,200,000
Cash Flow Hedges [Member] | Fair Value of Derivatives Not Designated as Hedge Instruments [Member]
Derivatives, Fair Value [Line Items]
Notional principle amounts of Company's derivative instruments	$ 35,100,000		$ 35,100,000		$ 30,400,000

XML

Commitments, Contingencies and Legal Matters - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Loss Contingencies [Line Items]
Estimated arbitration proceeding charge	$ 20
Accrued and Other Liabilities [Member]
Loss Contingencies [Line Items]
Estimated arbitration proceeding charge		$ 20

XML

Convertible Senior Notes - Schedule of Convertible Notes (Detail) - USD ($)	Jun. 30, 2015	Dec. 31, 2014	Feb. 28, 2014
Liability component:
Net carrying amount	$ 282,979,000	$ 278,213,000
Equity component	73,013,000	73,013,000
Convertible Senior Notes [Member]
Liability component:
Principal	345,000,000	345,000,000
Less: debt discount, net of amortization	$ (62,021,000)	$ (66,787,000)
Net carrying amount			$ 345,000,000

XML

Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 8,269	$ 9,148	$ 15,827	$ 15,930
Cost of sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	1,008	1,473	2,049	1,854
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	2,277	2,481	4,475	4,609
Sales and marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	1,743	1,926	3,193	3,542
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 3,241	$ 3,268	$ 6,110	$ 5,925

XML

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Tax Contingency [Line Items]
Provision for income taxes	$ 1,254,000	$ 919,000	$ 778,000	$ 1,599,000
Percentage of federal statutory tax rate	34.00%	34.00%	34.00%	34.00%
Income tax expense or benefit recorded in US federal and state tax jurisdictions	$ 0		$ 0
Uncertain tax positions, Interest and penalties	0		0
Accrued interest or penalties	$ 0		$ 0		$ 0
Domestic [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Income tax examination, open tax year			1996
Domestic [Member] | Latest Tax Year [Member]
Income Tax Contingency [Line Items]
Income tax examination, open tax year			2014
Foreign [Member] | Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Income tax examination, open tax year			2009
Foreign [Member] | Latest Tax Year [Member]
Income Tax Contingency [Line Items]
Income tax examination, open tax year			2014

XML

Fair Value - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial assets	$ 383,053	$ 377,010
Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial assets	$ 0	$ 0

XML

Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Restricted Stock Plan Activity (Detail) - 6 months ended Jun. 30, 2015 - $ / shares shares in Thousands	Total
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Outstanding, Beginning Balance, Shares	698
Granted, Shares	447
Vested, Shares	(186)
Cancelled, Shares	(50)
Outstanding, Ending Balance, Shares	909
Weighted Average Grant Date Fair Value, Outstanding, Beginning Balance	$ 40.30
Weighted Average Grant Date Fair Value, Granted	56.31
Weighted Average Grant Date Fair Value, Vested	39.07
Weighted Average Grant Date Fair Value, Cancelled	44.37
Weighted Average Grant Date Fair Value, Outstanding, Ending Balance	$ 48.20

XML

Commitments, Contingencies and Legal Matters (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Summary of Purchase Commitments

The following table summarizes the Company’s purchase commitments at June 30, 2015 (in thousands):

Years Ending December 31,	Purchase Commitments
2015 (remaining six months)	$	36,177
2016		—
2017		—
2018		—
2019		—
Thereafter		—
Total minimum payments	$	36,177

XML

Convertible Senior Notes - Schedule of Total Interest Expense Related to Notes (Detail) - Convertible Senior Notes [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest Expense [Line Items]
1.25% coupon	$ 1,078	$ 1,078	$ 2,156	$ 1,653
Amortization of debt issuance costs	144	100	278	150
Amortization of debt discount	2,398	2,284	4,766	3,491
Total interest expense	$ 3,620	$ 3,462	$ 7,200	$ 5,294

XML

Derivative Financial Instruments - Pre-tax Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Parenthetical) (Detail) - Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] - Reclassified from AOCI [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Operating Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss)	$ (2.4)	$ (0.4)	$ (4.7)	$ (0.9)
Revenue [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss)	$ 2.4	$ 0.2	$ 4.7	$ 0.4

XML

Investments - Schedule of Marketable Securities with Unrealized Losses (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 months, Fair Value	$ 104,009	$ 178,279
Less Than 12 months, Unrealized Loss	(60)	(168)
More than 12 months, Fair Value	8,056	0
More than 12 months, Unrealized Loss	(11)	0
Total, Fair Value	112,065	178,279
Total, Unrealized Loss	(71)	(168)
Asset-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 months, Fair Value	24,297	54,580
Less Than 12 months, Unrealized Loss	(5)	(35)
More than 12 months, Fair Value	3,592	0
More than 12 months, Unrealized Loss	(1)	0
Total, Fair Value	27,889	54,580
Total, Unrealized Loss	(6)	(35)
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 months, Fair Value	72,814	79,360
Less Than 12 months, Unrealized Loss	(51)	(74)
More than 12 months, Fair Value	4,464	0
More than 12 months, Unrealized Loss	(10)	0
Total, Fair Value	77,278	79,360
Total, Unrealized Loss	(61)	(74)
Government Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 months, Fair Value		39,532
Less Than 12 months, Unrealized Loss		(51)
More than 12 months, Fair Value		0
More than 12 months, Unrealized Loss		0
Total, Fair Value		39,532
Total, Unrealized Loss		(51)
Other Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 months, Fair Value	6,898	4,807
Less Than 12 months, Unrealized Loss	(4)	(8)
More than 12 months, Fair Value	0	0
More than 12 months, Unrealized Loss	0	0
Total, Fair Value	6,898	4,807
Total, Unrealized Loss	$ (4)	$ (8)

XML

Convertible Senior Notes - Schedule of Carrying Value of Debt Instrument (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Fair Value	$ 399,344	$ 382,232
Carrying Value	282,979	278,213
Level 2 [Member]
Debt Instrument [Line Items]
Fair Value	399,344	382,232
Carrying Value	$ 282,979	$ 278,213

XML

Segment and Significant Concentrations - Segment Revenue by Geography Region (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 132,475	$ 116,503	$ 265,112	$ 223,410
Clinical [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	125,010	111,340	250,317	211,785
Non-Clinical [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	7,465	5,163	14,795	11,625
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	76,187	61,575	158,492	124,410
North America [Member] | Clinical [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	69,056	57,649	144,529	114,935
North America [Member] | Non-Clinical [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	7,131	3,926	13,963	9,475
International [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	56,288	54,928	106,620	99,000
International [Member] | Clinical [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	55,953	53,691	105,787	96,850
International [Member] | Non-Clinical [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 335	$ 1,237	$ 833	$ 2,150

XML

Convertible Senior Notes - Additional Information (Detail) - USD ($)	1 Months Ended	6 Months Ended
	Feb. 28, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Debt Instrument [Line Items]
Convertible notes issued		$ 282,979,000	$ 278,213,000
Initial strike price of common stock		$ 65.10
Conversion of notes, cap price		$ 78.61
Cost of purchased capped calls		$ 25,100,000
Closing price of common stock		$ 61.15
Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Convertible notes issued	$ 345,000,000
Convertible notes, maturity date		Feb. 01, 2021
Convertible notes fixed rate	1.25%	1.25%		1.25%
Convertible senior notes, Maturity date description		1.25% convertible senior notes (the "Notes") due February 1, 2021, unless earlier repurchased by the Company or converted by the holder pursuant to their terms
Convertible senior notes, interest payment description		Interest is payable semiannually in arrears on February 1 and August 1 of each year, commencing on August 1, 2014.
Convertible debt, conversion rate	15.3616
Convertible debt, conversion rate, principal amount	$ 1,000
Conversion price per share of common stock	$ 65.10
Debt converted into number of common shares	5,300,000
Convertible debt maturity date		Aug. 01, 2020
Convertible debt, fair value of liability		$ 270,000,000
Convertible debt, present value of future payments		345,000,000	$ 345,000,000
Convertible debt discount, recorded in additional paid in capital		$ 75,000,000
Convertible debt, interest rate		5.00%
Debt instrument transaction costs		$ 7,200,000
Convertible Senior Notes [Member] | Scenario One [Member]
Debt Instrument [Line Items]
Debt instrument trading days	20 days
Consecutive trading days	30 days
Percentage of conversion price	130.00%
Convertible Senior Notes [Member] | Scenario Two [Member]
Debt Instrument [Line Items]
Consecutive trading days	5 days
Percentage of conversion price	98.00%
Equity Component [Member]
Debt Instrument [Line Items]
Debt instrument transaction costs		$ 2,000,000

XML

Investments

6 Months Ended

Jun. 30, 2015

Investments Schedule [Abstract]

Investments

3. Investments

The Company’s marketable securities as of June 30, 2015, were classified as available-for-sale securities, with changes in fair value recognized in accumulated other comprehensive income (loss), net, a component of shareholders’ equity. Classification of marketable securities as a current asset is based on the intended holding period and realizability of the investment. The following tables summarize available-for-sale marketable securities (in thousands):

Balance as of June 30, 2015:
	Cost			Gross Unrealized Gain			Gross Unrealized Loss			Estimated Fair Value
Short-term investments:
Asset-backed securities	$	47,549		$	4		$	(6	)	$	47,547
Commercial paper		74,511			20			—			74,531
Corporate debt securities		65,683			4			(25	)		65,662
Government agency securities		21,000			7			—			21,007
Other securities		8,118			8			—			8,126
Amounts classified as cash equivalents		(27,494	)		(4	)		—			(27,498	)
Total short-term investments	$	189,367		$	39		$	(31	)	$	189,375
Investments:
Asset-backed securities	$	18,373		$	10		$	—		$	18,383
Corporate debt securities		44,596			7			(36	)		44,567
Government agency securities		8,001			4			—			8,005
Other securities		8,711			3			(4	)		8,710
Total investments	$	79,681		$	24		$	(40	)	$	79,665

Balance as of December 31, 2014:
	Cost			Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
Short-term investments:
Asset-backed securities	$	52,240		$	3	$	(23	)	$	52,220
Commercial paper		76,683			12		—			76,695
Corporate debt securities		64,244			2		(45	)		64,201
Government agency securities		15,000			3		—			15,003
Other securities		9,206			2		—			9,208
Amounts classified as cash equivalents		(20,598	)		—		—			(20,598	)
Total short-term investments	$	196,775		$	22	$	(68	)	$	196,729
Investments:
Asset-backed securities	$	12,724		$	—	$	(12	)	$	12,712
Corporate debt securities		22,709			—		(29	)		22,680
Government agency securities		39,583			—		(51	)		39,532
Other securities		4,815			—		(8	)		4,807
Total investments	$	79,831		$	—	$	(100	)	$	79,731

For the six months ended June 30, 2015 and 2014, $44.9 million and $67.7 million, respectively, of proceeds from sales of marketable securities were collected. The Company determines gains and losses from sales of marketable securities based on specific identification of the securities sold. Gross realized gains and losses from sales of marketable securities, all of which are reported as a component of “Interest income” in the Condensed Consolidated Statements of Operations, were for the three and six months ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Gross realized gains	$	3	$	25	$	3	$	27
Gross realized losses		—		—		—		—
Realized gains, net	$	3	$	25	$	3	$	27

The fair value of the Company’s marketable securities with unrealized losses at June 30, 2015 and December 31, 2014, and the duration of time that such losses had been unrealized (in thousands) were:

Balance at June 30, 2015:
	Less Than 12 months					More than 12 months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Asset-backed securities	$	24,297	$	(5	)	$	3,592	$	(1	)	$	27,889	$	(6	)
Corporate debt securities		72,814		(51	)		4,464		(10	)		77,278		(61	)
Other securities		6,898		(4	)		—		—			6,898		(4	)
Total	$	104,009	$	(60	)	$	8,056	$	(11	)	$	112,065	$	(71	)

Balance at December 31, 2014:
	Less Than 12 months					More than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Asset-backed securities	$	54,580	$	(35	)	$	—	$	—	$	54,580	$	(35	)
Corporate debt securities		79,360		(74	)		—		—		79,360		(74	)
Government agency securities		39,532		(51	)		—		—		39,532		(51	)
Other securities		4,807		(8	)		—		—		4,807		(8	)
Total	$	178,279	$	(168	)	$	—	$	—	$	178,279	$	(168	)

The Company has evaluated such securities, which consist of investments in asset-backed securities, corporate debt securities, government agency securities, and other securities as of June 30, 2015, and has determined that there was no indication of other-than-temporary impairments. This determination was based on several factors, including the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the debt issuer, and the Company’s intent and ability to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

The following table summarizes the amortized cost and estimated fair value of available-for-sale debt securities at June 30, 2015 and December 31, 2014, by contractual maturity (in thousands):

	June 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Mature in one year or less	$	157,642	$	157,654	$	150,133	$	150,105
Mature after one year through three years		125,417		125,397		135,675		135,566
Mature in more than three years		13,483		13,487		11,396		11,387
Total	$	296,542	$	296,538	$	297,204	$	297,058

XML

Related Party Transaction - Additional Information (Detail) - Director [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Related Party Transaction [Line Items]
Net revenues recorded from Geisinger	$ 0.5	$ 0.4	$ 1.3	$ 0.8
Accounts receivable due from Geisinger	$ 0.2		$ 0.2		$ 0.2

XML

Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization expense	$ 1,700	$ 900	$ 3,334	$ 1,841
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives of intangible assets			3 years
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives of intangible assets			15 years

XML

Organization and Summary of Significant Accounting Policies - Components of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw Materials	$ 31,080	$ 36,287
Work in Process	58,369	51,691
Finished Goods	52,601	44,657
Inventory	$ 142,050	$ 132,635

XML

Organization and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015 USD ($) shares	Jun. 30, 2014 shares	Jun. 30, 2015 USD ($) Customer shares	Jun. 30, 2014 shares	Dec. 31, 2014 USD ($) Customer
Concentration Risk [Line Items]
Percentage of cash and cash equivalents held by the Company's			59.00%		58.00%
Capitalized stock-based compensation expense included in inventory			$ 1.7		$ 1.6
Total anti-dilutive common stock equivalent shares | shares	8,847,000	9,845,000	8,655,000	9,237,000
Reclassification of debt issuance costs	$ 6.0		$ 6.0
Accounts Receivable [Member] | Credit Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			15.00%		26.00%
Number of customers | Customer			1		1
Prepaid Expenses and Other Current Assets [Member] | Bill and Melinda Gates Foundation and National Philanthropic Trust [Member]
Concentration Risk [Line Items]
Restricted cash	$ 0.5		$ 0.5		$ 1.9
Minimum [Member]
Concentration Risk [Line Items]
Contract term for purchasing minimum quantities of reagents			P3Y
Maximum [Member]
Concentration Risk [Line Items]
Contract term for purchasing minimum quantities of reagents			P5Y

XML

Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Option Activity (Detail) - Jun. 30, 2015 - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	Total
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares, Outstanding, Beginning Balance	5,581
Shares, Granted	1,141
Shares, Exercised	(912)
Shares, Forfeited	(144)
Shares, Outstanding, Ending Balance	5,666
Shares, Exercisable, June 30, 2015	2,955
Shares, Vested and expected to vest, June 30, 2015	5,431
Weighted Average Exercise Price, Outstanding, Beginning Balance	$ 33.20
Weighted Average Exercise Price, Granted	56.46
Weighted Average Exercise Price, Exercised	22.84
Weighted Average Exercise Price, Forfeited	41.29
Weighted Average Exercise Price, Outstanding, Ending Balance	39.35
Weighted Average Exercise Price, Exercisable, June 30, 2015	31.05
Weighted Average Exercise Price, Vested and expected to vest, June 30, 2015	$ 38.87
Weighted Average Remaining Contractual Term (in years), Outstanding, June 30, 2015	4 years 6 months 26 days
Weighted Average Remaining Contractual Term (in years), Exercisable, June 30, 2015	3 years 4 months 2 days
Weighted Average Remaining Contractual Term (in years), Vested and expected to vest, June 30, 2015	4 years 6 months
Intrinsic Value, Outstanding, June 30, 2015	$ 123,503
Intrinsic Value, Exercisable, June 30, 2015	88,962
Intrinsic Value, Vested and expected to vest, June 30, 2015	$ 120,996

XML

Intangible Assets - Net Carrying Value and Accumulated Amortization of Major Classes of Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 55,916	$ 58,789
Accumulated Amortization	(27,736)	(27,349)
Net Carrying Amount	28,180	31,440
Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	11,454	13,594
Accumulated Amortization	(6,747)	(8,477)
Net Carrying Amount	4,707	5,117
Technology acquired in acquisitions [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	8,613	8,613
Accumulated Amortization	(8,613)	(8,613)
Net Carrying Amount	0	0
Customer relationships and other intangible assets acquired in acquisitions [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	35,849	36,582
Accumulated Amortization	(12,376)	(10,259)
Net Carrying Amount	$ 23,473	$ 26,323

XML

Organization and Summary of Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic:
Net loss	$ (16,730)	$ (9,843)	$ (15,824)	$ (19,146)
Basic weighted shares outstanding	71,861	69,968	71,563	69,622
Net loss per share	$ (0.23)	$ (0.14)	$ (0.22)	$ (0.27)
Diluted:
Net loss	$ (16,730)	$ (9,843)	$ (15,824)	$ (19,146)
Basic weighted shares outstanding	71,861	69,968	71,563	69,622
Effect of dilutive securities:
Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes	0	0	0	0
Diluted weighted shares outstanding	71,861	69,968	71,563	69,622
Net loss per share	$ (0.23)	$ (0.14)	$ (0.22)	$ (0.27)

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 110,569	$ 96,663
Total short-term investments	189,375	196,729
Foreign currency derivatives	3,444	3,887
Total investments	79,665	79,731
Assets, Total	383,053	377,010
Foreign currency derivatives	3,205	3,812
Liabilities, Total	3,205	3,812
Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	47,547	52,220
Total investments	18,383	12,713
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	65,662	64,202
Total investments	44,567	22,679
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	47,033	56,096
Government Agency Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	21,007	15,003
Total investments	8,005	39,532
Other Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	8,126	9,208
Total investments	8,710	4,807
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	83,071	76,065
Total short-term investments	0	0
Foreign currency derivatives	0	0
Total investments	0	0
Assets, Total	83,071	76,065
Foreign currency derivatives	0	0
Liabilities, Total	0	0
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	27,498	20,598
Total short-term investments	189,375	196,729
Foreign currency derivatives	3,444	3,887
Total investments	79,665	79,731
Assets, Total	299,982	300,945
Foreign currency derivatives	3,205	3,812
Liabilities, Total	3,205	3,812
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0	0
Total short-term investments	0	0
Foreign currency derivatives	0	0
Total investments	0	0
Assets, Total	0	0
Foreign currency derivatives	0	0
Liabilities, Total	0	0
Fair Value, Measurements, Recurring [Member] | Asset-Backed Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Asset-Backed Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	47,547	52,220
Total investments	18,383	12,713
Fair Value, Measurements, Recurring [Member] | Asset-Backed Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	65,662	64,202
Total investments	44,567	22,679
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	47,033	56,096
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Government Agency Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Government Agency Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	21,007	15,003
Total investments	8,005	39,532
Fair Value, Measurements, Recurring [Member] | Government Agency Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Other Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0	0
Total investments	0	0
Fair Value, Measurements, Recurring [Member] | Other Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	8,126	9,208
Total investments	8,710	4,807
Fair Value, Measurements, Recurring [Member] | Other Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total short-term investments	0	0
Total investments	$ 0	$ 0

XML

Fair Value

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value

2. Fair Value

The following table summarizes the fair value hierarchy for the Company’s financial assets (cash, cash equivalents, short-term investments, non-current investments and foreign currency derivatives) and financial liabilities (foreign currency derivatives) measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

Balance as of June 30, 2015:
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	83,071	$	27,498	$	—	$	110,569
Short-term investments:
Asset-backed securities		—		47,547		—		47,547
Corporate debt securities		—		65,662		—		65,662
Commercial Paper		—		47,033		—		47,033
Government agency securities		—		21,007		—		21,007
Other securities		—		8,126		—		8,126
Total short-term investments		—		189,375		—		189,375
Foreign currency derivatives		—		3,444		—		3,444
Investments:
Asset-backed securities		—		18,383		—		18,383
Corporate debt securities		—		44,567		—		44,567
Government agency securities		—		8,005		—		8,005
Other securities		—		8,710		—		8,710
Total investments		—		79,665		—		79,665
Total	$	83,071	$	299,982	$	—	$	383,053
Liabilities:
Foreign currency derivatives	$	—	$	3,205	$	—	$	3,205
Total	$	—	$	3,205	$	—	$	3,205

Balance as of December 31, 2014:
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	76,065	$	20,598	$	—	$	96,663
Short-term investments:
Asset-backed securities				52,220				52,220
Corporate debt securities		—		64,202		—		64,202
Commercial paper		—		56,096		—		56,096
Government agency securities				15,003				15,003
Other securities		—		9,208		—		9,208
Total short-term investments		—		196,729		—		196,729
Foreign currency derivatives		—		3,887		—		3,887
Investments:
Asset-backed securities		—		12,713		—		12,713
Corporate debt securities		—		22,679		—		22,679
Government agency securities		—		39,532		—		39,532
Other securities		—		4,807		—		4,807
Total investments		—		79,731		—		79,731
Total	$	76,065	$	300,945	$	—	$	377,010
Liabilities:
Foreign currency derivatives	$	—	$	3,812	$	—	$	3,812
Total	$	—	$	3,812	$	—	$	3,812

The estimated fair values of the Company’s other financial instruments which are not measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 were as follows (in thousands):

Balance as of June 30, 2015:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible senior notes	$	—	$	399,344	$	—	$	399,344
Total	$	—	$	399,344	$	—	$	399,344

Balance as of December 31, 2014:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible senior notes	$	—	$	382,232	$	—	$	382,232
Total	$	—	$	382,232	$	—	$	382,232

The Company utilized levels 1 and 2 to value its financial assets on a recurring basis. Level 1 instruments use quoted prices in active markets for identical assets or liabilities, which include the Company’s cash accounts, short-term deposits, and money market funds as these specific assets are liquid. Level 2 instruments are valued using the market approach which uses quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 instruments include commercial paper, corporate debt securities, United States government securities, government agency securities, asset-backed securities, and other securities as similar or identical instruments can be found in active markets.

The Company recorded derivative assets and liabilities at fair value. The Company’s derivatives consist of foreign exchange forward contracts. The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact.

Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically foreign currency spot rate and forward points) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR rates, credit default spot rates, and company specific LIBOR spread). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. The estimated fair value of the convertible senior notes, which we have classified as Level 2 financial instruments, was determined based on the quoted price of the convertible senior notes on June 30, 2015.

Level 3 assets and liabilities are valued by applying the income approach and are based on significant unobservable inputs that are supported by little or no market activity. The Company had no level 3 financial assets as of June 30, 2015 and December 31, 2014.

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Fair Value - Liabilities Measured at Fair Value on Non-Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Liabilities:
Convertible senior notes	$ 399,344	$ 382,232
Liabilities, Total	399,344	382,232
Level 2 [Member]
Liabilities:
Convertible senior notes	399,344	382,232
Fair Value, Measurements, Nonrecurring [Member] | Level 1 [Member]
Liabilities:
Convertible senior notes	0	0
Liabilities, Total	0	0
Fair Value, Measurements, Nonrecurring [Member] | Level 2 [Member]
Liabilities:
Convertible senior notes	399,344	382,232
Liabilities, Total	399,344	382,232
Fair Value, Measurements, Nonrecurring [Member] | Level 3 [Member]
Liabilities:
Convertible senior notes	0	0
Liabilities, Total	$ 0	$ 0

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Derivative Financial Instruments - Derivative Instruments at Gross Fair Value Reflected in Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Foreign exchange contracts, Assets	$ 3,444	$ 3,887
Foreign exchange contracts, Liabilities	(3,205)	(3,812)
Fair Value of Derivatives Designated as Hedge Instruments [Member]
Derivatives, Fair Value [Line Items]
Foreign exchange contracts, Assets	3,396	3,887
Foreign exchange contracts, Liabilities	(3,014)	(3,685)
Fair Value of Derivatives Not Designated as Hedge Instruments [Member]
Derivatives, Fair Value [Line Items]
Foreign exchange contracts, Assets	48	0
Foreign exchange contracts, Liabilities	$ (191)	$ (127)

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Commitments, Contingencies and Legal Matters - Summary of Purchase Commitments (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2015 (remaining six months)	$ 36,177
2016	0
2017	0
2018	0
2019	0
Thereafter	0
Total minimum payments	$ 36,177

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 110,569	$ 96,663
Short-term investments	189,375	196,729
Accounts receivable, less allowance for doubtful accounts of $300 as of June 30, 2015 and $237 as of December 31, 2014	77,758	68,809
Inventory, net	142,050	132,635
Prepaid expenses and other current assets	28,596	24,274
Total current assets	548,348	519,110
Property and equipment, net	120,226	115,765
Investments	79,665	79,731
Other non-current assets	7,776	7,847
Intangible assets, net	28,180	31,440
Goodwill	39,681	39,681
Total assets	823,876	793,574
Current liabilities:
Accounts payable	60,700	50,435
Accrued compensation	31,245	33,760
Accrued royalties	5,309	5,443
Accrued and other liabilities	30,815	34,761
Current portion of deferred revenue	13,722	13,447
Total current liabilities	141,791	137,846
Long-term portion of deferred revenue	5,248	4,532
Convertible senior notes, net	282,979	278,213
Other liabilities	19,376	18,768
Total liabilities	$ 449,394	$ 439,359
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized, none issued or outstanding	$ 0	$ 0
Common stock, no par value; 150,000,000 shares authorized, 72,057,132 and 70,904,388 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively	443,209	422,151
Additional paid-in capital	241,528	225,529
Accumulated other comprehensive income (loss), net	(719)	247
Accumulated deficit	(309,536)	(293,712)
Total shareholders' equity	374,482	354,215
Total liabilities and shareholders' equity	$ 823,876	$ 793,574

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Intangible Assets - Expected Future Annual Amortization Expense of Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2015 (remaining six months)	$ 3,001
2016	5,822
2017	5,460
2018	5,080
2019	4,181
Thereafter	4,636
Net Carrying Amount	$ 28,180	$ 31,440

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (15,824)	$ (19,146)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment	13,435	10,340
Amortization of intangible assets	3,334	1,841
Unrealized foreign exchange differences	1,338	122
Amortization of debt discount and transaction costs	5,044	3,642
Impairment of acquired intangible assets, licenses, property and equipment	224
Stock-based compensation expense	15,799	15,930
Excess tax benefits from stock-based compensation expense	(53)
Loss on the disposal of property, equipment and intangible assets	28
Changes in operating assets and liabilities:
Accounts receivable	(8,949)	(3,167)
Inventory, net	(9,267)	(19,809)
Prepaid expenses and other current assets	(5,151)	(5,867)
Other non-current assets	(207)	(42)
Accounts payable and other current and non-current liabilities	9,695	1,916
Accrued compensation	(2,514)	2,821
Deferred revenue	991	2,864
Net cash provided by (used in) operating activities	7,923	(8,555)
Cash flows from investing activities:
Capital expenditures	(19,308)	(25,745)
Cost of acquisitions, net	(3,000)
Proceeds from sale of equipment and an intangible asset	834
Proceeds from sales of marketable securities and investments	44,873	67,739
Proceeds from maturities of marketable securities and investments	118,497	21,326
Purchases of marketable securities and investments	(156,401)	(334,800)
Transfer from restricted cash	1,328
Net cash used in investing activities	(13,177)	(271,480)
Cash flows from financing activities:
Net proceeds from the issuance of common shares and exercise of stock options	20,592	24,498
Excess tax benefits from stock-based compensation expense	53
Proceeds from borrowings of convertible senior notes, net of issuance costs		335,789
Purchase of convertible note capped call hedge		(25,082)
Principal payment of notes payable	(80)	(95)
Net cash provided by financing activities	20,565	335,110
Effect of foreign exchange rate change on cash and cash equivalents	(1,405)	(166)
Net increase in cash and cash equivalents	13,906	54,909
Cash and cash equivalents at beginning of period	96,663	66,072
Cash and cash equivalents at end of period	$ 110,569	$ 120,981

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Segment and Significant Concentrations - Additional Information (Detail) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) Customer	Jun. 30, 2014 USD ($) Customer	Jun. 30, 2015 USD ($) Customer Segment	Jun. 30, 2014 USD ($) Customer	Dec. 31, 2014 USD ($)
Segment Reporting Information [Line Items]
Number of operating business segment | Segment			1
Product sales to customers	$ 132,475	$ 116,503	$ 265,112	$ 223,410
China [Member]
Segment Reporting Information [Line Items]
Product sales to customers	1,300	15,400	1,800	15,500
United States [Member]
Segment Reporting Information [Line Items]
Product sales to customers	72,600	$ 60,000	149,600	$ 121,600
Long lived-assets	100,500		100,500		$ 96,000
Non-US Countries [Member]
Segment Reporting Information [Line Items]
Long lived-assets	$ 19,700		$ 19,700		$ 19,800
Revenue [Member] | Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Concentration risk, number of customers above threshold | Customer	0	1	0	0
Concentration risk, percentage threshold	10.00%	10.00%	10.00%	10.00%
Revenue [Member] | Customer Concentration Risk [Member] | One Distributor [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage	0.10%	13.10%	0.10%	6.80%
Revenue [Member] | Geographic Concentration Risk [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage threshold	10.00%	10.00%	10.00%	10.00%
Revenue [Member] | Geographic Concentration Risk [Member] | China [Member] | Greater Than [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage		10.00%

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Investments - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Proceeds from sales of marketable securities	$ 44.9	$ 67.7

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments at Gross Fair Value Reflected in Condensed Consolidated Balance Sheets

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, respectively (in thousands):

	June 30, 2015
	Fair Value of Derivatives Designated as Hedge Instruments			Fair Value of Derivatives Not Designated as Hedge Instruments			Total Fair Value
Derivative Assets (a):
Foreign exchange contracts	$	3,396		$	48		$	3,444
Derivative Liabilities (b):
Foreign exchange contracts		(3,014	)		(191	)		(3,205	)

	December 31, 2014
	Fair Value of Derivatives Designated as Hedge Instruments			Fair Value of Derivatives Not Designated as Hedge Instruments			Total Fair Value
Derivative Assets (a):
Foreign exchange contracts	$	3,887		$	—		$	3,887
Derivative Liabilities (b):
Foreign exchange contracts		(3,685	)		(127	)		(3,812	)

^(a)  The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

^(b)  The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued and other liabilities in the Condensed Consolidated Balance Sheets.

Pre-tax Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended
	Loss Recognized in OCI - Effective Portion						Loss Reclassified from AOCI into Income - Effective Portion						Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2015			June 30, 2014			June 30, 2015 (a)			June 30, 2014 (b)			Location	June 30, 2015			June 30, 2014
Cash flow hedges:
Foreign exchange contracts	$	(1,455	)	$	(472	)	$	(22	)	$	(216	)	Foreign currency exchange loss and other, net	$	(38	)	$	20
Total	$	(1,455	)	$	(472	)	$	(22	)	$	(216	)		$	(38	)	$	20

^(a)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $2.4 million loss within costs and operating expenses and a $2.4 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2015.

^(b)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $0.4 million loss within costs and operating expenses and a $0.2 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2014.

	Six Months Ended
	Loss Recognized in OCI - Effective Portion						Loss Reclassified from AOCI into Income - Effective Portion						Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2015			June 30, 2014			June 30, 2015 (a)			June 30, 2014 (b)			Location	June 30, 2015			June 30, 2014
Cash flow hedges:
Foreign exchange contracts	$	(1,051	)	$	(291	)	$	(45	)	$	(503	)	Foreign currency exchange loss and other, net	$	(124	)	$	33
Total	$	(1,051	)	$	(291	)	$	(45	)	$	(503	)		$	(124	)	$	33

^(a)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $4.7 million loss within costs and operating expenses and a $4.7 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2015.

^(b)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $0.9 million loss within costs and operating expenses and a $0.4 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2014.

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Investments - Schedule of Gross Realized Gains and Losses of Marketable Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Gross realized gains	$ 3	$ 25	$ 3	$ 27
Gross realized losses	0	0	0	0
Realized gains, net	$ 3	$ 25	$ 3	$ 27

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Convertible Senior Notes (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of Convertible Notes

The Notes consist of the following (in thousands):

	June 30, 2015			December 31, 2014
Liability component:
Principal		345,000			345,000
Less: debt discount, net of amortization		(62,021	)		(66,787	)
Net carrying amount		282,979			278,213
Equity component (a)		73,013			73,013

(a) Recorded in the condensed consolidated balance sheets within additional paid-in capital, net of $2.0 million issuance costs in equity

Schedule of Total Interest Expense Related to Notes

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2015		2014		2015		2014
1.25% coupon	$	1,078	$	1,078	$	2,156	$	1,653
Amortization of debt issuance costs		144		100		278		150
Amortization of debt discount		2,398		2,284		4,766		3,491
		3,620		3,462		7,200		5,294

Schedule of Carrying Value of Debt Instrument

As of June 30, 2015 and December 31, 2014, the fair value of the Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands):

	June 30, 2015				December 31, 2014
	Fair Value		Carrying Value		Fair Value		Carrying Value
Convertible Senior Notes	$	399,344	$	282,979	$	382,232	$	278,213

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Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Organization and Basis of Presentation

Cepheid (the “Company”) was incorporated in the State of California on March 4, 1996. The Company is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for testing in the Clinical market, as well as for application in the Company’s Non-Clinical legacy market. The Company’s systems enable rapid, sophisticated molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures.

The Condensed Consolidated Balance Sheet at June 30, 2015, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014, the Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2015 and 2014 and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 are unaudited. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments that management considers necessary for a fair presentation of the Company’s financial position at such dates, and the operating results and cash flows for those periods. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations for such periods are not necessarily indicative of the results expected for the remainder of 2015 or for any future period. The Condensed Consolidated Balance Sheet as of December 31, 2014 is derived from audited financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates.

Cash, Cash Equivalents, Restricted Cash, Short-Term Investments and Non-Current Investments

Cash and cash equivalents consist of cash on deposit with banks and money market instruments. Interest income includes interest, dividends, amortization of purchase premiums and discounts and realized gains and losses on sales of securities.

Restricted cash consists of cash contractually restricted for use to develop the Xpert Ebola test in accordance with the Company’s agreements with the Bill and Melinda Gates Foundation (“BMGF”) and the National Philanthropic Trust (“NPT”). At June 30, 2015 and December 31, 2014, prepaid expense and other current assets included $0.5 million and $1.9 million of restricted cash, respectively.

The Company’s marketable debt securities have been classified and accounted for as available-for-sale. The Company determines the appropriate classification of its investments at the time of purchase and re-evaluates the designations at each balance sheet date. The Company classifies its marketable debt securities as cash equivalents, short-term investments or non-current investments based on each instrument’s underlying effective maturity date. All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Marketable debt securities with effective maturities of 12 months or less are classified as short-term, and marketable debt securities with effective maturities greater than 12 months are classified as non-current. The Company’s marketable debt securities are carried at fair value, with the unrealized gains and losses reported within accumulated other comprehensive income (loss), a component of shareholders’ equity. The cost of securities sold is based upon the specific identification method.

The Company assesses whether an other-than-temporary impairment loss on its investments has occurred due to declines in fair value or other market conditions. With respect to the Company’s debt securities, this assessment takes into account the severity and duration of the decline in value, the Company’s intent to sell the security, whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and whether or not the Company expects to recover the entire amortized cost basis of the security (that is, a credit loss exists).

See Note 3, “Investments,” for information and related disclosures regarding the Company’s investments.

Concentration of Credit Risks and Other Uncertainties

The carrying amounts for financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to their short maturities. Derivative instruments and investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s derivative instruments consist of large financial institutions of high credit standing.

The Company’s main financial institution for banking operations held 59% and 58% of the Company’s cash and cash equivalents as of June 30, 2015 and December 31, 2014, respectively.

The Company’s accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has not experienced significant losses to date. There was one direct customer whose accounts receivable balance represented 15% and 26% of total accounts receivable as of June 30, 2015 and December 31, 2014, respectively.

See Note 10, “Segment and Significant Concentrations,” for disclosure regarding total sales to direct customers and single countries.

Inventory, Net

Inventory is stated at the lower of standard cost (which approximates actual cost) or market value, with cost determined on the first-in-first-out method. Allocation of fixed production overheads to conversion costs is based on normal capacity of production. Abnormal amounts of idle facility expense, freight, handling costs, and spoilage are expensed as incurred, and not included in overhead. The Company maintains provisions for excess and obsolete inventory based on management’s estimates of forecasted demand and, where applicable, product expiration.

The components of inventories were as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw Materials	$	31,080	$	36,287
Work in Process		58,369		51,691
Finished Goods		52,601		44,657
Inventory	$	142,050	$	132,635

In addition, capitalized stock-based compensation expense of $1.7 million and $1.6 million were included in inventory as of June 30, 2015 and December 31, 2014, respectively.

Revenue Recognition

The Company recognizes revenue from sales when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. No right of return exists for the Company’s products except in the case of damaged goods. The Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of sales. In those cases where the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue.

The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. In situations with multiple deliverables, revenue is recognized upon the delivery of the separate elements. The Company sells service contracts for which revenue is deferred and recognized ratably over the contract period.

The Company may place an instrument at a customer site under a reagent rental. Under a reagent rental, the Company retains title to the instrument and earns revenue for the usage of the instrument and related maintenance services through the amount charged for reagents and other disposables. Under a reagent rental, a customer may commit to purchasing minimum quantities of reagents at stated prices over a defined contract term, which is typically between three to five years. Revenue is recognized over the term of a reagent rental as reagents and other disposables are shipped and all other revenue recognition criteria have been met.

For multiple element arrangements, the total consideration for an arrangement is allocated among the separate elements in the arrangement based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on: (1) vendor specific objective evidence (“VSOE”), if available; (2) third party evidence of selling price if VSOE is not available; or (3) an estimated selling price, if neither VSOE nor third party evidence is available. Estimated selling price is the Company’s best estimate of the selling price of an element in a transaction. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services or other future performance obligations. The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance.

Revenue includes fees for research and development services, including research and development under grants and government sponsored research and collaboration agreements. Revenue and profit under cost-plus service contracts are recognized as costs are incurred plus negotiated fees. Fixed fees on cost-plus service contracts are recognized ratably over the contract performance period as services are performed. Contract costs include labor and related employee benefits, subcontracting costs and other direct costs, as well as allocations of allowable indirect costs. For contract change orders, claims or similar items, judgment is required for estimating the amounts, assessing the potential for realization, and determining whether realization is probable. From time to time, facts develop that require revisions of revenue recognized or cost estimates. To the extent that a revised estimate affects the current or an earlier period, the cumulative effect of the revision is recognized in the period in which the facts requiring the revision become known. Advance payments received in excess of amounts earned, such as funds received in advance of products to be delivered or services to be performed, are classified as deferred revenue until earned.

Earnings per Share

Basic earnings per share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options, employee stock purchases, restricted stock awards, restricted stock units and shares issuable upon a potential conversion of the convertible senior notes using the treasury stock method. In loss periods, the earnings per share calculation excludes all common equivalent shares because their inclusion would be antidilutive. Antidilutive common equivalent shares totaled 8,847,000 and 9,845,000 for the three months ended June 30, 2015 and 2014, respectively, and 8,655,000 and 9,237,000 for the six months ended June 30, 2015 and 2014, respectively.

The following summarizes the computation of basic and diluted earnings per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Basic:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)
Diluted:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Effect of dilutive securities:
Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes		—			—			—			—
Diluted weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principal of ASU 2014-09 is to recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective transition methods. The Company has not yet selected a transition method nor has it determined the potential effects on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends limited sections within ASC Subtopic 835-30. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company will adopt ASU 2015-03 on January 1, 2016, at which time the Company will reclassify approximately $6 million of debt issuance costs associated with the Company’s long-term debt from other noncurrent assets to long-term debt. A reclassification will also be applied retrospectively to each prior period presented.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 300	$ 237
Preferred stock, par value	$ 0	$ 0
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	$ 0
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	72,057,132	70,904,388
Common stock, shares outstanding	72,057,132	70,904,388

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Related Party Transaction

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party Transaction

11. Related party transaction

The Company sells its products and provides services to Geisinger Health System (“Geisinger”), a physician-led health care system serving multiple regions of Pennsylvania. A director of the Company was the President and Chief Executive Officer of Geisinger until the second quarter of 2015. Net revenues recorded from sales to Geisinger were approximately $0.5 million and $0.4 million for the three months ended June 30, 2015 and 2014, respectively, and $1.3 million and $0.8 million for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015 and December 31, 2014, the Company had accounts receivable of approximately $0.2 million and $0.2 million due from Geisinger, respectively.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 23, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	CPHD
Entity Registrant Name	CEPHEID
Entity Central Index Key	0001037760
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		72,080,557

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Cepheid (the “Company”) was incorporated in the State of California on March 4, 1996. The Company is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for testing in the Clinical market, as well as for application in the Company’s Non-Clinical legacy market. The Company’s systems enable rapid, sophisticated molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures.

The Condensed Consolidated Balance Sheet at June 30, 2015, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014, the Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2015 and 2014 and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 are unaudited. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments that management considers necessary for a fair presentation of the Company’s financial position at such dates, and the operating results and cash flows for those periods. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information or footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations for such periods are not necessarily indicative of the results expected for the remainder of 2015 or for any future period. The Condensed Consolidated Balance Sheet as of December 31, 2014 is derived from audited financial statements as of that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates.

Cash, Cash Equivalents, Restricted Cash, Short-Term Investments and Non-Current Investments

Cash, Cash Equivalents, Restricted Cash, Short-Term Investments and Non-Current Investments

Cash and cash equivalents consist of cash on deposit with banks and money market instruments. Interest income includes interest, dividends, amortization of purchase premiums and discounts and realized gains and losses on sales of securities.

Restricted cash consists of cash contractually restricted for use to develop the Xpert Ebola test in accordance with the Company’s agreements with the Bill and Melinda Gates Foundation (“BMGF”) and the National Philanthropic Trust (“NPT”). At June 30, 2015 and December 31, 2014, prepaid expense and other current assets included $0.5 million and $1.9 million of restricted cash, respectively.

The Company’s marketable debt securities have been classified and accounted for as available-for-sale. The Company determines the appropriate classification of its investments at the time of purchase and re-evaluates the designations at each balance sheet date. The Company classifies its marketable debt securities as cash equivalents, short-term investments or non-current investments based on each instrument’s underlying effective maturity date. All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Marketable debt securities with effective maturities of 12 months or less are classified as short-term, and marketable debt securities with effective maturities greater than 12 months are classified as non-current. The Company’s marketable debt securities are carried at fair value, with the unrealized gains and losses reported within accumulated other comprehensive income (loss), a component of shareholders’ equity. The cost of securities sold is based upon the specific identification method.

The Company assesses whether an other-than-temporary impairment loss on its investments has occurred due to declines in fair value or other market conditions. With respect to the Company’s debt securities, this assessment takes into account the severity and duration of the decline in value, the Company’s intent to sell the security, whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, and whether or not the Company expects to recover the entire amortized cost basis of the security (that is, a credit loss exists).

See Note 3, “Investments,” for information and related disclosures regarding the Company’s investments.

Concentration of Credit Risks and Other Uncertainties

Concentration of Credit Risks and Other Uncertainties

The carrying amounts for financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities approximate fair value due to their short maturities. Derivative instruments and investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s derivative instruments consist of large financial institutions of high credit standing.

The Company’s main financial institution for banking operations held 59% and 58% of the Company’s cash and cash equivalents as of June 30, 2015 and December 31, 2014, respectively.

The Company’s accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has not experienced significant losses to date. There was one direct customer whose accounts receivable balance represented 15% and 26% of total accounts receivable as of June 30, 2015 and December 31, 2014, respectively.

See Note 10, “Segment and Significant Concentrations,” for disclosure regarding total sales to direct customers and single countries.

Inventory,Net

Inventory, Net

Inventory is stated at the lower of standard cost (which approximates actual cost) or market value, with cost determined on the first-in-first-out method. Allocation of fixed production overheads to conversion costs is based on normal capacity of production. Abnormal amounts of idle facility expense, freight, handling costs, and spoilage are expensed as incurred, and not included in overhead. The Company maintains provisions for excess and obsolete inventory based on management’s estimates of forecasted demand and, where applicable, product expiration.

The components of inventories were as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw Materials	$	31,080	$	36,287
Work in Process		58,369		51,691
Finished Goods		52,601		44,657
Inventory	$	142,050	$	132,635

In addition, capitalized stock-based compensation expense of $1.7 million and $1.6 million were included in inventory as of June 30, 2015 and December 31, 2014, respectively.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue from sales when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. No right of return exists for the Company’s products except in the case of damaged goods. The Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of sales. In those cases where the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue.

The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. In situations with multiple deliverables, revenue is recognized upon the delivery of the separate elements. The Company sells service contracts for which revenue is deferred and recognized ratably over the contract period.

The Company may place an instrument at a customer site under a reagent rental. Under a reagent rental, the Company retains title to the instrument and earns revenue for the usage of the instrument and related maintenance services through the amount charged for reagents and other disposables. Under a reagent rental, a customer may commit to purchasing minimum quantities of reagents at stated prices over a defined contract term, which is typically between three to five years. Revenue is recognized over the term of a reagent rental as reagents and other disposables are shipped and all other revenue recognition criteria have been met.

For multiple element arrangements, the total consideration for an arrangement is allocated among the separate elements in the arrangement based on a selling price hierarchy. The selling price hierarchy for a deliverable is based on: (1) vendor specific objective evidence (“VSOE”), if available; (2) third party evidence of selling price if VSOE is not available; or (3) an estimated selling price, if neither VSOE nor third party evidence is available. Estimated selling price is the Company’s best estimate of the selling price of an element in a transaction. The Company limits the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services or other future performance obligations. The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance.

Revenue includes fees for research and development services, including research and development under grants and government sponsored research and collaboration agreements. Revenue and profit under cost-plus service contracts are recognized as costs are incurred plus negotiated fees. Fixed fees on cost-plus service contracts are recognized ratably over the contract performance period as services are performed. Contract costs include labor and related employee benefits, subcontracting costs and other direct costs, as well as allocations of allowable indirect costs. For contract change orders, claims or similar items, judgment is required for estimating the amounts, assessing the potential for realization, and determining whether realization is probable. From time to time, facts develop that require revisions of revenue recognized or cost estimates. To the extent that a revised estimate affects the current or an earlier period, the cumulative effect of the revision is recognized in the period in which the facts requiring the revision become known. Advance payments received in excess of amounts earned, such as funds received in advance of products to be delivered or services to be performed, are classified as deferred revenue until earned.

Earnings per Share

Earnings per Share

Basic earnings per share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding and common equivalent shares from dilutive stock options, employee stock purchases, restricted stock awards, restricted stock units and shares issuable upon a potential conversion of the convertible senior notes using the treasury stock method. In loss periods, the earnings per share calculation excludes all common equivalent shares because their inclusion would be antidilutive. Antidilutive common equivalent shares totaled 8,847,000 and 9,845,000 for the three months ended June 30, 2015 and 2014, respectively, and 8,655,000 and 9,237,000 for the six months ended June 30, 2015 and 2014, respectively.

The following summarizes the computation of basic and diluted earnings per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Basic:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)
Diluted:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Effect of dilutive securities:
Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes		—			—			—			—
Diluted weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principal of ASU 2014-09 is to recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective transition methods. The Company has not yet selected a transition method nor has it determined the potential effects on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends limited sections within ASC Subtopic 835-30. ASU 2015-03 requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company will adopt ASU 2015-03 on January 1, 2016, at which time the Company will reclassify approximately $6 million of debt issuance costs associated with the Company’s long-term debt from other noncurrent assets to long-term debt. A reclassification will also be applied retrospectively to each prior period presented.

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Revenue	$ 132,475	$ 116,503	$ 265,112	$ 223,410
Costs and operating expenses:
Cost of sales	69,377	59,568	130,578	112,651
Collaboration profit sharing	1,326	649	2,593	1,940
Research and development	28,092	23,998	52,078	45,738
Sales and marketing	28,078	23,502	54,014	46,960
General and administrative	16,352	14,340	31,994	28,007
Total costs and operating expenses	143,225	122,057	271,257	235,296
Loss from operations	(10,750)	(5,554)	(6,145)	(11,886)
Other income (expense):
Interest income	416	306	789	459
Interest expense	(3,646)	(3,500)	(7,250)	(5,363)
Foreign currency exchange loss and other, net	(1,496)	(176)	(2,440)	(757)
Other expense, net	(4,726)	(3,370)	(8,901)	(5,661)
Loss before income taxes	(15,476)	(8,924)	(15,046)	(17,547)
Provision for income taxes	(1,254)	(919)	(778)	(1,599)
Net loss	$ (16,730)	$ (9,843)	$ (15,824)	$ (19,146)
Basic net loss per share	$ (0.23)	$ (0.14)	$ (0.22)	$ (0.27)
Diluted net loss per share	$ (0.23)	$ (0.14)	$ (0.22)	$ (0.27)
Shares used in computing basic net loss per share	71,861	69,968	71,563	69,622
Shares used in computing diluted net loss per share	71,861	69,968	71,563	69,622

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

For the three and six months ended June 30, 2015, the Company recorded an income tax provision of $1.3 million and $0.8 million, respectively, comprised primarily of ordinary tax expense of the Company’s foreign subsidiaries, and the tax effect of items in accumulated other comprehensive income (loss), net. For the three and six months ended June 30, 2014, the Company recorded an income tax provision of $0.9 million and $1.6 million, respectively, primarily related to ordinary tax expense of the Company’s foreign subsidiaries.

The Company’s effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014 differs from the statutory federal income tax rate of 34%, primarily due to the impact of operations in foreign jurisdictions, as well as income or loss in the United States federal and state jurisdictions for which no tax expense or benefit is recorded. The difference in the effective tax rate for the three and six months ended June 30, 2015, compared to the three and six months ended June 30, 2014 is primarily due to increased United States income, or decreased United States losses, for the three and six months ended June 30, 2015, for which no income tax expense or benefit is recorded in the United States federal and state tax jurisdictions.

The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. The Company’s position is to record a valuation allowance when it is more likely than not that some of the deferred tax assets will not be realized. Based on all available objective evidence, the Company believes that it is more likely than not that the net United States deferred tax assets will not be fully realized. Accordingly, the Company continues to maintain a full valuation allowance on its United States deferred tax assets and will do so until there is sufficient evidence to support the reversal of all or some portion of this valuation allowance.

The Company or one of its subsidiaries files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company’s United States and state income tax return years 1996 through 2014 remain open to examination. In addition, the Company files tax returns in multiple foreign taxing jurisdictions with open tax years ranging from 2009 to 2014.

The Company anticipates that the total unrecognized tax benefits will not significantly change within the next 12 months due to the settlement of audits and the expiration of statutes of limitations. The Company is currently under examination in Sweden. Although the outcome of any tax audit is uncertain, the Company believes that it has adequately provided in its consolidated financial statements for any additional taxes that the Company may be required to pay as a result of such examination.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the three and six months ended June 30, 2015 and 2014, the Company did not recognize any significant interest or penalties related to uncertain tax positions. As of June 30, 2015 and December 31, 2014, the Company had not accrued significant interest or penalties.

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Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

5. Intangible Assets

Intangible assets related to licenses are recorded at cost, less accumulated amortization. Intangible assets related to technology and other intangible assets acquired in acquisitions are recorded at fair value at the date of acquisition, less accumulated amortization. Intangible assets are amortized over their estimated useful lives, ranging from 3 to 15 years, on a straight-line basis. Amortization of intangible assets is primarily included in cost of sales, research and development and sales and marketing in the Condensed Consolidated Statements of Operations.

The recorded value and accumulated amortization of major classes of intangible assets were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Balance, June 30, 2015
Licenses	$	11,454	$	(6,747	)	$	4,707
Technology acquired in acquisitions		8,613		(8,613	)		—
Customer relationships and other intangible assets acquired in acquisitions		35,849		(12,376	)		23,473
	$	55,916	$	(27,736	)	$	28,180
Balance, December 31, 2014
Licenses	$	13,594	$	(8,477	)	$	5,117
Technology acquired in acquisitions		8,613		(8,613	)		—
Customer relationships and other intangible assets acquired in acquisitions		36,582		(10,259	)		26,323
	$	58,789	$	(27,349	)	$	31,440

Intangible asset amortization expense was $1.7 million and $0.9 million for the three months ended June 30, 2015 and 2014, respectively, and $3.3 million and $1.8 million for the six months ended June 30, 2015 and 2014, respectively. The following table summarizes the expected future annual amortization expense of intangible assets recorded on the Company’s Condensed Consolidated Balance Sheet as of June 30, 2015, assuming no impairment charges (in thousands):

For the Years Ending December 31,	Amortization Expense
2015 (remaining six months)	$	3,001
2016		5,822
2017		5,460
2018		5,080
2019		4,181
Thereafter		4,636
Total expected future annual amortization	$	28,180

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Net Carrying Value and Accumulated Amortization of Major Classes of Intangible Assets

The recorded value and accumulated amortization of major classes of intangible assets were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Balance, June 30, 2015
Licenses	$	11,454	$	(6,747	)	$	4,707
Technology acquired in acquisitions		8,613		(8,613	)		—
Customer relationships and other intangible assets acquired in acquisitions		35,849		(12,376	)		23,473
	$	55,916	$	(27,736	)	$	28,180
Balance, December 31, 2014
Licenses	$	13,594	$	(8,477	)	$	5,117
Technology acquired in acquisitions		8,613		(8,613	)		—
Customer relationships and other intangible assets acquired in acquisitions		36,582		(10,259	)		26,323
	$	58,789	$	(27,349	)	$	31,440

Expected Future Annual Amortization Expense of Intangible Assets

The following table summarizes the expected future annual amortization expense of intangible assets recorded on the Company’s Condensed Consolidated Balance Sheet as of June 30, 2015, assuming no impairment charges (in thousands):

For the Years Ending December 31,	Amortization Expense
2015 (remaining six months)	$	3,001
2016		5,822
2017		5,460
2018		5,080
2019		4,181
Thereafter		4,636
Total expected future annual amortization	$	28,180

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Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Components of Inventories

The components of inventories were as follows (in thousands):

	June 30, 2015		December 31, 2014
Raw Materials	$	31,080	$	36,287
Work in Process		58,369		51,691
Finished Goods		52,601		44,657
Inventory	$	142,050	$	132,635

Computation of Basic and Diluted Earnings Per Share

The following summarizes the computation of basic and diluted earnings per share (in thousands, except for per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Basic:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)
Diluted:
Net loss	$	(16,730	)	$	(9,843	)	$	(15,824	)	$	(19,146	)
Basic weighted shares outstanding		71,861			69,968			71,563			69,622
Effect of dilutive securities:
Stock options, ESPP, restricted stock units, restricted stock awards and convertible senior notes		—			—			—			—
Diluted weighted shares outstanding		71,861			69,968			71,563			69,622
Net loss per share	$	(0.23	)	$	(0.14	)	$	(0.22	)	$	(0.27	)

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Employee Equity Incentive Plans and Stock-Based Compensation Expense

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Equity Incentive Plans and Stock-Based Compensation Expense

9. Employee Equity Incentive Plans and Stock-Based Compensation Expense

The following table is a summary of the major categories of stock-based compensation expense recognized in accordance with ASC 718, “Compensation—Stock Compensation” (“ASC 718”) for the three and six months ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Cost of sales	$	1,008	$	1,473	$	2,049	$	1,854
Research and development		2,277		2,481		4,475		4,609
Sales and marketing		1,743		1,926		3,193		3,542
General and administrative		3,241		3,268		6,110		5,925
Total stock-based compensation expense	$	8,269	$	9,148	$	15,827	$	15,930

The following table summarizes option activity under all plans (in thousands, except weighted average exercise price and weighted average remaining contractual term):

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Intrinsic Value
Outstanding, December 31, 2014		5,581		$	33.20
Granted		1,141		$	56.46
Exercised		(912	)	$	22.84
Forfeited		(144	)	$	41.29
Outstanding, June 30, 2015		5,666		$	39.35		4.57	$	123,503
Exercisable, June 30, 2015		2,955		$	31.05		3.34	$	88,962
Vested and expected to vest, June 30, 2015		5,431		$	38.87		4.50	$	120,996

The following table summarizes all award activity, which consists of restricted stock awards and restricted stock units (in thousands, except weighted average grant date fair value):

	Shares			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2014		698		$	40.30
Granted		447			56.31
Vested		(186	)		39.07
Cancelled		(50	)		44.37
Outstanding, June 30, 2015		909		$	48.20

The following table summarizes the assumptions used in determining the fair value of the Company’s stock options granted to employees and shares purchased by employees under the Company’s 2012 Employee Stock Purchase Plan (“ESPP”):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
OPTION SHARES:
Expected Term (in years)		4.46			4.40			4.46			4.40
Volatility		0.36			0.38			0.36			0.38
Expected Dividends		—	%		—	%		—	%		—	%
Risk Free Interest Rates		1.45	%		1.73	%		1.45	%		1.73	%
Estimated Forfeitures		6.14	%		6.75	%		6.14	%		6.79	%
Weighted Average Fair Value Per Share	$	18.05		$	15.29		$	18.07		$	15.64
ESPP SHARES:
Expected Term (in years)		1.22			1.25			1.22			1.25
Volatility		0.32			0.32			0.32			0.32
Expected Dividends		—	%		—	%		—	%		—	%
Risk Free Interest Rates		0.26	%		0.17	%		0.26	%		0.17	%
Weighted Average Fair Value Per Share	$	16.43		$	14.54		$	16.43		$	14.54

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Segment and Significant Concentrations - Revenue Information by Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue from External Customer [Line Items]
Total revenue	$ 132,475	$ 116,503	$ 265,112	$ 223,410
Clinical [Member]
Revenue from External Customer [Line Items]
Total revenue	125,010	111,340	250,317	211,785
Non-Clinical [Member]
Revenue from External Customer [Line Items]
Total revenue	7,465	5,163	14,795	11,625
Systems and other revenue [Member] | Clinical [Member]
Revenue from External Customer [Line Items]
Total revenue	21,783	28,334	38,084	45,619
Reagent and disposable revenue [Member] | Clinical [Member]
Revenue from External Customer [Line Items]
Total revenue	$ 103,227	$ 83,006	$ 212,233	$ 166,166

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Convertible Senior Notes

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Convertible Senior Notes

7. Convertible Senior Notes

In February 2014, the Company issued $345 million aggregate principal amount of 1.25% convertible senior notes (the “Notes”) due February 1, 2021, unless earlier repurchased by the Company or converted by the holder pursuant to their terms. Interest is payable semiannually in arrears on February 1 and August 1 of each year, commencing on August 1, 2014.

The Notes are governed by an Indenture between the Company, as issuer, and Wells Fargo Bank, National Association, as trustee. The Notes are unsecured and rank: senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to the Company’s existing and future indebtedness that is not so subordinated; effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities incurred by the Company’s subsidiaries.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

The Notes have an initial conversion rate of 15.3616 shares of common stock per $1,000 principal amount of Notes. This represents an initial effective conversion price of approximately $65.10 per share of common stock and approximately 5,300,000 shares upon conversion. Throughout the term of the Notes, the conversion rate may be adjusted upon the occurrence of certain events. Holders of the Notes will not receive any cash payment representing accrued and unpaid interest, if any, upon conversion of a Note, except in limited circumstances. Accrued but unpaid interest will be deemed to be paid by the cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock paid or delivered, as the case may be, to the holder upon conversion of a Note.

Prior to the close of business on the business day immediately preceding August 1, 2020, the Notes will be convertible at the option of holders during certain periods, only upon satisfaction of certain conditions set forth below. On or after August 1, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the conversion rate at any time regardless of whether the conditions set forth below have been met.

Holders may convert all or a portion of their Notes prior to the close of business on the business day immediately preceding August 1, 2020, in multiples of $1,000 principal amount, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a 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 conversion price on each applicable trading day;

• during the five business day period after any five consecutive trading day period (the “Notes Measurement Period”) in which the “trading price” (as the term is defined in the Indenture) per $1,000 principal amount of notes for each trading day of such Notes Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock on such trading day and the conversion rate on each such trading day; or

• upon the occurrence of specified corporate events.

As of June 30, 2015, the Notes are not yet convertible.

Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its Notes to be approximately 5.0%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Notes, which resulted in a fair value of the liability component of $270 million upon issuance, calculated as the present value of implied future payments based on the $345 million aggregate principal amount. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the Notes. The $75 million difference between the aggregate principal amount of $345 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the Notes were not considered redeemable.

In accounting for the transaction costs related to the issuance of the Notes, the Company allocated the total amount incurred to the liability and equity components based on their estimated relative fair values. Transaction costs attributable to the liability component, totaling $7.2 million, are being amortized to expense over the term of the Notes, and transaction costs attributable to the equity component, totaling $2.0 million, and were netted with the equity component in shareholders’ equity.

The Notes consist of the following (in thousands):

	June 30, 2015			December 31, 2014
Liability component:
Principal		345,000			345,000
Less: debt discount, net of amortization		(62,021	)		(66,787	)
Net carrying amount		282,979			278,213
Equity component (a)		73,013			73,013

(a) Recorded in the condensed consolidated balance sheets within additional paid-in capital, net of $2.0 million issuance costs in equity

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2015		2014		2015		2014
1.25% coupon	$	1,078	$	1,078	$	2,156	$	1,653
Amortization of debt issuance costs		144		100		278		150
Amortization of debt discount		2,398		2,284		4,766		3,491
		3,620		3,462		7,200		5,294

As of June 30, 2015 and December 31, 2014, the fair value of the Notes, which was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, quoted price of the Notes in an over-the-counter market (Level 2), and carrying value of debt instruments (carrying value excludes the equity component of the Company’s convertible notes classified in equity) were as follows (in thousands):

	June 30, 2015				December 31, 2014
	Fair Value		Carrying Value		Fair Value		Carrying Value
Convertible Senior Notes	$	399,344	$	282,979	$	382,232	$	278,213

In connection with the issuance of the Notes, the Company entered into capped call transactions with certain counterparties affiliated with the initial purchasers and others. The capped call transactions are expected to reduce potential dilution of earnings per share upon conversion of the Notes. Under the capped call transactions, the Company purchased capped call options that in the aggregate relate to the total number of shares of the Company’s common stock underlying the Notes, with an initial strike price of approximately $65.10 per share, which corresponds to the initial conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, and have a cap price of approximately $78.61. The cost of the purchased capped calls of $25.1 million was recorded to shareholders’ equity and will not be re-measured.

Based on the closing price of our common stock of $61.15 on June 30, 2015, the if-converted value of the Notes was less than their respective principal amounts.

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Commitments, Contingencies and Legal Matters

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Legal Matters

8. Commitments, Contingencies and Legal Matters

Purchase Commitments

The following table summarizes the Company’s purchase commitments at June 30, 2015 (in thousands):

Years Ending December 31,	Purchase Commitments
2015 (remaining six months)	$	36,177
2016		—
2017		—
2018		—
2019		—
Thereafter		—
Total minimum payments	$	36,177

Purchase commitments include non-cancellable purchase orders or contracts for the purchase of raw materials used in the manufacturing of the Company’s systems and reagents.

Legal Matters

In May 2005, the Company entered into a license agreement with F. Hoffman-La Roche Ltd. and Roche Molecular Systems, Inc. (“Roche”) that provided us with rights under a broad range of Roche patents, including patents relating to the PCR process, reverse transcription-based methods, nucleic acid quantification methods, real-time PCR detection process and composition, and patents relating to methods for detection of viral and cancer targets. A number of the licensed patents expired in the United States prior to the end of August of 2010 and in Europe prior to the end of August of 2011. In August 2010, the Company terminated the Company’s license to United States Patent No. 5,804,375 (the “375 Patent”) and ceased paying United States-related royalties. The Company terminated the entire license agreement in the fourth quarter of 2011. In August 2011, Roche initiated an arbitration proceeding against the Company in the International Chamber of Commerce pursuant to the terms of the terminated agreement. The Company filed an answer challenging arbitral jurisdiction over the issues submitted by Roche and denying that the Company violated any provision of the agreement. A three-member panel has been convened to address these issues in confidential proceedings. On July 30, 2013, the panel determined that it had jurisdiction to decide the claims, a determination that the Company appealed to the Swiss Federal Supreme Court. On October 2, 2013, the arbitration panel determined that it would proceed with the arbitration while this appeal was pending. On February 27, 2014 the Swiss Federal Supreme Court upheld the jurisdiction of the arbitration panel to hear the case, and the case is continuing. The Company believes that it has not violated any provision of the agreement and that the asserted claim of the 375 Patent is expired, invalid, unenforceable, and not infringed.

Based on its ongoing evaluation of the facts and circumstances of the case, the Company believes that it is probable that this arbitration proceeding could result in a material loss. Accordingly, the Company recorded an estimated charge of $20 million as its best estimate of the potential loss in the fourth quarter of 2014, which was included in accrued and other liabilities in the Company’s condensed consolidated balance sheets and the Company has not changed its estimate of this potential loss. If the Company were to incur a loss in the arbitration proceeding, depending on the ruling of the arbitrator, the Company could also be responsible for certain attorneys’ fees and interest; however, at this time, the Company is unable to estimate these potential amounts. Given the inherent uncertainty of arbitration and the nature of the claims in this matter, it is possible that the Company may incur an additional material charge, but an estimate of such a charge cannot be made at this time. The Company continues to strongly dispute Roche’s claims and intends to vigorously defend against them.

On August 21, 2012 the Company filed a lawsuit against Roche in the United States District Court for the Northern District of California (“the Court”), for a declaratory judgment of (a) invalidity, expiration, and non-infringement of the 375 Patent; and (b) invalidity, unenforceability, expiration and non-infringement of United States Patent No. 6,127,155 (the “155 Patent”). On January 17, 2013, the Court issued an order granting a motion by Roche to stay the suit with respect to the 375 Patent pending resolution of the above noted arbitration proceeding. In the same order, the Court dismissed the Company’s suit with respect to the 155 Patent for lack of subject matter jurisdiction, without considering or ruling on the merits of the Company’s case. The Court left open the possibility that the Company could re-file its case against the 155 Patent in the future. The Company believes that the possibility that these legal proceedings will result in a material adverse effect on the Company’s business is remote.

On July 16, 2014 Roche filed a lawsuit in the Court, alleging that the Company’s Xpert MTB-RIF product infringes United States Patent No. 5,643,723 (the “723 Patent”), which expired on July 1, 2014. On September 15, 2014, the Company filed its answer and counterclaims denying Roche’s allegations of infringement and asking the Court to find the 723 Patent invalid, unenforceable, and not infringed. On November 10, 2014, the Company filed a petition for inter partes review (“IPR”) of certain claims of the 723 Patent in the United States Patent and Trademark Office (“USPTO”) and filed a motion with the Court to stay this lawsuit pending the outcome of the IPR. On January 7, 2015, the Court issued an order staying the lawsuit pending the outcome of the IPR. On March 16, 2015, the Company filed a second petition for IPR of an additional claim of the 723 Patent. On June 11, 2015, the USPTO issued a decision declining to institute the first requested IPR. On July 13, 2015, the Company filed a request for reconsideration of the first petition for IPR with respect to certain challenged claims. The Company believes that the possibility that these legal proceedings will result in a material loss is remote.

The Company may be subject to additional various claims, complaints and legal actions that arise from time to time in the normal course of business. Other than as described above, the Company does not believe it is party to any currently pending legal proceedings that will result in a material adverse effect on its business. 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 the Company’s business, consolidated financial position, results of operations or cash flows.

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Segment and Significant Concentrations

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment and Significant Concentrations

10. Segment and Significant Concentrations

The Company and its wholly owned subsidiaries operate in one business segment.

The following table summarizes revenue in the Clinical and Non-Clinical markets (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue by market:
Clinical Systems	$	21,783	$	28,334	$	38,084	$	45,619
Clinical Reagents		103,227		83,006		212,233		166,166
Total Clinical		125,010		111,340		250,317		211,785
Non-Clinical		7,465		5,163		14,795		11,625
Total revenue	$	132,475	$	116,503	$	265,112	$	223,410

The Company currently sells product through its direct sales force and through third-party distributors. No customers accounted for more than 10% of total revenue for the three and six months ended June 30, 2015, and for the six months ended June 30, 2014. One distributor represented greater than 10% of the Company’s total revenue for the three months ended June 30, 2014. Revenue from this distributor for the three months ended June 30, 2015 and 2014 were 0.1% and 13.1% of total revenue, respectively, and for the six months ended June 30, 2015 and 2014 were 0.1% and 6.8% of total revenue, respectively.

The following table summarizes revenue by geographic region (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Geographic revenue information:
North America
Clinical	$	69,056	$	57,649	$	144,529	$	114,935
Non-Clinical		7,131		3,926		13,963		9,475
Total North America		76,187		61,575		158,492		124,410
International
Clinical	$	55,953	$	53,691	$	105,787	$	96,850
Non-Clinical		335		1,237		833		2,150
Total International		56,288		54,928		106,620		99,000
Total revenue	$	132,475	$	116,503	$	265,112	$	223,410

No single country outside of the United States represented more than 10% of the Company’s total revenue for the three and six months ended June 30, 2015 and the six months ended June 30, 2014. For the three months ended June 30, 2014, revenue from China customers represented more than 10% of the Company’s total revenue.

The Company recognized revenue of $72.6 million and $60.0 million for sales to United States customers for the three months ended June 30, 2015 and 2014, respectively, and $149.6 million and $121.6 million for the six months ended June 30, 2015 and 2014, respectively. The Company recognized revenue of $1.3 million and $15.4 million to China customers for the three months ended June 30, 2015 and 2014, respectively, and $1.8 million and $15.5 million for the six months ended June 30, 2015 and 2014, respectively.

As of June 30, 2015 and December 31, 2014, the Company has long lived-assets (excluding intangible assets and goodwill) of $100.5 million and $96.0 million, respectively, which reside in the United States. As of June 30, 2015 and December 31, 2014, the Company has long-lived assets of $19.7 million and $19.8 million, respectively, located outside of the United States, which reside primarily in Sweden and countries in the European Monetary Union.

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Investments - Schedule of Available-for-Sale Marketable Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Short-Term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	$ 189,367	$ 196,775
Available-for-sale marketable securities, Gross Unrealized Gain	39	22
Available-for-sale marketable securities, Gross Unrealized Loss	(31)	(68)
Available-for-sale marketable securities, Estimated Fair Value	189,375	196,729
Short-Term Investments [Member] | Asset-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	47,549	52,240
Available-for-sale marketable securities, Gross Unrealized Gain	4	3
Available-for-sale marketable securities, Gross Unrealized Loss	(6)	(23)
Available-for-sale marketable securities, Estimated Fair Value	47,547	52,220
Short-Term Investments [Member] | Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	74,511	76,683
Available-for-sale marketable securities, Gross Unrealized Gain	20	12
Available-for-sale marketable securities, Gross Unrealized Loss	0	0
Available-for-sale marketable securities, Estimated Fair Value	74,531	76,695
Short-Term Investments [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	65,683	64,244
Available-for-sale marketable securities, Gross Unrealized Gain	4	2
Available-for-sale marketable securities, Gross Unrealized Loss	(25)	(45)
Available-for-sale marketable securities, Estimated Fair Value	65,662	64,201
Short-Term Investments [Member] | Government Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	21,000	15,000
Available-for-sale marketable securities, Gross Unrealized Gain	7	3
Available-for-sale marketable securities, Gross Unrealized Loss	0	0
Available-for-sale marketable securities, Estimated Fair Value	21,007	15,003
Short-Term Investments [Member] | Other Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	8,118	9,206
Available-for-sale marketable securities, Gross Unrealized Gain	8	2
Available-for-sale marketable securities, Gross Unrealized Loss	0	0
Available-for-sale marketable securities, Estimated Fair Value	8,126	9,208
Short-Term Investments [Member] | Amounts Classified as Cash Equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	(27,494)	(20,598)
Available-for-sale marketable securities, Gross Unrealized Gain	(4)	0
Available-for-sale marketable securities, Gross Unrealized Loss	0	0
Available-for-sale marketable securities, Estimated Fair Value	(27,498)	(20,598)
Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	79,681	79,831
Available-for-sale marketable securities, Gross Unrealized Gain	24	0
Available-for-sale marketable securities, Gross Unrealized Loss	(40)	(100)
Available-for-sale marketable securities, Estimated Fair Value	79,665	79,731
Investments [Member] | Asset-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	18,373	12,724
Available-for-sale marketable securities, Gross Unrealized Gain	10	0
Available-for-sale marketable securities, Gross Unrealized Loss	0	(12)
Available-for-sale marketable securities, Estimated Fair Value	18,383	12,712
Investments [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	44,596	22,709
Available-for-sale marketable securities, Gross Unrealized Gain	7	0
Available-for-sale marketable securities, Gross Unrealized Loss	(36)	(29)
Available-for-sale marketable securities, Estimated Fair Value	44,567	22,680
Investments [Member] | Government Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	8,001	39,583
Available-for-sale marketable securities, Gross Unrealized Gain	4	0
Available-for-sale marketable securities, Gross Unrealized Loss	0	(51)
Available-for-sale marketable securities, Estimated Fair Value	8,005	39,532
Investments [Member] | Other Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale marketable securities, Cost	8,711	4,815
Available-for-sale marketable securities, Gross Unrealized Gain	3	0
Available-for-sale marketable securities, Gross Unrealized Loss	(4)	(8)
Available-for-sale marketable securities, Estimated Fair Value	$ 8,710	$ 4,807

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Convertible Senior Notes - Schedule of Total Interest Expense Related to Notes (Parenthetical) (Detail)	Jun. 30, 2015	Jun. 30, 2014	Feb. 28, 2014
Convertible Senior Notes [Member]
Interest Expense [Line Items]
Coupon interest rate	1.25%	1.25%	1.25%

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Investments (Tables)

6 Months Ended

Jun. 30, 2015

Investments Schedule [Abstract]

Schedule of Available-for-Sale Marketable Securities

The following tables summarize available-for-sale marketable securities (in thousands):

Balance as of June 30, 2015:
	Cost			Gross Unrealized Gain			Gross Unrealized Loss			Estimated Fair Value
Short-term investments:
Asset-backed securities	$	47,549		$	4		$	(6	)	$	47,547
Commercial paper		74,511			20			—			74,531
Corporate debt securities		65,683			4			(25	)		65,662
Government agency securities		21,000			7			—			21,007
Other securities		8,118			8			—			8,126
Amounts classified as cash equivalents		(27,494	)		(4	)		—			(27,498	)
Total short-term investments	$	189,367		$	39		$	(31	)	$	189,375
Investments:
Asset-backed securities	$	18,373		$	10		$	—		$	18,383
Corporate debt securities		44,596			7			(36	)		44,567
Government agency securities		8,001			4			—			8,005
Other securities		8,711			3			(4	)		8,710
Total investments	$	79,681		$	24		$	(40	)	$	79,665

Balance as of December 31, 2014:
	Cost			Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
Short-term investments:
Asset-backed securities	$	52,240		$	3	$	(23	)	$	52,220
Commercial paper		76,683			12		—			76,695
Corporate debt securities		64,244			2		(45	)		64,201
Government agency securities		15,000			3		—			15,003
Other securities		9,206			2		—			9,208
Amounts classified as cash equivalents		(20,598	)		—		—			(20,598	)
Total short-term investments	$	196,775		$	22	$	(68	)	$	196,729
Investments:
Asset-backed securities	$	12,724		$	—	$	(12	)	$	12,712
Corporate debt securities		22,709			—		(29	)		22,680
Government agency securities		39,583			—		(51	)		39,532
Other securities		4,815			—		(8	)		4,807
Total investments	$	79,831		$	—	$	(100	)	$	79,731

Schedule of Gross Realized Gains and Losses of Marketable Securities

Gross realized gains and losses from sales of marketable securities, all of which are reported as a component of “Interest income” in the Condensed Consolidated Statements of Operations, were for the three and six months ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Gross realized gains	$	3	$	25	$	3	$	27
Gross realized losses		—		—		—		—
Realized gains, net	$	3	$	25	$	3	$	27

Schedule of Marketable Securities with Unrealized Losses

The fair value of the Company’s marketable securities with unrealized losses at June 30, 2015 and December 31, 2014, and the duration of time that such losses had been unrealized (in thousands) were:

Balance at June 30, 2015:
	Less Than 12 months					More than 12 months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Asset-backed securities	$	24,297	$	(5	)	$	3,592	$	(1	)	$	27,889	$	(6	)
Corporate debt securities		72,814		(51	)		4,464		(10	)		77,278		(61	)
Other securities		6,898		(4	)		—		—			6,898		(4	)
Total	$	104,009	$	(60	)	$	8,056	$	(11	)	$	112,065	$	(71	)

Balance at December 31, 2014:
	Less Than 12 months					More than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Asset-backed securities	$	54,580	$	(35	)	$	—	$	—	$	54,580	$	(35	)
Corporate debt securities		79,360		(74	)		—		—		79,360		(74	)
Government agency securities		39,532		(51	)		—		—		39,532		(51	)
Other securities		4,807		(8	)		—		—		4,807		(8	)
Total	$	178,279	$	(168	)	$	—	$	—	$	178,279	$	(168	)

Schedule of Amortized Cost and Estimated Fair Value of Available-for-Sale Debt Securities by Contractual Maturity

The following table summarizes the amortized cost and estimated fair value of available-for-sale debt securities at June 30, 2015 and December 31, 2014, by contractual maturity (in thousands):

	June 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Mature in one year or less	$	157,642	$	157,654	$	150,133	$	150,105
Mature after one year through three years		125,417		125,397		135,675		135,566
Mature in more than three years		13,483		13,487		11,396		11,387
Total	$	296,542	$	296,538	$	297,204	$	297,058

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Employee Equity Incentive Plans and Stock-Based Compensation Expense (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock-Based Compensation Expense

The following table is a summary of the major categories of stock-based compensation expense recognized in accordance with ASC 718, “Compensation—Stock Compensation” (“ASC 718”) for the three and six months ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Cost of sales	$	1,008	$	1,473	$	2,049	$	1,854
Research and development		2,277		2,481		4,475		4,609
Sales and marketing		1,743		1,926		3,193		3,542
General and administrative		3,241		3,268		6,110		5,925
Total stock-based compensation expense	$	8,269	$	9,148	$	15,827	$	15,930

Summary of Option Activity

The following table summarizes option activity under all plans (in thousands, except weighted average exercise price and weighted average remaining contractual term):

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Intrinsic Value
Outstanding, December 31, 2014		5,581		$	33.20
Granted		1,141		$	56.46
Exercised		(912	)	$	22.84
Forfeited		(144	)	$	41.29
Outstanding, June 30, 2015		5,666		$	39.35		4.57	$	123,503
Exercisable, June 30, 2015		2,955		$	31.05		3.34	$	88,962
Vested and expected to vest, June 30, 2015		5,431		$	38.87		4.50	$	120,996

Summary of Restricted Stock Plan Activity

The following table summarizes all award activity, which consists of restricted stock awards and restricted stock units (in thousands, except weighted average grant date fair value):

	Shares			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2014		698		$	40.30
Granted		447			56.31
Vested		(186	)		39.07
Cancelled		(50	)		44.37
Outstanding, June 30, 2015		909		$	48.20

Summary of Assumptions to Estimate Fair Value

The following table summarizes the assumptions used in determining the fair value of the Company’s stock options granted to employees and shares purchased by employees under the Company’s 2012 Employee Stock Purchase Plan (“ESPP”):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
OPTION SHARES:
Expected Term (in years)		4.46			4.40			4.46			4.40
Volatility		0.36			0.38			0.36			0.38
Expected Dividends		—	%		—	%		—	%		—	%
Risk Free Interest Rates		1.45	%		1.73	%		1.45	%		1.73	%
Estimated Forfeitures		6.14	%		6.75	%		6.14	%		6.79	%
Weighted Average Fair Value Per Share	$	18.05		$	15.29		$	18.07		$	15.64
ESPP SHARES:
Expected Term (in years)		1.22			1.25			1.22			1.25
Volatility		0.32			0.32			0.32			0.32
Expected Dividends		—	%		—	%		—	%		—	%
Risk Free Interest Rates		0.26	%		0.17	%		0.26	%		0.17	%
Weighted Average Fair Value Per Share	$	16.43		$	14.54		$	16.43		$	14.54

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Convertible Senior Notes - Schedule of Convertible Notes (Parenthetical) (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
Equity Component [Member]
Debt Instrument [Line Items]
Debt instrument transaction costs	$ 2.0

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Derivative Financial Instruments - Pre-tax Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Loss Recognized in OCI - Effective Portion	$ (1,455)	$ (472)	$ (1,051)	$ (291)
Loss Reclassified from AOCI into Income - Effective Portion	(22)	(216)	(45)	(503)
Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing	(38)	20	(124)	33
Foreign Exchange Contracts [Member] | Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Loss Recognized in OCI - Effective Portion	(1,455)	(472)	(1,051)	(291)
Loss Reclassified from AOCI into Income - Effective Portion	(22)	(216)	(45)	(503)
Foreign Exchange Contracts [Member] | Cash Flow Hedges [Member] | Foreign Currency Exchange Loss and Other, Net [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing	$ (38)	$ 20	$ (124)	$ 33

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Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net loss	$ (16,730)	$ (9,843)	$ (15,824)	$ (19,146)
Change in unrealized gains and losses related to cash flow hedges:
Loss recognized in other comprehensive income	(1,455)	(472)	(1,051)	(291)
Loss reclassified from accumulated comprehensive income to the statement of operations	22	216	45	503
Change in unrealized gains and losses related to available-for-sale investments:
Gain recognized in other comprehensive income	1	104	143	30
Gain reclassified from accumulated comprehensive income to the statement of operations	(3)	(25)	(3)	(27)
Other comprehensive loss, before tax	(18,165)	(10,020)	(16,690)	(18,931)
Income tax benefit (expense) related to items of accumulated comprehensive income, net	375		(100)
Comprehensive loss	$ (18,540)	$ (10,020)	$ (16,590)	$ (18,931)

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

4. Derivative Financial Instruments

The Company uses derivatives to partially offset its business exposure to foreign currency exchange risk. The Company may enter into foreign currency forward contracts generally up to twelve months to offset some of the foreign exchange risk on expected future cash flows on certain forecasted revenue, cost of sales, operating expenses and on certain existing assets and liabilities.

The Company may also enter into foreign currency forward contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities. However, the Company may choose not to hedge certain foreign currency exchange exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures.

The Company records all derivatives in the Condensed Consolidated Balance Sheet at fair value. The Company’s accounting treatment of these instruments is based on whether the instruments are designated as hedge or non-hedge instruments. For derivative instruments that are designated and qualify as cash flow hedges, the Company initially records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income or loss (“AOCI”), a separate component of shareholders’ equity and subsequently reclassifies these amounts into earnings within the same financial statement line item as the hedged item in the period during which the hedged transaction is recognized in earnings. The ineffective portions of cash flow hedges are recorded in foreign currency exchange loss and other, net.

The Company had a net deferred loss of $0.8 million and a net deferred gain of $0.2 million associated with cash flow hedges recorded in AOCI as of June 30, 2015 and December 31, 2014, respectively. Deferred gains and losses associated with cash flow hedges of forecasted foreign currency revenue are recognized as a component of revenues in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of forecasted expenses are recognized as a component of cost of sales, research and development expense, sales and marketing expense and general and administrative expense in the same period as the related expenses are recognized. The Company’s hedged transactions as of June 30, 2015 are expected to occur within twelve months.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into foreign currency exchange loss and other, net. Any subsequent changes in fair value of such derivative instruments are reflected in foreign currency exchange loss and other, net unless they are re-designated as hedges of other transactions. The Company did not recognize any significant net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during the three and six months ended June 30, 2015 and 2014.

Gains or losses on derivatives not designated as hedging instruments are recorded in foreign currency exchange loss and other, net. During the three months ended June 30, 2015 and 2014, the Company recognized a loss of $0.3 million and $0.2 million, respectively, as a component of foreign currency exchange loss and other, net, related to derivative instruments not designated as hedging instruments. During the six months ended June 30, 2015 and 2014, the Company recognized a gain of $1.7 million and a loss of $0.5 million, respectively, as a component of foreign currency exchange loss and other, net, related to derivative instruments not designated as hedging instruments. These amounts represent the net gain or loss on the derivative contracts and do not include changes in the related exposures or ineffective portion or amounts excluded from the effectiveness testing of cash flow hedges.

The notional principle amounts of the Company’s outstanding derivative instruments designated as cash flow hedges are $152.8 million and $117.2 million as of June 30, 2015 and December 31, 2014, respectively. The notional principle amounts of the Company’s outstanding derivative instruments not designated as cash flow hedges is $35.1 million and $30.4 million as of June 30, 2015 and December 31, 2014, respectively.

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, respectively (in thousands):

	June 30, 2015
	Fair Value of Derivatives Designated as Hedge Instruments			Fair Value of Derivatives Not Designated as Hedge Instruments			Total Fair Value
Derivative Assets (a):
Foreign exchange contracts	$	3,396		$	48		$	3,444
Derivative Liabilities (b):
Foreign exchange contracts		(3,014	)		(191	)		(3,205	)

	December 31, 2014
	Fair Value of Derivatives Designated as Hedge Instruments			Fair Value of Derivatives Not Designated as Hedge Instruments			Total Fair Value
Derivative Assets (a):
Foreign exchange contracts	$	3,887		$	—		$	3,887
Derivative Liabilities (b):
Foreign exchange contracts		(3,685	)		(127	)		(3,812	)

^(a)  The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

^(b)  The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued and other liabilities in the Condensed Consolidated Balance Sheets.

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2015 and 2014 (in thousands):

	Three Months Ended
	Loss Recognized in OCI - Effective Portion						Loss Reclassified from AOCI into Income - Effective Portion						Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2015			June 30, 2014			June 30, 2015 (a)			June 30, 2014 (b)			Location	June 30, 2015			June 30, 2014
Cash flow hedges:
Foreign exchange contracts	$	(1,455	)	$	(472	)	$	(22	)	$	(216	)	Foreign currency exchange loss and other, net	$	(38	)	$	20
Total	$	(1,455	)	$	(472	)	$	(22	)	$	(216	)		$	(38	)	$	20

^(a)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $2.4 million loss within costs and operating expenses and a $2.4 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2015.

^(b)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $0.4 million loss within costs and operating expenses and a $0.2 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2014.

	Six Months Ended
	Loss Recognized in OCI - Effective Portion						Loss Reclassified from AOCI into Income - Effective Portion						Gain (Loss) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2015			June 30, 2014			June 30, 2015 (a)			June 30, 2014 (b)			Location	June 30, 2015			June 30, 2014
Cash flow hedges:
Foreign exchange contracts	$	(1,051	)	$	(291	)	$	(45	)	$	(503	)	Foreign currency exchange loss and other, net	$	(124	)	$	33
Total	$	(1,051	)	$	(291	)	$	(45	)	$	(503	)		$	(124	)	$	33

^(a)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $4.7 million loss within costs and operating expenses and a $4.7 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2015.

^(b)  Includes gains and losses reclassified from AOCI into net income for the effective portion of cash flow hedges, of which a $0.9 million loss within costs and operating expenses and a $0.4 million gain within revenue, were recognized within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2014.

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Employee Equity Incentive Plans and Stock-Based Compensation Expense - Summary of Assumptions to Estimate Fair Value (Detail) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term (in years)	4 years 5 months 16 days	4 years 4 months 24 days	4 years 5 months 16 days	4 years 4 months 24 days
Volatility	0.36%	0.38%	0.36%	0.38%
Expected Dividends	0.00%	0.00%	0.00%	0.00%
Risk Free Interest Rates	1.45%	1.73%	1.45%	1.73%
Estimated Forfeitures	6.14%	6.75%	6.14%	6.79%
Weighted Average Fair Value Per Share	$ 18.05	$ 15.29	$ 18.07	$ 15.64
Employee Stock Purchase Plans One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Term (in years)	1 year 2 months 19 days	1 year 3 months	1 year 2 months 19 days	1 year 3 months
Volatility	0.32%	0.32%	0.32%	0.32%
Expected Dividends	0.00%	0.00%	0.00%	0.00%
Risk Free Interest Rates	0.26%	0.17%	0.26%	0.17%
Weighted Average Fair Value Per Share	$ 16.43	$ 14.54	$ 16.43	$ 14.54

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Segment and Significant Concentrations (Tables)

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Revenue Information by Segments

The following table summarizes revenue in the Clinical and Non-Clinical markets (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenue by market:
Clinical Systems	$	21,783	$	28,334	$	38,084	$	45,619
Clinical Reagents		103,227		83,006		212,233		166,166
Total Clinical		125,010		111,340		250,317		211,785
Non-Clinical		7,465		5,163		14,795		11,625
Total revenue	$	132,475	$	116,503	$	265,112	$	223,410

Segment Revenue by Geography Region

The following table summarizes revenue by geographic region (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Geographic revenue information:
North America
Clinical	$	69,056	$	57,649	$	144,529	$	114,935
Non-Clinical		7,131		3,926		13,963		9,475
Total North America		76,187		61,575		158,492		124,410
International
Clinical	$	55,953	$	53,691	$	105,787	$	96,850
Non-Clinical		335		1,237		833		2,150
Total International		56,288		54,928		106,620		99,000
Total revenue	$	132,475	$	116,503	$	265,112	$	223,410

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Investments - Schedule of Amortized Cost and Estimated Fair Value of Available-for-Sale Debt Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investments, Debt and Equity Securities [Abstract]
Mature in one year or less, Amortized Cost	$ 157,642	$ 150,133
Mature after one year through three years, Amortized Cost	125,417	135,675
Mature in more than three years, Amortized Cost	13,483	11,396
Total, Amortized Cost	296,542	297,204
Mature in one year or less, Estimated Fair Value	157,654	150,105
Mature after one year through three years, Estimated Fair Value	125,397	135,566
Mature in more than three years, Estimated Fair Value	13,487	11,387
Total, Estimated Fair Value	$ 296,538	$ 297,058

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes the fair value hierarchy for the Company’s financial assets (cash, cash equivalents, short-term investments, non-current investments and foreign currency derivatives) and financial liabilities (foreign currency derivatives) measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 (in thousands):

Balance as of June 30, 2015:
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	83,071	$	27,498	$	—	$	110,569
Short-term investments:
Asset-backed securities		—		47,547		—		47,547
Corporate debt securities		—		65,662		—		65,662
Commercial Paper		—		47,033		—		47,033
Government agency securities		—		21,007		—		21,007
Other securities		—		8,126		—		8,126
Total short-term investments		—		189,375		—		189,375
Foreign currency derivatives		—		3,444		—		3,444
Investments:
Asset-backed securities		—		18,383		—		18,383
Corporate debt securities		—		44,567		—		44,567
Government agency securities		—		8,005		—		8,005
Other securities		—		8,710		—		8,710
Total investments		—		79,665		—		79,665
Total	$	83,071	$	299,982	$	—	$	383,053
Liabilities:
Foreign currency derivatives	$	—	$	3,205	$	—	$	3,205
Total	$	—	$	3,205	$	—	$	3,205

Balance as of December 31, 2014:
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	76,065	$	20,598	$	—	$	96,663
Short-term investments:
Asset-backed securities				52,220				52,220
Corporate debt securities		—		64,202		—		64,202
Commercial paper		—		56,096		—		56,096
Government agency securities				15,003				15,003
Other securities		—		9,208		—		9,208
Total short-term investments		—		196,729		—		196,729
Foreign currency derivatives		—		3,887		—		3,887
Investments:
Asset-backed securities		—		12,713		—		12,713
Corporate debt securities		—		22,679		—		22,679
Government agency securities		—		39,532		—		39,532
Other securities		—		4,807		—		4,807
Total investments		—		79,731		—		79,731
Total	$	76,065	$	300,945	$	—	$	377,010
Liabilities:
Foreign currency derivatives	$	—	$	3,812	$	—	$	3,812
Total	$	—	$	3,812	$	—	$	3,812

Liabilities Measured at Fair Value on Non-Recurring Basis

The estimated fair values of the Company’s other financial instruments which are not measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 were as follows (in thousands):

Balance as of June 30, 2015:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible senior notes	$	—	$	399,344	$	—	$	399,344
Total	$	—	$	399,344	$	—	$	399,344

Balance as of December 31, 2014:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible senior notes	$	—	$	382,232	$	—	$	382,232
Total	$	—	$	382,232	$	—	$	382,232