Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedDecember 31, 20212023
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 001-33462
INSULET CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 04-3523891
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
100 Nagog ParkActonMassachusetts01720
(Address of Principal Executive Offices)
 (Zip Code)
Registrant’s telephone number, including area code: (978) 600-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.001 Par Value Per SharePODDThe NASDAQ Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  x    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨    No  x
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 every Interactive Data File required to be submitted 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxNon-accelerated filer¨
Accelerated filer¨Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The aggregate market value of the common stock held by non-affiliates of the registrant computed by reference to the last reported sale price of the Common Stock as reported on The NASDAQ Global Market on June 30, 20212023 was approximately $18.8$20.1 billion.
The number of shares of common stock outstanding as of February 17, 202215, 2024 was 69,217,620.

69,925,730.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2021.2023. Portions of such proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K.



TABLE OF CONTENTS
 
Item 1
Item 1A
Item 1B
Item 1C
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Item 10
Item 11
Item 12
Item 13
Item 14
Item 15
Item 16


Table of Contents
PART I
Item 1. Business
Overview
Insulet Corporation (“we” or the “Company”) is primarily engaged in the development, manufacture and sale of its proprietary Omnipod® System, a continuous insulin delivery systemsystems for people with insulin-dependent diabetes, which we have been selling since 2005.diabetes. The Omnipod Systemplatform includes: the Omnipod® 5 Automated Insulin ManagementDelivery System (“Omnipod”Omnipod 5”), the Omnipod DASH® Insulin Management System (“Omnipod DASH”), our digital mobile Omnipod platform and the Omnipod® 5 Automated Insulin Delivery System (“Omnipod 5”). In addition to the diabetes market space, we have partnered with pharmaceutical and biotechnology companies to tailor the Omnipod Insulin Management System technology platform(“Classic Omnipod”) and our latest innovation, Omnipod GOTM, which received U.S. Food and Drug Administration (“FDA”) clearance in 2023.
We also produce pods for the delivery of subcutaneous drugs across other therapeutic areas. Most of our drug delivery revenue consists of sales of pods to Amgen for use in the Neulasta® Onpro® kit, a delivery system for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy.
Market Opportunity: Management of Diabetes
Diabetes is a chronic, life-threatening disease for which there is no known cure. It is caused by the body’s inability to produce or effectively utilize the hormone insulin, which prevents the body from adequately regulating blood glucose levels. Glucose, the primary source of energy for cells, must be maintained at certain concentrations in the blood in order to permit optimal cell function and health. In people with diabetes, blood glucose levels fluctuate between very high levels, a condition known as hyperglycemia, and very low levels, a condition called hypoglycemia. Hyperglycemia can lead to serious short-term complications, such as confusion, vomiting, dehydration, and loss of consciousness and long-term complications, such as blindness, kidney disease, nervous system disease, occlusive vascular diseases, stroke, cardiovascular disease, or death. Hypoglycemia can lead to confusion, loss of consciousness, or death.
Diabetes is typically classified as either type 1 or type 2:
Type 1 diabetes is characterized by the body’s nearly complete inability to produce insulin. It is frequently diagnosed during childhood or adolescence. Individuals with type 1 diabetes require daily insulin therapy to survive. We estimate that approximately four to four and a halffive million people have type 1 diabetes in the countries we currently serve.
Type 2 diabetes, the more common form, is characterized by the body’s inability to either properly utilize insulin or produce enough insulin. Historically, type 2 diabetes has occurred in later adulthood, but its incidence is increasing among the younger population, due primarily to increasing obesity. Initially, many people with type 2 diabetes attempt to manage their diabetes with improvements in diet, exercise, and/or medications, both oral medications.and injectable, including SGLT2 inhibitors and GLP-1 drugs. As their diabetes advances, some individuals progress to multiple drug therapies, which often include insulin therapy. People with type 2 diabetes who take insulin either require intensive insulin therapy (typically multiple injections of insulin per day) or basal insulin (typically a single injection daily or weekly). We estimate that approximately seven to seven and a halfsix million people have insulin-requiringinsulin-intensive type 2 diabetes in the countries we currently serve.serve and another three million people with type 2 diabetes require only long-acting insulin in the United States.
We estimate that approximately one-third40% of the type 1 diabetes population in the United States and even less of the international type 1 diabetes population use insulin pump therapy. An even smaller portion of the U.S. and international insulin-requiringinsulin-intensive type 2 diabetes population use insulin pump therapy. We believe these factors present a significant available market for theour Omnipod Systemplatform globally.
Throughout this Annual Report on Form 10-K, we refer to both type 1 diabetes and insulin-requiringinsulin-intensive type 2 diabetes as insulin-dependent diabetes.
Diabetes Management Challenges
Diabetes is often frustrating and difficult for people to manage. Blood glucose levels can be affected by the carbohydrate and fat content of meals, exercise, stress, illness, impending illness, hormonal releases, variability in insulin absorption, and changes in the effects of insulin on the body. For people with insulin-dependent diabetes, many corrections, consisting of the administration of additional insulin or ingestion of additional carbohydrates, are needed throughout the day in order to maintain blood glucose levels within normal ranges. Achieving this result can be very difficult with multiple daily injections of insulin. Individuals with diabetes attempting to control their blood glucose levels tightly to prevent the long-term complications associated with fluctuations in blood glucose levels are at greater risk for overcorrection and hypoglycemia. As a result, many people have difficulty managing their diabetes. Additionally, the time spent managing fluctuations in blood glucose levels and the fear associated with hypoglycemia can be incredibly stressful for individuals with diabetes and their families.
Current Insulin Therapy
People with insulin-dependent diabetes need a continuous supply of insulin, known as basal insulin, to provide for background metabolic needs. In addition to basal insulin, people with insulin-dependent diabetes require supplemental insulin, known as bolus insulin,
3

Table of Contents
to compensate for carbohydrates ingested during meals or snacks or for a high blood glucose level caused by
3

Table of Contents
other physiological reasons. There are two primary types of insulin therapy practiced today: multiple daily injectionsinjection (“MDI”) therapy using syringes or insulin pens and pump therapy using insulin pumps.
MDI therapy involves the administration ofinjecting fast-acting insulin before meals (bolus) to lower blood glucose levels to a healthy range. MDI therapy may also require a separate injection of a long-acting (basal) insulin, to control glucose levels between meals; typically, once or twice per day. By comparison, insulin pump therapy uses only fast-acting insulin to fulfill both mealtime (bolus) and background (basal) requirements. Insulin pump therapy allows individuals to customize their bolus and basal insulin doses to meet their insulin needs throughout the day and is intended to more closely resemble the physiologic function of a healthy pancreas.
Insulin pumps perform continuous subcutaneous insulin infusion and typically use a programmable device and an infusion set to administer insulin into the body. Insulin pump therapy has been shown to provide numerous advantages relative to MDI therapy. For example, insulin pump therapy eliminates individual insulin injections, (approximately five per day), delivers insulin more accurately and precisely than injections, often improves HbA1c (a common measure of blood glucose levels) over time, provides greater flexibility with meals, exercise, and daily schedules, and can reduce severe low blood glucose levels. We believe that these advantages, along with technological advancements, including the use of continuous glucose monitoring technology and automated insulin device (“AID”) algorithms, and increased awareness of insulin pump therapy will continue to generate demand for insulin pump devices.
Our Solution: The Omnipod SystemPlatform
The Omnipod System is aplatform offers continuous insulin delivery system that provides all the benefits of insulin pump therapy in a unique way.way without the need for external tubing required with conventional pumps. The small, lightweight, self-adhesive disposable tubeless Omnipod device (“Pod”), can be worn in multiple locations, including the abdomen, hip, back of upper arm, upper thigh, or lower back, and delivers insulin into the body through a small flexible tube (called a cannula). We refer to this as “Pod therapy.” We believe the Omnipod System’splatform’s innovative proprietary design and differentiated features allow people with insulin-dependent diabetes to live their lives and manage their diabetes, with unprecedented freedom, comfort, convenience, and ease.
OP5_INSU_POD_PDM_ADH_DEX_RIGHT-ADJ_RGB.jpg
INSU_POD_PDM_DASH_ADH_LEFT-ADJ_RGB.jpg

Omnipod GO JPEG.jpg

podd-20211231_g1.jpg
Omnipod 5
podd-20211231_g2.jpg
Omnipod DASH
Omnipod GO

The Omnipod System features two discreet and easy-to-use devices that eliminates the need for the external tubing required with conventional pumps:
a small, lightweight, self-adhesive disposable tubeless Omnipod device (“Pod”) that the user fills with insulin and wears directly on the body. It can be worn in multiple locations, including the abdomen, hip, back of upper arm, upper thigh, or lower back. The Pod delivers precise, personalized doses of insulin into the body through a small flexible tube (called a cannula); and
the Personal Diabetes Manager (“PDM”) or Controller, a wireless, handheld device that programs the Pod with the user’s personalized insulin-delivery instructions and, wirelessly monitors the Pod’s operation.5
Omnipod 5, which builds on our Omnipod DASH platform, described below, was fully launchedcleared by the FDA in January 2022. Our limited market release of Omnipod 5 in the United States in 2019commenced the following month, and in August 2022 we launched our existingU.S. full market release. In September 2022, we received CE Mark approval for Omnipod 5 under the European Union Medical Device Regulation (“MDR”) and in 2023, we launched Omnipod 5 in the United Kingdom and Germany.
Omnipod 5 includes a proprietary AID algorithm embedded in the Pod. The Pod integrates with a third-party continuous glucose monitor (“CGM”) to obtain glucose values through wireless Bluetooth communication. The embedded algorithm utilizes these glucose values to predict glucose levels into the future and automatically adjusts insulin dosing intended to improve time-in-range and reduce the occurrence of blood glucose highs and lows. The user can also deliver insulin doses for snacks or meals or to correct high blood glucose through the system. The Pod is controllable by an Insulet-provided handheld device (Controller) or a user-downloaded Android app, which allows for full compatible smartphone control. In addition, in October 2023, we received FDA clearance for our Omnipod 5 App for iPhone, which allows for control using a compatible iOS smartphone. We expect to launch the iOS app in 2024. The Omnipod 5 Controller and the Omnipod 5 Android and iOS apps use cloud-based technology to wirelessly upload data using a built-in SIM card for cellular connectivity or from a secure Wi-Fi
4

Table of Contents
connection if established. The Pod currently integrates with Dexcom, Inc.’s G6 CGM and we recently launched a limited market release with Dexcom’s G7 CGM. Additionally, we plan to launch Omnipod 5 with Abbott Diabetes Care, Inc.’s FreeStyle Libre 2 Plus sensor (“Libre 2 Plus”) in certain international markets in 2020 and 2021. It2024.
Omnipod DASH
Omnipod DASH features a secure Bluetooth enabled Pod and PDMthat is controlled by a smartphone-like Personal Diabetes Manager (“PDM”) with a color touch screen user interface supported by smartphone connectivity, nightlyinterface. In the U.S., the PDM has Wi-Fi capabilities to enable automatic data uploads providing users and their clinicians with cloud access to data and enhancements for pushing software updates wirelessly to users.
In January 2022, we received clearance from the U.S. Food and Drug Administration’s (“FDA”) for the commercial distribution of Omnipod 5, which builds on our Omnipod DASH mobile platform. Omnipod 5 includes an AID algorithm that is located on
4

Table of Contents
the Pod. The Pod integrates with a third-party continuous glucose monitor (“CGM”) to obtain glucose values. The embedded algorithm then predicts glucose levels into the future and automatically adjusts insulin dosing intended to reduce the occurrence of blood glucose highs and lows. The Pod is controllable by an Insulet-provided handheld device (Controller) or a user-downloaded Android app, which allows for full compatible smartphone control and currently integrates with a CGM manufactured by Dexcom, Inc. In February, we commenced a limited market release of Omnipod 5 in the U.S.

The Omnipod System provides continuous insulin delivery at preset rates, eliminating the need for individual insulin injections. In addition, insulin delivery can be changed with the press of a button to adapt to snacks or unexpected changes in daily routine.
The Omnipod System works like the pancreas of a person without diabetes by deliveringDASH delivers insulin in two ways:
A small, constant background supply of insulin is delivered automatically at a programmed rate, all day and night.
An extra dose of insulin can be delivered when needed to match the carbohydrates in a snack or meal to correct high blood glucose.
We have designed the Omnipod SystemDASH to fit within the normal daily routines of users. The Omnipod SystemDASH communicates wirelessly, provides for virtually pain-free automated cannula insertion, and eliminates the need for MDI therapy or the use of pump and tubing. The Pod can be worn for up to three days at a time and, because it is waterproof (with an IP28 rating for up to 25 feet for 60 minutes), there is no need to remove it when showering, swimming, or performing other activities. The
Omnipod System consistsClassic
Following the launch of just two devices as opposed to up to sevenOmnipod 5, the vast majority of our customer base is no longer using our Classic Omnipod product. Accordingly, we are phasing-out our Classic Omnipod product in the U.S. and no longer guarantee the availability of its supplies.
Omnipod GO
Omnipod GO is a standalone, wearable, insulin delivery system that provides a fixed rate of continuous rapid-acting insulin for tubed insulin pumps. As a result,72 hours. Omnipod GO has been cleared by the Omnipod System is easy toFDA for use which reduces the training burden on healthcare professionals and users. We believe that the Omnipod System’s overall ease of use, flexibility, and substantially lower training burden make it very attractive toby people with insulin-dependent diabetes and allows healthcare professionals to prescribe pump therapy to a broader group of people with diabetes.
Several publications over the past decade have found that compared to MDI therapy, the use of the Omnipod System by individuals with both type 1 and type 2 diabetes across all age groups18 and older who would typically take daily injections of long-lasting insulin. The newest addition to the Omnipod brand features a tubeless and waterproof Pod (with an IP28 rating for up to 25 feet for 60 minutes) which is associatedoffered in seven different pre-programmed daily rates, ranging from 10 to 40 units per day, and operates without the need for a handheld device to control the Pod. Omnipod GO has been cleared for use with good glycemic controlthe following U-100 insulins: NovoLog®, Fiasp®, Humalog®, Admelog®, and reduced frequency and severity of hypoglycemic episodes. These results are consistent with published literature of other continuous subcutaneous insulin infusion devices. In addition, research in adultsLyumjev®.
The product was developed to serve people with type 12 diabetes has found that comparedearlier in their treatment journey by starting them on Pod therapy for their insulin delivery, rather than daily injections. As a patient progresses to prior treatment modality,requiring additional insulin, including basal and bolus, the use oftransition from Omnipod GO to another Omnipod product will be a natural progression.
We developed Omnipod GO with convenience in mind for both the primary care physician and the user, including with respect to prescribing, getting started, training and using the product. We are currently conducting a pilot program for Omnipod System is associated with improved quality of life. We believe that this data is clinically meaningful to healthcare providers and provides support for the use of the Omnipod SystemGO in the treatment of both type 1 and type 2 diabetes.United States.
Paramount to our ability to deliver full compatible smartphone control is our commitment to cybersecurity and information security. Omnipod DASH is the first FDA-cleared insulin pump certified under the Diabetes Technology Society’s “Standard for Wireless Diabetes Device Security” cybersecurity assurance standard and program, known as DTSec. This certification is a cybersecurity standard intended to raise confidence in the security of network connected medical devices through independent expert evaluation. In addition, Insulet’s information security management system is International Organization for Standardization (“ISO”) 27001 certified, which is the international standard for best practice in an information security management system globally. With the DTSec and ISO 27001 certifications, Insulet is globally recognized for incorporating the highest standards for cybersecurity and information security and safety, including secure data transfer between the Pod and PDM, as well as secure cloud storage.
Insulet continues to advance the cybersecurity capabilities of our medical devices. Omnipod 5 is globally recognized for incorporating the highest standards for information and cyber security by design, which includes secure data transfer between the Pod and the Controller, as well as secure cloud storage. Omnipod 5 is certified by ISO 27001 and the U.K. Cyber Essentials. In addition, Omnipod 5 utilizes state-of-the-art authentication, encryption, and cybersecurity protection that enables the use of approved personal smartphone devices.Data Management
We have partnered with Glooko Inc. (“Glooko”) to connect our Omnipod System user data with Glooko’s comprehensive diabetes data management system (including Glooko and Diasend in selected regions). Glooko provides a cloud-based application for clinicians and users accessible through a kiosk, home computer, or a mobile application on the user’s smartphone that provides users and their healthcare providers access to insulin delivery trends, blood glucose levels, and other integrated data.
Security
Paramount to our ability to deliver full compatible smartphone control is our commitment to cybersecurity and information security. With certifications from the Diabetes Technology Society’s “Standard for Wireless Diabetes Device Security” cybersecurity and assurance standard and program as well as from the International Organization for Standardization (“IOS”), Insulet is globally recognized for incorporating the highest standards for cybersecurity, information security and safety, including secure data transfer between the Pod and PDM, as well as secure cloud storage. See Item 1C. “Cybersecurity” for additional information.
Third-Party Reimbursement
In the United States, entities to whom our products are sold directly to consumers, as well as(including wholesalers, private healthcare organizations, healthcare facilities, mail order pharmacies, independent retailers, and independent retailers. These entities,consumers), and the Company in some cases, seek reimbursement from health insurance companies and/or government administrative payors. In the United States, consumers generally have commercial insurance, Medicare or Medicaid coverage that pays for the product. TheOur Omnipod System’splatform’s unique patented
5

Table of Contents
design allowallows us to provide pumpPod therapy at a relatively low or no up-front investment, which reduces the risk to third-
5

Table of Contents
partythird-party payors in the U.S.
In certainour international locations in which we sell either directly to consumers or through a distributordistributor/intermediary. In all countries where we operate either Insulet or intermediary, our distribution partners and local intermediaries establish appropriate reimbursement contracts with healthcare systems in those countries and provinces. Reimbursement structures vary by country and our unique offering allows us to provide Pod therapy in attractive pricing structures that reduce the risk to payors while expanding access.
Markets and Distribution Methods
The Omnipod System isproducts are currently available in the following 25 countries:
AustraliaFinlandCyprusItalyGreeceSwedenNetherlandsSwitzerland
AustriaFranceDenmarkKuwaitIcelandSwitzerlandNorwayTurkey
BelgiumGermanyFinlandNetherlandsIsraelTurkeyQatarUnited Arab Emirates
CanadaGreeceFranceNorwayItalySaudi ArabiaUnited Kingdom
CroatiaIcelandGermanyQatarKuwaitSwedenUnited States
DenmarkIsrael
We sell the Omnipod Systemproducts directly to consumers, through distribution partners and in the U.S., also through the pharmacy channel. For the year ended December 31, 2021, 76%2023, 90% of our Omnipod Systemproduct sales globally were through intermediaries. The Omnipod System is also marketed to physicians.
The percentages of total revenue for customers that represent 10% or more of total revenue was as follows:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,


202120202019

202320222021
Distributor ADistributor A10%11%*Distributor A28%19%*
Distributor BDistributor B12%10%11%Distributor B24%16%*
Distributor CDistributor C19%17%12%
* Represents less than 10% of revenue for the period.
Our sales and marketing efforts are focused on customer acquisition and retention to meet the user, clinician, and payor demands for theour Omnipod System.products. We have a comprehensive sales and marketing approach, which communicates the benefits of the Omnipod Systemplatform to users, physicians and providers. This includes three areas of focus:
Building consumer awareness about the features and benefits that the Omnipod System providesproducts provide to simplify diabetes management.
Strengthening physician support by demonstrating the clinical evidence of how the Omnipod system improvesproducts improve outcomes and quality of life and providing data and insights to physicians offering diabetes care.
Providing payors with the clinical and economic justifications for why the Omnipod System offersproducts offer unique value to the people whom they insure.
Training
We believe that training consumers on how to use the Omnipod Systemproducts is an important factor to promote successful outcomes and customer retention. We have streamlined and standardized our training by developing improved online resources and increased our field clinician team to directly train new Omnipod System users. With the launch of Omnipod DASH, weWe created an online training program for Omnipod customers transitioning to Omnipod DASH or Omnipod 5. In addition, due to the challenges COVID-19 has presented, we have also been usingour virtual training allows us to onboard new Omnipod customers transitioning from MDI. Our virtual capabilities have allowed us to continue to onboard new customers despite COVID-19MDI in a cost-effective manner. Our distributors and intermediaries have also implemented virtual training programs.
Customer Support
We seek to provide our customers with high quality customer support, from product ordering to insurance investigation, order fulfillment and ongoing support. Our customer support systems are integrated with our sales, reimbursement and billing processes, allowing us to provide customers with seamless and reliable support by telephone and through our website.
Competition
The diabetes medical device market is highly competitive, subject to rapid change and significantly affected by new product introductions. TheOur Omnipod Systemplatform competes for consumers in the insulin delivery market. Because most new Omnipod System users come from MDI therapy, which currently is the most prevalent method of insulin delivery, we believe that we primarily
6

Table of Contents
primarily compete with companies that provide products and supplies for MDI therapy. We also compete with companies in the insulin pump market, which today consists of tubed pump companies, including Medtronic MiniMed, a division of Medtronic public limited company (“Medtronic”), and Tandem Diabetes Care Inc. (“Tandem”). Medtronic historically has held the majority share of the tubed insulin pump market. The competitive landscape in our industry continues to undergo significant change. In addition to the established insulin pump competitors, several companies are working to develop and market new insulin pumps and smart pens. These companies are at various stages of development and the number of such companies often changes as they enter or exit the market. Our non-insulin drug delivery product line competes with drug delivery device companies such as West Pharmaceutical Services, Inc.
Research and Development
Our research and development efforts are primarily focused on making improvements to the Omnipod System, including adding features and functionality that will deliver clinical outcomes, economic value, convenience, and simplicity to users.
Throughout 2021, we worked to receive FDA clearance for Omnipod 5 for individuals aged six years and older with type 1 diabetes, which was obtained in January 2022. In 2021, we also completed our Omnipod 5 clinical study of pediatric users ages two to six years old, and in 2022, we filed for clearance of this expanded indication. We have also filed for CE Mark approval of Omnipod 5.
During 2021, we completed our Omnipod 5 feasibility study for individuals with type 2 diabetes, and we plan to conduct additional studies with the goal of expanding Omnipod 5’s indications. In addition, we have a development agreement to integrate Abbott Diabetes Care, Inc.’s CGM with Omnipod 5 in the future, and are also working on developing an iOS app that could be utilized to control Omnipod 5 Pods.
In addition to our focus on Omnipod 5, we are also working on innovation programs are designed to drive:
simplicity of user interaction with our systems;
improved outcomes through algorithm advancements;
insights and value from our growing datasets and analytics; and
user choice of sensor and smartphone integrations.
In addition, our research and development efforts are primarily focused on making improvements to Omnipod 5, including adding features and functionality that will deliver increased economic value and convenience to users. In October 2023, we received FDA clearance for an iOS app that will enable control of Omnipod 5 Pods using an iPhone and plan to launch a limited market release in the U.S. in 2024. Further, we recently launched a limited market release for Omnipod 5 integration with Dexcom’s G7 CGM in the United States. We also recently received CE mark approval under the MDR for the added compatibility of Libre 2 Plus with Omnipod 5 for individuals aged two years and older with type 1 diabetes and expect to launch a limited market release of Omnipod 5 with Libre 2 Plus in the U.K. and the Netherlands in 2024.
We also continue to advance work to improve the Omnipod 5 algorithm and develop next-generation automated insulin delivery products. In 2023, we began our EVOLUTION feasibility trial in New Zealand to test potential enhancements to the Omnipod 5 algorithm in order to further drive simplicity of use. We have completed the first round of study, which included testing the system with both type 1 and type 2 users and are in the process of analyzing the data and making modifications for the next round of study.
In December 2023, we completed enrollment in our pivotal trial for Omnipod 5 with the goal of expanding its indication to individuals with type 2 diabetes. We expect to complete the trial and submit our 510(k) application to the FDA by the end of 2024. Further, in April 2023, we received FDA clearance for Omnipod GO, a basal-only Pod for individuals with type 2 diabetes.
Manufacturing and Quality Assurance
We believe a key contributing factor to the overall attractiveness and success of the Omnipod System is the disposable nature of the Pod. In order to manufacture sufficient volumes of our Pods at high quality and achievewhile still achieving a cost-effective per unit production price, for the Omnipod, we have designed the Omnipod Systemour Pods to be manufactured through automation.
In 2019, we began producing productPods at our highly automated manufacturing facility in Acton, Massachusetts and in 2020 and 2021, we began producing on additional lines in this facility. In addition to increasingincrease supply redundancy and addingadd capacity closer to our North American customer base to support the growth of our business, we expect that once the Acton facility is operating at full capacity, the highly automated assembly process will be able to produce a globally cost competitive product.business.
We also produce our devices on manufacturing lines at a facility in Kunshan (Shanghai), China operated by a contract manufacturer. This contract manufacturing agreement expires in December 2022October 2025 and is subject to automatic renewal, unless canceled by either party under the terms of the contract. We have recently optimizedIn December 2023, we completed construction of our operations in China by consolidating our production in that region into this one location. Additionally, we plan to invest in a new manufacturing plant in anotherMalaysia to support our international locationexpansion strategy and further ensure product supply. We expect to further diversify globally and increase efficiency.begin production at this facility in 2024.
We also continue to invest in supply chain efficiencies, including automation improvements at our suppliers and contract manufacturer. In addition, in January 2022, we acquired one of our suppliers to bring key intellectual property and expertise in-house, strengthen our production capabilities and mitigate supply chain risks.
Raw Materials
We use a broad range of raw materials in the assembly and manufacturing of the Omnipod System.our products. We purchase all our raw materials and select components used in the manufacturing of our products from external suppliers. We purchase some supplies from a single or limited number of sources for reasons of proprietary know-how, quality assurance, cost-effectiveness, or constraints resulting from regulatory requirements. We rely on a limited number of suppliers for a certain number of the components and sub-assemblies used in the manufacture of the Omnipod System,our products, including application-specific integrated circuit chips, Bluetooth low-energy chips, and other specialized parts. The design of certain components and sub-assemblies (including, in some instances, the raw materials used to manufacture them) is proprietary and the intellectual property rights may be owned exclusively by one party. In such cases, we are sole sourcedsole-sourced, with the supplier controlling the intellectual property rights. These sole sourcedsole-sourced components are critical to the design and functionality of the Omnipod System.our products. In the case of sole sourced parts, we manage risk
7

Table of Contents
of sole sourced parts, we manage risk through holding inventory in-house and at the supplier to ensure continuity of supply and lowlower risk of disruption. We purchase many of our components and sub-assemblies from manufacturers with whom we are at least dual sourced. We work closely with all suppliers to ensure continuity of supply while maintaining high quality and reliability.
Quality Assurance
We utilize outside vendors for the supply of components, sub-assemblies, and various services used in the manufacture of the Omnipod System.our products. Our outside vendors produce the components to our specifications, and they are audited periodically by our Quality Assurance Department to confirm conformity with the specifications, policies, and procedures for the Omnipod System.our products. Our Quality Assurance Department also inspects and tests the Omnipod Systemour products at various steps in the manufacturing cycle to facilitate compliance with our specifications. We have received our ISO, European Union MDR, and Medical Device Single Audit Program certifications for our Quality Management System from BSI Group, an accredited Notified Body for CE Marking. Processes utilized in the manufacture, test, and release of the Omnipod Systemour products have been verified and validated as required by the FDA and other regulatory bodies. As a medical device manufacturer and distributor, our manufacturing facilities and the facilities of our suppliers are subject to periodic inspection by the FDA, certain corresponding state agencies, and other regulatory bodies.
Intellectual Property
To maintain a competitive advantage, we believe we must develop and preserve the proprietary aspect of our technologies. We rely on a combination of copyright, patent, trademark, trade secret, and other intellectual property laws, non-disclosure agreements, and other measures to protect our proprietary rights. We require our employees, consultants, and advisers to execute non-disclosure agreements in connection with their employment, consulting, or advisory relationships with us, where appropriate. We also require employees, consultants, and advisers who work on our products to agree to disclose and assign to us all inventions conceived during their work with us that are developed using our property or relate to our business. Despite measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of the Omnipod Systemour products or obtain and use information that we regard as proprietary.
Patents
As of December 31, 2021,2023, we had over 240700 patents in the United States and in certain other countries, with expiration dates ranging from 20222024 through 2041,2043 and had over 240500 patent applications pending. The issued patents and pending patent applications cover, among other things:
the basic architecture of theour Omnipod System,products, including the pump and the PDM/Controller;
the Omnipod shape memory alloy drive system;
the Omnipod System cannula insertion system; 
communication features between system componentssoftware, such as algorithms and apps, for the Omnipod Systemcontrolling our current and next generation products;
software, such as apps, for controlling the Omnipod System and next generation products; and
various novel aspects of the Omnipod System,our current and potential future generations of Omnipod Systems,products, and other mechanisms for the delivery of pharmaceuticals.
Trademarks 
We have registered various trademarks associated with our business with the United States Patent and Trademark Office on the Principal Register and in other appropriate jurisdictions. Our trademarks include INSULETTM®, OMNIPOD®, OMNIPOD® 5 Automated Insulin Delivery System, SIMPLIFY LIFETM®, Omnipod DASH®, Omnipod GOTM, Omnipod DISPLAY®, Omnipod VIEWTM®, SmartAdjustTM, Pod Pals®, Podder®, and PodderCentral®.
Government Regulation
United States FDA Regulation
The Omnipod System is aOur products are medical devicedevices that are subject to extensive and ongoing regulation by the FDA and other federal, state, and local regulatory bodies. FDA regulations govern, among other things, product design and development, preclinical and clinical testing, pre-market clearance or approval, manufacturing, labeling, product storage, advertising and promotion, sales and distribution, post-market adverse event reporting, post-market surveillance, complaint handling, repair or recall of products, and record keeping.
Unless an exemption applies, each medical device we seek to commercially distribute in the United States will require either prior 510(k) clearance or pre-market approval (“PMA”) from the FDA. A 510(k) pre-market notification filing must contain information establishing that the device to be sold is substantially equivalent to a device commercially distributed prior to May 28, 1976 or to a device that has been determined by the FDA to be substantially equivalent. Both the 510(k) clearance and PMA processes can be expensive and lengthy and entail significant user fees. We have obtained 510(k) clearance for theClassic Omnipod, Omnipod DASH, Omnipod 5, and Omnipod 5 SystemsGO and expect that regulatory approvalclearances or approvals will be needed
8

Table of Contents
for some of our future products. In addition, we
8

Table of Contents
may be required to obtain a new 510(k) clearance or pre-market approval for significant post-market modifications to our products.
510(k) Clearance. To obtain 510(k) clearance for any of our potential future devices (or for certain modifications to devices that have previously received 510(k) clearance), we must submit a pre-market notification demonstrating that the proposed device is substantially equivalent to a previously cleared 510(k) device. The FDA’s 510(k) clearance pathway generally takes three to 12 months from the date the application is completed but can take significantly longer. A 510(k) application must be supported by extensive data, including technical information, labeling, and potentially clinical data to meet any Special Controls and to demonstrate the safety and effectiveness of the device to the FDA’s satisfaction. After a medical device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a significant change in its intended use, requires a new 510(k) clearance or, depending on the modification, could require a PMA application. The FDA requires each manufacturer to make this determination initially, but if the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or PMA is obtained and assess significant regulatory fines or penalties for failure to submit the requisite 510(k) or PMA application(s).
PMA. Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, and devices deemed not substantially equivalent to a previously cleared 510(k) device generally require a PMA before they can be commercially distributed. A PMA application must be supported by extensive data, including technical information, pre-clinical and clinical trials, manufacturing information and labeling, to demonstrate the safety and effectiveness of the device to the FDA’s satisfaction. After a PMA application is complete, the FDA begins an in-depth review of the submitted information, which generally takes between one and three years, but may take significantly longer. During this review period, the FDA may request additional information or clarification of information already provided. Also, during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA conducts a pre-approval inspection of the manufacturing facility to ensure compliance with Quality System Regulations (“QSR”), which impose elaborate design development, testing, control, documentation and other quality assurance procedures in the design and manufacturing process. The FDA may approve a PMA application with post-approval conditions intended to ensure the safety and effectiveness of the device including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from people in the clinical study that supported approval. Failure to comply with the conditions of approval can result in materially adverse enforcement action, including the loss or withdrawal of the approval. After PMA, a new PMA application or application supplement may be required in the event of modifications to the device, its labeling, intended use or indication, or its manufacturing process. PMA supplements often require submission of the same type of information as a PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA application, and may not require as extensive clinical data or the convening of an advisory panel.
Clinical Trials. Clinical trials are almost always required to support a PMA application and may also be required to support 510(k) submissions. If the device presents a “significant risk” to human health as defined by the FDA, the FDA requires the device sponsor to submit an investigational device exemption (“IDE”) and obtain IDE approval prior to commencing human clinical trials. The IDE must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. Clinical trials for a significant risk device may begin once an IDE is approved by the FDA and the appropriate Institutional Review Board (“IRB”) at each clinical trial site. If the product is deemed a “non-significant risk” device, IDE approval from the FDA would not be required, but the clinical trial would need to meet other requirements including IRB approval.
Our clinical trials must be conducted in accordance with FDA regulations and federal and state regulations concerning human subject protection, including informed consent and healthcare privacy. A clinical trial may be suspended by the FDA or at a specific site by the relevant IRB at any time for various reasons, including a belief that the risks to the trial participants outweigh the benefits of participation in the clinical trial. Even if a clinical trial is completed, the results of our clinical testing may not demonstrate the safety and efficacy of the device or may be equivocal or otherwise insufficient for us to obtain approval of our product.
Ongoing Regulation.  After a device is placed on the market, numerous regulatory requirements apply, including:
establishment registration and device listing;
QSR,the FDA’s Quality System Regulation (“QSR”), which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during the development and manufacturing process;
labeling regulations and prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses, and other requirements related to promotional activities;
9

Table of Contents
medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury, or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur;
corrections and product recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the federal Food, Drug and Cosmetic Act that may present a risk to health. In addition, the FDA may order a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; and
post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and efficacy data for the device.
Failure to comply with applicable regulatory requirements can result in enforcement actions by the FDA and other regulatory agencies, which may include any of the following sanctions: untitled letters or warning letters, fines, injunctions, consent decrees, civil or criminal penalties, recall or seizure of our current or future products, operating restrictions, partial suspension or total shutdown of production, refusal of or delay in granting 510(k) clearance or PMA of new products or modified products, rescinding previously granted 510(k) clearances or withdrawing previously granted PMAs, or refusal to grant import or export approval of our products.
We are subject to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of our subcontractors. If, as a result of these inspections, the FDA determines that our equipment, facilities, laboratories, or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA may seek civil, criminal, or administrative sanctions and/or remedies against us, including the suspension of our manufacturing operations. Since approvalclearance of the first generation of our Omnipod System,product, we have been subject to FDA inspections of our facilities on multiple occasions.
Other Regulations
Licensure. SeveralIn order to sell our product through the pharmacy channel in the United States, we are required to work with intermediaries who have the appropriate pharmacy license for the applicable market. In addition, several states require that durable medical equipment (“DME”) providers be licensed in order to sell products in that state. Certain of these states require, among other things, that DME providers maintain an in-state location. In order to sell our product through the pharmacy channel in the United States, we
9

Table of Contents
We are required to work with intermediaries who have the appropriate pharmacy license for the applicable market.
In addition, we arealso subject to certain state laws regarding professional licensure. We believe that our certified diabetes educators are in compliance with all such state laws. However, if our educators or we were to be found non-compliant, we may need to modify our approach to providing education, clinical support, and customer service.
Federal Anti-Kickback and Self-Referral Laws.  The federal healthcare Anti-Kickback Statute prohibits the knowing and willful offer, payment, solicitation, or receipt of any form of remuneration (anything of value) in return for, or to induce:
the referral of an individual;
furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid, or other federal healthcare programs; or
the purchase, lease, or order of, or the arrangement or recommendation of the purchasing, leasing, or ordering of, any item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs.
The federal Anti-Kickback Statute has been interpreted to apply to arrangements between drug and medical device manufacturers and suppliers on one hand and prescribers, patients, purchasers, and formulary managers on the other. Liability under the statute may be established without a person or entity having actual knowledge of the statute or specific intent to violate it. In addition, claims resulting from a violation of the federal Anti-Kickback Statute constitute false or fraudulent claims for purposes of the federal civil False Claims Act which is addresseddiscussed below. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common business practices from prosecution and administrative sanctions, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration that may be perceived as inducing the prescription, purchase, or recommendation of the Omnipod Systemproducts may be subject to scrutiny under the law. For example, we may provide the initial training to users necessary for appropriate use of the Omnipod Systemour product either through our own diabetes educators or by contracting with outside diabetes educators that have completed a Certified Pod Trainer course. We compensate outside diabetes educators for their services at contracted rates deemed to be consistent with the market. We have structured our arrangements with diabetes educators and other business practices to comply with statutory exemptions and regulatory safe harbors whenever possible, but our practices may be subject to scrutiny if they fail to strictly comply with the criteria in the exemption or regulatory safe harbor. Moreover, there are no safe harbors for many common practices such as
10

Table of Contents
providing reimbursement assistance, coding and billing information, or other customer assistance and product support programs. If any of our practices, arrangements, or programs are found to violate the federal Anti-Kickback Statute, we could be subject to significant criminal, civil, and administrative penalties, including imprisonment, fines, damages, and exclusion from Medicare, Medicaid, or other governmental programs.
Federal law also includes a provision commonly known as the “Stark Law,” which prohibits a physician from referring Medicare or Medicaid patients to an entity for the furnishing of certain “designated health services,” including durable medical equipment, in which the physician has an ownership or investment interest or with which the physician has entered into a compensation arrangement. Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received for items and services referred by a physician with a noncompliant arrangement, civil damages and penalties, and exclusion from Medicare, Medicaid, or other governmental programs. Although there are statutory and regulatory exceptions protecting certain common business practices, and we have structured our arrangements with physicians and other providers to comply with these exceptions, these arrangements may not expressly meet the requirements for applicable exceptions from the Stark Law.
Federal Civil False Claims Act.  The federal civil False Claims Act imposes penalties against any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment of government funds, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim. Actions under the False Claims Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Violations of the False Claims Act are subject to the imposition of significant per claim penalties, three times the amount of damages that the federal government sustained and possible exclusion from participation in federal healthcare programs like Medicare and Medicaid. We believe that we are in compliance with the federal government’s laws and regulations concerning the filing of claims for reimbursement. However, many drug and medical device manufacturers have been investigated or subject to lawsuits by whistleblowers and have reached substantial financial settlements with the federal government under the False Claims Act for a variety of alleged improper marketing activities, including providing free product to customers with the expectation that the customers would bill federal programs for the product; or causing submission of false claims by providing inaccurate coding or billing information to actual or prospective purchasers. Our business practices could be subject to scrutiny and enforcement under the federal False Claims Act. We also may be subject to other federal false claim laws, including federal criminal statutes that prohibit making a false statement to the federal government.
Civil Monetary Penalties Law.  We are subject to the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transferring of remuneration to a Medicare or Medicaid beneficiary that the person knows or should
10

Table of Contents
know is likely to influence the beneficiary’s selection of a particular supplier of Medicare or Medicaid payable items or services. Noncompliance can result in significant civil monetary penalties for each wrongful act, assessment of three times the amount claimed for each item or service, and exclusion from the federal healthcare programs.
Federal Healthcare Fraud Statutes. We are also subject to a federal healthcare fraud statutes that, among other things, impose criminal and civil liability for executing a scheme to defraud any healthcare benefit program including non-governmental programs, and prohibit knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false or fraudulent statement or representation, or making or using any false writing or document with knowledge that it contains a materially false or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services. Violations of these statutes can result in significant civil, criminal, and administrative penalties, fines, damages, and exclusion from federal healthcare programs.
State Fraud and Abuse Laws and Marketing Restrictions.  Many states have adopted anti-kickback, anti-referral laws, and false claims laws and regulations analogous to the federal civil Anti-Kickback Statute and federal False Claims Act. In some cases, these state laws apply regardless of the payor, including private payors. We believe that we are in compliance with such laws. Moreover, several states have imposed requirements to disclose payments to healthcare providers, restrictions on marketing and other expenditures, and requirements to adopt a code of conduct or compliance program with specific elements. Liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.
Administrative Simplification of the Health Insurance Portability and Accountability Act of 1996.  The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) mandated the adoption of standards for the exchange of electronic health information to encourage overall administrative simplification and enhance the effectiveness and efficiency of the healthcare industry. Ensuring privacy and security of patient information is one of the key factors driving the legislation. HIPAA regulations have been amended under the Health Information Technology for Economic and Clinical Health Act of 2009. If we are found to be in violation of HIPAA, we could be subject to civil or criminal penalties.
Privacy Laws. SeveralAt least 15 states have enacted various privacy laws.laws of general applicability over the past several years. For example, the California Consumer Privacy Act (“CCPA”) is a consumer privacy law, which provides certain privacy rights and consumer protection for residents of the state of
11

Table of Contents
California. These consumer rights include the right to know what personal information is collected, the right to know whether the data is sold or disclosed and to whom, the right to request a company to the delete personal information collected, the right to opt-out of the sale of personal information and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right. The California Privacy Rights Act (“CPRA”) amends and expands the CCPA and is to take effect in January 2023 with respect to personal data collected beginning in January 2022. CPRA enforcement is scheduled to begin in March of 2024. If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance. ColoradoVirginia and VirginiaColorado have enacted similar laws, also withlaws. The Consumer Data Protection Act in Virginia and the Colorado Privacy Act both became effective dates in 2023. In addition, general privacy legislation has been filed in Congress, but the final form of the legislation and when it might be enacted is difficult to predict.
Patient Protection and Affordable Care Act.  The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 (“ACA”) enacted significant changes to the provision of and payment for healthcare in the United States. Under the ACA and related laws and regulations, federal and state government initiatives are focused on limiting the growth of healthcare costs and implementing changes to healthcare delivery structures. These reforms are intended in part to put increased emphasis on the delivery to patients of more cost-effective therapies and could adversely affect our business. Some of the provisions of the ACA have yet to be fully implemented, and certain provisions have been subject to judicial and Congressional challenges. In addition, there have been efforts to repeal or replace certain aspects of the ACA and to alter the implementation of the ACA and related laws. It is unclear how the ACA and its implementation, as well as efforts to repeal or replace, or invalidate, the ACA, or portions thereof, will affect our business. Additional legislative changes, regulatory changes, and judicial challenges related to the ACA remain possible. While some uncertainty exists regarding the future aspects of the ACA, weWe expect that the ACA will continue to have a significant impact on the delivery of healthcare in the United States and on our business in the near term.
Physician Payments Sunshine Act.  The Physician Payments Sunshine Act, implemented as the Open Payments program, requires manufacturers of drugs and devices for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to direct or indirect payments and other transfers of value provided to physicians and teaching hospitals, as well as ownership and investment interests held by physician and their immediate family members. Beginning in 2022, applicableApplicable manufacturers are also will be required to report information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives. Failure to disclose reportable payments could subject us to penalties and materially adversely impact our business and financial results. Certain states’ laws require additional reporting of payments and transfers of value to healthcare providers.
Since these laws and regulations continue to evolve, we lack definitive guidance as to the application of certain key aspects of these laws and regulations as they relate to certain of our arrangements and programs, including those with providers with
11

Table of Contents
respect to user training. We cannot predict the final form of these federal and state regulations or the effect their application will have on us. As a result, our provider and training arrangements may ultimately be found not to be in compliance with applicable federal law. Moreover, these laws continue to evolve. The Bipartisan Budget Act of 2018 increased the criminal and civil penalties that can be imposed for violating certain federal healthcare laws, including the Anti‑Kickback Statute. Additionally, in late 2020, the United States Department of Health and Human Services’ Office of the Inspector General (“OIG”) finalized a rule that will remove protection from the discount safe harbor to the federal healthcare Anti-Kickback Statute for manufacturers rebates to pharmacy benefit managers (or “PBMs”), Medicare Part D plans and Medicaid managed care organizations (“MCOs”), effective January 2022. The rule also includes a new safe harbor for point-of-sale reductions offered by manufacturers to Part D plans, Medicaid MCOs and their PBMs, and a new safe harbor for certain fees manufacturers pay to PBMs for services to the manufacturers. The rule was finalized consistent with an Executive Order issued by the President in 2020; with the change in Administrations, it is possible that the rule may be revised before it is fully effective. If it takes effect as written, the rule will be one of the most significant amendments to the Anti-Kickback Statute regulatory safe harbors in decades and likely will transform manufacturer interactions with Part D plans, Medicaid MCOs and their PBMs.laws.
Ensuring that our business arrangements and interactions with healthcare professionals, third‑party payors, customers and others comply with applicable healthcare laws and regulations requires substantial resources. Because of the breadth of these laws and the narrowness of the exceptions or safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of these laws.
U.S. Foreign Corrupt Practices Act (FCPA). We are also subject to FCPA in the U.S. and to similar anti-bribery laws in other jurisdictions, which generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, our customer relationships outside of the United States may be with governmental entities and therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti-bribery laws. We operate in parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with
12

Table of Contents
anti-bribery laws may conflict with local customs and practices. Despite our training and compliance programs, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees or agents.
International Regulations
International sales of medical devices are subject to foreign government regulations, which may vary substantially from country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may differ. There is a trend towards harmonization of quality system standards among the European Union, United States, Canada and various other industrialized countries.
The primary regulatory body in Europe is that of the European Union, which includes most of the major countries in Europe. Other countries, such as Switzerland, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to medical devices. The European Union has adopted numerous directives and standards regulating the design, clinical trials, manufacture, labeling, and adverse event reporting for medical devices, including the Medical Device Directive (“MDD”) and the Medical Device Regulation (“MDR”),MDR, which replaced MDD in May 2021. Devices that comply with the requirements of the MDD will be entitled to bear the CE conformity marking and, accordingly, can be commercially distributed until May 2024, at which time devices must comply with the MDR.MDR, unless certain requirements are met that would allow for an extension until December 2027. The method of assessing conformity with the applicable directive varies depending on the class of the product, but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a “Notified Body”. The latter is required in order for a manufacturer to commercially distribute the product throughout the European Union. This third-party assessment may consist of an audit of the manufacturer’s quality system and specific testing of the manufacturer’s product. Outside of the European Union, regulatory approval needs to be sought on a country-by-country basis for us to market our products.
We have obtained the right to affix the CE Mark to theClassic Omnipod and Omnipod DASH Systems, which allows usunder the MDD. We can continue to distribute these products throughoutsell Classic Omnipod through 2027 under MDD in the European Union and in other countries that recognize the CE Mark.Mark and are awaiting certification under MDR for Omnipod DASH. We have obtained the right to affix the CE Mark to Omnipod 5 under MDR, which allows us to distribute it throughout the European Union and in the United Kingdom. In addition weto these countries, Omnipod DASH can be marketed in the Gulf Cooperation Council Countries and in Australia. We also have Health Canada approval to sell these productsClassic Omnipod and Omnipod DASH in Canada.
A range of anti-bribery and anti-corruption laws, as well as industry specific laws and codes of conduct, apply to the medical device industry and interactions with government officials and entities and healthcare professionals. These laws include the U.K. Bribery Act and similar antibribery laws in other jurisdictions in which we operate. Such laws generally prohibit U.S.-based companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business to foreign officials, or in the case of the U.K. Bribery Act, to any person. In addition, the European Union Whistleblower Directive (effective in late 2023) and other applicable law around the world impose specific requirements on companies regarding speak up policies and non-retaliation policies.
General Data Protection Regulation. The General Data Protection Regulation (“GDPR”) is a comprehensive update to the data protection regime in the European Economic Area that imposes requirements relating to, among other things, consent to process personal data of individuals, the information provided to individuals regarding the processing of their personal data, the security and confidentiality of personal data, notifications in the event of data breaches, and use of third-party processors. If we fail to comply with these standards, we could be subject to criminal penalties and civil sanctions, including fines and penalties for noncompliance.
12

Table of Contents
The European Union has laid out a multi-year plan for additional privacy and data regulation, building upon the GDPR, and has begun to execute on that plan. For example, the Cybersecurity Directive and the Artificial Intelligence Act have been finalized and will impose additional obligations on businesses generally, including those in the medical device industry.
Human Capital Resources
Employees
Our people are our most valuable asset and are the source of our innovation and our success. We strive to attract and retain the best talent with competitive compensation and benefits, opportunities for growth and development, and a culture that emphasizes fair and equitable treatment. As of December 31, 2021,2023, we had approximately 2,3003,000 full-time employees, representing a 21%an 18% increase over the prior year. Approximately 80%75% of our employees are located in the United States and the remainder are located in 1315 other countries.
To assess and improve employee retention and engagement and identify potential opportunities for improvement, we survey employees with the assistance of third-party consultants,conduct periodic ‘Your Voice’ employee pulse surveys and take timely action to address key areas of employee concern. We regularly conduct engagement surveys to gain valuable insight into our employees’ experience and identify areas for improvement. In 2021, we heard from employees through a variety of surveys focused on wellness, work-life balance, and the workplace of the future. In 2022, we implemented a new approach to engagement. Instead of conducting an engagement survey once per year, we will perform short pulse surveys three to four times per year to better understand opportunities to improve our talent management strategy and gain a more dynamic view of our employees’ needs. Our senior leadership team assesses engagement to understand and identify potential opportunities for improvement.
Our executive leadership team also conducts regular Town Hall meetings to ensure our global employees are highly engaged and receive timely business updates. To help our remote employees feel socially connected to their colleagues, we created our “Stay Connected” initiative, which includes video updates from leaders around the world. This initiative also includes virtual meetings with our executive team members. These virtual meetings are designed as casual conversations with our executives so
13

Table of Contents
employees can talk about what is on their minds, get to know the executive leaders, and connect with colleagues from across the organization. We also publish a monthly global employee newsletter, which includes a timely collection of high-level developments and local highlights from across our organization and utilize a social networking tool to ensure our global employees are engaged, motivated, and collaborating with one another.
Diversity, Equity, and Inclusion (“DEI”)
Our success thrives on the diversity of perspective, thought, experience, and background within our workforce. We aspireare committed to createcreating a diverse and inclusive global culture that reflects the diversity of the customers we serve and fosterscreates an environment where all employees feel welcomed, respected, and valued. Accordingly, we are committed to providing equal opportunity in all aspects of our Company culture and workplace. In 2023, we continued to develop a comprehensive, multi-year diversity and social impact strategy that outlines how to implement our greatest opportunities for impact, in alignment with the needs of our stakeholders and diversity maturity model. Our annual three-day leadership program includes instruction in unconscious biasDEI activities focus on four main areas—Attraction, Talent Development, Culture, and hiring behaviors that support diversity. We haveExternal Engagement—which reflect our commitment to integrating DEI within our business processes. In 2023, we continued to embed diversity more formally into our talent programs that fosteracquisition process to attract a diverse talent pipeline by recruiting candidates with a wide varietypool of backgrounds.candidates. In addition, we continue to provide Conscious Inclusion and Inclusive Hiring diversity training to people managers and employees.
Our Employee Resource Groups (“ERG”ERGs”) serve as a source of inclusion across seventhe following nine categories: African Descent, Asian and Pacific Islander, Hispanic/Latin, LGBTQ+, Sustainability, Veterans and First Responders, Women, Young Professionals, and Young Professionals.Jewish Heritage. These ERGERGs support the acquisition of diverse talent and are sponsored by senior leaders across our organization.
Training and Development
We are committed to fostering an environment in which our employees continuously learn and develop. We offer both leadership and professional skills development programs. All employees who join Insulet undergo a robust onboarding program called RITE Start that introduces our core values of respect, integrity, teamwork, and excellence, and educates new employees about diabetes, our Omnipod products, our business strategy, and other business topics designed to engage and connect employees to each otherour culture, and our mission. Duemission, which is to improve the COVID-19 pandemic,lives of people with diabetes. In 2022, we transformedlaunched our regional on-boarding‘Ignite Your Growth’ career development program to employees across the globe and in 2023 we launched our ‘Ignite Your Leadership’ training program to people managers to support the growth and development of our future leaders and build their capabilities.In addition, we launched LinkedIn Learning to all employees globally providing everyone access to virtual and online learning programs on demand to support their career growth and development. We also offer training for new hires to a global, virtual program. We also offermanagers, resources for our experienced leaders, intensive Customer Care New Hire Training, and Sales (Field and Inside Sales) New Hire Training. In addition, employees have access to monthly learning programs and virtual and online learning programs. Further, during our 2021 annual Compliance Week, employees logged over 6,000 training hours.We offer leadership development programs to support the growth of our future leaders. We also offer training for new managers and resources for experienced leaders. Additionally, we offer professional certification course reimbursement of up to $3,000 annually and tuition reimbursement of up to $5,250 annually for courses taken in pursuit of an undergraduate degree and up to $10,000 annually for courses taken in pursuit of a graduate degree. Finally, we offer virtual training programs and employee communications designed to support employees and leaders that take advantage of our flexible work policy, including programs on leading effective remote meetings, managing remotely, and how to leverage collaborative learning tools.
Competitive Pay and Benefits
Our compensation program is designed to align employee compensation with our performance and to provide the proper incentives to attract, retain, and motivate employees to achieve superior results. The structure of our compensation program balances incentive earnings for both short-term and long-term performance. Specifically,
13

Table of Contents
We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location.
We engage internationally recognized outside compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs and to provide benchmarking.
We align our executives’ long-term equity compensation with our shareholders’ interests.
Annual increases and incentive compensation are based on our performance as well as each individual’s contribution to the results achieved and are documented through our talent management process as part of our annual review process.
We are committed to providing comprehensive benefit options that allow our employees and their families to live healthier and more secure lives. Our wide-ranging benefits include:include health insurance, telehealth, prescription drug benefits, dental insurance, vision insurance, 80 hours of COVID-19 paid sick time, accident insurance, critical illness insurance, life insurance, disability insurance, health savings accounts, flexible savings accounts, retirement plans, employee stock purchase plan, legal services, identity theft protection, maternity/paternity leave, tuition and professional certification course reimbursement, and employee assistance program. In addition, we offer a free online wellness program; subsidized child, senior care or pet services, and access to personal services; free virtual babysitting and tutoring services; Pod perks, which provides a free Omnipod System,5 or Omnipod DASH product, including PDMPDM/Controller and Pods to benefit eligible employees, interns, or dependents;dependents. We also offer summer hours;hours and a flexible work policy. In addition, our employee stock purchase plan is availablearrangements, including the opportunity to all full-time employeeswork remotely, which allows us to access a broader, more diverse, and has a participation rate of over 60%.
14

Table of Contents
more exceptional talent pool.
Health and Safety
We maintain an occupational health and safety management system that covers all our employees, contractors, and contractors,temporary employees because we are committed to the safety and well-being of our workforce. By minimizing risks at our factories and implementing training to enhance awareness of hazards, we are able to promote safe practices and preserve the health of our employees.
Modern manufacturing enables efficiency and automation, which reduces exposure to health and safety risks throughout the production process. At our facilities, the majority of our equipment is fully automated to minimize human involvement in the operations of machines and therefore reduce the risk of injury. We maintain high standards for workplace safety, and our orientation for technicians includes training about safe procedures, such as lockout/tagout. All employees working in our machine shop must also attend training to understand and comply with safety protocols.
We have a Health and Safety Compliance Manual to provide employees with the tools needed to identify and report hazards and reduce work relatedwork-related injuries. Our programs and policies are in compliance with applicable local, regional, and federal laws, including U.S. Occupational Safety and Health Administration requirements. We continuously monitor and adapt to regional regulations as we expand our facilities into new geographies. In addition to hazard recognition, our workplace health and safety programs cover ergonomics, hearing conservation, fall protection, and accident and injury prevention. Furthermore, we added a detailed program on contractor safety in 2021 to support the health and well-being of the contractors who work with us on various aspects of our operations every day.
We also have formal plans in place to protect our employeesemployees' safety in the event of an emergency. In addition, we haveour Acton, Massachusetts facility maintains an Emergency Action Plan for our Acton, Massachusetts facility that outlines processesdescribes procedures that our employees mustshould follow duringwhen faced with a variety of unexpected health and safety events. As part of this initiative, we have trained certain employees to use automated external defibrillators, provide first aid, and perform cardiopulmonary resuscitation (CPR). In 2023, we implemented a text emergency system for our employee base located in our Acton headquarters and Acton manufacturing facility, which advises employees on building closures and emergencies with clear instructions. We are also planning to schedule annual emergency evaluation drills to enhance theconduct periodic health and safety audits of our facility.
In responsefacilities to COVID-19, we organized an internal cross-functional Coronavirus Task Force to manage our response tomonitor the pandemic and maintain business continuity while aligning with safety protocols recommended by the World Health Organization, the U.S. Centers for Disease Control and Prevention, and other local health agencies. In addition, to ensure the safetyeffectiveness of our essential employees who workprograms and drive continuous improvement in our ownedoverall safety performance as Insulet expands in size and contract manufacturing facilities during the pandemic, we implemented additional screening processes and provided masks, sanitizer, and other personal protective equipment. We also initiated contact tracing and offered COVID-19 testing for all employees in the U.S. and offered vaccination clinics at our principal U.S. office and manufacturing location.impact.
Company Information
Insulet Corporation is a Delaware corporation formed in 2000. Our principal office is located at 100 Nagog Park, Acton, Massachusetts, 01720 and our website address is http://www.insulet.com. We make available free of charge on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (“SEC”). We have also posted the charters for our Audit Committee, Talent and Compensation Committee and Nominating, Governance and Risk Committee, as well as our Code of Business Conduct and Ethics, under the heading “Corporate Governance” in the Investors section of our website. The information on our website is not incorporated in this report by reference. In addition, the SEC maintains a website (http//www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
14

Table of Contents
Item 1A. Risk Factors
Risks Related to Our Business and Industry
We currently rely on sales of theour Omnipod System, and tailored versions of the Omnipod System in our drug delivery product line,platform to generate nearly all our revenue.
Our main product is the Omnipod System, from which weWe expect to continue to derive nearly all our revenue.revenue from our Omnipod product platform. Accordingly, our ability to continue to generate revenue is highly reliant on our ability to market and sell theour Omnipod Systemproducts and to retain consumers who currently use the product. Our sales of the Omnipod Systemproducts may be negatively impacted by many factors, including:
development of an effective patch pump by one or more competitors or breakthrough diabetes treatments not requiring the delivery of insulin;
failure of theour Omnipod Systemproducts to achieve and maintain wide acceptance among opinion leaders in the diabetes treatment community, insulin-prescribing physicians, third-party payors, and people with insulin-dependent diabetes;
manufacturing problems or capacity constraints;
actual or perceived quality problems;
reductions in reimbursement rates or coverage policies relating to the Omnipod Systemproducts by third-party payors;
15

Table of Contents
claims that any portion of the Omnipod Systemproducts infringes on intellectual property rights of others;
adverse regulatory or legal actions relating to theour Omnipod System;products;
damage, destruction or loss of any of the facilities where our products are manufactured or stored or of the equipment therein;
failure to successfully open or expand new facilities;
the inability of users to continue paying for our products;
attrition rates of consumers who cease using the Omnipod System;products;
competitive pricing; and
results of clinical studies relating to the Omnipod Systemproducts or our competitors’ products.
If any of these events occurs,occur, our ability to generate revenue could be significantly reduced, which would adversely affect our business, financial condition, and results of operations.
If we fail to expand and maintain an effective sales force or successfully develop and maintain our relationships with intermediaries, our business, prospects and brand may be materially and adversely affected.
In addition to promoting, marketing, and selling the Omnipod Systemproducts through our own direct sales force, we also utilize domestic and international intermediaries to distribute our product to users. We need to expand our distribution network to maintain and grow our business and revenue. We cannot assure you thatIf we will beare not able to successfully develop our relationships with third-party intermediaries. If we fail to do so,intermediaries, our sales could fail to grow or could decline, and our ability to grow our business could be adversely affected. Intermediaries that are in the business of selling other medical products may not devote a sufficient level of resources and the support required to generate awareness of our products and grow or maintain our product sales. If our intermediaries are unwilling or unable to market and sell our products, or if they do not perform to our expectations, we could experience delayed or reduced market acceptance and sales of our products, which would adversely affect our business, financial condition, and results of operations.
Our ability to grow our revenue depends in part on our retaining a high percentage of our customers.
A key to driving our revenue growth is the retention of a high percentage of our customers. We have developed retention programs aimed at both healthcare professionals and consumers, which include appeals assistance, ongoing customer communications, newsletters, support, training and an automatic re-order program for certain customers. We have had a satisfactory customer retention rate; however, we cannot assure you that we will maintain this retention rate in the future. Current uncertainty in global economic conditions, competition, higher levels of unemployment, changes in insurance reimbursement levels, and negative financial news may negatively affect product demand. If demand for our products fluctuates as a result of economic conditions, competition or otherwise, our ability to attract and retain customers could be harmed. The failure to retain a high percentage of our customers could negatively impact our revenue growth and may have a material adverse effect on our business, financial condition, and results of operations.
If we do not effectively manage our rapid growth, our business resources may become strained and we may not be able to deliver the Omnipod Systemour products in a timely manner, which could harmadversely affect our results of operations.
As we continue to expand our sales,the number of customers we serve, driven in large part by significant demand for Omnipod 5, we expect to continue to increase our manufacturing capacity, our personnel, and the scope of our sales and marketing efforts. This growth, as well as any other growth that we may experience in the future, will providecreate challenges tofor our organization and may strain our management and operations resources.resources, including our customer service. In order to manage future growth, we will be required to improve existing, and implement new, sales and marketing efforts, distribution channels, and distribution channels. Thecustomer support procedures. In addition, the form and function of our enterprise information technology systems will need to change and be
15

Table of Contents
improved upon as our business needs change. For example, we are currently working to implementrecently implemented a new enterprise resource planning system and significantlyplan to upgrade our customer relationship management system. We will also need to manage our supply chain and manufacturing effectively, including the continued developmentour sourcing of our manufacturing and our relationships with our contract manufacturer and other suppliers.materials such as semiconductor chips. We may also need to partner with additional third-party suppliers to manufacture certain components of theour Omnipod Systemproducts and install additional manufacturing lines.lines, including as a part of our newly constructed facility in Malaysia. A transition to new suppliers may result in additional costs or delays. We may misjudge the amount of time or resources that will be required to effectively manage any anticipated or unanticipated growth in our business, or we may not be able to manufacture sufficient inventory, or attract, hire and retain sufficient personnel to meet our needs. If we cannot scale our business appropriately, maintain control over expenses or otherwise adapt to anticipated and unanticipated growth, our business resources may become strained, we may not be able to deliver theour Omnipod Systemproducts in a timely manner, and our results of operations may be adversely affected.
16

Table of Contents
Failure to secure or retain adequate coverage or reimbursement for our products by third-party payors could adversely affect our business, financial condition, and results of operations.
We expect that sales of our Omnipod products, which, for Omnipod 5, occur only through the pharmacy channel in the U.S. and for Omnipod SystemDASH, primarily through the pharmacy channel, will be limited unless a substantial portion of thetheir sales price of the Omnipod System is paid for by third-party payors, including private insurance companies, health maintenance organizations, preferred provider organizations, federal and state government healthcare agencies, intermediaries, Medicare, Medicaid and other managed care providers. In the United States, we currently have contracts establishing reimbursement for the Omnipod Systemproducts with national and regional third-party payors and government agencies that provide reimbursement in all 50 states. Medicare Part D Plan Sponsors may provide coverage for Omnipod products under the Medicare Part D prescription drug program, which requires negotiating with third-party payors in order to provide our product through the pharmacy channel in the United States. While we anticipate entering into additional contracts with other intermediaries and third-party payors, we cannot assure you that our efforts will be successful.successful, which could limit the availability of Omnipod products. In addition, these contracts can generally be terminated by the third-party payor without cause. Healthcare market initiatives in the United States may also lead third-party payors to decline or reduce reimbursement for the Omnipod System.products. Moreover, compliance with administrative procedures or requirements of third-party payors may result in delays in processing approvals by those payors for consumers to obtain coverage for the use of the Omnipod System.products and for payment to be made for such use. Coverage decisions and rates of reimbursement increasingly require clinical evidence showing an improvement in user outcomes. Generating this clinical evidence requires substantial time and investment and there is no guarantee of a desired outcome.
We are an approved Medicare supplier and CMS has issued guidance clarifying that Medicare Part D Plan Sponsors may provide coverage for products such as the Omnipod System under the Medicare Part D prescription drug program. As a result, we must negotiate with third-party payors in order to provide our product through the pharmacy channel in the United States to users who are covered under Medicare Part D. Compliance with administrative procedures or requirements of these third-party payors may result in delays in processing approvals by those payors for consumers to obtain Medicare Part D coverage for the use of the Omnipod System. Medicaid coverage decisions are made by the governing authorities in each state. As the Medicaid coverage process and stakeholders are unique to each state, the timeline to gain coverage in each state may vary.
We began our full market release of Omnipod DASH in 2019, primarily through the pharmacy channel, which required negotiation of new or amended agreements with our intermediaries and payors. The availability of Omnipod DASH may be limited or restricted if we are unable to maintain these agreements and sustain an adequate level of reimbursement under these agreements. As we expand our Omnipod System sales and marketing efforts internationally, we face additional risks associated with obtaining and maintaining reimbursement from foreign healthcare payment systems on a timely basis or at all. Failure to secure or retain adequate coverage or reimbursement for the Omnipod Systemour products by third-party payors could have a material adverse effect on our business, financial condition, and results of operations.
Healthcare reform laws could adversely affect our revenue and financial condition.
During the past several years, the U.S. healthcare industry has been subject to an increase in governmental regulation at both the federal and state levels. Efforts to control healthcare costs, including limiting access to care, alternative delivery models, and changes in the methods used to determine reimbursement scenarios and rates, are ongoing at the federal and state government levels.
The ACA and related healthcare reform laws, regulations and initiatives have significantly increased regulation of managed care plans and decreased reimbursement to Medicare managed care. Some of these initiatives purport to, among other things, require that health plan members have greater access to drugs not included on a plan’s formulary. Moreover, to alleviate budget shortfalls, states have reduced or frozen payments to Medicaid managed care plans.
It is unclear how the ACA and its implementation, as well as efforts to repeal or replace, or invalidate, the ACA, or portions thereof, will affect our business. Additional legislative changes, regulatory changes, and judicial challenges related to the ACA remain possible. It is possible that the ACA, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have an adverse effect on our industry and on our ability to maintain or increase sales of any of our products.
Risks Related to Competition, Product Development Market Access and CompetitionIntellectual Property
We face competition from numerous competitors, many of whom have far greater resources than we have, and, as a result, we may not be ableOur failure to compete effectively.effectively would negatively impact our revenue.
The medical device industry is intensely competitive, subject to rapid change resulting from technological advances and scientific discoveries as well as other market activities of industry participants. The Omnipod System competes with several existing insulin delivery devices as well as other methods for the treatment of diabetes. We also compete with Medtronic and Tandem, among others. Medtronic has been the insulin pump market leader for many years. The competitive landscape in our industry continues to undergo significant change. We compete with companies that produce insulin pumps, such as Medtronic, Tandem, The Ypsomed Group and Roche Diabetes Care, Inc (“Roche”). In addition to the established insulin pump competitors, severalwe compete with companies are working to developthat provide products and market new insulin “patch” pumps,supplies for MDI therapy. MDI therapy, including smart pens, can be substantially less expensive than pump therapy, and other methods forimprovements in the treatmenteffectiveness of diabetes. These companies are at various stages of developmentMDI therapy may result in fewer people with insulin-dependent diabetes converting from MDI therapy to pump therapy than we expect, which could result in price pressure and the number of such companies continuously changes as they enter or exit the market on an ongoing basis.decreased revenue.
17

Table of Contents
SomeIn addition, some of our competitors, such as Medtronic and Roche, are large, well-capitalized companies with more resources than we have. These companies may have competitive advantages over us, including:
16

Table of Contents
significantly greater name recognition;
different and more complete reimbursement profiles;
established relations with healthcare professionals, customers, and third-party payors;
larger and more established distribution networks;
greater experience in conducting research and development, clinical trials, manufacturing, marketing, and obtaining regulatory approval; and
greater financial and human resources for product development, sales and marketing, and patent litigation.
As a result, we may not be able to compete effectively against these companies or their products, which may adversely impact our business.
We also compete with MDI therapy, including smart pens, which is substantially less expensive than pump therapy. While we believe that pump therapy, in general, and the Omnipod System, in particular, have significant competitive and clinical advantages over MDI therapy, improvements in the effectiveness of MDI therapy may result in fewer people with insulin-dependent diabetes converting from MDI therapy to pump therapy than we expect and may result in negative price pressure.
Our current competitors or other companies may at any time develop additional products for the treatment of diabetes. Several companies are working to develop and market new insulin “patch” pumps, smart pens, and other methods for the treatment of diabetes. If an existing or future competitor develops a product that competes with or is superior to theour Omnipod System,products, our revenue may decline. In addition, some of our competitors may compete by changing their pricing model or by lowering the price of their insulin delivery systems or ancillary supplies. If these competitors’ products were to gain acceptance by healthcare professionals, people with insulin-dependent diabetes, or third-party payors, we could experience pricing pressure. If prices were to fall, our results of operations could be materially adversely impacted.
Technological breakthroughs in diabetes monitoring, treatment, or prevention could render theour Omnipod System obsolete.products obsolete or less desirable.
The diabetes treatment market is subject to rapid technological change and product innovation. TheOur Omnipod System isproducts are based on our proprietary technology, but a number of companies, medical researchers, and pharmaceutical companies are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs, and other therapeutics for the monitoring, treatment, and/or prevention of insulin-dependent diabetes. For example, FDA approval of a commercially viable “closed-loop” or “hybrid closed-loop” system that combines continuous “real-time” glucose sensing or monitoring and automatic continuous subcutaneous insulin infusion in a manner that delivers appropriate amounts of insulin on a timely basis with reduced user direction could have a material adverse effect on our revenue and future profitability. Medtronic commercially launched a “hybrid closed-loop” system in 2017, andin 2020 Tandem launched an AID system, which could negatively impact our business. In addition, well-capitalized biopharmaceutical companies like Vertex Pharmaceuticals, the National Institutes of Health, and other supporters of diabetes research, are continually seeking ways to prevent, cure, or improve the treatment of diabetes. Any technological breakthroughs in diabetes monitoring, treatment or prevention could reduce the potential market for our products or render the Omnipod Systemour products obsolete altogether, which would havesignificantly reduce our sales or cause our sales to grow at a material adverse effectslower rate than we currently expect. In addition, even the perception that new products may be introduced, or that technological or treatment advancements could occur, could cause consumers to delay the purchase of our products or impact our stock price.In 2023, for example, ongoing adoption of the GLP-1 class of drugs in diabetes and news surrounding the expansion of use of GLP-1 drugs in obesity led to speculation regarding the impact on the insulin therapy market.We believe this speculation was the cause of a decline in our business, financial condition and results of operations.stock price in 2023.
Our own new product development initiatives may prove to be ineffective or not commercially successful.
We have ongoing initiatives to develop products to improve the treatment of type 1 and type 2 diabetes. We may be unable to effectively introduce and market new products or may fail to keep pace with advances in technology. The healthcare industry is characterized by continuous technological change, resulting in changing consumer preferences and requirements. The success of our business depends on our abilityIf we are unable to introduce and market new products and adapt to these changing technologies and consumer demands.keep pace with advances in technology, our business will be negatively impacted. To compete in the marketplace, we must make substantial investments in new product development whether internally or externally through licensing or acquisitions. Even if we can develop, manufacture, and obtain regulatory and reimbursement approvals for our new products, the success of those products depends on market acceptance. Market acceptance for our new products could be affected by several factors, including the availability of alternative products from our competitors, the price of our products, the timing of our market entry, and our ability to market and distribute our products effectively. Our failure to introduce new and innovative products in a timely manner could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval or commercialize our products.
We rely on third parties, such as contract research organizations, medical institutions, clinical investigators, contract laboratories, and other third parties to conduct some of our clinical trials and pre-clinical investigations. If these third parties do
18

Table of Contents
not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, or if the quality or accuracy of the data they obtain is compromised due to failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended, or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, or at all, and our business and operating results may be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.
17

Table of Contents
Future market or clinical studies may be unfavorable to theour Omnipod Systemproducts and itstheir efficacy, which could hinder our sales efforts and have a material adverse effect on our business, results of operations, financial condition, and cash flows.
To help improve, market, and sell theour Omnipod System,products, we have sponsored, and expect to continue to sponsor market studies to assess various aspects of the Omnipod System’s functionality and its relative efficacy.efficacy of our products. The data obtained from the studies may be unfavorable to the Omnipod Systemour products or may be inadequate to support satisfactory conclusions. In addition, in the future we may sponsor clinical trials to assess certain aspects of the efficacy of the Omnipod System.our products. If future clinical trials fail to support the efficacy of our current or future products, our sales may be adversely affected and we may lose an opportunity to secure clinical preference from prescribing clinicians, which may have a material adverse effect on our business, financial condition, and results of operations.
In addition, future clinical studies or articles regarding our existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than the Omnipod Systemour products or that the Omnipod System isour products are not as effective or easy to use as we claim. Additionally, diabetes associations, healthcare providers that focus on diabetes, or other organizations that may be viewed as authoritative could endorse products or methods that compete with the Omnipod Systemour products or otherwise announce positions that are unfavorable to the Omnipod System.our products. Any of these events may negatively affect our sales efforts and result in decreased revenue.
We may be unable to adequately protect our intellectual property rights.
Our success depends in part on our ability to maintain the proprietary nature of our technologies.develop or acquire commercially valuable intellectual property rights and to protect those rights adequately. We rely on a combination of patents, trade secrets, copyright and trademark laws, confidentiality, non-disclosure and assignment of invention agreements, and other contractual provisions and technical measures to protect our intellectual property rights. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or misappropriated.
Our ability to compete depends in part on our continued ability to develop or acquire commercially valuable intellectual property rights and to protect those rights adequately. We may not be able to develop additional proprietary technologies that are patentable. Further,patentable, and we cannot ensure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by or to us in the past or in the future will not be challenged or circumvented by competitors or that these patents will be found to be valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications. In addition, our ability to enforce and protect our intellectual property rights internationally may be limited in certain circumstances. For example, we may not be able to protect our intellectual property rights effectively in China, where we rely on a third-party contract manufacturer to produce our product. The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.
Our efforts to safeguard our unpatented and unregistered intellectual property rights, including requiring employees, consultants and other third parties to sign confidentiality, non-disclosure, or assignment of invention agreements, may not be successful. The agreements may be breached and trade secrets and other proprietary information could be disclosed to our competitors. Further, we may have inadequate remedies for any breach. In addition, others may independently develop substantially equivalent or superior proprietary information and techniques or gain access to our trade secrets or disclose such technologies. If we are unable to sufficiently protect our intellectual property rights and our intellectual property is disclosed or misappropriated, our competitiveness could be impaired, which would limit our growth and future revenue.
us. To protect our intellectual property, we may need to assert claims of infringement or misappropriation against third parties. Any lawsuits that we initiate could be expensive, take significant time, and divert management’s attention from other business concerns. The outcome of litigation to enforce our intellectual property rights is highly unpredictable. A court could determine that some or all of our asserted intellectual property rights are not infringed or misappropriated, or are invalid, or unenforceable. Additionally, we may provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially valuable. Additionally, we may provoke third parties to assert claims against us, and we may not be successful defending against these claims. The occurrence of any of these events could have a material adverse effect on our business, financial condition, and results of operations.
19

Table of Contents
Claims that our current or future products infringe or misappropriate the proprietary rights of others could adversely affect our ability to sell those products and cause us to incur additional costs.
We operatehave been involved in an industry characterized by extensive patent litigation. We have settled infringement suits in the past and as disclosedmay be again in Note 17 to the consolidated financial statements included in Item 8, we are currently subject to patent infringement litigation with Roche Diabetes Care, Inc. In addition, we expect that we could be increasingly subject to third-party infringement claims asfuture. As our revenue increases, the number of competitorscompanies with whom we compete grows, and the functionality of products and technology in different industry segments overlaps.overlaps, the risk of third-party infringement claims increases. Third parties may currently have, or may eventually be issued, patents on which our current or future products or technologies may be alleged to infringe. Any of these third parties might make a claim of infringement against us.
Such litigation, regardless of its outcome, could result in the expenditure of significant financial resources and the diversion of management’s time and resources. In addition, such litigation could cause negative publicity, adversely affect prospective users, cause product shipment delays, limit or prohibit us from manufacturing, marketing or selling our current or future products, and/or require us to develop non-infringing technology, make substantial payments to third parties, or enter into royalty or license agreements, which may not be available on acceptable terms or at all. If a successful claim of infringement were made against us and we could not develop non-infringing technology or license the infringed or similar technology on a timely and cost-effective basis, our revenue could decrease substantially, and we could be exposed to significant liability. A court could enter orders that temporarily, preliminarily, or permanently enjoin consumers from using our products or us from manufacturing, selling, or importing our products, or could enter an order mandating that we undertake certain remedial activities.
We rely on agreements or licenses to intellectual property or other rights in order to sell our current product and commercialize new products.
We rely on agreements or licenses to intellectual property or other rights in order to sell our current product and commercialize new products. If we cannot retain or obtain these agreements, licenses, or other rights, we may not be able to sell, develop, or commercialize our products. For example, our rights to incorporate the FreeStyle blood glucose meter into Classic Omnipod is governed by a license agreement with Abbott. In addition, we have a commercial agreement with Dexcom that allows us to sell
18

Table of Contents
Omnipod 5 with integration to Dexcom’s CGM and have a development agreement with Abbott to integrate Abbott’s CGM with Omnipod 5. The loss of any of these rights could impair the functionality of our products or prevent us from selling our products without significant development and regulatory activities that may not be completed in time to prevent an interruption in the availability of our products to consumers. This could result in a material adverse effect on our business, financial condition, and results of operations.
We also have a partnership with Glooko that allows our products to connect with Glooko’s cloud-based diabetes data management system so that users and healthcare providers can monitor user data, including insulin delivery trends and blood glucose levels. Our agreement with Glooko expires in December 2025. If this agreement is not renewed in the future and we do not develop or contract for an alternative data management system, our business could be materially adversely impacted.
Risks Related to Economic Conditions and Operating Internationally
The continuing worldwide macroeconomic and geopolitical uncertainty as well as the impact of the COVID-19 or other global pandemics may adversely affect our business and prospects.
Continued concerns about the systemic impact of potential long-term and wide-spread recession and geopolitical issues, including wars and terrorism, have contributed to increased market volatility and diminished expectations for economic growth in the world. Our financial conditionbusiness and results of operations have been and may to continue to be adversely affectedimpacted by the COVID-19 pandemic.
The COVID-19 pandemic has created significant volatility, uncertaintychanges in macroeconomic conditions, including inflation, bank failures, rising interest rates and availability of capital markets. Uncertainty about global economic disruptionconditions, particularly in the markets we sellcountries with government-sponsored healthcare systems, may also cause decreased demand for our products, into and operate in and negatively impacted business and healthcare activity globally. The pandemic and preventative measures taken to contain or mitigate the outbreak, including vaccine mandates, have caused, and are continuing to cause, business slowdown or shutdown in affected areas, supply chain disruptions, labor shortages, inflation and disruption in the financial markets globally. As a result, consumers may reduce their spending, new orders for our Omnipod Systemproducts may decline and our user attrition rate may increase, which could have a material adverse effect on our business, sales, financial condition, and results of operations.
TheAnother global pandemic like COVID-19 pandemic also has the potential to significantly impact our supply chain if the manufacturing plants that produce our products or product components, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize our products, are disrupted, temporarily closed or experience worker shortages for a sustained period of time. Although China, where we manufacture a significant portion of our product, has experienced a recovery and we are currently producing at pre-COVID-19 levels, should China suffer a COVID-19 relapse, it could hinder our ability to produce product and have a material adverse effect on our business and results of operations.
As a result of the COVID-19 pandemic, many employees have transitioned to a remote or hybrid work environment, which has increased risks associated with our information technology systems and networks. These increased risks include cyber-attacks, computer viruses, disruptions, or shutdowns that could result in a failure to protect our information technology systems and data integrity.
The further spreadAnother global pandemic or new variants of COVID-19, and the requirements to take action to help limit the spread of the illness, maycould impact our ability to carry out our business as usual. For example, the COVID-19 pandemic may divertdiverted healthcare resources away from the conduct of clinical trials and interruptinterrupted the operations of the FDA, and comparable foreign regulatory agencies, which could delaydelayed product approval timelines, as it didincluding for Omnipod 5.
Our financial condition or results of operations may be adversely affected by international business risks.
In addition to the United States, we sell the Omnipod Systemour products in Europe, Canada, the Middle East and Australia. Our international operations are subject to risks that are inherent in conducting business under foreign laws, regulations and customs. International sales made up one third24% of our revenues in 20212023 and we expect international sales to contribute significantly to our future growth.growth as we launch Omnipod 5 in our international markets. If the U.S. dollar strengthens in relation to the currencies of other countries where we sell our products, such as the euro, our U.S. dollar reported revenue and income will decrease. Changes in the relative values of currencies occur regularly and, in some instances, may have a significant effect on our operating results. We also rely on third-party suppliers located in other countries. For example, a significant portion of our Omnipod Systemsproducts are manufactured atby a third-party contract manufacturer facilities in China.
20

Table of Contents
Our efforts to introduce or expand our current or future products in international markets may not be successful, in which case we may have expended significant resources without realizing the expected benefit. Ultimately, the investment required for expansion into international markets could exceed the results of operations generated from this expansion.
In addition to the risks discussed elsewhere in this Item 1A, other risks associated with doing business internationally, include:
political instability and actual or anticipated military or political conflicts;
trade protection measures, such as tariff increases, and import and export licensing and control requirements;
negative consequences from changes in or interpretations of tax laws;
difficulty in establishing, staffing, and managing international operations;
difficulties associated with foreign legal systems, including increased costs associated with enforcing contractual obligations in foreign jurisdictions;
19

Table of Contentschanges in regulatory requirements;
adapting to the differing laws and regulations, business and clinical practices, and consumer preferences in international markets;
difficulties in managing international relationships, including any relationships that we establish with foreign partners, distributors, or sales or marketing agents; and
difficulty in collecting accounts receivable and longer collection periods.
In addition, in January 2020, the U.K. withdrew from the European Union, commonly referred to as “Brexit”. The effects of Brexit will depend on the terms of the U.K.’s future relationship with the European Union. Although it is unknown what those terms will be, it is possible that there could be greater restrictions on imports and exports and on the movement of people between the U.K. and European Union countries, and increased regulatory complexities.
Failure to comply with the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws could materially adversely affect our business and result in civil and/or criminal sanctions.
The FCPA, the U.K. Bribery Act, and similar anti-bribery laws enacted in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws. Because we do business in the U.K., the U.K. Bribery Act also extends to our interaction with public and private sector entities and persons outside the U.K., including in the U.S.United States. Our policies mandate compliance with these anti-bribery laws. We operate in parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents. Violations of anti-bribery laws, or allegations of such violations, could disrupt our business and have a material adverse effect on our results of operations, financial condition, and cash flows.
Risks Related to Supply Chain, Operations, and Third-Party ArrangementsDrug Delivery
Our Omnipod System inventory is produced and maintained in a limited number of locations.
OurWhile we expect to begin production at our newly constructed manufacturing of the Omnipod System is conductedfacility in Malaysia in 2024, currently our products are manufactured in two locations, at our U.S. manufacturing facility in Massachusetts and on manufacturing lines owned by us at a facility located in China that is operated by a third-party contract manufacturer. Political or financial instability, currency fluctuations, the outbreak of pandemics such as COVID-19, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters, or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could materially disrupt our supply of product from China, increase our costs, and/or adversely affect our results of operations. Further, following the COVID-19 pandemic there may be increased pressure for U.S. medical device companies to reduce dependency on China for their supply chain. In addition, substantially all of our U.S. Omnipod System inventory in the United States is held at a single location in Massachusetts and our European Omnipod System inventory in Europe is maintained by a third-party logistics entity primarily inat a single location in the Netherlands. We take precautions to ensure that our third-party contract manufacturer and logistics entity safeguard our assets, including maintaining insurance, enacting health and safety protocols, and off-site storage ofstoring computer data.data offsite. However, a natural or other disaster, such as a fire or flood, could cause substantial delays in our operations, damage or destroy our manufacturing equipment and/or inventory, and cause us to incur additional expenses. The insurance we maintain may not be adequate to cover our losses in any particular case. With or without insurance, damage to our facility, manufacturing equipment, inventory or other property or to any of our suppliers, may have a material adverse effect on our business, financial condition, and results of operations.
21

Table of Contents
IfWe are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations, and we are unablemay not be able to obtain sufficient components or raw materials on a timely basis or if we experience manufacturing difficulties, including not effectively managing the start-up of new manufacturing lines, our business may be harmed.at all.
The manufacture of our productproducts requires the timely delivery of sufficient amounts of quality components and materials. We acquire our components and materials from many suppliers in various countries. We work closely with our suppliers to ensure the continuity of supply, but we cannot guarantee these efforts will always be successful. Further, while efforts are made to diversifyFor example, given the recent worldwide semiconductor chip shortage, we have entered into “take or pay” contracts with suppliers but cannot guarantee our sources ofsuppliers will meet their obligations under these contracts. We have also seen significant price increases for various components and materials, in certain instances we acquire components and materials from a sole supplier. In addition, due to the stringent regulations and requirements of the FDA and similar regulatory agencies in other countries regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for some components or materials. A reduction or interruption in supply, and an inability to develop alternative sources for such supply, could hinder our ability to manufacture our products in a timely or cost-effective manner, and have a material adverse effect on our business and results of operations.
The manufacture of our product is highly exacting and complex, due in part to strict regulatory requirements. Problems in the manufacturing process, including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials, and environmental factors, could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation. A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue. Significant manufacturing problems or inability to obtain key components and materials could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, as we commence operation of new manufacturing lines, we could experience quality issues and unexpected operational delays that decrease our gross margins and cause a shortage of product supply.
We are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations.
We rely on suppliers who manufacture the componentsincluding for and perform assembly of the Pods and PDMs. In addition, a third-party contract manufacturer in China performs assembly and supplies a significant portion of all finished Omnipod Systems.semiconductor chips. We do not have long-term supply agreements with all of our suppliers, and, in many cases, we, or our contract manufacturer, make purchases based on individual purchase orders. In some cases, our agreements with suppliers can be terminated by either party upon short notice. Additionally, while efforts are made to diversify our supplierssources of components and materials, in certain instances we acquire components and materials from a sole supplier. Also, due to the stringent regulations and requirements of the FDA and similar regulatory agencies in other countries regarding the manufacture of our products, we may encounter problems during manufacturingnot be able to quickly establish additional or replacement sources for a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction, component part supply constraints and environmental factors, any of which could delaysome components or impede their ability to meet our demand. materials.
Our reliance on these third-party suppliers, alsoas well as on our third-party manufacturer, subjects us to other risks that could harm our business, including:
our suppliers may give other customers’ needs higher priority than ours affecting their ability to deliver products to us in a timely manner, as we are not a major customer of many of our suppliers;
20

Table of Contents
we may not be able to obtain an adequate supply of materials or components in a timely manner or on commercially reasonable terms;
our suppliers may make errors in manufacturing that could negatively affect the safety or efficacy of our products, cause delays in shipment, or negatively affect our reputation;
we may have difficulty locating and qualifying alternative suppliers for our sole-source supplies;
switching components may require product redesign and submission to the FDA of a new 510(k);
thefts of our trade secrets and intellectual property could occur with the third-party supply process;
the occurrence of a fire, natural disaster, or other catastrophe, impacting one or more of our suppliers, may affect their ability to deliver products to us in a timely manner;
our suppliers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements, and
our suppliers may fail to comply with conflict minerals, anti-slavery, or other applicable laws, thus impairing our ability to source materials.
We may not be able to quickly establish additional or alternative suppliers, particularly for our sole-source suppliers, in part because of the FDA approval process and because of the custom nature of various parts. An interruption, delay, or delay in obtaininginability to obtain components, products and raw materials from our third-party suppliers or our inability to obtain products from alternate sources at acceptable prices in a timely manner, could impairhinder our ability to meet the demand of our customers and cause them to cancel orders or switch to competing products.
22

Table of Contents
We rely on agreements or licenses to intellectual property or other rights in order to sell our current product and commercialize new products.
We rely on agreements or licenses to intellectual property or other rights in order to sell our current product and commercialize new products. If we cannot retain or obtain these agreements, licenses, or other rights, we may not be able to sell, develop or commercialize our products. For example, our rights to incorporate the FreeStyle blood glucose meter into the Omnipod are governed by a license agreement with Abbott. In addition, we have a commercial agreement with Dexcom that allows us to sell Omnipod 5 with integration to Dexcom’s CGM and have a development agreement with Abbott to integrate Abbott’s CGM into Omnipod 5. The loss of any of these rights could impair the functionality of the Omnipod System or prevent us from sellingmanufacture our products without significant developmentin a timely or cost-effective manner and regulatory activities that may not be completed in time to prevent an interruption in the availability of the Omnipod System to consumers. This could result inhave a material adverse effect on our business financial condition and results of operations.
Our manufacturing process is highly complex and subject to regulation; as demand for our products increase, we may experience manufacturing difficulties, including not effectively managing the start-up of new manufacturing lines or issues with our third-party contract manufacturer, which could harm our business.
The manufacture of our product is highly exacting and complex, due in part to strict regulatory requirements. While we manufacture our products in the United States, a third-party contract manufacturer in China manufactures and supplies a significant portion of our inventory and we expect to begin additional manufacturing in our new facility in Malaysia during 2024. We and our contract manufacturer may encounter problems during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials, and environmental factors. These issues could lead to launch delays, product shortage, unanticipated costs, lost revenues, and damage to our reputation. A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue. Significant manufacturing problems could have a partnership with Glooko that allows the Omnipod System to connect with Glooko’s cloud-based diabetes data management system so that users and healthcare providers can monitor user data, including insulin delivery trends and blood glucose levels. Our agreement with Glooko expires in December 2025. If this agreement is not renewed in the future,material adverse effect on our business, results of operations, financial condition, and cash flows. In addition, as we commence operation of new manufacturing lines, we could be materially adversely impacted.experience quality issues and unexpected operational delays that decrease our gross margins and cause a shortage of product supply.
Our non-insulin drug deliveryDrug Delivery product line faces challenges which, if not met, may impair its future success.
Our non-insulin drug deliveryDrug Delivery product line involves the development, manufacture, and sale of a modified Omnipod SystemPod for delivery of a specific drug other than insulin. MostSubstantially all of our commercialized drug deliveryDrug Delivery revenue consists of sales of a customized version of our product for use in Amgen’s Neulasta Onpro kit under an agreement that expires in December 2023.2028. The marketing and sales initiatives driving this product line differ markedly from those on which we rely for our sales of Omnipod Systemsproducts to treat diabetes since the non-insulin drug delivery devices depend on marketing and sales to pharmaceutical companies, not to users and clinicians. We expect that the future results of our non-insulin drug deliveryDrug Delivery product line will face several challenges, including:
our identification of drug delivery opportunities for a modified Omnipod System;Pod;
our achievement of satisfactory development and pricing terms with the pharmaceutical companies that sell such drugs;
our development of appropriate modifications to our Omnipod System technology to address the needs and parameters required for the respective drug-delivery opportunities;
manufacturing issues relating to the modified Omnipod System;Pod;
long lead-times associated with the development, regulatory approvals, and ramp up applicable to the use of modified Omnipod SystemsPods for the delivery of such drugs;
relatively small number of modified Omnipod SystemsPods needed to address each drug-delivery opportunity;
uncertainties regarding the market acceptance of such drugs and the modified Omnipod SystemPod as an appropriate delivery device;
uncertainties relating to the success of the pharmaceutical companies in marketing and selling such drugs as well as the modified Omnipod SystemsPods as the appropriate delivery devices;
21

Table of Contents
intense competition in the drug-delivery industry, including from competitors which have substantially greater resources;
demand for non-insulin drugs, including the impact of generics and biosimilars;
maintaining appropriate gross margins; and
regulatory requirements and reimbursement rates associated with such drugs.
If we are unsuccessful in overcoming one or more of these challenges, or if our agreement with Amgen is terminated or not renewed, our financial results could be materially and adverselynegatively impacted.
Risks Related to Government Regulation and Litigation
We are subject to extensive government regulation, which could restrict the sales and marketing of our products and could cause us to incur significant costs.
Our medical device products and operations are subject to extensive regulation by the FDA and various other federal, state, local, and foreign government authorities. Government regulation of medical devices is meant to assure their safety and effectiveness, and includes regulation of, among other things:
23

Table of Contents
design, development and manufacturing;
testing, labeling, and content and language of instructions for use and storage;
clinical trials;
regulatory clearances and approvals, including premarket clearance and approval;
product safety;
advertising and promotion;
marketing, sales, and distribution;
conformity assessment procedures;
product traceability and record keeping procedures;
product complaints, complaint reporting, recalls and field safety corrective actions;
post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury;
post-market studies; and
product import and export.
Before a new medical device, or a significant modification of a medical device, including a new use of or claim for an existing product, can be marketed in the United States, it must first receive either 510(k)regulatory clearance, or PMA from the FDA, unless an exemption applies. In December 2012, we received 510(k)Obtaining such regulatory clearance for our Omnipod Insulin Management System. We have since obtained clearance for modified versions of this device, including Omnipod DASH, which was cleared by the FDA in 2018 and Omnipod 5, which was cleared by the FDA in January 2022. We may be required to obtain a new 510(k) clearance or PMA for significant further post-market modifications to the Omnipod System. Obtaining 510(k) clearance or PMA for medical devices can be expensive and lengthy, and entail significant user fees. Further, we may not be able to obtain additional 510(k) clearances or PMAs for new products or for modifications to, or additional indications for, the Omnipod System in a timely fashion or at all.lengthy. Delays in obtaining or inability to obtain future clearances could adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn could harm our revenue and future profitability.
We also are subject to numerous post-marketing regulatory requirements, which include quality system regulations related to the manufacture of our devices, labeling regulations, and medical device reporting regulations. The last of these regulations requires us to report to the FDA if our devices cause or contribute to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury if the malfunction recurred. If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA, which may include any of the following sanctions:
untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties;
customer notification, or orders for repair, replacement, or refunds;
voluntary or mandatory recall or seizure of our current or future products;
administrative detention by the FDA of medical devices believed to be adulterated or misbranded;
operating restrictions, suspension or shutdown of production;
refusing our requests for 510(k)regulatory clearance or PMA of new products, new intended uses or modifications to theour Omnipod System;products;
rescinding, 510(k) clearance or suspending or withdrawing PMAsclearance that havehas already been granted; and
criminal prosecution.
22

Table of Contents
The occurrence of any of these events may have a material adverse effect on our business, financial condition, and results of operations. As described elsewhere in this 10-K, in October and November 2022, we issued voluntary Medical Device Corrections (“MDCs”) relating to the batteries and/or charging of our DASH PDMs and Omnipod 5 Controllers, which are manufactured for us by a third-party.
In addition, the FDA may change its clearance and approval policies, adopt additional regulations, or revise existing regulations, or take other actions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis. The FDA is in the process of reviewing the 510(k) approvalclearance process and criteria and has announced initiatives to improve the current pre- and post-market regulatory processes and requirements associated with infusion pumps and other home use medical devices. As part of this effort, the FDA is reviewing the adverse event reporting and recall processes for insulin pumps. Any change in the laws or regulations that govern
24

Table of Contents
the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market, and distribute existing products.
The Omnipod System isWe also soldsell our products in Canada, Australia and certain countries in Europe and the Middle East. As a result, we are required to comply with additional foreign regulatory requirements. As we expand our sales efforts internationally, we may need to obtain additional foreign approval certifications. Failure to fulfill foreign regulatory requirements on a timely basis or at all could adversely affect our ability to grow our business.
If we, our contract manufacturer or our component suppliers fail to comply with the FDA’s quality system regulations, the manufacturing and distribution of our devices could be interrupted, and our sales and operating results could suffer.
We and our contract manufacturer and our component suppliersmanufacturers are required to comply with the FDA’s QSR, which is a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance, sterilization, labeling, packaging, storage, shipping, and servicing of our devices. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic, sometimes unannounced, inspections by the FDA. We cannot assure you that our facilities or our contract manufacturer or component suppliers’manufacturers’ facilities wouldwill pass any future quality system inspection. If our or our contract manufacturers’ or component suppliers’ facilities fails a quality system inspection the manufacturing or distributionotherwise fails to adhere to QSR requirements, this could delay production of our devices could be interrupted,products and our operations disrupted. Failurelead to business disruption; failure to take adequate and timely corrective action in response to an adverse quality system inspection or QSR violation could force a suspensionresult in business disruption; failure to take adequate and timely corrective action in response to an adverse quality system inspection or shutdown of our labeling operations or the manufacturing operations of our contract manufacturer, or a recall of our devices.
If we, or our manufacturer, fail to adhere to QSR requirements, thisviolation could delay production of our products and lead toresult in fines, difficulties in obtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our financial condition or results of operations.
Malfunction of our products could lead to recalls or safety alerts or litigation and have a significant adverse impact on us.
The FDA and similar governmental bodies in other countries have the authority to require the recall of our products if we or our contract manufacturer fails to comply with relevant regulations pertaining to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning the safety or efficacy of these products. A government-mandated recall could occur if the FDA finds that there is a reasonable probability that the device would cause serious, adverse health consequences or death. A voluntary recall by us could occur as a result of any material deficiency in a device, such as manufacturing defects, labeling deficiencies, packaging defects, or other failures to comply with applicable regulations. Adverse events involving our products have been reported to us in the past, and we cannot guarantee that they will not occur in the future. Any corrective action, whether voluntary or involuntary, such as our voluntary Medical Device Corrections issued in February 2020 and January 2021, may require the dedication of our time and capital, could distract management from operating our business and potentially harm our reputation and financial results.
We may initiate voluntary recalls involving our products in the future that we determine do not require notification to the FDA. If the FDA disagrees with our determinations, it could require us to report those actions as recalls and could take enforcement action against us for failing to report the recalls when they were conducted. In the event of a recall,product malfunction, we may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on our future sales and our ability to generate profits. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require notification to the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.
We may be subject to enforcement action if we engage in improper marketing or promotion of our products.
Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of unapproved, or off-label, use. Doctors may prescribe our products off-label, as the FDA does not restrict or regulate a doctor’s choice of treatment within the practice of medicine. However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine, or criminal penalties. It is also possible that other federal, state, or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged, and adoption of the products could be impaired. Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory
23

Table of Contents
agency could disagree with our characterization of certain statements and conclude that we have engaged in off-label promotion. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert management’s attention, result in substantial damage awards against us, and
25

Table of Contents
harm our reputation.
If we were found to be noncompliant with state DME licensure rules, we could lose our licensure in that state, which could prohibit us from selling our current or future products directly to consumers in that state.
Several states require that DME providers be licensed in order to sell products to customers in that state. Certain of these states require, among other things, that DME providers maintain an in-state location. Although we believe we are in compliance with all applicable state regulations regarding licensure requirements, if we were found to be noncompliant, we could lose our licensure in that state, which could prohibit us from selling our current or future products directly to consumers in that state.
The medical device industry is heavily regulated. If we fail to comply with all applicable lawsMedicare, Medicaid, fraud and governmentabuse, and other healthcare regulations, we could be subject to substantial penalties and/or be excluded from participation in government programs.
Our relationships with customers and third-party payors are subject to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain our sales, marketing, and other promotional activities by limiting the kinds of financial arrangements, including sales programs and certain customer and product support programs, we may have with hospitals, physicians, customers, or other potential purchasers of medical devices. These laws include, among others, the federal healthcare Anti-Kickback Statute, the federal civil False Claims Act, other federal healthcare false statement and fraud statutes, the Open Payments program, the Civil Monetary Penalties Law, and analogous fraud and abuse and transparency laws in most states, as described in “Item 1—Business—Government Regulation”.Regulation.”
We conduct various marketing and product training activities that involve making payments to healthcare providers and entities. While we believe and make every effort to ensure that our business arrangements with third parties and other activities and programs comply with all applicable laws, these laws are complex and our activities may be found not to be compliant with one of these laws, which may result in significant civil, criminal, and/or administrative penalties, fines, damages, and exclusion from participation in federal healthcare programs. Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to, and thus could have a material adverse effect on our business, financial condition, and results of operations. Our compliance with Medicare and Medicaid regulations may be reviewed by federal or state agencies, including the OIG, CMS, and the Department of Justice, or may be subject to whistleblower lawsuits under federal and state false claims laws. To ensure compliance with Medicare, Medicaid, and other regulations, government agencies conduct periodic audits of us to ensure compliance with various supplier standards and billing requirements.
Risks Related to Privacy and Security
We are subject to complex and evolving laws and regulations regarding privacy and data protection, many of which are subject to change and uncertain interpretation, which could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.
We are subject to a variety of laws and regulations relating to privacy and data protection, data security, data retention and deletion, personal information, electronic contracts, and other communications. The introduction of new products or expansion of our activities in certain jurisdictions may subject us to additional laws and regulations. For example, data privacy laws at the federal and state levels protect the confidentiality of certain health information and restrict the use and disclosure of that protected information. In particular, the U.S. privacy rules under HIPAA protect medical records and other personal health information by limiting their use and disclosure, giving individuals the right to access, amend, and seek accounting of their own health information, and limiting most use and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended purpose. At least fifteen states have adopted new privacy laws in the past few years. In California, the CCPA, which provides certain privacy rights and consumer protection for residents of the state became effective in 2020, and additional regulation under the CPRA, which amends and expands the CCPA, will take effect in 2023.2024. These consumer rights include the right to know what personal information is collected, the right to know whether the data is sold or disclosed and to whom, the right to request a company to delete the personal information collected, the right to opt-out of the sale of personal information, and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right. Colorado and VirginiaThe California laws have enactedserved as a model for many subsequently adopted laws in other states. In 2023, similar privacy laws that will also take effectbecame effective in 2023.Colorado and Virginia. California and other states’ laws apply more broadly and now or in the future may reach data we hold that relates to employees and healthcare providers, not just customers. In addition, data security protection laws passed by the federal government and many states require notification to data subjects, including customers and others, when there is a security breach of personal data. If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance.
In addition, foreign data protection, privacy, and other laws and regulations can be more restrictive than those in the United States. Data localization laws in some countries generally mandate that certain types of data collected in a particular country be stored and/or processed within that country. We could be subject to audits in Europe and around the world, particularly in the areas of consumer and data protection, as we continue to grow and expand our operations. Legislators and regulators may make legal and regulatory changes, or interpret and apply existing laws, in ways that make our products less useful to users, require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to change our business practices.
26

Table of Contents
These changes or increased costs could negatively impact our business and results of operations in material ways. For example, the GDPR imposes requirements in the European Economic Area relating to, among other things, consent to process personal
24

Table of Contents
data of individuals, the information provided to individuals regarding the processing of their personal data, the security and confidentiality of personal data, notifications in the event of data breaches, and use of third-party processors. If we fail to comply with these standards, we could be subject to criminal penalties and civil sanctions, including significant fines and penalties.
The increased scope of regulation around the world may require expanded compliance programs and resources. As our efforts to gain insights from data increase for the operation of our products and services and for the improvement of business processes, including sales and marketing, our exposure to increasingly complex privacy regulation may impede our ability to use data in this way.
We rely on the proper function, availability, and security of our product and information technology systems and a successful cyber-attack or other breach or disruption of our product or these systems could have a material adverse effect on our business and results of operations.
We rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations. The nature of our business involves the receipt and storage of personal and financial information regarding our customers, including sensitive medical information. We use our information technology systems to manage or support a variety of business processes and activities, including sales, shipping, billing, customer service, procurement, and supply chain, manufacturing, and accounts payable. In addition, we use enterprise information technology systems to record, process, and summarize transactions and other financial information and results of operations for internal reporting purposes and to comply with financial reporting, legal, and tax regulatory requirements. Many of our information systems are cloud-hosted and managed by third-party vendors, some of which may have access to confidential business, employee, healthcare professional, and/or customer information. Our information technology systems may be susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events. Any failure by us to maintain or protect our information technology systems and data integrity, including from cyber-attacks, intrusions, disruptions, or shutdowns, could result in the unauthorized access to customer data and personally identifiable information, theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise our confidential or proprietary information and disrupt our operations.
Additionally, the FDA has warned that insulin pumps may have cybersecurity vulnerabilities and could be manipulated by hackers, causing danger to people with diabetes. After extensive testing and research in conjunction with an independent third-party firm, a potential security vulnerability in theClassic Omnipod was identified. (This vulnerability does not exist in Omnipod DASH or Omnipod 5.) Successful exploitation of this vulnerability may allow an attacker to gain access to the Pod to intercept, modify, or interfere with the wireless RFradio frequency communications to or from the PDM. This may allow attackers to read sensitive data, change pump settings, or control insulin delivery.
Insulet is aware of a specific group of people with diabetes who have been able to duplicate the Pod communication protocol using a smartphone and a bridge, which in turn allows the Pod to be controlled using an unauthorized device. This practice is commonly referred to as Do-It-Yourself (DIY) and is not the intended use for thewith Omnipod System.products. Insulet has not provided the DIY community with any type of information or input on the product, nor has Insulet been provided with any information proving that this form of off-label use is a safe use of the system. This practice does not exist with Omnipod 5.
If our product is breached or our information technology systems are breached or suffer severe damage, disruption, or shutdown and we are unable to effectively resolve the issues in a timely manner, our reputation, business, and operating results may be materially adversely affected.
Failure to maintain the privacy and security of our customer, third-party payor, employee, supplier, or Company information could result in substantial costs and/or subject us to litigation, enforcement actions, and reputational damage.
Our business, like that of most medical device manufacturers, involves the receipt, storage, and transmission of customer information and payment and reimbursement information, as well as confidential information about third-party payors, our employees, our suppliers, and our Company. Our information systems are vulnerable to an increasing threat of continually evolving cybersecurity risks. Unauthorized parties may attempt to gain access to our systems or information through fraud or other means of deceiving our employees or third-party service providers. Hardware, software, or applications we develop or obtain from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information and device security. The methods used to obtain unauthorized access, disable or degrade service, or sabotage systems are also constantly changing and evolving, and may be difficult to anticipate or detect for long periods of time. We have implemented and regularly review and update processes and procedures to protect against unauthorized access to or use of secured data and to prevent data loss. However, the ever-evolving threats mean we must continually evaluate and adapt our
27

Table of Contents
systems and processes, and our efforts may not be adequate to safeguard against all data security breaches, misuse of data, or sabotage of our systems. Any future significant compromise or breach of our data security, whether external or internal, or
25

Table of Contents
misuse of customer, third-party payor, employee, supplier, or Company data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs.
Risks Related to Our Debt
We may not be able to generate sufficient cash flow from operations to service our debt, which is substantial.
As of December 31, 2021,2023, we had debt of $1.4 billion, including $800 million aggregate principal amount of Convertible Senior Notes, which mature in 2026. Our ability to make scheduled payments or to refinance the Convertible Senior Notes or other debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, and other factors beyond our control. If our cash flows and capital resources are insufficient to fund these obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital, or restructure or refinance our indebtedness, including the outstanding Convertible Senior Notes. We cannot assure you that we would be able to take any of these actions, that these actions would permit us to meet our scheduled debt service obligations, or that these actions would be permitted under the terms of our future debt agreements. If we do not generate sufficient cash flow from operations, and additional borrowings, refinancings, or proceeds from asset sales are not available to us, we may not have sufficient cash to enable us to meet all of our obligations.
Our Credit Agreement imposes restrictions on us that may adversely affect our ability to operate our business.
Our Credit Agreement contains covenants that restrict our ability, and that of our subsidiaries, to engage in certain transactions, including, among other things, limitations on our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness, and make acquisitions or other investments. These restrictions may impair our ability to respond to changing business and economic conditions and may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Conversion of any of our Convertible Senior Notes may dilute the ownership interest of existing stockholders or depress our stock price.
The conversion of some or all our Convertible Senior Notes may dilute the ownership interests of existing stockholders. Any sales in the public market of any of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, conversion of the Convertible Senior Notes could depress the price of our common stock.
Our ability to use net operating loss carryforwards may be subject to limitation.
Section 382 and 383 of the U.S. Internal Revenue Code imposes an annual limit on the amount of net operating loss and tax carryforwards that may be used to offset taxable incomereduce taxes payable when a corporation has undergone significant changes in its stock ownership or equity structure. Our ability to use net operating losses may be limited by prior changes in our ownership and may be further limited by theThe issuance of common stock in connection with the conversion of our Convertible Senior Notes, or by the consummation of other transactions. As a result,equity transactions could limit our ability to useutilize net operating loss and tax credit carryforwards to offset future U.S. federal taxable income may become subject to limitations.and state taxes payable.
General Risks
Our success depends on our ability to attract, motivate, and retain key personnel.
Our success depends on our ability to retain our employees and to attract and retain additional qualified personnel in the future. We face intense competition for employees, particularly in light of recent labor shortages and as people are increasingly able to work remotely. We face challenges in maintaining employee well-being, recognizing that the additional financial, family, and health burdens that many employees may be experiencing due toin the wake of the COVID-19 pandemic and related economic uncertainties may adversely impact job performance and employee retention. Additionally, during the second half of 2023 we introduced a new organizational operating model, which initially may be disruptive or confusing to some employees as job and reporting structures evolve, causing dissatisfaction or resulting in departures. Losing members of our senior management, and other highly skilled personnel could prevent or delay the implementation and completion of our objectives or divert management’s attention to seeking qualified replacements and ensuring seamless transitions. Additionally, the sale and after-sale support of the Omnipod Systemproducts is logistically complex, requiring us to maintain an extensive infrastructure of field sales personnel, diabetes educators, customer support, insurance specialists, and billing and collections personnel. We face considerable challenges in recruiting, training, managing, motivating, and retaining these employees, including managing geographically dispersed teams. If we fail to maintain and grow an adequate pool of trained and motivated personnel, our reputation could suffer, and our financial position could be adversely affected.
2826

Table of Contents
Acquisitions or investments in new businesses, products, or technologies could disrupt our business.
If we are presented with appropriate opportunities, we may pursue acquisitions or investments in complementary businesses, products, or technologies. For example, in January 2022, we acquired one of our suppliers. We may not complete the transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the expected benefits of any acquisition or investment. Even if we are successful in making an acquisition, the products and technologies that we acquire may not be successful or may require significantly greater resources and investments than we originally anticipated. We could also experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets, and asset impairment charges if the acquisitions are not as successful as we originally anticipate. Acquisitions also present risks, uncertainties, and disruptions associated with the integration process, including difficulties in the integration of the operations of any acquired company, integration of acquired technology with our products, and the potential loss of key employees, customers, distributors, or suppliers of the acquired businesses. In addition, integration of an acquired business may require management resources that otherwise would be available for development of our existing business. If an acquired business fails to operate as anticipated or cannot be successfully integrated into our existing business, our stock price, business, financial condition, and results of operations could be materially and adversely affected. Furthermore, we may have to incur debt or issue equity to pay for any future acquisitions or investments, the issuance of which could be dilutive to our existing stockholders.
We may need to raise additional funds in the future, and these funds may not be available on acceptable terms or at all.
Our capital requirements will depend on many factors, including:
revenue generated by sales of our current products and any other future products that we may develop;
costs associated with capital expenditures, including adding additional manufacturing capacity;
costs associated with any expansion, including expanding our sales and marketing efforts globally;
expenses we incur in manufacturing and selling our products;
costs of developing new products or technologies and enhancements to our products;
costs of complying with regulatory requirements, including obtaining and maintaining FDA approval or clearance of our current or future products;
costs associated with litigation; and
the number and timing of any acquisitions or other strategic transactions.
We may in the future seek additional funds from public and private stock or debt offerings, borrowings under credit lines, or other sources, and we may need to raise additional debt or equity financing to repay our outstanding Senior Convertible Notes or other debt obligations. If we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences, and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaboration, licensing, or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies or grant licenses on terms that are not favorable to us.
Our ability to raise additional capital may be adversely impacted by current economic conditions, including any sustained disruption to the creditinflation and financial markets from the COVID-19 pandemic. If the macro-economic disruption continues for pro-longed periods,worldwide political unrest, and we may need to raise additional capital and capital may not be availableable to raise any necessary capital on acceptable terms, or at all. We cannot predict when the macro-economic disruption stemming from COVID-19 will ebb or when the economy will return to pre-COVID-19 levels, if at all.
If we are unable to raise additional capital due to these or other factors, we may need to further manage our operational expenses, including potentially curtailing planned product development activities. In addition, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. If any of these events occur, it could adversely affect our business, financial condition, and results of operations.
The price of our common stock may be volatile.
The market price of our common stock is affected by a number of factors, including:
failure to maintain and increase production capacity and reduce per unit production costs;
changes in the availability of third-party reimbursement in the United States or other countries;
volume and timing of orders for our products;
developments in administrative proceedings or litigation related to intellectual property rights;
issuance of patents to us or our competitors;
29

Table of Contents
the announcement of new products or product enhancements by us or our competitors;
the announcement of technological or medical innovations in the treatment or diagnosis of diabetes;
changes in governmental regulations or in the status of our regulatory approvals or applications;
publication of clinical studies relating to our products or a competitor’s product;
quarterly variations in our or our competitors’ results of operations;
changes in earnings estimates or recommendations by securities analysts; and
general market conditions and other factors, including factors unrelatedrelated to our operating performance oras a high-growth company and the operating performance of our competitors.
At times, the fluctuations in the market price of our common stock have been unrelated or disproportionate to our operating performance. In particular, the U.S. equity markets have at times experienced significant price and volume fluctuations that have affected the market prices of equity securities of many medical device and technology companies. Also, in 2023, ongoing adoption of the GLP-1 class of drugs in diabetes and news surrounding the expansion of use of GLP-1 drugs in obesity led to speculation regarding the impact of GLP-1 drugs on the insulin therapy market. We believe this negatively impacted the stock prices of companies in the medical device industry, including ours. Broad market and industry factors such as these could materially and adversely affect the market price of our stock, regardless of our actual operating performance.
We have identified control deficiencies that have been determined to be a material weakness in our internal control over financial reporting.This issue, if not remediated, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations.
As disclosed in Item 9A, “Controls and Procedures,” we have reported a material weakness because we did not maintain effective information technology general controls over systems that support our financial reporting outside of North America. The material weakness will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective. We cannot assure that the measures we take will remediate the material weakness or that additional material weaknesses will not arise in the future. Any failure to remediate the material weakness, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a negative impact on our financial condition, results of operations or cash flows, restrict our ability to access the capital markets, require significant resources to correct the material weaknesses or deficiencies, subject us to fines, penalties or judgments, harm our reputation or otherwise cause a decline in investor confidence and cause a decline in the market price of our stock.
27

Table of Contents
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
We manage cyber risk on a daily basis, as we face a multitude of threats ranging from ransomware and phishing attacks, business email compromise, and a wide array of other cyber-criminal tactics aimed at impacting our operations and compromising our sensitive information. Our customers, suppliers, subcontractors and partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance and results of operations. Accordingly, we have invested in resources (people, process, and technology) aimed at identifying, assessing, and responding to cyber threats.
Our Board of Directors (“Board”) oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure to our strategic objectives. While the Board reviews the Company’s cybersecurity program annually, the Nominating, Governance, and Risk Committee of the Board has primary responsibility for cybersecurity as part of its risk oversight mandate. The Nominating, Governance, and Risk Committee is scheduled to have regular updates on cybersecurity matters from our Chief Information Security Officer (“CISO”) and members of the CISO’s team at least two times per year. The CISO will discuss management’s actions to identify and detect threats and review the structure of and enhancements to the Company’s defenses as well as management’s progress on its cybersecurity strategic roadmap. The Nominating, Governance, and Risk Committee Chair reports back to the full Board after each Committee meeting, including information relating to the cybersecurity discussions.
Our Cybersecurity organization, which includes corporate and product security, is led by our CISO. Our CISO, reporting directly to our Chief Technology Officer (“CTO”), is responsible for developing and implementing our cybersecurity program, including setting the directional security strategy and continuous improvement plans for the overall security program. Our CISO has over a decade of experience as a leader of cyber-security and technology risk management programs in both healthcare and medical device manufacturing organizations. This experience is coupled with obtaining and maintaining multiple industry certifications, including Certified Information Systems Security Professional certifications (CISSP), and Certified Information Security Manager (CISM). The CTO ensures cyber-security measures are prioritized across research and development, software engineering, and our IT functions.
Assessing, identifying and managing cybersecurity-related risks are also integrated into our overall enterprise risk management (“ERM”) process. Cybersecurity-related risks are included in the risk universe that the ERM function evaluates to assess top risks to the enterprise on an annual basis. To the extent the ERM process identifies a heightened cybersecurity-related risk, risk owners are assigned to develop risk mitigation plans, which are then tracked to completion. The ERM annual risk assessment is presented to the Board, with additional reporting during the year to the Nominating, Governance and Risk Committee.
We leverage the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework to better manage and respond to cybersecurity risks in protecting our infrastructure and sensitive data. We have mapped our people, process, and technology in alignment with the categories defined in the NIST industry standard framework: Identify, Protect, Detect, Respond, and Recover. Additionally, Insulet’s information security management system is ISO 27001 and 27701 certified. For the sixth consecutive year, Insulet received re-certification from the ISO, which is the recognized standard for information security management and privacy best practices that adheres to the highest international data security standards.
We regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation. We maintain a cybersecurity risk register, and cybersecurity team leaders hold monthly meetings to discuss and prioritize risks as well as the status of any remediation activity. Key facets of our cybersecurity program include:
24/7 cyber monitoring. Our security operations center is located in multiple time zones to ensure around-the-clock coverage and timely threat detection and response.
External Threat Landscape Assessment. Our integrated privacy, legal, and security teams are continuously monitoring for any external threat that may impact our operations. Third-party threat intelligence feeds are leveraged to monitor Insulet’s digital footprint and activity that may cause brand damage.
Insider Risk Detection. We have targeted tools aimed at detecting insider threats and suspicious data movement.
Cloud and Vulnerability Management. To enhance cloud and data security, we reduce the attack surface by establishing secure defaults, implementing least privilege, and monitoring configurations continuously. As part of vulnerability and overall security posture management, we have a focused cross-functional team that meets regularly to address issues identified by security scans and security configuration checks to maintain hygiene of Insulet’s computing devices.
28

Table of Contents
Testing and Audits. Regular penetration testing, incident response tabletop testing, and audits are performed by trusted third-party security consultants. These final reports and gap analysis documents are logged into our risk register as appropriate.
Operating Technology (OT) Visibility. As a manufacturer of medical devices, OT is a vital component of our business operations. Interconnectedness between OT technology and other business critical IT infrastructure can create a material cyber risk. Insult deploys segmentation and OT-specific monitoring capabilities to mitigate and monitor this risk as our OT environment continues to expand to meet the needs of our business.
Vendor Management. Vendors and key partners are subject to Insulet’s Vendor Risk assessment process and subsequently monitored by our threat intelligence capability, which tracks our key vendors and suppliers.
Training and Culture. Training, awareness, and incorporating security into Insulet’s culture is key to reducing risk around common threats such as phishing. We have an operational information security training program for all employees. In addition to annual trainings, we have frequent “nanolearning” targeted trainings. These quick trainings encourage participation, provide constant reminders to our employees to be vigilant and give them the tools to recognize and protect against cyber threats. We also conduct phishing simulations to test effectiveness of our training program with the aim of reducing the percentage of employees who click on suspicious emails.
We are intensely focused on protecting the security of our products; our guiding principle of “secure by design” underlies all of our product development. We have a cybersecurity team embedded with our research and development group to deliver on this mission as well as a Product Cybersecurity Risk Management Policy which is aligned with FDA guidance. Omnipod DASH was the first FDA-cleared insulin pump certified under the Diabetes Technology Society’s “Standard for Wireless Diabetes Device Security” cybersecurity assurance standard and program, known as DTSec. This certification is a cybersecurity standard intended to raise confidence in the security of network connected medical devices through independent expert evaluation. Omnipod 5 incorporates cybersecurity by design principles, which includes secure data transfer between the Pod, Controller, cloud storage, and compatible continuous glucose monitors. Our Secure Software Development Lifecycle enforces application testing and continuous monitoring to identify security risks. Omnipod 5 is certified by ISO 27001 and the U.K. Cyber Essentials. Omnipod 5 incorporates authentication, encryption, and cybersecurity protection to ensure only trusted devices and authorized people can access the system.
Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. Should a cyber incident occur, we have in place the Insulet Cybersecurity Incident Response Procedure (“CIRP”), which is designed to enable us to respond efficiently to any incidents. Pursuant to the CIRP, cybersecurity incidents are reviewed and rated by our CISO and his team. A cybersecurity incident rated at predefined risk levels will be escalated to CTO, the Chief Compliance Officer, and the General Counsel and assessed for materiality and disclosure to the CEO and the Board. Our internal Disclosure Committee would review any planned public disclosures or filings. CIRP provides the organizational and operational structure to respond to incidents that may affect the confidentiality, integrity or availability of our information systems.
We currently do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected the Company’s business strategy, results of operations, or financial condition. While Insulet maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity and other risks which may impact Insulet.
Item 2. Properties
We own a 350,000 square foot facility in Acton, MA, which houses both our headquarters and our U.S. manufacturing. As of December 31, 2021,2023, we leased a total of 1713 facilities in 87 countries consisting of approximately 320,000282,000 square feet of office, research and development, and warehousing space and other related facilities, primarily in North America, Asia and Europe. In addition, we leased a 344,000 square foot facility in Malaysia under a finance lease arrangement, which houses our new manufacturing facility and office space. Additional information regarding our leases is provided in Note 15 to the consolidated financial statements included in Item 8 of this Form 10-K.
Item 3. Legal Proceedings
The information required by this Item is provided under “Legal Proceedings” in Note 1719 to the consolidated financial statements included in Item 8 of this Form 10-K and is incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not applicable.

3029

Table of Contents
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is listed on The NASDAQ Global Market (“NASDAQ”) under the trading symbol PODD.
Holders of Record
As of February 17, 2022,15, 2024, there were 86 registered holders of record of our common stock.
Recent Sales of Unregistered Securities
During the year ended December 31, 2021, we issued securities that were not registered under the Securities Act, which were issued in reliance on the exemption from registration under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”). We issued 2,586,133 shares of our common stock to certain holders of our 1.375% Convertible Senior Notes due 2024 (the “Notes”) upon the conversion of $402.5 million aggregate principal amount of the Notes by such holders.None.
Stock Performance Graph
The following graph shows the cumulative total return on $100 invested in each of our common stock, the NASDAQ Composite Index, and the NASDAQ Health Care Index, and the S&P 500 Index for the five-year period beginning on December 31, 2016,2018, and ending on December 31, 2021,2023, assuming reinvestment of all dividends. The historical stock price performance on the graph below is not necessarily indicative of future stock price performance.
podd-20211231_g3.jpg785
201620172018201920202021
2018201820192020202120222023
Insulet CorporationInsulet Corporation$100 $183 $211 $454 $678 $706 
NASDAQ Composite
NASDAQ Composite
$100 $128 $123 $167 $239 $291 
NASDAQ Health CareNASDAQ Health Care$100 $121 $116 $146 $190 $183 
S&P 500(1)
(1) Our common stock was added to S&P 500 Index in March 2023.
The material in this performance graph shall not be deemed to be filed with the SEC and is not incorporated by reference in any filing of Insulet Corporation under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, whether made on, before, or after the date of this filing and irrespective of any general incorporation language in such filing.
Dividends
We currently intend to retain any earnings to finance research and development and the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future.
Issuer Purchases of Equity Securities
None.
3130

Table of Contents
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this Item is provided under Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 6. Reserved

3231

Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included in this annual report. The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs, which are subject to risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed under the headings “Risk Factors” and “Forward-Looking Statements.”
Overview
Our mission is to improve the lives of people with diabetes. We are primarily engaged in the development, manufacture, and sale of our proprietary Omnipod System, a continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod System features a small, lightweight, self-adhesive disposable tubelessplatform, includes: Classic Omnipod, device that is worn onits next generation Omnipod DASH, the body for up to three days at a time;most recent generation Omnipod 5, and its wireless companion, the handheld PDM/Controller. Theour latest innovation, Omnipod System,GO, which features discreetreceived U.S. Food and easy-to-use devices, communicates wirelessly, provides for virtually pain-free automated cannula insertion and eliminatesDrug Administration (“FDA”) clearance in 2023, all of which eliminate the need for MDI therapymultiple daily injections using syringes or insulin pens or the use of pump and tubing. We believeOmnipod DASH features a secure Bluetooth enabled Pod that theis controlled by a smartphone-like PDM with a color touch screen user interface. Omnipod System’s unique proprietary design and features allow people5, which builds on our Omnipod DASH mobile platform, is a tubeless automated insulin delivery system that integrates with insulin-dependent diabetesa continuous glucose monitor (“CGM”) to manage their diabetes with unprecedented freedom, comfort, convenienceblood sugar and ease.
In addition to the diabetes market space,is fully controlled by a compatible personal smartphone or Omnipod 5 Controller. The CGM is sold separately by a third party. Omnipod GO, for which we have partnered with pharmaceutical and biotechnology companies to tailor the Omnipod System technology platform for the delivery of subcutaneous drugs across other therapeutic areas. Most of our drug delivery revenueare currently consists of sales of pods to Amgen for useconducting a pilot program in the Neulasta® Onpro® kit, a delivery systemUnited States, is our basal-only Pod for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy.
Our mission is to improve the lives of peopleindividuals with diabetes. To assist in achieving this mission, we are focused on the following key strategic imperatives:
expanding accesstype 2 diabetes age 18 and awareness;
delivering consumer-focused innovation;
growing our global addressable market; and
driving operational excellence.older who require insulin.
Our long-term financial objective is to sustain profitable growth. To achieve this goal, our efforts have been focused onwe launched Omnipod 5 in the United States in August 2022 and in the United Kingdom and Germany in June and August 2023, respectively. Subsequent to the launch of Omnipod 5, which recently received FDA clearance for individuals aged six yearswe began to phase-out our Classic Omnipod in the U.S. in 2023, since the vast majority of our U.S. customer base is no longer using this product.
We are working on further building our international teams and older with type 1 diabetes. Our limitedadvancing our regulatory, reimbursement, and market release ofdevelopment efforts so we can bring Omnipod 5 is underway. Additionally, we have completed our FDA submission to expand Omnipod 5’s indication down to age two, and are planning for an expanded indication in 2022.additional international markets. We have also recently completed our type 2 feasibility study and plan to conduct additional studieslaunch Omnipod 5 in more European markets in 2024 starting with the Netherlands. Additionally, in December 2023, we completed enrollment for our pivotal trial for Omnipod 5 with the goal to further expandof expanding Omnipod 5’s indication to type 2 users. In our effortsWe expect to bringcomplete the trial and submit to the FDA for an expanded indication by the end of 2024.
We have completed a randomized control trial in the U.S. and France for Omnipod 5 to international markets, we have submitted for CE Marking in Europe under MDR.
In orderwith DexCom’s G6 continuous glucose monitor (“CGM”) to support our continued growthpricing and the full commercial launchmarket access initiatives. We also continue to expand market access and awareness of Omnipod products through our direct to consumer advertising programs and through growing our presence in the U.S. pharmacy channel, where access to Omnipod 5 weand Omnipod DASH is simpler and affordable, as no up-front investment is required.
We also continue to focus on adding capacity to our U.S. manufacturing plant. During 2021, we began producing salable product on our third highly automated manufacturing line. We have also takentake steps to strengthen our global manufacturing capabilities. We have optimized our operations in China by consolidating our production in that region into one location and we plan to invest inrecently completed construction of a new manufacturing plant in anotherMalaysia to support our international location toexpansion strategy, further diversify globallyensure product supply, and increase efficiency to drive higher gross margins over time.
In 2021, we completed our full commercial launch of Omnipod DASH, our digital mobile Omnipod platform, in the countries we serve with our roll out in Canada. Over the long term, we expect the introduction of Omnipod DASH throughout our international markets to be a growth driver as we increase our presence within our existing markets and enter into new countries.
We are continuing to expand internationally in a targeted and strategic manner. During 2021, we increased our global footprint by expanding into Turkey and entered the Asia Pacific region with our launch in Australia. In 2022. we expect to enter additional countriesbegin production at this new manufacturing facility in the Middle East. Further, we are working to bring Omnipod 5 to our international markets.2024.
Finally, we plan to continue to expand awareness of and access to our products, while also focusingfocus on our product development efforts. The latter includesefforts, including AID offerings such as choice of smartphone integration and CGM, and enhancing the customer experience through digital product offerings. Achievingand data capabilities. In February 2024, we began our limited market release of Omnipod 5 with Dexcom’s G7 CGM in the above strategic imperatives is expectedUnited States and received CE mark approval for the added compatibility of Libre 2 Plus with Omnipod 5 for individuals aged two years and older with type 1 diabetes. We expect to require additional investmentslaunch a limited market release of Omnipod 5 with Libre 2 Plus in certain initiativesthe U.K. and personnel, as well as enhancementsthe Netherlands in 2024. Additionally, we received FDA clearance for the Omnipod 5 App for iPhone in the fourth quarter of 2023 and plan to our supply chain operation capacity, efficiency and effectiveness.launch a limited market release in the U.S. in 2024.
33

Table of Contents
Results of Operations
The discussion of our results of operations for 20192021 has been omitted from this Form 10-K but can be found in Item 7. Management’s Discussion and Analysis and Results of Operations in our Form 10-K for the fiscal year ended December 31, 20202022 filed with the Securities and Exchange Commission on February 24, 2021.2023.
Factors Affecting Operating Results
Our Pods arePod is intended to be used continuously for up to three days, and then beafter which it is replaced with a new disposable Pod. We recently achieved a milestone of approximately 300,000425,000 estimated active global customers using Omnipod. As we grow our customer base, we generate an increasing portion of our revenue through recurring sales of our Pods, which provides consistent cash flow.Omnipod products, including approximately 250,000 global customers using Omnipod 5. Our recurring revenue business model, alongside the Omnipod System’sproduct’s unique patented design enablesallows us to provide pumpPod therapy at a relatively low or no up-front investment in regions where reimbursement allows for it. Ourit and our pay-as-you-go
32

Table of Contents
pricing model also reduces the risk to third-party payors. As we grow our customer base, we expect to generate an increasing portion of our revenues through recurring sales of our disposable Pods, which provide recurring revenue.
During 2020 and 2021,In 2022, we were subjectissued two voluntary Medical Device Corrections (“MDCs”), one in October for our Omnipod DASH PDM related to challenging conditions stemming from the coronavirus pandemic (“COVID-19” or the “pandemic”). Containment efforts and responses to the pandemic have varied by individuals, businesses, state and local municipalities, and region. We believe people were less likely to change the way they manage their diabetes during the pandemic for a variety of reasons including temporary closure of doctors’ offices or a general unwillingness to visit a doctor’s office or hospital during the pandemic, particularly since those with diabetes are deemed at higher risk of suffering complications from COVID-19. While the pandemic had a negative impact on new customer startsits battery and the effects will not be fully reflectedother in November for our Omnipod 5 Controller related to its charging port and cable. During 2022, we initially recorded a net charge of $57.9 million related to these MDCs. During the year ended December 31, 2023, we recorded $11.5 million of income associated with a change in our results of operations and overall financial performance until future periods, we believe our overall recurring revenue model provides a solid financial foundationestimated liability for strong cash flow generation. Further, the pandemic had a positive impact on our Drug Delivery revenue.MDCs, primarily due to lower distribution costs.
We have also experienced and may continue to experience challenges stemming from the global supply chain disruption; however, while there is no guarantee of future performance, to date we have been able to successfully mitigate any disruption. See “Risk Factors”this disruption and ensure uninterrupted supply to our customers by increasing our inventory levels and taking other measures. While our mitigation efforts and inflation have and are expected to continue to negatively impact gross margins and net income in Part I, Item 1A of this Annual Report for further discussion of the possible impact of the COVID-19 pandemic on our business.2024, we intend to continue to work to improve productivity to help offset these costs.
Comparison of the Years Ended December 31, 20212023 and December 31, 20202022
Revenue
Years Ended December 31,
(In millions)20212020% ChangeCurrency Impact
Constant Currency(1)
U.S. Omnipod$651.5 $526.9 23.6 %— %23.6 %
International Omnipod359.9 308.0 16.9 %5.3 %11.6 %
Total Omnipod1,011.4 834.9 21.1 %1.9 %19.2 %
Drug Delivery87.4 69.5 25.8 %— %25.8 %
Total$1,098.8 $904.4 21.5 %1.8 %19.7 %
Years Ended December 31,
(in millions)20232022% ChangeCurrency Impact
Constant Currency(1)
U.S.$1,251.0 $884.8 41.4 %— %41.4 %
International410.1 363.0 13.0 %1.6 %11.4 %
Total Omnipod Products1,661.1 1,247.8 33.1 %0.4 %32.7 %
Drug Delivery36.0 57.5 (37.4)%— %(37.4)%
Total$1,697.1 $1,305.3 30.0 %0.4 %29.6 %
(1) Constant currency revenue growth is a non-GAAP financial measure which should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. See “Management’s Use of Non-GAAP Measures.”
Total revenue for 20212023 increased $194.4$391.8 million, or 21.5%30.0%, to $1,098.8$1,697.1 million, compared with $904.4$1,305.3 million in 2020.2022. Constant currency revenue growth of 19.7%29.6% was primarily driven by higher volume and, to a lesser extent, favorable sales channel mix. This increase wasmix, partially offset by decreased drug delivery revenue.
U.S.
Revenue from the normalizationsale of inventory levels at distributors, which were elevatedOmnipod products in the prior year due to the launch of Omnipod DASH.
U.S. Omnipod
U.S. Omnipod revenue for 2021 increased $124.6$366.2 million, or 23.6%41.4%, in 2023 to $651.5$1,251.0 million, compared with $526.9$884.8 million in 2020.2022. This increase was primarily due toresulted from higher volumes driven by growing our customer base and, to a lesser extent, an increase due to growth through the pharmacy channel, where Pods have a higher average selling price from our pay-as-you-go pricing modeldue in whichpart to the fact that we offer the PDMPDM/Controller for no charge. Thischarge, and an increase was partially offset byin estimated inventory days-on-hand at distributors.
Revenue from the impactsale of Omnipod products in the pandemic on our recurring revenue. U.S. Omnipod revenue for 2021 includes $58.2$473.7 million of related party revenue thatin 2023, compared with $249.9 million in 2022. The $223.8 million increase primarily resulted from a shift in certain revenues from one distributor to another.growth through the pharmacy channel. Additional information regarding our related party transactions is provided in Note 5. 5 to our consolidated financial statements.
In 2022,2024, we expect strong OmnipodU.S. revenue growth driven by continued volume growth of Omnipod 5, continued sales of Omnipod DASH, primarilyand the benefits of our recurring revenue model and pharmacy channel access. We expect these increases to be partially offset by lower conversions from Classic Omnipod and Omnipod DASH to Omnipod 5 in the pharmacy channel.first half of the year compared to 2023 since the vast majority of conversions to Omnipod 5 occurred in 2023.
International
Revenue from the sale of Omnipod
International Omnipod revenue for 2021 products in our international markets increased $51.9$47.1 million, or 16.9%13.0%, in 2023 to $359.9$410.1 million, compared with $308.0$363.0 million in 2020.2022. Excluding the 5.3%1.6% favorable impact of currency exchange, the remaining 11.6%11.4% increase in revenue was primarily due to higher volumes as we continue to expand awareness and access to Omnipod DASH and, to a lesser extent, the timing of revenue recognition related to deferrals associated with our Omnipod partially offset by the normalization of inventory
34

DASH MDC and a technology upgrade program,Table of Contents
levels at distributors, which were elevated in the prior year due to and product mix from the launch of Omnipod DASH5 in the United Kingdom. These increases were partially offset by a decrease in estimated days-on-hand at distributors and higher attrition in the impact of the pandemic on our recurring revenue. countries where we have not yet launched Omnipod 5 as we continue to be impacted by competition from AID systems.
In 2022,2024, we expect higher International Omnipod revenue due to continued volume growth driven by new customers and market penetration aided by conversions to Omnipod 5 in the U.K. and Germany and to a lesser extent, the ongoing adoption of Omnipod DASH throughout our international markets.. We expect this revenue growththese increases to be partially offset by competition from AID systems and the impactsystems.
33

Table of the pandemic on our recurring revenue.Contents
Drug Delivery
Substantially all of our Drug Delivery revenue consists of sales of pods to Amgen for use in the Neulasta® Onpro® kit, a delivery system for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy. Drug Delivery revenue for 2021 increased $17.92023 decreased $21.5 million, or 25.8%37.4%, to $87.4$36.0 million, compared with $69.5$57.5 million in 2020.2022. This increase was decrease primarily driven by increased production volume due to higher demandresulted from a lower forecast from our partner.partner, partially offset by a higher selling price. In 2022,2024, we expect Drug Delivery revenue to decline as production levels that were elevated during the pandemic normalize.$18 million to $22 million due to a lower forecast from our partner.
Operating Expenses
Years Ended December 31,
20212020
(In millions)AmountPercent of RevenueAmountPercent of Revenue
Years Ended December 31,Years Ended December 31,
202320232022
(in millions)(in millions)AmountPercent of RevenueAmountPercent of Revenue
Cost of revenueCost of revenue$346.7 31.6 %$322.1 35.6 %Cost of revenue$537.2 31.7 31.7 %$499.7 38.3 38.3 %
Research and development expensesResearch and development expenses$160.1 14.6 %$146.8 16.2 %Research and development expenses$205.0 12.1 12.1 %$180.2 13.8 13.8 %
Selling, general and administrative expensesSelling, general and administrative expenses$466.0 42.4 %$384.0 42.5 %Selling, general and administrative expenses$734.9 43.3 43.3 %$587.8 45.0 45.0 %
Cost of Revenue
Cost of revenue for 20212023 increased $24.6$37.5 million, or 7.6%7.5%, to $346.7$537.2 million, compared with $322.1$499.7 million in 2020.2022. Gross margin was 68.4%68.3% in 2021,2023, compared with 64.4%61.7% in 2020.2022. The 400 basis6.6 point increase in gross margin was primarily driven by improved manufacturing efficiencies, the $57.9 million net charge associated with the voluntary MDC notices issued in 2022, which did not repeat in the current period, and an $11.5 million revision to the voluntary MDC liability in 2023, due to lower than expected distribution costs. The increase was also driven by higher average selling priceprices primarily due to growth in the pharmacy channel and a decrease in COVID-19 related costs, as the prior year included a period expense for two months of depreciation for under-utilized plant capacity, recruiting and screening expenses, expedited shipping costs andimproved manufacturing incentives totaling $8.5 million, primarily associated with our contract manufacturer in Shenzhen, China.efficiencies. These increases were partially offset by higher production costs associated with Omnipod 5 and U.S. manufacturing as we continueit continues to scale U.S manufacturing.become a larger portion of total production, and to a lesser extent, continued inflation.
We expect gross margin for 20222024 to be in the range of 67%68% to 68%69%. We anticipate gross margin to be relatively level due to higher average selling prices primarily due to growth in the pharmacy channel and improved manufacturing efficiencies, partially offset by $11.5 million of income associated with a reduction to our MDC liability in 2023, which will be negatively impacted by unfavorable product mix,not recur, and higher costs associated with Omnipod 5 production, and continued higher production costs as we further scale U.S. manufacturing, and contend with inflation and global supply chain disruptions. We believe these higher costs will be partially offset by the benefits of continued improvements in global manufacturing and supply chain operations and increased volumes in the pharmacy channel.our new product launches.
Research and Development
Research and development expenses for 20212023 increased $13.3$24.8 million, or 9.1%13.8%, to $160.1$205.0 million, compared with $146.8$180.2 million in 2020.2022. This increase was primarily due to year-over-year headcount additions to support our continued investment in the development of Omnipod products.products and third-party costs to support clinical trials. Research and development expenses as a percent of revenue declined to 12.1% in 2023, compared with 13.8% in 2022 primarily due to an increase in sustaining costs following the launch of Omnipod 5 in the United States, which are included in selling, general and administrative expenses. We expect research and development spending in 20222024 to increase compared with 20212023 as we continue to invest in advancing our innovation and clinical pipeline and contend with inflation.pipeline.
Selling, General and Administrative
Selling, general and administrative expenses for 20212023 increased $82.0$147.1 million, or 21.4%25.0%, to $466.0$734.9 million, compared with $384.0$587.8 million in 2020.2022. This increase was primarily attributable to year-over-year headcount additions, mainly to support international expansion, information technology, salesgrowth and commercial operations, a $14.1 millioncosts associated with our new leadership structure that is designed to accelerate innovation and commercialization. In addition, we had higher direct-to-consumer advertising spend and third-party customer service costs to support Omnipod 5 adoption, and an increase in advertising expensesoftware license fees driven by our direct-to-consumer advertising campaign and online advertising, as well as a shiftinvestments in resources and certain costs from our Omnipod 5 clinical effortsnew systems due to our commercial strategy.growing business and increased headcount. To a lesser extent, the increase was due to higher amortization of cloud computing implementation costs and higher third-party training costs. These increases were partially offset by $14.6$27.3 million of cumulative amortization expenselegal costs incurred in the prior year related to the resolutionsettlement of a purchase price contingencypatent infringement lawsuit, associated with the acquisition of customer relationships fromlegal fees, and an estimated liability to settle a former European distributor in 2018, and $4.8 million of stock-based compensation expense in the prior year resulting from a company-wide 20th anniversary equity grant to non-executives, a significant portion of which vested immediately. contract dispute.
We expect selling, general and administrative expenses to increase in 20222024 compared with 20212023 due to expansion of our sales force and customer support personnel, investments to expand market acceptance and access for the Omnipod System, including direct-to-consumer advertising, and investments in our operating structure, primarily headcount additions, to facilitate operational efficienciescontinued growth, including customer support. Additionally, we plan to make additional investments to support our Omnipod platform, including market acceptance and continued growth.access, and the phased launch of Omnipod 5 in our international markets.
3534

Table of Contents
Non-Operating Items
Interest Expense Netand Income
Interest expense netof $36.2 million in 2023 was level with interest expense of $36.0 million in 2022. Interest income for 20212023 increased $16.1$19.3 million or 35.7%, to $61.2$28.6 million, compared with $45.1$9.3 million in 2020.2022. This increase was primarily driven by cashhigher interest expense associated with the Term Loan entered into in May 2021. As discussed under “rates.
Other Income (Expense), Net
Accounting Standards Issued and Not Yet Adopted asOther income of December 31, 2021,” in January 2022, we adopted Accounting Standards Update 2020-06, Accounting$2.2 million for Convertible Debt Instruments and Contracts in an Entity's Own Equity (“ASU 2020-06”), which eliminated most2023 consists primarily of the non-cash interest expense$2.6 million of gains related to fair value adjustments associated with our convertible notes. Accordingly, we expect strategic debt and equity investments.Other expense of $1.1 million for 2022 consists primarily ofnet interest expense to decrease approximately $30 million in 2022 compared with 2021.
Loss on Extinguishment of Debt
During 2021, we incurred a $42.4 million loss on extinguishment of debt related to the repurchaseunrealized and conversion of all of our outstanding 1.375% Notes. Refer to Note 15 to the consolidated financial statements for additional information.
Other (Expense) Income, Net
During 2021, we had other expense, net of $1.9 million, compared with other income, net of $3.3 million in 2020. The $5.2 million decrease was primarily driven by unrealizedrealized foreign currency losses due to the change in exchange rates.losses.
Income Tax Expense
Income tax expense was $3.7$8.3 million on pre-tax income of $20.5$214.6 million for 20212023 and $2.9$5.2 million on pre-tax income of $9.7$9.8 million for 2020.2022. Our effective tax rate was 18.2%3.9% and 29.6%53.4% for 20212023 and 2020,2022, respectively. The decrease in our effective tax rate was primarily driven by an increase in pre-tax income in the U.S. where we have net operating loss carryforwards to reduce taxable profits and a full valuation allowance against deferred tax assets.
Additionally, Accordingly, we have not recordedreported any tax benefitsbenefit relating to the remaining net operating loss carryforwards and income tax credit carryforwards that are available for utilization in future periods.
We maintain a $202.9 million valuation allowance on net deferred tax assets at December 31, 2023. Given our current year lossesearnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of our valuation allowance will no longer be needed. A release of the valuation allowance would result in the United Kingdom duerecognition of certain deferred tax assets and a decrease to income tax expense in the period the release is recorded. However, the timing and amount of the valuation allowance requirements following a transferrelease, if any, are unknown as this is subject to change on the basis of intellectual propertythe level of profitability that occurred during 2021. Seewe are able to actually achieve in future periods and other evidence that will be considered at the time of the assessment. Refer to Note 2223 to theour consolidated financial statements for additional information on our income tax expense.
In 2021, the Organization for Economic Co-operation and Development (“OECD”) and G20 international forum released the Model Global Anti-Base Erosion (GloBE) rules (“Model Rules”) under Pillar Two. These Model Rules set forth the common approach for a Global Minimum Tax at 15% for multinational enterprises with revenue greater than €750 million and is expected to be applicable to Insulet. In December 2022, Pillar Two was adopted by the Council of the European Union for implementation by European Union member states by December 31, 2023, with effect for tax years beginning in calendar year 2024. Similar directives under Pillar Two are already adopted or expected to be adopted by taxing authorities in other countries where Insulet has business operations, with widespread implementation of the Global Minimum Tax in calendar years 2024 and 2025. We are continuing to evaluate the Model Rules for Pillar Two and related legislation, and their potential impact on future periods.
35

Table of Contents
Adjusted EBITDA
The table below presents reconciliations of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most directly comparable financial measure prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”):
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)20212020(in millions)20232022
Net incomeNet income$16.8 $6.8 
Interest expense, netInterest expense, net61.2 45.1 
Income tax expenseIncome tax expense3.7 2.9 
Depreciation and amortization(1)
57.4 55.4 
Stock-based compensation(2)
34.4 35.9 
Loss on extinguishment of debt42.4 — 
Depreciation and amortization
Stock-based compensation expense
Voluntary medical device corrections(1)
Unrealized gains on investments(2)
Legal costs(3)
CEO transition costs(4)
Adjusted EBITDAAdjusted EBITDA$215.9 $146.1 
(1) The year ended December 31, 2020 includes $14.6 million of cumulative amortizationRepresents net (income) expense resulting from estimated costs associated with customer relationships that were acquiredthe voluntary MDC notices issued in 2018. For more information seethe fourth quarter of 2022 and adjustments to those costs, which is included in cost of revenue. Refer to Note 1714 to theour consolidated financial statements.statements for additional information.
(2) The year ended December 31, 2020 includes $7.3Represents non-operating gains related to fair value adjustments of strategic debt and equity investments.
(3) Includes a $20.0 million charge to settle patent infringement litigation with Roche, associated legal fees, and a $3.6 million charge to settle a contract dispute. Refer to Note 19 to our consolidated financial statements for additional information.
(4) Represents costs associated with the retirement and advisory services of our former chief executive officer, including $2.3 million of accelerated stock-based compensation expense related to a company-wide 20th anniversary equity grant (excluding executives), a significant portion of which immediately vested.expense.
Non-GAAP Financial Measures
Management uses the following non-GAAP financial measures:
Constant currency revenue growth represents the change in revenue between current and prior year periods using the exchange rate in effect during the applicable prior year period. We present constant currency revenue growth because we believe it provides meaningful information regarding our results on a consistent and comparable basis. Management uses this non-GAAP financial measure, in addition to financial measures in accordance with GAAP, to evaluate our operating results. It is also one of the performance metrics that determines management incentive compensation.
Adjusted EBITDA represents net income (loss) plus net interest expense, income tax expense, (benefit), depreciation and amortization, stock-based compensation expense and other significant unusual items,transactions or events, such as legal settlements, medical device corrections, gains (losses) on investments, and loss on extinguishment of debt, which affect the period-to-period comparability of our operating performances, as applicable. We present Adjusted EBITDA because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful
36

Table of Contents
to investors, and other interested parties as a measure of our comparative operating performance from period to period. Adjusted EBITDA is a commonly used measure in determining business value and we use it internally to report results.
These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. In addition, the above definitions may differ from similarly titled measures used by others. Non-GAAP financial measures exclude the effect of items that increase or decrease our reported results of operations; accordingly, we strongly encourage investors to review our consolidated financial statements in their entirety.
36

Table of Contents
Liquidity and Capital Resources
AsCapitalization
The following table contains several key measures to gauge our financial condition and liquidity at the end of December 31, 2021, we had $791.6 million in cash and cash equivalents. Additionally, we have a $60 million three year senior secured revolving credit facility (“Revolving Credit Facility”), which expires in 2024. At December 31, 2021, no amount was outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio under certain conditions when there are amounts outstanding under the facility. It also contains other customary covenants, none of which are considered restrictive to our operations. We believe that our current liquidity will be sufficient to meet our projected operating, investing and debt service requirements for at least the next twelve months.each year:
As of December 31,
(in millions)20232022
Cash and cash equivalents$704.2 $674.7 
Current portion of long-term debt$49.4 $27.5 
Long-term debt, net$1,366.4 $1,374.3 
Total debt, net$1,415.8 $1,401.8 
Total stockholders’ equity$732.7 $476.4 
Debt-to-total capital ratio66 %75 %
Net debt-to-total capital ratio33 %39 %
Convertible Debt
To finance our operations and global expansion, we have periodically issued convertible senior notes, which are convertible into our common stock. As of December 31, 2021,2023, the following notes were outstanding:
Issuance DateIssuance DateCouponPrincipal Outstanding
(in millions)
Due Date
Conversion Rate(1)
Conversion Price
per Share of Common Stock
Issuance DateCouponPrincipal Outstanding
(in millions)
Due Date
Conversion Rate(1)
Conversion Price
per Share of Common Stock
September 2019September 20190.375%800.0 September 20264.4105$226.73September 20190.375%$800.0 September 2026September 20264.4105$226.73
(1) Per $1,000 face value of notes.
In connection with the issuance of the 0.375% Convertible Senior Notes (“0.375% Notes”), we purchased capped call options (“Capped Calls”) on our common stock. By entering into the Capped Calls, we expect to reduce the potential dilution to our common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the 0.375% Notes. The Capped Calls have an initial strike price of $335.90 per share and cover 3.5 million shares of our common stock.
During 2021,Credit Agreement
We have a $300 million senior secured revolving credit facility (the “Revolving Credit Facility”), which expires in 2028. At December 31, 2023, no amount was outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio under certain conditions when there are amounts outstanding under the facility. It also contains other customary covenants, none of which are considered restrictive to our operations. Additionally, we obtainedhave a $500 million seven year Term Loan for net proceeds of $489.5 million,term loan, which we used to fund the cash portion of the repurchase of our 1.375% Convertible Senior Notes due November 2024 (“1.375% Notes”). The Term Loanmatures in 2028, that contains covenants restricting or limiting our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness, and make acquisitions and other investments.
Additional information regarding our debt is provided in Note 15Notes 16 and 26 to the consolidated financial statements.
We believe that our current liquidity will be sufficient to meet our projected operating, investing, and debt service requirements for at least the next twelve months.
Summary of Cash Flows
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)20212020(in millions)20232022
Cash (used in) provided by:
Cash provided by (used in):
Operating activities
Operating activities
Operating activitiesOperating activities$(68.1)$84.0 
Investing activitiesInvesting activities(82.7)14.0 
Financing activitiesFinancing activities40.7 605.5 
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(5.5)4.8 
Net (decrease) increase in cash, cash equivalents, and restricted cash$(115.6)$708.3 
Net increase (decrease) in cash, cash equivalents, and restricted cash
37

Table of Contents
Operating Activities
Net cash used inprovided by operating activities of $68.1$145.7 million in 20212023 was primarily attributable to net income, as adjusted for depreciation and amortization loss on extinguishment of debt, non-cash interest, and stock-based compensation partiallyexpense, which was more than offset by a $263.6$190.6 million working capital cash outflow. The working capital outflow was driven by a $154.4 million increase in inventories, a $71.3$154.2 million increase in accounts receivable, a $53.6 million increase in inventories and a $46.7$42.1 million increase in prepaid expenses and other assets, partially offset by a $24.4$70.3 million increase in accrued expenses and other liabilities. The increase in accounts receivable was primarily due to an increase in sales in the U.S. pharmacy channel, which has longer payment terms. The increase in inventories was primarily driven by a planned inventory build to mitigate supply chain risk and satisfy demanddemand. The increase in prepaid expenses and other assets was driven by an increase in prepaid cloud computing implementation and upgrade costs, subscription renewal costs, and other receivables. Finally, the additionincrease in accrued expenses and other liabilities was primarily driven by an increase in accrued rebates mainly due to revenue growth in the pharmacy channel and an increase in compensation costs due to higher incentive compensation achievement and headcount additions, partially offset by warranty fulfillment associated with the voluntary MDCs issued in 2022.
Net cash provided by operating activities of our third highly automated manufacturing line.$119.0 million in 2022 was primarily attributable to net income, as adjusted for depreciation and amortization and stock-based compensation expense, partially offset by a $2.5 million working capital cash outflow. The working capital outflow was driven by a $36.8 million increase in prepaid expenses and other assets, a $51.8 million increase in accounts receivable, was primarily due to anand a $49.1 million increase in U.S. pharmacy channel, which has longer payment terms.inventories, partially offset by a $137.6 million increase in accrued expenses and other liabilities. The increase in prepaid expenses and other assets was primarily driven by an increase in cloud computing implementation
37

Table costs. The increase in accounts receivable was primarily due to an increase in sales in the U.S. pharmacy channel, which has longer payment terms, partially offset by a decrease in unbilled accounts receivable related to lower production volumes of Contents
costs.our Drug Delivery product. The increase in inventories was primarily driven by a planned inventory build to satisfy demand. Finally, the increase in accrued expenses and other liabilities was primarily driven by the voluntary MDCs issued for our Omnipod DASH PDMs and Omnipod 5 Controllers, an increase in rebates due to growth in the pharmacy channel and higheran increase in compensation costs due to higher incentive compensation achievement and head count additions.
Net cash provided by operating activities of $84.0 million in 2020 was primarily attributable to net income, as adjusted for depreciation and amortization, non-cash interest, and stock-based compensation, partially offset by a $63.4 million working capital cash outflow. The working capital outflow was driven by a $50.5 million increase in inventories and a $34.1 million increase in prepaid expenses and other assets, partially offset by a $27.8 million increase in accrued expenses and other liabilities. The increase in inventories was primarily driven by a planned inventory build associated with the further roll out of Omnipod DASH and an increase in work in progress inventory due to additional capacity from our new contract manufacturer. The increase in prepaid expenses and other assets was primarily driven by an increase in software licenses due to head count additions, and an increase in software-as-a-service to support our strategic initiatives. The increase in accrued expenses and other liabilities, primarily driven by manufacturing operations costs associated with the addition of our contract manufacturer in Kunshan (Shanghai), China, as well as an increase in pharmacy rebates due to the growth in the pharmacy channel.
Investing Activities
NetWe had $119.4 million of net cash used in investing activities was $82.7in 2023, compared with $191.1 million in 2021, compared with net cash provided by investing activities of $14.0 million in 2020.2022.
Capital Spending—Capital expenditures were $111.9$75.6 million and $129.0$122.9 million in 20212023 and 2020,2022, respectively, and primarily related to the purchase of equipment to increase our manufacturing capacity. We expect capital expenditures for 20222024 to increase compared with 2021 as we continue to invest in2023 given the timing of spending on machinery, equipment and tooling for our new Malaysia manufacturing capabilitiesfacility and to support continuous improvement efforts in our growth and new product launches.other manufacturing locations. To a lesser extent, we expect capital expenditures to increase due to investments in our information technology infrastructure. We expect to fund our capital expenditures using existing cash.
PurchasesInvestments in Developed Software—Investments in developed software were $8.5 million and Sales of Investments—Proceeds from maturities of marketable securities were $40.0$12.9 million in 2021, compared with net proceeds from maturities of $180.5 million for 2020. The $140.5 million decrease was driven by the prior year shift of a portion of our investment portfolio2023 and 2022, respectively, and primarily related to investments that are classified as cash equivalents.in projects to support our cloud-based capabilities.
Acquisition of Intangible AssetsAcquisitions—In 2020, following2023, we paid Bigfoot Biomedical, Inc. $25.1 million, including transaction costs, to acquire patent assets related to pump-based AID technologies. In 2022, we paid $26.0 million to acquire substantially all the resolutionassets related to the manufacture and production of ashape-memory alloy wire assemblies that are used in the production of Pods from Dynalloy, Inc. and $21.5 million to acquire developed technology and patents from Automated Glucose Control LLC. The remaining $3.0 million purchase price contingency associated with our 2018for the Dynalloy acquisition was paid during 2023.
Investments—In 2023 and 2022, we made strategic investments in private companies in the amount of customer relationships from a former European distributor, we paid the distributor an additional $36.2$7.2 million for a total purchase price of $41.2 million. We had previously paid the distributor $3.8and $7.8 million, in 2019 and the remainder in 2018.respectively.
Financing Activities
NetWe had $13.6 million of net cash provided byused in financing activities was $40.7in 2023, compared with $40.3 million in 2021,2022.
Debt Repayments—During 2023, we made principal payments totaling $27.0 million on our equipment financings, term loan, and mortgage, compared with $605.5$24.5 million of aggregate payments in 2022.
Prepayments of Finance Lease Obligation—During 2022, we made $15.3 million in 2020.
Debt Issuance and Repayment—During 2021, we received net proceeds of $489.5 million from the issuance of the Term Loan and used $460.9 million of the proceeds to partially fund the cash portion of the repurchase of a portion of our 1.375% Notes. In addition, we received net proceeds of $43.1 million from an equipment financing transaction and made $22.3 million in debt principalupfront payments which primarily related to our equipment financings.
In 2020, we received net proceeds of $68.3 million upon entering into a mortgage of our Acton facility. Additionally, we received net proceeds of $60.0 million upon entering into two equipment financing transactions.
Issuance of Common Stock—In 2020, we sold 2.4 million common sharesan agreement to acquire real estate in Malaysia. Refer to Note 15 to the consolidated financial statements for $478.7 million in an underwritten registered offering. Net proceeds from the offering were $477.5 million. The proceeds provided us with additional liquidity to mitigate risk and allowed us to continue investing in the growth of our business and our strategic initiatives.information regarding this lease.
Proceeds from Option Exercises and Shares Issued Under Employee Stock Purchase Plan Proceeds(“ESPP”)—Total proceeds from option exercises was $15.4and issuance of shares under the ESPP were $26.9 million and $25.7$16.3 million in 20212023 and 2020,2022, respectively. The $10.3 million decrease was primarily driven by fewer option exercises by our former chief executive officer. Total proceeds from issuance of employee stock purchases was $8.1 million and $6.0 million in 2021 and 2020, respectively. The $2.1$10.6 million increase was primarily driven by growth in plan participation.option exercises by former executives.
38

Table of Contents
Payment of Taxes for Restricted Stock Net Settlements—Payments for taxes related to net restricted and performance stock unit settlements were $28.2$13.2 million and $29.8$16.8 million in 20212023 and 2020,2022, respectively. The $3.6 million decrease in payments for taxes related to restricted stock net settlements was primarily driven by a decreaselower achievement of the performance stock units that vested during 2023 (84% achievement in vesting of restricted shares in 2021,2023 compared with 2020 driven by the immediate vesting of a significant portion of a company-wide 20th anniversary equity grant101% achievement in the prior year.2022).
Commitments and Contingencies
Contractual Obligations—A summary of our contractual obligations and commitments for debt, operating lease obligations and other obligations at December 31, 20212023 is presented in the following table:
38

Table of Contents
(in millions)(in millions)Short TermLong TermTotal(in millions)Short TermLong TermTotal
Debt obligationsDebt obligations$25.1 $1,423.9 $1,449.0 
Interest payments(1)(2)
Interest payments(1)(2)
28.8 124.3 153.1 
Purchase obligations(3)
Purchase obligations(3)
305.2 28.5 333.7 
Operating lease obligations(1)
6.9 19.4 26.3 
Lease obligations(1)
Total contractual obligationsTotal contractual obligations$366.0 $1,596.1 $1,962.1 
(1)Interest on debt and lease obligations are projected for future periods using the interest rates in effect as of December 31, 2021.2023. Certain of these projected interest payments may differ in the future based on changes in market interest rates. Additional information regarding our leases is provided in Note 15 to the consolidated financial statements.
(2)Excludes the impact of the interest rate swaps discussed in Note 1618 to our consolidated financial statements.
(3)Purchase obligations include commitments for the purchase of Omnipod System components for our products, commitments related to establishing additional manufacturing capabilities, and other commitments for purchases of goods or services in the normal course of business. These commitments are derived from purchase orders, supplier contracts and open orders based on projected demand information.
Legal Proceedings—Roche Diabetes Care, Inc. (“Roche”) filed
Off-Balance Sheet Arrangements
In 2022, the Company entered into a patent infringement lawsuit against us$20 million uncommitted letter of credit facility, and is seeking monetary damagesconcurrently with the execution of an agreement to acquire real estate in Malaysia, a letter of credit of $16.5 million was issued under the facility to backstop a bank guarantee for the same amount. The bank guarantee serves as security for the building until the Company purchases the property. In 2023, additional letters of credit totaling $3.5 million were issued under this facility. In aggregate, we had letters of credit totaling $20.9 million and attorneys’ fees$18.6 million as of December 31, 2023 and costs. Since the patent expired in 2019, Roche is not seeking injunctive relief and the lawsuit will have no impact on ongoing sales of our products. We believe that we have meritorious defenses to Roche’s claims and intend to vigorously defend against them. At this time, based on available2022, respectively. Additional information regarding this litigation, we are unableour letters of credit is provided in Note 19 to reasonably assess the ultimate outcome of this case or determine an estimate, or range of estimates, of potential losses, which could be material; accordingly, we have excluded this exposure from the contractual obligations table above. Refer to Note 17 to our consolidated financial statements for additional information regarding this matter.statements.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The following accounting policies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. Management’s estimates are based on the relevant information available at the end of each period.
Revenue Recognition
We recognize revenue when a customer obtains control of the promised products in an amount that reflects the net consideration to which we expect to be entitled. We sell products both direct to consumers and through distributors, who resell the products to consumers, and directly to consumers. Transaction price is typically based on contracted rates less any estimates of claim denials and historical reimbursement experience, guidelines and payor mix, and less estimated variable consideration adjustments, including rebates. Recognizing revenue requires us to exercise judgment and use estimates that can have a significant impact on the amount and timing of revenue we report. We exercise significant judgment when we determine variable consideration adjustments. The amount of variable consideration that is included in the transaction price is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. We estimate reductions to our revenues for rebates paid to distributors in the United States and Canada and pharmacy benefit managers (“PBM”) in the United States. Rebates are based on contractual arrangements, which may vary. Our estimates are based on products sold, historical experience, trends, specific known market events and, as available, channel inventory data. Rebates charged against gross sales amounted to $465.5 million, $247.1 million and $143.3 million $82.5 millionin 2023, 2022 and $59.1 million in 2021, 2020 and 2019, respectively. Provisions for rebates, sales discounts, and returns are accounted for as a reduction of sales when revenue is recognized and are included within accounts receivable trade or accrued expenses and other current liabilities on our consolidated balance sheets, based upon the recipient of the rebate. If the actual amounts of consideration that we receive differ from our estimates, we would adjust our estimates, and that would affectwhich affects reported revenue in the period that such variances become known.
39

Table of Contents
Our drug deliveryDrug Delivery product line includes sales of a modified version of the OmnipodPod to pharmaceutical and biotechnology companies who use our technology as a delivery method for their drugs. Revenue from the drug deliveryDrug Delivery product was $87.4$36.0 million for 2021.2023. Revenue for this product line is recognized as the product is produced. Accounting for drug deliveryDrug Delivery revenue requires us to select a method to measure progress towards the satisfaction of the performance obligation. This election of the most meaningful measure of progress by which to recognize drug deliveryDrug Delivery revenue requires the application of judgment. We elected the input method and selected a blend of cost and time to produce as the measure of progress. Accordingly, revenue is recognized over time using a blend of costs incurred to date relative to total estimated costs at completion and time incurred to date relative to total production time to measure progress toward the satisfaction of our performance obligations. We believe
39

Table of Contents
that both incurred cost and elapsed time reflect the value generated, which best depicts the transfer of control to the customer. Contract costs include third-party costs as well as an allocation of manufacturing overhead. Changes from quarter to quarter in quantity and stage of production of in-process inventory could have a significant quarterly impact on revenue.
ContingenciesIncome Taxes
We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are involveddetermined based on the differences between the financial statement carrying amount and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in various legal proceedingseffect when the differences are expected to reverse. Deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. A valuation allowance is provided when it is more likely than not that arisesome portion or all of a deferred tax asset will not be realized.
Significant judgement is required in the ordinary coursedetermining whether it is probable that sufficient future taxable income will be available against which a deferred tax asset can be utilized. In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including cumulative income in recent fiscal years, our forecast of business as further discussed in Note 17future taxable income exclusive of certain reversing temporary differences and significant risks and uncertainties related to our consolidated financial statements,business. In determining future taxable income, we are responsible for assumptions utilized including a patent infringement case with Roche. Accruals recordedthe amount of state, federal and related disclosuresinternational pre-tax operating income, the reversal of certain temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income in applicable tax jurisdictions, which are based on judgment, bothour commercial experience to date and are consistent with the plans and estimates that we are using to manage our underlying business.
As of December 31, 2023, we recorded a full valuation allowance of $202.9 million on our net deferred tax assets because realizability is not more likely than not. If we determine that the deferred tax assets are realizable in a future period, it would result in material changes to income tax expense in that period.
Product Warranty
We provide a four-year warranty on our PDMs and Controllers sold in the United States and Europe and a five-year warranty on PDMs sold in Canada. In addition, we may replace Pods that do not function in accordance with product specifications. We estimate our warranty obligation at the time the product is shipped based on historical experience and the estimated cost to service the claims, which include the current product cost, reclaim costs, shipping and handling costs and direct and incremental distribution and customer service support costs. Since we continue to introduce new products and versions, the anticipated performance of the product over the warranty period is also considered in estimating warranty reserves. Changes to the actual replacement rates, which are evaluated quarterly, could have a material impact on our estimated warranty reserve.
Inventory Reserves
We reduce the carrying value of inventories for items that are potentially excess, obsolete, or slow-moving based on changes in customer demand, technology developments, or other economic factors in order to state inventories at net realizable value. Factors influencing these adjustments include inventories on hand compared to estimated future usage and sales. During 2023, we charged $3.7 million to the consolidated statement of operations for excess and obsolete inventory. The determination of this charge involved assumptions regarding the probabilitynumber of losses and range of loss, and, where applicable, includePDMs expected to be utilized to satisfy warranty claims during the consideration of opinions of internal and/or external legal counsel. When a range is established but a best estimate cannot be made, we record the minimum loss contingency amount, which could be zero. An estimate is often initially developed substantially earlier than the ultimate loss is known and is reevaluated each accounting period. As information becomes known, additional loss provision is recorded when either a best estimate can be made, or the minimum loss amount is increased. When events result in an expectation of a more favorable outcome than previously expected, our best estimate is changed to a lower amount. We record receivables from third-party insurers up to the amount of the related liability when we have determined that existing insurance policies will provide reimbursement. In making this determination, we consider applicable deductibles, policy limitsphase-out period and the historical payment experiencelength of time we will continue to offer Classic Omnipod outside the insurance carriers.United States.
Accounting Standards Issued and Not Yet Adopted as of December 31, 20212023
In August 2020,November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis, including enhanced disclosures about significant segment expenses. We are required to comply with these new disclosure requirements beginning with our annual filing for 2024. The guidance is applied retrospectively. We do not plan to early adopt ASU 2023-07.
40

Table of Contents
In December 2023, the FASB issued ASU 2020-06, which simplifies2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 includes improvements to income tax disclosures primarily related to information about rate reconciliation and income taxes paid. The new guidance requires disclosure of specific categories and greater disaggregation of information in the accountingrate reconciliation and adds a requirement to disaggregate income taxes paid by jurisdiction. The new guidance also requires disclosure of pretax income disaggregated between domestic and foreign, income tax expense (or benefit) disaggregated by federal, state, and foreign, and removes certain existing disclosure requirements. We are required to comply with these new disclosure requirements beginning with our annual filing for convertible instruments by eliminating certain separation models. Under ASU 2020-06, a convertible debt instrument will generally be reported as a single liability at its amortized cost with no separate accounting for embedded conversion features. Consequently, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. In addition, ASU 2020-06 eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.2025. The guidance is effective for us beginning inmay be applied on a prospective basis or retrospective basis. We do not plan to early adopt the first quarter of 2022. Adoptionrequirements of ASU 2020-06 as of January 1, 2022, resulted in a $213 million decrease in additional paid in capital from the derecognition of the bifurcated equity component, a $151 million increase in debt from the derecognition of the discount associated with the bifurcated equity component and a $62 million decrease to the opening balance of accumulated deficit, representing the cumulative interest expense recognized related to the amortization of the bifurcated conversion option. Additionally, we expect to write-off the related deferred tax liabilities with a corresponding adjustment to the valuation allowance, resulting in no net impact to the cumulative adjustment to retained earnings. Adoption of this standard will have no impact on our diluted earnings per share as we calculate earnings per share using the if-converted method.2023-09.
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements. Forward-looking statements relaterelating to future events or our future financial performance. We generally identify forward looking statements by terminologyperformance that are based on management’s current expectations, estimates, and projections. Words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Thesewords or expressions are intended to identify these forward-looking statements. Forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectationspredictions and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition.
Forward-looking statements involve risks, uncertainties, and assumptions. ActualCertain factors, including but not limited to those identified under “Item 1A. Risk Factors” of this Form 10-K, may cause actual results mayto differ materially from those expressed in these forward-looking statements.current expectations, estimates, projections, and forecasts, and from past results. You should not putplace undue reliance on any forward-looking statements.
The risk factors discussed in “Risk Factors” could cause our results to differ materially from those expressed in forward-looking statements. In addition, there may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. We expressly disclaim any obligation to update these forward-looking statements other than as required by law.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Our exposure to changes in interest rates is associated with borrowings under our Revolving Credit Facility and our Term Loan, both of which are variable-rate debt. At December 31, 2021,2023, no amounts were outstanding under our Revolving Credit Facility. In May 2021, we entered into two interest rate swap agreements to effectively convert $480.0 million of our term loan borrowings from a variable rate to a fixed rate. These interest rate swaps are intended to mitigate the exposure to fluctuations in interest rates and qualify for hedge accounting treatment as cash flow hedges. A 100 basis point increase or decrease in interest rates relative to interest rates as of December 31, 20212023 would decrease or increase our annual earnings, respectively, by approximately $0.2$0.1 million.
40

Table of Contents
Market Price Sensitive Instruments
As of December 31, 2021,2023, we had outstanding debt related to our convertible senior notes recorded on our consolidated balance sheet of $638.8$791.8 million, net of unamortized discount and issuance costs totaling $161.2$8.2 million. Changes in the fair value of our outstanding debt, which could be impacted by changes in interest rates, are not recorded in these consolidated financial statements as the debt is accounted for at cost less unamortized discount and issuance costs. The fair value of the convertible senior notes, which was $938.8$765.6 million as of December 31, 2021,2023, is also impacted by changes in our stock price.
In order to reduce potential equity dilution, in connection with the issuance of the $800.0 million aggregate principal amount of 0.375% Notes, we entered into Capped Calls. We expect the Capped Calls to reduce the potential dilution to our common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the 0.375% Notes. The Capped Calls have an initial strike price of $335.90 per share and cover 3.5 million shares of common stock.
Foreign Currency Exchange Risk
Foreign currency risk arises from our investments in subsidiaries owned and operated in non-U.S. countries. Such risk is also a result of transactions with customers in countries outside the United States. Approximately 33%24% of our revenue was denominated in foreign currencies for the year ended December 31, 2021.2023. As our business in regions outside of the United States continues to increase, we will be increasingly exposed to foreign currency exchange risk related to our foreign operations. The cost of revenue related to revenue generated outside of the United States is primarily denominated in U.S. dollars; however, operating costs related to these revenues are largely denominated in the same respective currencies, thereby partially limiting our transaction risk exposure. Fluctuations in the rate of exchange between the United States dollar and foreign currencies, primarily the Euro, British Poundpound and Canadian Dollar,Malaysia ringgit, could adversely affect our financial results, including our revenues, revenue growth rates, gross margins, income and losses as well as assets and liabilities.
We have intercompany receivables and payables from our foreign subsidiaries that are denominated in foreign currencies, principally the Euro, the British pound, Mexican peso, Malaysian ringgit and the Canadian dollar. Fluctuations from the beginning to the end of a reporting period result in the revaluation of our foreign currency-denominated intercompany receivables and payables, generating currency translation gains or losses. Net realized and unrealized gains (losses) from
41

Table of Contents
foreign currency transactions are included in other income (expense) income,, net in the consolidated statement of incomeoperations and amounted to a loss of $2.0$0.4 million for the year ended December 31, 2021.2023.
Item 8. Financial Statements and Supplementary Data
Our financial statements as of December 31, 20212023 and 20202022 and for each of the three years in the period ended December 31, 2021,2023, and the Report of the Registered Independent Public Accounting Firm are included in this report as listed in the index.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 20212023 and 20202022
Consolidated Statements of IncomeOperations for the Years ended December 31, 2021, 20202023, 2022 and 20192021
Consolidated Statements of Comprehensive Income for the Years ended December 31, 2021, 20202023, 2022 and 20192021
4142

Table of Contents
Report of Independent Registered Public Accounting FirmREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Insulet Corporation

OpinionsOpinion on the financial statements and internal control over financial reporting
We have audited the accompanying consolidated balance sheets of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 20212023 and 2020, and2022, the related consolidated statements of income,operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021,2023, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20212023 and 2020,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20212023 in conformity with accounting principles generally accepted in the United States of America. Also,
We also have audited, in our opinion,accordance with the standards of the Public Company maintained, in all material respects, effectiveAccounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021,2023, based on criteria established in the 2013 Internal ControlControl—Integrated Framework issued by COSO.the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2024 expressed an adverse opinion.
Basis for opinionsopinion
The Company’s management is responsible for theseThese financial statements for maintaining effective internal control over financial reporting, and for its assessmentare the responsibility of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.Company’s management. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
fraud. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
42

Table of Contents
Critical audit mattermatters
The critical audit mattermatters communicated below is a matterare matters arising from the current period audit of the financial statements that waswere communicated or required to be communicated to the audit committee and that: (1) relatesrelate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit mattermatters below, providing a separate opinion on the critical audit mattermatters or on the accounts or disclosures to which it relates.they relate.
Convertible Debt Repurchase and Conversion
Variable consideration – Rebates to pharmacy benefit managers
As described further in Note 152 to the consolidated financial statements, the Company repurchased and convertedprovides for certain rebates for sales of its 1.375% Convertible Senior Notes (“product through intermediaries. The Company estimates variable consideration related to rebates to pharmacy benefit managers in the notes”) due November 2024 for cash andUnited States when determining the issuancetransaction price at the time of common stock. This resulted in a total loss on extinguishment of $42.4 million.sale. We identified this transactionthe rebate estimate for pharmacy benefit managers as a critical audit matter.
The principal considerationsconsideration for our determination that this matterthe rebate estimate related to pharmacy benefit managers is a critical audit matter arewas the applicationhigh degree of auditor judgment in applying procedures to evaluate the accounting guidancesignificant estimation made by management. Management's estimate is based on historical experience adjusted for cash paid to note holdersrevenue growth, trends, specific known market events, and the estimation of fair value of the debt component of the notes. The guidance for accounting for the inducement as a debt extinguishment is complex. The Company estimated the fair value of the debt component to determine the loss on extinguishment using a yield model that includes several assumptions, including the discount rate.available channel inventory data.
Our audit procedures included, but were not limitedrelated to the following:rebate estimate included the following, among others;

Evaluated the significant assumptions and the completeness and accuracy of the underlying data used in management’s calculation through inspection of source documents and agreement to other audited schedules.
Performed retrospective analysis comparing actual rebates incurred to the previously estimated amounts.
We tested the design and operating effectiveness of controls related to management’s accountingestimate.


43

Table of Contents
Income taxes – Realizability of the U.S. deferred tax assets
As described further in Note 23 to the financial statements, management records valuation allowances against deferred tax assets when a judgment is made, that it is more likely than not, that a tax benefit will not be realized. The realization of deferred tax assets is dependent upon the generation of future U.S. taxable income during the periods in which those temporary differences will become deductible. We identified the realizability of the Company’s U.S. deferred tax assets as a critical audit matter.
The principal consideration for our determination that the realizability of U.S. deferred tax assets is a critical audit matter is the significant judgment regarding the weighting of available positive and negative evidence to determine that the existing valuation forallowance on U.S. deferred tax assets remains appropriate. Our audit procedures related to the repurchase transactionrealizability of the U.S. deferred tax assets included the following, among others. With the involvement of tax professionals, including consultation with national office resources, we assessed the appropriateness of management’s evaluation of available positive and negative evidence supporting the qualifications of specialists and review of the work performed by the specialists.
We consulted with our national office resources regarding management’s accounting conclusion that the repurchase of the notes be accounted for as an extinguishment of debt.
With the assistance of valuation professionals with specialized skills and knowledge, we tested management’s fair value of the debt component of the notes. This included an assessment of the appropriateness of the methodology, inputs and key assumptions used.allowance position.


/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2016.

Boston, Massachusetts
February 23, 2022






22, 2024
4344

Table of Contents
INSULET CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31,
(in millions, except share and per share data)20212020
ASSETS
Current Assets
Cash and cash equivalents$791.6 $907.2 
Short-term investments— 40.4 
Accounts receivable, net (Related Party Transactions Note 5)161.0 95.3 
Inventories303.2 154.3 
Prepaid expenses and other current assets74.0 51.5 
Total current assets1,329.8 1,248.7 
Property, plant and equipment, net536.5 478.7 
Other intangible assets, net36.6 28.7 
Goodwill39.8 39.8 
Other assets106.1 77.0 
Total assets$2,048.8 $1,872.9 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable$37.7 $54.1 
Accrued expenses and other current liabilities (Related Party Transactions Note 5)166.0 138.1 
Current portion of long-term debt25.1 15.6 
Total current liabilities228.8 207.8 
Long-term debt, net1,248.8 1,043.7 
Other liabilities14.9 17.8 
Total liabilities1,492.5 1,269.3 
Commitment and Contingencies (Note 17)00
Stockholders’ Equity
Preferred stock, $.001 par value:
Authorized: 5,000,000 shares at December 31, 2021 and 2020
Issued and outstanding: zero shares at December 31, 2021 and 2020
— — 
Common stock, $.001 par value:
Authorized: 100,000,000 shares at December 31, 2021 and 2020
Issued and outstanding: 69,178,691 and 66,017,444 shares at December 31, 2021 and 2020
0.1 0.1 
Additional paid-in capital1,207.9 1,264.3 
Accumulated deficit(649.5)(666.3)
Accumulated other comprehensive (loss) income(2.2)5.5 
Total stockholders’ equity556.3 603.6 
Total liabilities and stockholders’ equity$2,048.8 $1,872.9 
The accompanying notes are an integral part of these consolidated financial statements.
44

Table of Contents
INSULET CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
 Years Ended December 31,
(in millions, except share and per share data)202120202019
Revenue (Related Party Transactions Note 5)$1,098.8 $904.4 $738.2 
Cost of revenue346.7 322.1 257.9 
Gross profit752.1 582.3 480.3 
Research and development160.1 146.8 132.3 
Selling, general and administrative466.0 384.0 298.0 
Operating income126.0 51.5 50.0 
Interest expense, net(61.2)(45.1)(27.7)
Loss on extinguishment of debt(42.4)— (8.7)
Other (expense) income, net(1.9)3.3 0.9 
Income before income taxes20.5 9.7 14.5 
Income tax expense(3.7)(2.9)(2.9)
Net income$16.8 $6.8 $11.6 
Net income per share:
Basic$0.25 $0.11 $0.19 
Diluted$0.24 $0.10 $0.19 
Weighted-average number of common shares outstanding (in thousands):
Basic67,698 64,735 60,594 
Diluted68,579 65,946 62,304 
As of December 31,
(in millions, except share and per share data)20232022
ASSETS
Current Assets
Cash and cash equivalents$704.2 $674.7 
Accounts receivable trade, net240.2 140.9 
Accounts receivable trade, net — related party119.5 64.7 
Inventories402.6 346.8 
Prepaid expenses and other current assets116.4 86.9 
Total current assets1,582.9 1,314.0 
Property, plant and equipment, net664.9 599.9 
Other intangible assets, net98.7 75.5 
Goodwill51.7 51.7 
Other assets190.0 210.0 
Total assets$2,588.2 $2,251.1 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable$19.2 $30.8 
Accrued expenses and other current liabilities373.7 301.0 
Accrued expenses and other current liabilities — related party8.9 5.4 
Current portion of long-term debt49.4 27.5 
Total current liabilities451.2 364.7 
Long-term debt, net1,366.4 1,374.3 
Other liabilities37.9 35.7 
Total liabilities1,855.5 1,774.7 
Commitments and contingencies (Note 19)
Stockholders’ Equity
Preferred stock, $.001 par value, 5,000,000 authorized; none issued and outstanding— — 
Common stock, $.001 par value, 100,000,000 authorized; 69,907,289 and 69,511,286 issued and outstanding0.1 0.1 
Additional paid-in capital1,102.6 1,040.6 
Accumulated deficit(378.0)(584.3)
Accumulated other comprehensive income8.0 20.0 
Total stockholders’ equity732.7 476.4 
Total liabilities and stockholders’ equity$2,588.2 $2,251.1 
The accompanying notes are an integral part of these consolidated financial statements.
45

Table of Contents
INSULET CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEOPERATIONS
 Years Ended December 31,
(in millions)202120202019
Net income$16.8 $6.8 $11.6 
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment(11.9)6.8 0.6 
Unrealized gain on cash flow hedges4.5 — — 
Unrealized (loss) gain on available-for-sale securities(0.3)(0.1)1.1 
Total other comprehensive (loss) income, net of tax(7.7)6.7 1.7 
Total comprehensive income$9.1 $13.5 $13.3 
 Years Ended December 31,
(in millions, except share and per share data)202320222021
Revenue$1,223.4 $1,055.4 $1,040.6 
Revenue from related party473.7 249.9 58.2 
Total revenue1,697.1 1,305.3 1,098.8 
Cost of revenue537.2 499.7 346.7 
Gross profit1,159.9 805.6 752.1 
Research and development expenses205.0 180.2 160.1 
Selling, general and administrative expenses734.9 587.8 466.0 
Operating income220.0 37.6 126.0 
Interest expense(36.2)(36.0)(61.7)
Interest income28.6 9.3 0.5 
Loss on extinguishment of debt— — (42.4)
Other income (expense), net2.2 (1.1)(1.9)
Income before income taxes214.6 9.8 20.5 
Income tax expense(8.3)(5.2)(3.7)
Net income$206.3 $4.6 $16.8 
Net income per share:
Basic$2.96 $0.07 $0.25 
Diluted$2.94 $0.07 $0.24 
Weighted-average number of common shares outstanding (in thousands):
Basic69,751 69,375 67,698 
Diluted73,633 69,910 68,579 
The accompanying notes are an integral part of these consolidated financial statements.
46

Table of Contents
INSULET CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYCOMPREHENSIVE INCOME
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive (Loss) IncomeTotal
Stockholders’
Equity
(dollars in millions)Shares
(in thousands)
Amount
Balance, December 31, 201859,189 $0.1 $898.5 $(683.6)$(2.9)$212.1 
Exercise of options to purchase common stock1,340 — 46.6 — — 46.6 
Issuance of shares for employee stock purchase plan51 — 4.3 — — 4.3 
Stock-based compensation— — 28.7 — — 28.7 
Restricted stock units vested, net of shares withheld for taxes230 — (8.6)— — (8.6)
Conversion feature of 0.375% Notes, net of issuance costs— — 207.8 — — 207.8 
Extinguishment of conversion feature on 1.25% Notes, net of issuance costs— — (642.3)— — (642.3)
Issuance of shares for debt extinguishment1,875 — 299.4 — — 299.4 
Purchase of capped call options— — (85.4)— — (85.4)
Net income— — — 11.6 — 11.6 
Other comprehensive income— — — — 1.7 1.7 
Balance, December 31, 201962,685 0.1 749.0 (672.0)(1.2)75.9 
Adoption of ASU 2016-13 (Note 2)— — — (1.1)— (1.1)
Issuance of common stock2,370 — 477.5 — — 477.5 
Exercise of options to purchase common stock674 — 25.7 — — 25.7 
Issuance of shares for employee stock purchase plan38 — 6.0 — — 6.0 
Stock-based compensation— — 35.9 — — 35.9 
Restricted stock units vested, net of shares withheld for taxes250 — (29.8)— — (29.8)
Net income— — — 6.8 — 6.8 
Other comprehensive income— — — — 6.7 6.7 
Balance, December 31, 202066,017 0.1 1,264.3 (666.3)5.5 603.6 
Exercise of options to purchase common stock364 — 15.4 — — 15.4 
Issuance of shares for employee stock purchase plan36 — 8.1 — — 8.1 
Stock-based compensation— — 34.4 — — 34.4 
Restricted stock units vested, net of shares withheld for taxes176 — (28.2)— — (28.2)
Extinguishment of conversion feature on 1.375% Notes, net of issuance costs— — (808.5)— — (808.5)
Issuance of shares for debt extinguishment2,586 — 722.4 — — 722.4 
Net income— — — 16.8 — 16.8 
Other comprehensive loss— — — — (7.7)(7.7)
Balance, December 31, 202169,179 $0.1 $1,207.9 $(649.5)$(2.2)$556.3 
 Years Ended December 31,
(in millions)202320222021
Net income$206.3 $4.6 $16.8 
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment2.5 (10.3)(11.9)
Unrealized (loss) gain on cash flow hedges(14.2)32.5 4.5 
Unrealized loss on securities(0.3)— (0.3)
Total other comprehensive (loss) income, net of tax(12.0)22.2 (7.7)
Comprehensive income$194.3 $26.8 $9.1 
The accompanying notes are an integral part of these consolidated financial statements.
47

Table of Contents
INSULET CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ EQUITY
Years Ended December 31,
(in millions)202120202019
Cash flows from operating activities
Net income$16.8 $6.8 $11.6 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization57.4 55.4 27.9 
Non-cash interest40.2 45.2 35.6 
Stock-based compensation34.4 35.9 28.7 
Loss on extinguishment of convertible debt42.4 — 8.7 
Provision for credit losses3.1 3.3 4.5 
Other1.2 0.8 1.1 
Changes in operating assets and liabilities:
Accounts receivable(71.3)(13.7)(10.9)
Inventories(154.4)(50.5)(30.2)
Prepaid expenses and other assets(46.7)(34.1)(21.9)
Accounts payable(15.6)7.1 25.6 
Accrued expenses and other liabilities24.4 27.8 17.7 
Net cash (used in) provided by operating activities(68.1)84.0 98.4 
Cash flows from investing activities
Capital expenditures(111.9)(129.0)(163.7)
Acquisition of intangible assets(10.8)(37.5)(7.2)
Proceeds from the maturity or sale of investments40.0 218.4 247.9 
Purchases of investments— (37.9)(150.6)
Net cash (used in) provided by investing activities(82.7)14.0 (73.6)
Cash flows from financing activities
Proceeds from issuance of convertible debt, net of issuance costs— — 780.2 
Repayment of convertible debt(460.9)— (663.6)
Proceeds from issuance of term loan, net of issuance costs489.5 — — 
Repayment of term loan(2.5)— — 
Proceeds from equipment financings, net of issuance costs43.1 60.0 — 
Repayment of equipment financings(17.8)(1.4)— 
Proceeds from mortgage, net of issuance costs— 68.3 — 
Repayment of mortgage(2.0)(0.3)— 
Payment of debt issuance costs(4.0)(0.5)— 
Purchase of capped call options— — (85.4)
Proceeds from issuance of common stock, net— 477.5 — 
Proceeds from exercise of stock options15.4 25.7 46.6 
Proceeds from issuance of common stock under employee stock purchase plan8.1 6.0 4.3 
Payment of withholding taxes in connection with vesting of restricted stock units(28.2)(29.8)(8.6)
Net cash provided by financing activities40.7 605.5 73.5 
Effect of exchange rate changes on cash(5.5)4.8 1.5 
Net (decrease) increase in cash, cash equivalents, and restricted cash(115.6)708.3 99.8 
Cash, cash equivalents, and restricted cash, beginning of year922.0 213.7 113.9 
Cash, cash equivalents, and restricted cash, end of year (Note 6)$806.4 $922.0 $213.7 
Supplemental cash flow information
Cash paid for interest, net of amount capitalized$21.5 $2.6 $— 
Cash paid for taxes$7.0 $3.0 $2.5 
Purchases of property, plant and equipment included in accounts payable and accrued expenses$6.1 $6.7 $13.3 
Purchases of intangible assets included in accounts payable and accrued expenses$3.2 $— $0.5 
Lease liabilities arising from obtaining right-of-use assets$0.7 $2.5 $9.8 

 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive Income (Loss)Total
Stockholders’
Equity
(dollars in millions)Shares
(in thousands)
Amount
Balance, December 31, 202066,017 $0.1 $1,264.3 $(666.3)$5.5 $603.6 
Exercise of options to purchase common stock364 — 15.4 — — 15.4 
Issuance of shares for employee stock purchase plan36 — 8.1 — — 8.1 
Stock-based compensation expense— — 34.4 — — 34.4 
Restricted stock units vested, net of shares withheld for taxes176 — (28.2)— — (28.2)
Extinguishment of conversion feature on 1.375% Notes, net of issuance costs— — (808.5)— — (808.5)
Issuance of shares for debt extinguishment2,586 — 722.4 — — 722.4 
Net income— — — 16.8 — 16.8 
Other comprehensive loss— — — — (7.7)(7.7)
Balance, December 31, 202169,179 0.1 1,207.9 (649.5)(2.2)556.3 
Adoption of ASU 2020-06 (Note 2)— — (207.7)60.6 — (147.1)
Exercise of options to purchase common stock147 — 6.9 — — 6.9 
Issuance of shares for employee stock purchase plan53 — 9.4 — — 9.4 
Stock-based compensation expense— — 40.9 — — 40.9 
Restricted stock units vested, net of shares withheld for taxes132 — (16.8)— — (16.8)
Net income— — — 4.6 — 4.6 
Other comprehensive income— — — — 22.2 22.2 
Balance, December 31, 202269,511 0.1 1,040.6 (584.3)20.0 476.4 
Exercise of options to purchase common stock249 — 16.3 — — 16.3 
Issuance of shares for employee stock purchase plan55 — 10.6 — — 10.6 
Stock-based compensation expense— — 48.3 — — 48.3 
Restricted stock units vested, net of shares withheld for taxes92 — (13.2)— — (13.2)
Net income— — — 206.3 — 206.3 
Other comprehensive loss— — — — (12.0)(12.0)
Balance, December 31, 202369,907 $0.1 $1,102.6 $(378.0)$8.0 $732.7 
The accompanying notes are an integral part of these consolidated financial statements.
48

Table of Contents
INSULET CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(in millions)202320222021
Cash flows from operating activities
Net income$206.3 $4.6 $16.8 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization72.8 63.2 57.4 
Stock-based compensation expense48.3 40.9 34.4 
Non-cash interest expense6.7 5.8 40.2 
Loss on extinguishment of convertible debt— — 42.4 
Provision for credit losses2.3 4.2 3.1 
Other(0.1)2.8 1.2 
Changes in operating assets and liabilities:
Accounts receivable(99.4)(12.9)(45.5)
Accounts receivable — related party(54.8)(38.9)(25.8)
Inventories(53.6)(49.1)(154.4)
Prepaid expenses and other assets(42.1)(36.8)(46.7)
Accounts payable(11.0)(2.4)(15.6)
Accrued expenses and other liabilities73.8 133.9 22.7 
Accrued expenses and other liabilities — related party(3.5)3.7 1.7 
Net cash provided by (used in) operating activities145.7 119.0 (68.1)
Cash flows from investing activities
Capital expenditures(75.6)(122.9)(111.9)
Investments in developed software(8.5)(12.9)(10.8)
Acquisition of other intangible assets(25.1)(21.5)— 
Acquisition of a business(3.0)(26.0)— 
Cash paid for investments(7.2)(7.8)— 
Receipts from the maturity or sale of marketable securities— — 40.0 
Net cash used in investing activities(119.4)(191.1)(82.7)
Cash flows from financing activities
Repayment of convertible debt— — (460.9)
Proceeds from issuance of term loan, net of issuance costs— — 489.5 
Repayment of term loan(5.0)(5.0)(2.5)
Proceeds from equipment financings, net— — 43.1 
Repayment of equipment financings(19.8)(17.4)(17.8)
Repayment of mortgage(2.2)(2.1)(2.0)
Payment of debt issuance costs(0.3)— (4.0)
Prepayments of financing lease obligation— (15.3)— 
Proceeds from exercise of stock options16.3 6.9 15.4 
Proceeds from issuance of common stock under employee stock purchase plan10.6 9.4 8.1 
Payment of withholding taxes in connection with vesting of restricted stock units(13.2)(16.8)(28.2)
Net cash (used in) provided by financing activities(13.6)(40.3)40.7 
Effect of exchange rate changes on cash1.8 (4.3)(5.5)
Net increase (decrease) in cash, cash equivalents, and restricted cash14.5 (116.7)(115.6)
Cash, cash equivalents, and restricted cash, beginning of year689.7 806.4 922.0 
Cash, cash equivalents, and restricted cash, end of year (Note 6)$704.2 $689.7 $806.4 
Supplemental cash flow information (Note 25)
The accompanying notes are an integral part of these consolidated financial statements.
49

Table of Contents
INSULET CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of the Business
Insulet Corporation (the “Company”) is primarily engaged in the development, manufacture, and sale of its proprietary Omnipod System, an innovative, continuous insulin delivery system for people with insulin-dependent diabetes. TheCurrently, the Omnipod platform’s revenue generating products include: the Omnipod Insulin Management System (“Classic Omnipod”), its next generation Omnipod DASH® Insulin Management System (“Omnipod DASH”), and its newest generation Omnipod® 5 Automated Insulin Delivery System (“Omnipod 5”). Each product features a small, lightweight, self-adhesive disposable tubeless Omnipod device (“Pod”) that is wornthe user fills with insulin and wears directly on the body for up to three days at a time, and its wireless companion, the handheld Personal Diabetes Manager (“PDM”) or Controller. The Omnipod System, which features two discreet, easy-to-use devices, communicates wirelessly, provides for virtually pain-free automated cannula insertion and eliminates the need for multiple daily injections using syringes ordelivers personalized doses of insulin, pens or the use of pump and tubing. The Omnipod System includes: the Omnipod Insulin Management System (“Omnipod”) and its next generation Omnipod DASHTM Insulin Management System (“Omnipod DASH”). Omnipod DASH features a secure Bluetooth enabled Pod and PDMthat is controlled by a smartphone-like Personal Diabetes Manager (“PDM”) with a color touch screen user interface supportedinterface. Omnipod 5, which builds on our Omnipod DASH mobile platform, is a tubeless automated insulin delivery system, that integrates with a continuous glucose monitor (“CGM”) to manage blood sugar and is fully controlled by a compatible personal smartphone connectivity.or Omnipod 5 Controller. The CGM is sold separately by a third party.
The Company generates most of its revenue from sales of theits Omnipod System,products, which isare sold in the U.S., Europe, Canada, the Middle East, and Australia. The Omnipod System is soldAustralia either directly to end-users or indirectly through intermediaries. Intermediaries include independent distributors who resell the Omnipod products to end-users and wholesalers who sell the Company’s product to end-users through the pharmacy channel in the United States.
In addition to selling the Omnipod System for insulin delivery, the Company also partners with global pharmaceutical and biotechnology companies to tailor the Omnipod System technology platform for the delivery of subcutaneous drugs across other therapeutic areas. The majority Substantially all of the Company’s drug deliveryDrug Delivery revenue consists of sales of pods to Amgen for use in the Neulasta® Onpro®Neulasta® Onpro® kit, a delivery system for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements reflect the consolidated operations of Insulet Corporation and its subsidiaries. The consolidated financial statements have been prepared in United States dollars, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results may differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
Reclassification of Prior Period Amounts
Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. Unbilled revenues have been combined with accounts receivable, net on the consolidated balance sheet. The impact of this change was an increase to accounts receivable, net and a decrease to prepaid expenses and other current assets at December 31, 2020. Unbilled revenue is presented in Note 8. In addition, the Company reclassified the change in unbilled receivables from the change in prepaid expenses and other current assets to the change in accounts receivable in the prior year statements of cash flows in the amount of $1.9 million and $0.1 million for the years ended December 31, 2020 and 2019, respectively. There was no change to previously reported total current assets or net cash (used in) provided by operating activities.
Foreign Currency Translation
For the foreign subsidiariesThe assets and liabilities of the Company, assets and liabilitiesCompany’s foreign subsidiaries are translated into U.S. dollars using exchange rates as of the balance sheet date, andwhile income and expenses of foreign subsidiaries are translated using the average exchange rates in effect for the related month. The net effect of these translation adjustments is reported in accumulated other comprehensive income (loss) within stockholders’ equity on the consolidated balance sheet. Net realized and unrealized gains (losses) gains from foreign currency transactions are included in other income (expense) income,, net in the consolidated statement of incomeoperations and were $(2.0)$(0.4) million, $3.2$(1.3) million and $(0.6)$(2.0) million for the years ended December 31, 2021, 20202023, 2022 and 2019,2021, respectively.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents may include money market mutual funds, commercial paper, and U.S. government and agency
49

Table of Contents
bonds, that are carried at cost, which approximates their fair value.cost. Restricted cash required to be set aside in connection with equipment financings or that serves as collateral for outstanding letters of credit and bank guarantees is included in other assets and cash and cash equivalents on the consolidated balance sheet.
InvestmentsCertain of the Company’s subsidiaries participate in Marketable Securitiesa multi-currency, notional cash pooling arrangement with a third-party bank provider to manage global liquidity requirements. Under this arrangement, cash deposited by participating subsidiaries may be in positive or negative cash positions to the extent the overall balance in the cash pool is at least zero. The net cash balance of the notional cash pooling arrangement is included within cash and cash equivalents in the consolidated balance sheets and was insignificant at both December 31, 2023 and 2022.
50

Table of Contents
Investments
The Company has investments in equity securities of privately held companies, in which the Company’s interest is less than 20%, the Company does not exercise significant influence over the investee, and the investment does not have a readily determinable fair value. These investments are carried at cost less impairment, if any. If an observable price change in orderly transactions for the identical or similar investment in the same issuer is identified, the investment is measured at its fair value as of the date that the observable transaction occurred with the adjustments reflected in other income (expense), net in the Company’s consolidated statements of operations.
The Company also has investments in debt securities of privately held companies, which are either classified as available-for-sale securities or for which the Company has elected the fair value option. The available-for-sale securities are recorded at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity on the consolidated balance sheet. The other investment is a debt security that contains embedded derivatives. Unrealized gains and losses for this investment are recorded as a component of other income (loss), net in the consolidated statement of operations. All investments in debt securities are recorded within other assets on the consolidated balance sheet.
The Company may consist of certificates of deposit,also invest in marketable securities, including term deposits, commercial paper, U.S. government and agency bonds, and corporate bonds. Thesesbonds, which are classified as available-for-sale marketable securities areand carried at fair value andwith unrealized gains and losses are includedrecorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity on the consolidated balance sheet. Investments with a stated maturity date of more than one year from the balance sheet date and that are not expected to be used in current operations are classified as long-term investments within other assets on the consolidated balance sheet. The Company reviews investments for other-than-temporary impairment when the fair value of an investment is less than its amortized cost. If an available-for-sale security is other than temporarily impaired, the loss is included in other income (expense), net in the consolidated statement of income.operations.
Accounts Receivable and Allowance for Credit Losses
Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Credit Losses (Topic 326) (“ASU 2016-13”) using the modified retrospective method, whereby the guidance is applied prospectively as of the date of adoption and prior periods are not restated. The cumulative effect of adopting ASU 2016-13 resulted in a $1.1 million increase to the opening balance of accumulated deficit upon adoption related to an increase in the allowance for credit losses on accounts receivable.
Trade accounts receivable consist of amounts due from third-party payors, customers, and intermediaries and are presented at amortized cost. The allowance for credit losses reflects an estimate of losses inherent in the Company’s accounts receivable portfolio determined based on historical experience, specific allowances for known troubled accounts, and other available evidence. Accounts receivable are written off when management determines they are uncollectible.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:
Direct Customer Receivables—The Company measures expected credit losses on direct customer receivables using an aging methodology. The risk of loss for direct customer receivables is higher than other portfolios. The Company relies on third-party payors to accept and timely process claims and on direct consumers to have the ability to pay. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and supportable forecasts.
Distributor Receivables—The Company measures expected credit losses on distributor receivables using an individual reserve methodology. The risk of loss in this portfolio is low based on the Company’s historical experience. The estimate of expected credit losses considers payment history as well as credit ratingsand the financial condition of the distributors, in addition to current conditions and supportable forecasts.distributors.
National Healthcare System Receivables—The Company measures expected credit losses on national healthcare system receivables using an individual reserve methodology. The risk of loss in this portfolio is low based on the Company’s historical experience. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and supportable forecasts.
Inventories
Inventories are stated at the lower of cost or net realizable value, with cost determined under the first-in, first-out method. The Company reduces the carrying value of inventories for those items that are potentially excess, obsolete, or slow-moving based on changes in customer demand, technology developments, or other economic factors in order to state inventories at net realizable value. Factors influencing these adjustments include inventories on hand compared to estimated future usage and sales.
Contract Acquisition Costs
The Company incurs commission costs to obtain a contract related to new customer starts. These costs are capitalized as contract assets in other assets on the consolidated balance sheet, net of the short-term portion included in prepaid and other current assets. Costs to obtain a contract are amortized to selling, general and administrative expense on a straight-line basis over the expected period of benefit, which considers future product upgrades for which a commission would be paid.upgrades. These costs are periodically reviewed for impairment.
51

Table of Contents
Derivative Instruments
The Company is exposed to certain risks relating to its business operations. Risks that relate to interest rate exposure are managed by using interest rate swaps. The Company recognizes derivative instruments as either assets or liabilities at fair value
50

Table of Contents
on the consolidated balance sheet. Changes in a derivative financial instrument’s fair value are recognized in earnings unless specific hedge criteria are met, in which case changes in fair value are recognized as adjustments to other comprehensive income. The Company has designated its interest rate swap contracts as cash flow hedges.
Fair Value Measurements
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.
To measure fair value of assets and liabilities, the Company uses the following fair value hierarchy based on three levels of inputs:
Level 1 — observable inputs, such as quoted prices in active markets for identical assets or liabilities;
Level 2 — significant other observable inputs that are observable either directly or indirectly; and
Level 3 — significant unobservable inputs for which there are little or no market data, which require the Company to develop its own assumptions.
Judgement is involved in estimating inputs, such as discount rates, used in Level 3 fair value measurements. Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized.
Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of their short-term maturity. See Notes 6 and 15 for financial assets and liabilities held at carrying amount on the consolidated balance sheet and Notes 7 and 16for investments and derivative instruments measured at fair value on a recurring basis.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Major improvements are capitalized, while routine repairs and maintenance are expensed as incurred. Depreciation for property, plant and equipment, other than land and construction in progress, is based upon the following estimated useful lives using the straight-line method:
Building and building improvements20 to 39 years
Leasehold improvementsLesser of lease term or useful life of asset
Machinery and equipment2 to 15 years
Furniture and fixtures3 to 5 years
The Company assesses the recoverability of assets whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable. The Company recognizes an impairment loss if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows. The impairment loss is measured as the difference between the carrying amount and the fair value of the asset.
Business Combinations
The Company recognizes the assets and liabilities assumed in business combinations based on their estimated fair values at the date of acquisition. The Company allocates the purchase price in excess of net tangible assets acquired to identifiable intangible assets. The Company assesses the fair value of assets, including intangible assets, using a variety of methods and each asset is measured at fair value from the perspective of a market participant. Assets recorded from the perspective of a market participant that are determined to not have economic use for the Company are expensed immediately. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price of an acquired entity over the amounts assigned to assets and liabilities assumed in a business combination. The Company performs an assessment of its goodwill for impairment annually on October 1 or whenever events or changes in circumstances indicate there might be impairment. Goodwill is evaluated for impairment at the reporting unit level.
The Company may assess its goodwill for impairment initially using a qualitative approach to determine whether conditions exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts, and circumstances that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any
52

Table of Contents
impairment. Alternatively, the Company may elect to initially perform a quantitative analysis instead of starting with a qualitative analysis. The Company would record an impairment loss to the extent that the carrying value of the reporting unit’s goodwill exceeds its fair value.
51

Table of Contents
Intangible assets acquired in a business combination are recorded at fair value, while intangible assets purchased or software developed for internal-use are recorded at cost and are stated at cost less accumulated amortization. Intangible assets with finite useful lives are amortized based on the pattern in which the economic benefits of the assets are estimated to be consumed over the following estimated useful lives of the assets:
Customer relationships14 years
Internal-use software3 to 5 years
Intellectual propertyDeveloped technology13 to 15 years
Patents8 to 15 years
Amortization expense is included in selling, general and administrative expenses in the consolidated statement of income.operations. The Company reviews intangible assets for impairment by comparing the fair value of the assets, estimated using an income approach, with their carrying value. If the carrying value exceeds the fair value of the intangible asset, the Company recognizes an impairment equal to the difference between the carrying value of the asset and the present value of future cash flows. The Company assesses the remaining useful life and the recoverability of intangible assets whenever events or circumstances indicate that the carrying value of an asset may not be recoverable using undiscounted cash flows.
Cloud Computing Arrangements
Cloud computing arrangements includes services used to support certain internal corporate functions as well as technology platforms that support commercial initiatives. The Company capitalizes costs incurred to implement cloud computing arrangements that are service contracts within other current and non-current assets and amortizes such costs over the expected term of the hosting arrangement using the straight-line method to the same income statement line as the associated cloud operating expenses. The Company assesses the recoverability of capitalized implementation costs in accordance with the policy disclosed under Property, Plant and Equipment.
Leases
The Company determines if an arrangement includes a lease at inception. Lease agreements generally have lease and non-lease components, which are accounted for separately. At lease commencement, the Company recognizes operating lease liabilities equal to the present value of the future lease payments and operating lease assets representing the right to use the underlying asset forthroughout the lease term. Certain leases may contain variable lease payments, including periodic payments that can be avoided by the Company. Variable payments that do not depend on an index or rate are excluded from the right-of-use asset and lease liability and are recognized as expenses in the period in which the obligation for those payments is incurred. Certain of the Company’s leases contain options to extend and/or terminate the lease, and/or to purchase the underlying asset. The Company assesses if it is reasonably certainlease term used to exercisecalculate the right-of-use asset and related lease liability includes options to extend or terminate the lease for inclusion or exclusion in the lease term when it is reasonably certain that the Company measureswill exercise the lease liability. As theoption. The Company’s leases do not provide an implicit rate,rate; accordingly, the Company uses an incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company’s incremental borrowing rate estimatesreflects a secured rate that reflectsconsiders the term of the lease, the nature of the underlying asset and the economic environment. The Company excludes leases with an expected term of one year or less from recognition on the consolidated balance sheet. OperatingRight-of-use assets are calculated as the initial measurement of the lease assets includesliability plus lease payments made prior to lease commencement and excludes lease incentives and initial direct costs incurred. incurred, less lease incentives received.
Lease expense is recognized on a straight-line basis over the lease term. For finance leases, the right-of-use asset is amortized to amortization expense and interest expense is recorded in connection with the lease liability.
Contingencies
The Company records a liability on the consolidated balance sheet for loss contingencies when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. Legal costs associated with loss contingencies are expensed as incurred.
Product Warranty
The Company provides a four-year warranty on its PDMs and Controllers sold in the United States and Europe and a five-year warranty on PDMs sold in Canada and may replace Pods that do not function in accordance with product specifications. The
53

Table of Contents
Company estimates its warranty obligation at the time the product is shipped based on historical experience and the estimated cost to service the claims. Costs to service the claims reflect the current product cost.cost, reclaim costs, shipping and handling costs and direct and incremental distribution and customer service support costs. Since the Company continues to introduce new products and versions, the anticipated performance of the product over the warranty period is also considered in estimating warranty reserves. Warranty expense is recorded in cost of revenue in the consolidated statements of income.operations.
Revenue Recognition
Revenue is recognized when a customer obtains control of the promised products. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these products. To achieve this core principle, the Company applies the following five steps:
Identify Contracts with Customers. The Company’s contracts with its direct customers generally consist of a physician order form, a customer information form and, if applicable, third-party insurance (payor) approval. Contracts with the Company’s intermediaries are generally in the form of master service agreements against which firm purchase orders are issued. At the outset of the contract, the Company assesses the customer’s ability and intention to pay, which is based on a
52

Table of Contents
variety of factors including historical payment experience or, in the case of a new intermediary, credit references and other available financial information pertaining to the customer and, in the case of a new direct customer, an investigation of insurance eligibility.
Identify Performance Obligations. The performance obligations in contracts for the delivery of the Omnipod products to new end-users, either directly to end-users or through intermediaries, primarily consist of the PDM andPDM/Controller, the initial and subsequent quantity of Pods ordered.ordered, and product training. In the Company’s judgment, these performance obligations are capable of being distinct and distinct in the context of the contract in that the customer can benefit from each item in conjunction with other readily available resources and the transfer of the PDMPDM/Controller and the Pods is separately identifiable in the contract with the customer.
Determine Transaction Price. The price charged for the PDMPDM/Controller and Pods is dependent on the Company’s pricing as established with third-party payors and intermediaries. The Company provides a right of return for sales of its Omnipod products to new end-users and certain of our distributors and wholesalers. The Company also provides for certain rebates and discounts for sales of its product through intermediaries. These rights of return, discounts, and rebates represent variable consideration and reduce the transaction price at the outset of the contract based on the Company’s estimates, which are primarily based on the expected value method using historical and other data (such as product return trends or forecastforecasted sale volumes) related to actual product returns, discounts, and rebates paid in each market in which the Omnipod isproducts are sold. Variable consideration is included in the transaction price if it is probable that a significant future reversal of cumulative revenue under the contract will not occur; otherwise, the Company reduces the variable consideration. The variable consideration in the Company’s contracts is not typically constrained and the Company’s contracts do not contain significant financing components.
Allocate Transaction Price to Performance Obligations. The Company allocates the transaction price to each performance obligation based on its relative stand-alone selling price, which is determined based on the price at which the Company typically sells the deliverable or, if the performance obligation is not typically sold separately, the stand-alone selling price is estimated based on cost plus a reasonable profit margin or the price that a third party would charge for a similar product or service.
Recognize Revenue as Performance Obligations are Satisfied. The Company transfers the Omnipod products at a point in time, which is determined based on when the customer gains control of the product. Generally, intermediaries in the U.S.United States, obtain control upon shipment based on the contractual terms, including right to payment and transfer of title and risk of ownership. For sales directly to end-users and international intermediaries, control is generally transferred at the time of delivery based on customary business practices related to risk of ownership, including transfer of title. Revenue from product training is recognized in the period it is provided. The Company records deferred revenue related to product training as there is generally a lag between when the customer is billed and when the end-user receives product training.
The Company’s drug deliveryDrug Delivery product line includes sales of a modified version of the OmnipodPod to pharmaceutical and biotechnology companies who use the Company’s technology as a delivery method for their drugs. For the majority of this product line, revenue is recognized, with an associated unbilled receivable, as the product is produced pursuant to the customer’s firm purchase commitments. The Company has an enforceable right to payment for performance completed to date and the inventory has no alternative use to the Company. Judgment is required in the assessment of progress toward completion of in-process inventory. The Company recognizes revenue over time using a blend of costs incurred to date relative to total estimated costs at completion and time incurred to date relative to total production time to measure progress toward the satisfaction of its performance obligations. The Company believes that both incurred cost and elapsed time reflect the value generated, which best depicts the transfer of control to the customer. Contract costs include third-party costs as well as an allocation of manufacturing overhead.
54

Table of Contents
Research and Software Development Costs
Internal research and development costs are expensed as incurred. Research and development expenses include salary and benefits, allocated overhead and occupancy costs, clinical trial and related clinical manufacturing costs, contract services, and other costs.
Costs incurred in the research, design, and development of software embedded in products to be sold to customers are charged to expense until technological feasibility of the ultimate product to be sold is established. The Company’s policy is that technological feasibility is achieved when a working model, with the key features and functions of the product, is available for customer testing. Software development costs incurred after the establishment of technological feasibility and until the product is available for general release are capitalized, provided recoverability is reasonably assured. Capitalized software development costs are amortized over their estimated useful life and recorded within cost of revenues.
Shipping and Handling Costs
The Company does not typically charge its customers for shipping and handling costs associated with shipping its product to its customers unless non-standard shipping and handling services are requested. These shipping and handling costs are included in selling, general and administrative expenses and were $10.5$12.4 million, $10.1$12.8 million, and $9.7$10.5 million for the years ended December 31, 2023, 2022, and 2021, 2020 and 2019, respectively.
53

Table of Contents
Advertising Costs
The Company expenses advertising costs as they are incurred. Advertising expenses were $44.1$63.1 million, $30.0$41.2 million, and $11.2$44.1 million for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively.
Stock-Based Compensation Expense
The Company measures stock-based compensation on the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect in the years in which the differences are expected to reverse. The Company reviews its deferred tax assets for recoverability by considering all available positive and negative evidence, including historical profitability, projected future taxable income, and the expected timing of the reversals of existing temporary differences and tax planning strategies. A valuation allowance is provided to reduce the deferred tax assets if, based on the available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. The effect of a change in enacted tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Interest and penalties are classified as a component of income tax expense. The Company has not reclassified income tax effects within accumulated other comprehensive income (loss) to retained earnings due to its full valuation allowance.
Concentration of Credit Risk
Credit Risk—Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents short-term and long-term investments in marketable securities and accounts receivable. The Company maintains most of its cash and investments with a limited number of financial institutions that have a high investment grade credit rating.rating, which exceed Federal Deposit Insurance Corporation limits. See Notes 4 and 87 for customer concentration.
Supply Risk—The Company uses different types of semiconductor chips, which are sourced from external suppliers, in the manufacturing of its products. While the Company has multiple suppliers of semiconductor chips, each type is typically sourced from a single supplier. Supply chain disruptions, supplier shortages, logistic delays, or quality problems could result in manufacturing delays, increased costs, or a possible loss of sales, which could adversely affect operating results.
Recently Adopted Accounting StandardStandards
Convertible Debt—Effective January 1, 2021,2022, the Company adopted Accounting Standards Update (“ASU”) 2019-12,2020-06, Income Taxes (Topic 740)Debt – Debt With Conversion and Other Options(Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions in the former guidance regarding the approach for intraperiod tax allocations, the methodology for calculating income taxesConvertible Instruments and Contracts in an interim periodEntity’s Own Equity using the modified retrospective method for convertible debt instruments outstanding as of the date of adoption. Under ASU 2020-06, a convertible debt instrument is generally reported as a single liability at its amortized cost with no separate accounting for embedded conversion features. Consequently, the effective interest rate of convertible debt instruments is closer to the coupon interest rate
55

Table of Contents
under this guidance. The cumulative effect of adopting ASU 2020-06 resulted in a $207.7 million decrease to the opening balance of additional paid-in-capital upon adoption resulting from the derecognition of the embedded conversion feature and debt issuance costs bifurcated to equity, a $60.6 million decrease to the recognitionopening balance of accumulated deficit representing the cumulative interest expense recognized related to the amortization of the bifurcated conversion option and debt issuance costs, and a $147.1 million increase in long-term debt resulting from the derecognition of the discount associated with the embedded conversion feature, offset by the remaining debt issuance costs reclassified out of equity. In addition, the Company wrote-off the related deferred tax liabilities with a corresponding adjustment to the valuation allowance, resulting in no net impact to the cumulative adjustment recorded to accumulated deficit. Adoption of this standard had no impact on the Company’s diluted earnings per share as the Company historically calculated earnings per share using the if-converted method.
Reference Rate Reform—ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Reporting and ASU 2021-01, Reference Rate Reform (Topic 848) – Scope allow companies to elect optional expedients and exceptions for outside basis differences.applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform (e.g., discontinuation of the London Interbank Offered Rate (“LIBOR”)) if certain criteria are met. During the fourth quarter of 2022, the Company elected to apply optional expedients for contract modifications to all eligible debt instruments and hedging relationships affected by the transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”). Accordingly, the Company did not have to assess whether the contract modification should be accounted for as a debt extinguishment. Additionally, the Company was not required to dedesignate hedging relationships when the contractual terms changed. The adoption of this guidance did not have a significantthese standards had no impact on the Company'sour consolidated financial statements.
Note 3. Segment and Geographic Data
The Company operates under 1one reportable segment. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the chief operating decision-maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company has concluded that its Chief Executive Officer (“CEO”) is the CODM as the CEO is the ultimate decision maker for key operating decisions, determining the allocation of resources and assessing the financial performance of the Company. These decisions, allocations, and assessments are performed by the CODM using consolidated financial information, as the Company’s current product offering primarily consists of the Omnipod Systemplatform and drug delivery devicesdevice based on the Omnipod platform.
Geographic information about revenue, based on customer location, is as follows:
Years Ended December 31,
(in millions)202120202019
United States(1)
$738.9 $596.4 $485.1 
International359.9 308.0 253.1 
Total$1,098.8 $904.4 $738.2 
(1) Includes U.S. Omnipod and Drug Delivery revenues.
54

Table of Contents
Years Ended December 31,
(in millions)202320222021
U.S.$1,287.0 $942.3 $738.9 
International410.1 363.0 359.9 
Total revenue$1,697.1 $1,305.3 $1,098.8 
Geographic information about long-lived assets, net, excluding goodwill and other intangible assets is as follows:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)20212020(in millions)20232022
United States$445.4 $409.7 
U.S.
ChinaChina84.1 66.2 
Malaysia
OtherOther7.0 2.8 
Total$536.5 $478.7 
Total long-lived assets, net
56

Table of Contents
Note 4. Revenue and Contract Acquisition Costs
The following table summarizes the Company’s disaggregated revenues:revenue:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)202120202019(in millions)202320222021
U.S. Omnipod$651.5 $526.9 $420.4 
International Omnipod359.9 308.0 253.1 
Total Omnipod1,011.4 834.9 673.5 
U.S.
International
Total Omnipod Products
Drug DeliveryDrug Delivery87.4 69.5 64.7 
Total revenueTotal revenue$1,098.8 $904.4 $738.2 
The percentages of total revenue for customers that represent 10% or more of total revenue was as follows:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,


202120202019

202320222021
Distributor ADistributor A10%11%*Distributor A28%19%*
Distributor BDistributor B12%10%11%Distributor B24%16%*
Distributor CDistributor C19%17%12%
* Represents less than 10% of revenue for the period.
Deferred revenue related to unsatisfied performance obligations was included in the following consolidated balance sheet accounts in the amounts shown:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities$3.5 $5.4 
Other liabilitiesOther liabilities1.5 1.0 
Total deferred revenueTotal deferred revenue$5.0 $6.4 
Revenue recognized from amounts included in deferred revenue at the beginning of each respective period was as follows:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)202120202019(in millions)202320222021
Deferred revenue recognizedDeferred revenue recognized$4.4 1.8 1.2 
Contract acquisition costs, representing capitalized commission costs related to new customers, net of amortization, were included in the following consolidated balance sheet accountscaptions in the amounts shown:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Prepaid expenses and other current assetsPrepaid expenses and other current assets$13.3 $11.0 
Other assetsOther assets26.1 21.9 
Total capitalized contract acquisition costs, netTotal capitalized contract acquisition costs, net$39.4 $32.9 
The Company recognized $12.3$16.3 million, $10.6$14.6 million, and $8.8$12.3 million of amortization of capitalized contract acquisition costs for the years ended December 31, 2021, 2020,2023, 2022, and 2019,2021, respectively.
55

Table of Contents
Note 5. Related Party Transactions
In February 2021, the Company entered into a distribution agreement, the terms of which are consistent with those prevailing at arm'sarm’s length. The spouse of one of the members of the Company’s Board of Directors is an executive officer of the distributor. During the year ended December 31, 2021, theThe Company recorded $473.7 million, $249.9 million and $58.2 million of net revenues from the distributor. Atdistributor for the years ended December 31, 2023, 2022, and 2021, respectively.
At each period end, related party transactions recorded on the Company had $25.8 millionconsolidated balance sheets were as follows:
57

Table of net accounts receivable due from the distributor and an aggregate $1.7 million of distribution fees due to the distributor and deferred revenue,Contents
As of December 31,
(in millions)20232022
Accounts receivable, net$119.5 $64.7 
Distribution fees payable(1)
$6.1 $3.4 
Deferred revenue(1)
$2.8 $2.0 
(1) Balances are included in accrued expenses and other current liabilities on its consolidated balance sheet.liabilities.
Note 6. Cash and Cash Equivalents
The following table provides a summary of cash and cash equivalents as of December 31, 20212023 and 2020:2022:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)20212020(in millions)20232022
CashCash$159.3 $164.6 
Money market mutual fundsMoney market mutual funds630.7 739.8 
Term deposits
Restricted cashRestricted cash1.6 2.8 
Total cash and cash equivalentsTotal cash and cash equivalents791.6 907.2 
Restricted cash included in other assetsRestricted cash included in other assets14.8 14.8 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flowsTotal cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows$806.4 $922.0 
The restrictedRestricted cash included in other assets on the consolidated balance sheet isas of December 31, 2022 was held as a compensating balance against long-term borrowings.
All cash and cash equivalents are level 1 in the fair value hierarchy.
Note 7. Investments
The table below provides amortized costs, gross unrealized gains and losses, fair values and the level in the fair value hierarchy for the Company’s investments at December 31, 2020. The Company had no investments at December 31, 2021. Realized gains or losses were insignificant for the years ended December 31, 2021, 2020 and 2019.
(in millions)Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueLevel 1
Level 2 (1)
December 31, 2020
U.S. government and agency bonds$35.1 $0.2 $— $35.3 $35.3 $— 
Corporate bonds2.8 0.1 — 2.9 — 2.9 
Certificates of deposit2.2 — — 2.2 — 2.2 
Total short-term investments$40.1 $0.3 $— $40.4 $35.3 $5.1 
(1) Fair value was determined using market prices obtained from third-party pricing sources.
Note 8.7. Accounts Receivable
At the end of each period, accounts receivable were comprised of the following:
As of December 31,
(in millions)20212020
Accounts receivable trade, net$127.0 $83.8 
Unbilled receivable34.0 11.5 
Accounts receivable, net$161.0 $95.3 
As of December 31,
(in millions)20232022
Accounts receivable trade, net$234.5 $128.6 
Unbilled receivable5.7 12.3 
Accounts receivable, net$240.2 $140.9 
At December 31, 2021, two distributors accounted for 35%The percentages of the Company’s consolidatedtotal net accounts receivable trade. At December 31, 2020, one distributor accountedtrade for 15% consolidated the Company’scustomers that represent 10% or more of total net accounts receivable trade were as follows:.
56

Table of Contents
As of December 31,

20232022
Distributor A35%34%
Distributor B25%23%
Distributor C18%11%
The following table presents the activity in the allowance for credit losses, which is comprised primarily of ourthe Company’s direct consumer receivable portfolio. The allowance for credit losses of other portfolios is insignificant.
Year Ended December 31,
Year Ended December 31,Year Ended December 31,
(in millions)(in millions)20212020(in millions)202320222021
Credit losses at beginning of year, after adoption of ASU 2016-1$2.9 $4.9 
Credit losses at beginning of year
Provision for expected credit lossesProvision for expected credit losses3.1 3.3 
Write-offs charged against allowanceWrite-offs charged against allowance(3.8)(5.8)
Recoveries of amounts previously reservedRecoveries of amounts previously reserved0.5 0.5 
Credit losses at end of yearCredit losses at end of year$2.7 $2.9 
58

Table of Contents
Note 9.8. Inventories
At the end of each period, inventories were comprised of the following:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Raw materialsRaw materials$70.0 $30.7 
Work in processWork in process112.6 59.6 
Finished goodsFinished goods120.6 64.0 
Total inventories Total inventories$303.2 $154.3 
Amounts charged to the consolidated statements of operations for excess and obsolete inventory for the years ended December 31, 2023, 2022, and 2021 were $3.7 million, $8.4 million, and $2.8 million, respectively.
Note 10.9. Cloud Computing Costs
Capitalized costs to implement cloud computing arrangements at cost and accumulated amortization were as follows: 
As of December 31, As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Short-term portionShort-term portion$18.4 $5.4 
Long-term portionLong-term portion49.2 20.3 
Total capitalized implementation costsTotal capitalized implementation costs67.6 25.7 
Less: accumulated amortizationLess: accumulated amortization(4.4)(1.5)
Capitalized implementation costs, netCapitalized implementation costs, net$63.2 $24.2 
Amortization expense is recognized on a straight-line basis over the expected term of the hosting arrangements, which range from three to ten years. Amortization expense was $2.9$20.3 million, $12.7 million, and $1.4$2.9 million for the years ended December 31, 2023, 2022, and 2021, and 2020, respectively. Amortization expense for the year ended December 31, 2019 was insignificant.
Note 11.10. Property, Plant and Equipment, Net
Property, plant and equipment at cost and accumulated depreciation were as follows: 
As of December 31, As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Land$2.5 $2.5 
Building and building improvements159.5 147.3 
Land(1)
Building and building improvements(2)
Machinery and equipmentMachinery and equipment437.2 318.7 
Furniture and fixturesFurniture and fixtures15.9 14.8 
Leasehold improvementsLeasehold improvements5.9 4.4 
Construction in processConstruction in process94.7 119.6 
Total property, plant and equipment715.7 607.3 
Less: accumulated depreciation(179.2)(128.6)
Property, plant and equipment, gross
Less: accumulated depreciation(2)
Property, plant and equipment, netProperty, plant and equipment, net$536.5 $478.7 
(1) Includes $6.5 million of land at December 31, 2023 related to the finance lease discussed in Note 15.
(2) Includes $31.7 million of building and building improvements and $0.4 million of accumulated depreciation at December 31, 2023 related to the finance lease discussed in Note 15.
Capitalized interest expense was $1.6 million, $1.3 million, and $5.6 million for the years ended December 31, 2023, 2022, and 2021, respectively. Depreciation expense related to property and equipment was $50.6$62.6 million, $38.0$56.0 million, and $25.2$50.6 million for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively. Construction in process primarily consists of manufacturing equipment located at the Company’s U.S.for our new manufacturing facility being constructed in Acton, MassachusettsMalaysia and contract manufacturer in Kunshan (Shanghai), China,equipment and tooling for our existing manufacturing lines, most of which is expected to be placed into service during 2022.2024.
5759

Table of Contents
Note 11. Business Combination
On January 3, 2022, the Company acquired substantially all of the assets related to the manufacture and production of shape-memory alloy wire assemblies that are used in the production of Pods from Dynalloy, Inc., a maker of dynamic alloys. The aggregate purchase price was $29.0 million, of which $26.0 million was paid in cash upon closing, and the remaining $3.0 million was paid in January 2023. Transaction costs were expensed as incurred and were not material.
The following table summarizes the fair value allocation of the assets acquired at the date of acquisition:
(in millions)
Inventories$0.5 
Property, plant and equipment0.9 
Other assets0.2 
Goodwill (tax deductible)12.0 
Developed technology (15 year useful life)15.4 
Total assets acquired$29.0 
The primary factor that contributed to an acquisition price in excess of the fair value of assets acquired and the establishment of goodwill was the expected cost savings resulting from the integration of a supplier.
Note 12. Goodwill and Other Intangible Assets, Net
Goodwill
The change in the carrying amount of goodwill was $39.8 million at both December 31, 2021 and December 31, 2020.for the period is as follows:

Year Ended December 31,
(in millions)20232022
Goodwill at beginning of the year$51.7 $39.8 
Acquisition (Note 11)— 12.0 
Foreign currency translation— (0.1)
Goodwill at end of the year$51.7 $51.7 
Intangible Assets, Net
The gross carrying amount, accumulated amortization and net book value of intangible assets at the end of each period were as follows:
As of December 31, As of December 31,
2021202020232022
(in millions)(in millions)Gross Carrying AmountAccumulated AmortizationNet Book ValueGross Carrying AmountAccumulated AmortizationNet Book Value(in millions)Gross Carrying AmountAccumulated AmortizationNet Book ValueGross Carrying AmountAccumulated AmortizationNet Book Value
Customer relationships (1)
$43.4 $(23.4)$20.0 $43.3 $(18.3)$25.0 
Customer relationships
Internal-use softwareInternal-use software25.5 (10.2)15.3 11.4 (8.6)2.8 
Intellectual property1.6 (0.3)1.3 1.1 (0.2)0.9 
Developed technology(1)
Patents(1)
Total intangible assetsTotal intangible assets$70.5 $(33.9)$36.6 $55.8 $(27.1)$28.7 
(1) Includes customer relationshipsintangible assets acquired from the Company’s former European distributor.in December 2022. See Note 17.19 for additional information.
Intangible asset amortizationAmortization expense for intangible assets was $6.8$10.2 million, $17.4$7.2 million, and $2.7$6.8 million for the years ended December 31, 2023, 2022, and 2021, 2020 and 2019, respectively.
In February 2023, the Company paid Bigfoot Biomedical, Inc. $25.1 million, including transaction costs, to acquire patent assets related to pump-based automated insulin delivery technologies. The acquired patent assets have a useful life of 11 years.
60

Table of Contents
Amortization expense associated with the intangible assets included on the Company’s consolidated balance sheet as of December 31, 20212023 is expected to be as follows:
Years Ending December 31,Years Ending December 31,(in millions)Years Ending December 31,(in millions)
2022$7.9 
20236.8 
202420245.8 
202520255.2 
202620264.7 
2027
2028
Note 13. Investments
Equity Securities
As of December 31, 2023 and 2022, the total carrying value of the Company’s investments in equity securities without readily determinable fair values was $9.7 million and $8.7 million, respectively. During 2023, the unrealized gain recorded due to changes in the fair value of equity investments was insignificant. There were no adjustments as of December 31, 2022.
Debt Securities
In 2023, the Company made a strategic investment in debt securities of a privately held entity in the amount of $5.0 million. The debt securities mature in December 2024, unless converted earlier. The amortized cost basis and fair value of the investment are $5.0 million and $4.7 million, respectively, as of December 31, 2023. The unrealized loss recorded due to changes in the fair value of the investment during 2023 was insignificant.
Other
In 2023, the Company made a strategic investment in a privately held entity in the amount of $2.0 million. The investment is a debt security with embedded derivatives and is accounted for by applying the fair value option, as this approach best reflects the underlying economics of the transaction. The fair value of the investment was calculated using a combination of the market approach and income approach methodologies. During 2023, a $1.8 million unrealized gain on the investment was recorded in other income (loss), net in the consolidated statement of operations. The fair value of the investment as of December 31, 2023 was $3.8 million and is reported within other assets on the consolidated balance sheet. The amount of interest earned on the investment in 2023 was insignificant.
Note 13.14. Accrued Expenses and Other Current Liabilities
The components of accrued expenses and other current liabilities were as follows:
As of December 31,
As of December 31,As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Accrued rebates
Employee compensation and related costsEmployee compensation and related costs$70.3 $53.1 
Accrued rebates30.2 13.1 
Professional and consulting servicesProfessional and consulting services17.0 19.1 
Warranty liability - current portion
OtherOther48.5 52.8 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities$166.0 $138.1 
Product Warranty Costs
Reconciliations of the changes in the Company’s product warranty liability were as follows:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)20212020(in millions)20232022
Product warranty liability at beginning of yearProduct warranty liability at beginning of year$6.7 $8.5 
Warranty expenseWarranty expense10.7 10.7 
Warranty claims settled(10.6)(12.5)
Change in estimate
Warranty fulfillment
Product warranty liability at end of yearProduct warranty liability at end of year$6.8 $6.7 
5861

Table of Contents
During the fourth quarter of 2022, the Company issued two voluntary medical device correction notices (“MDCs”), one for its Omnipod DASH PDM relating to its battery and the other for its Omnipod 5 Controller relating to its charging port and cable. During the year ended December 31, 2022, the Company initially recorded an estimated liability of $68.9 million related to these MDCs, which was subsequent revised by $11.0 million, resulting in a net charge of $57.9 million for the year ended December 31, 2022. The $11.0 million change in estimate primarily resulted from significantly fewer customers requesting a replacement Omnipod DASH PDM prior to the Company’s updated PDM being available. During the year ended December 31, 2023, the Company revised the estimated liability for these MDCs by an additional $11.5 million. This change in estimate primarily resulted from lower distribution costs. The Company had a liability of $0.7 million and $54.6 million related to the MDCs included in its product warranty liability at December 31, 2023, and 2022, respectively.
Note 14.15. Leases
As of December 31, 2021,2023, the Company leased certain office spaces, laboratory space, warehouse spaceautomobiles and automobiles,facilities for offices, laboratories, manufacturing, and warehousing, all of which were classified as operating leases. Certain of the Company’s operating leases include escalating rental payments, some include the option to extend for up to 510 years, and some include options to terminate the leases at certain times within the lease term. The Company also leases land and a manufacturing building in Malaysia, which are classified as finance leases. The Company has the option to purchase the property at any point after the completion of construction and is contractually obligated to purchase the property nine months after completion, which occurred in December 2023. Because the Company is reasonably certain to purchase the property, the lease term of each finance lease equals the economic life of the underlying asset. As of December 31, 2023, the Company had not exercised the purchase option.
As of December 31, 2021, operating2023, lease assets and operating lease liabilities were included in the following consolidated balance sheet accounts in the amounts shown:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)20212020(in millions)20232022
Operating leases
Operating lease asset:Operating lease asset:
Operating lease asset:
Operating lease asset:
Other assets
Other assets
Other assetsOther assets$9.9 $14.9 
Operating lease liabilities:Operating lease liabilities:
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities$5.0 $4.9 
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities
Other liabilitiesOther liabilities7.6 12.0 
Total operating lease liabilities Total operating lease liabilities$12.6 $16.9 
Finance leases
Finance lease assets:
Finance lease assets:
Finance lease assets:
Property, plant and equipment, net
Property, plant and equipment, net
Property, plant and equipment, net
Finance lease liabilities:
Current portion of long-term debt and finance leases
Current portion of long-term debt and finance leases
Current portion of long-term debt and finance leases
The Company’s total operating and financing lease cost was $6.0 million, $5.4 million, and $4.3 million for the years ended December 31, 2021, 2020, and 2019, respectively. Cash paid for amounts included in the measurementas follows:
Year Ended December 31,
(in millions)202320222021
Operating lease cost$8.8 $8.8 $6.0 
Finance lease cost:
    Amortization of leased assets0.4 — — 
    Interest on lease liabilities0.6 — — 
Total finance lease cost1.0 — — 
    Total operating and financing lease cost$9.8 $8.8 $6.0 
62

Table of lease liabilities was $5.7 million and $4.6 millionContentsfor the years ended December 31, 2021 and 2020, respectively.
Maturities of lease liabilities as of December 31, 20212023 are as follows:
(in millions)
Years Ending December 31,Years Ending December 31,(in millions)
2022$5.5 
20233.0 
Years Ending December 31,
Years Ending December 31,Operating Leases
Finance Lease(1)
202420243.0 
202520252.0 
202620260.1 
2027
2028
ThereafterThereafter— 
Total future minimum lease payments Total future minimum lease payments13.6 
Less: imputed interestLess: imputed interest(1.0)
Present value of future minimum lease payments Present value of future minimum lease payments$12.6 
(1) Excludes optional variable lease payments.
As of December 31, 2021,2023, the weighted average remaining lease term for operating leases was 3.1 years and the weighted-average discount rate used to determine the operating lease liability was 6.0%.for leases were as follows:
During the year ended December 31, 2021, the Company entered into an operating lease for additional warehouse space. The lease commences in 2022 and has a term of 7 years. Total future minimum lease payments under this lease is $12.7 million.
Operating LeasesFinance Leases
Weighted average remaining lease term12.4 years9 months
Weighted-average discount rate used to determine the lease liability7.1 %6.0 %
59

Table of Contents
Note 15.16. Debt
The components of debt consisted of the following: 
As of December 31, As of December 31,
(in millions)(in millions)20212020(in millions)20232022
1.375% Convertible Senior Notes due November 2024$— $402.5 
0.375% Convertible Senior Notes due September 2026800.0 800.0 
Term loan due May 2028497.5 — 
Equipment financing due May 2024Equipment financing due May 202416.0 22.2 
Equipment financing due November 2025Equipment financing due November 202529.6 36.4 
5.15% Mortgage due November 2025
0.375% Convertible Senior Notes due September 2026
Equipment financing
Term loan due May 2028
Revolving Credit Facility expires June 2028
Equipment financing due July 2028Equipment financing due July 202838.2 — 
5.15% Mortgage due November 202567.7 69.7 
Finance lease obligation(1)
Unamortized debt discountUnamortized debt discount(159.9)(252.5)
Debt issuance costsDebt issuance costs(15.2)(19.0)
Total debt, netTotal debt, net1,273.9 1,059.3 
Less: current portionLess: current portion25.1 15.6 
Total long term-debt, netTotal long term-debt, net$1,248.8 $1,043.7 
1.375% Convertible Senior Notes(1) Refer to Note 15 for information regarding finance lease obligation.
Equipment Financings
In October 2020, the Company entered into a Master Equipment Lease Agreement for a loan of $60.0 million secured by two manufacturing lines located at the Company’s Acton, Massachusetts manufacturing facility. The loan for the first manufacturing line is payable over 42 months and has an effective interest rate of 5.8%. The loan for the second manufacturing line is payable over 60 months and has an effective interest rate of 4.8%.
In July 2021, the Company repurchased $370.4entered into a $43.1 million equipment financing transaction secured by one of the manufacturing lines located at the Company’s Acton, Massachusetts manufacturing facility. The equipment financing is payable over 84 months and has an effective interest rate of 4.3%.
63

Table of Contents
In May 2023, the Company entered into an arrangement under which the Company may obtain up to $24.0 million of financing for manufacturing equipment. The Company is involved in principal ($305.7 millionthe construction of the manufacturing equipment; accordingly, it is included in property, plant and equipment on the consolidated balance sheet at December 31, 2023. The Company’s obligation reflects payments made to date by the third-party bank to the equipment manufacturer, net of discount and issuance costs)less repayment of its 1.375% Convertible Senior Notes due November 2024 (“1.375% Notes”principal. The financing obligation will mature 36 months following completion of construction and has an effective interest rate of 9.4%.
5.15% Mortgage
In October 2020, the Company entered into a Mortgage Loan Agreement (the “Mortgage”), which provides for $460.8a $70.0 million loan with an effective interest rate of 5.7%. Proceeds under the Mortgage are secured by the Company’s Acton, Massachusetts headquarters. The Mortgage is repayable in cash andmonthly installments of $0.5 million, with the issuance of 2.2 million shares with a fair value of $622.7 million. The remaining $32.1 million inoutstanding principal balance of the 1.375% Notes were converted into approximately 0.4 million shares with a fair valueloan due in November 2025. The Mortgage contains non-financial customary covenants, none of $99.8 million. The debt repurchase and conversions resulted in a $42.4 million loss on extinguishment, including cash paidwhich are considered restrictive to the note holders as an inducement to convert and transaction costs.Company’s operations.
0.375% Convertible Senior Notes
In September 2019, theThe Company issuedhas $800.0 million aggregate principal amount of 0.375% Convertible Senior Notes due September 2026 (the “0.375% Notes”). outstanding. The notes are convertible into cash, shares of the Company’s common stock, or the combination of cash and shares of common stock, at the Company's election, at an initial conversion rate of 4.4105 shares of common stock per $1,000 principal amount of the notes, which is equivalent to a conversion price of $226.73 per share, subject to adjustment under certain circumstances. The notes will be convertible at the holder's election, from June 1, 2026 through August 28, 2026 and prior to then under certain circumstances.
Thecircumstances as set forth in the agreement. Additionally, on or after September 6, 2023, the Company recorded a debt discount of $213.0 million related to the 0.375% Notes resulting from the allocation ofmay redeem for cash all or a portion of the proceedsNotes, if its stock price has been equal to the fair valueor greater than $294.75 for at least 20 of the conversion feature reflecting a nonconvertible debt borrowing rateprior 30 consecutive trading days including the date which the Company provides notice of 5.29% per annum. The Company also incurred debt issuance costs and other expenses of $19.8 million, of which $5.3 million was recorded as a reduction to the value of the conversion feature allocated to equity. The remaining $14.5 million of debt issuance costs was recorded as a reduction of debt on the consolidated balance sheet. The net proceeds of $780.2 million were used to fund the redemption of the Company’s 1.25% Convertible Senior Notes due September 2021 (the “1.25% Notes”) and to purchase capped call options (“Capped Calls”), both of which are discussed below..
Additional interest of 0.5% per annum is payable if the Company fails to timely file required documents or reports with the Securities and Exchange Commission (“SEC”). If the Company merges or consolidates with a foreign entity, the Company may be required to pay additional taxes. The Company determined that the higher interest payments and tax payments required in certain circumstances were embedded derivatives that should be bifurcated and accounted for at fair value. The Company assessed the value of the embedded derivatives at each balance sheet date and determined it had nominal value.
In conjunction with the issuance of the 0.375% Notes, the Company paid $85.4 million to enter intopurchased Capped Calls on the Company’s common stock with certain counterparties which was recorded as a reduction to additional paid-in capital on the consolidated balance sheet. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the 0.375% Notes. The Capped Calls have an initial strike price of $335.90 per share, which represents a premium of 100% over the last reported sale price of the Company’s common stock of $167.95 per share on the date of the transaction. The Capped Calls cover 3.5 million shares of common stock.stock and are recorded within stockholders’ equity on the consolidated balance sheets.
60

TableAs of ContentsDecember 31, 2023 and 2022, the net carrying amount of the Notes was $791.8 million and $788.8 million, respectively, net of unamortized issuance costs of $8.2 million and $11.2 million, respectively. As of December 31, 2023, the effective interest rate was 0.76%.
The components of interest expense related to the Notes were as follows:
Years Ended December 31,
(in millions)202320222021
Contractual interest expense$3.0 $3.0 $3.0 
Amortization of debt issuance costs3.0 3.0 1.9 
Total interest recognized on the Convertible Notes$6.0 $6.0 $4.9 
Senior Secured Credit Agreement
In May 2021, the Company entered into a senior secured credit agreement (the “Credit Agreement”), which includes a $500 million seven yearseven-year senior secured term loan B (the “Term Loan”) for net proceeds of $489.5 million, which was used to fund the cash portion of the repurchase of the 1.375% Notes discussed above. Thebelow. On November 30, 2022, the Company amended the Term Loan bearsto bear interest at a rate of LIBORSOFR plus 3.25%, with a 0.50% LIBOR floor, andSOFR floor. The Term Loan contains leverage and fixed charge coverage ratio covenants, both of which are measured upon the occurrenceincurrence of future debt.
Under the same agreement, the Company obtained a $60 million three year senior secured revolving credit facility (the “Revolving Credit Facility”). OutstandingIn 2023, the Company increased the borrowing capacity under the Revolving Credit Facility to $300.0 million and amended the agreement such that outstanding borrowings bear interest at a rate of LIBORSOFR plus an applicable margin of 2.75%2.625% to 3.25%
64

based on the Company’s net leverage ratio.ratio and credit rating and extended the maturity date to the earlier of June 2028 or 91 days prior to the maturity date of the Company's term loan if still outstanding. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio under certain conditions when there are amounts outstanding. No amount was outstanding under the Revolving Credit Facility at December 31, 2021.2023.
Borrowings under the Credit Agreement are guaranteed by certain wholly owned domestic subsidiaries of the Company and are secured by substantially all assets of the Company and of each subsidiary guarantor, subject to certain exceptions. Additionally, borrowings under the Credit Agreement are senior to all of the Company’s unsecured indebtedness, including the convertible notes.
Equipment Financings
In October 2020,January 2024, the Company entered into a Master Equipment Lease Agreementamended its Credit Agreement. Refer to Note 26 for a loan of $60.0 million secured by 2 manufacturing lines located at the Company’s Acton, Massachusetts manufacturing facility. The loan for the first manufacturing line is payable over 42 months and has an effective interest rate of 5.8%. The loan for the second manufacturing line is payable over 60 months and has an effective interest rate of 4.8%.additional information.
In July 2021, the Company entered into a $43.1 million equipment financing transaction secured by 1 the manufacturing lines located at the Company's Acton, Massachusetts manufacturing facility. The equipment financing is payable over 84 months and has an effective interest rate of 4.3%.
5.15% Mortgage
In October 2020, the Company entered into a Mortgage Loan Agreement (the “Mortgage”), which provides for a $70.0 million loan with an effective interest rate of 5.7%. Proceeds under the Mortgage are secured by the Company’s Acton, Massachusetts headquarters. The Mortgage is repayable in monthly installments of $0.5 million, with the outstanding principal balance of the loan due in November 2025. The Mortgage contains non-financial customary covenants, none of which are considered restrictive to the Company’s operations.
1.25%1.375% Convertible Senior Notes
In 2019,2021, the Company repurchased its $345.0$370.4 million in principal amount ($312.0305.7 million net of discount and issuance costs) 1.25%of its 1.375% Convertible Senior Notes due November 2024 (“1.375% Notes”) for total consideration of $963.0 million comprised of $663.6$460.8 million in cash and $299.4the issuance of 2.2 million representing theshares with a fair value of $622.7 million. The remaining $32.1 million in principal of the 1.871.375% Notes were converted into approximately 0.4 million shares issued. The Company allocated $642.3 million of the settlement to thewith a fair value of the equity component$99.8 million. The debt repurchase and $320.7 million to the debt component, whichconversions resulted in an $8.7a $42.4 million loss on extinguishment.extinguishment, including cash paid to the note holders as an inducement to convert and transaction costs.
Carrying Value
The carrying value amounts of the Company’s debt were as follows:
As of December 31,
(in millions)20232022
Term loan due May 2028$479.2 $482.1 
0.375% Convertible Senior Notes791.8 788.8 
Equipment financings59.3 66.4 
5.15% Mortgage62.6 64.5 
Finance lease obligation22.9 — 
Total debt, net$1,415.8 $1,401.8 
Maturity of Debt
The maturity of debt as of December 31, 20212023 is as follows:
Years Ending December 31,Years Ending December 31,(in millions)Years Ending December 31,(in millions)
2022$25.1 
202327.0 
2024202423.4 
2025202578.6 
20262026811.1 
2027
2028

6165

Note 17. Financial Instruments and Fair Value
Financial Instruments Disclosed at Fair Value
The carrying amountfollowing tables provide a summary of the significant financial instruments that are disclosed at fair value on a recurring basis as of December 31, 2023 and the estimated fair2022:
 Fair Value Measurements at December 31, 2023
(in millions)Level 1Level 2Level 3Total
Term loan due May 2028(1)
$490.2 $— $— $490.2 
0.375% Convertible Senior Notes(2)
— 765.6 — 765.6 
Equipment financings(3)
— — 59.3 59.3 
5.15% Mortgage(3)
— — 62.6 62.6 
Total$490.2 $765.6 $121.9 $1,377.7 
 Fair Value Measurements at December 31, 2022
(in millions)Level 1Level 2Level 3Total
Term loan due May 2028(1)
$485.1 $— $— $485.1 
0.375% Convertible Senior Notes(2)
— 1,038.7 — 1,038.7 
Equipment financings(3)
— — 66.4 66.4 
5.15% Mortgage(3)
— — 64.5 64.5 
Total$485.1 $1,038.7 $130.9 $1,654.7 
(1) Fair value of the Company’s debt were as follows:
As of December 31,
20212020
(in millions)Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
1.375% Convertible Senior Notes(1)
$— $— $323.9 $1,104.2 
0.375% Convertible Senior Notes(1)
638.8 938.8 609.2 902.0 
Term loan due May 2028(2)
485.2 498.1 — — 
Equipment financings(3)
83.7 83.7 58.3 58.3 
5.15% Mortgage(3)
66.2 66.2 67.9 67.9 
Total$1,273.9 $1,586.8 $1,059.3 $2,132.4 
Term Loan was determined using quoted market prices.
(1)(2) Convertible debt is classified as Level 2 inFair value of the fair value hierarchy. Fair valuenotes was determined using the Company’s quoted stock price and the contractual conversion rate.
(3) The fair values of the equipment financings and mortgage approximate their carrying values and were determined using their cost basis.
Assets Measured at Fair Value on a Recurring Basis
The following tables provide a summary of assets that are measured at fair value on a recurring basis as of December 31, 2023 and 2022:
Fair Value Measurements at December 31, 2023
(in millions)Level 1Level 2Level 3Total
Cash(1)
$103.7 $— $— $103.7 
Money market mutual funds(1)
547.0 — — 547.0 
Term deposits(2)
— 53.5 — 53.5 
Interest rate swaps(3)
— 22.8 — 22.8 
Debt securities(4)
— — 4.7 4.7 
Other investments(4)
— — 3.8 3.8 
Total assets$650.7 $76.3 $8.5 $735.5 
Fair Value Measurements at December 31, 2022
(in millions)Level 1Level 2Level 3Total
Cash(1)
$136.1 $— $— $136.1 
Money market mutual funds(1)
487.3 — — 487.3 
Term deposits(2)
— 50.8 — 50.8 
Restricted cash(1)
0.5 — — 0.5 
Interest rate swaps(3)
— 36.9 — 36.9 
Total assets$623.9 $87.7 $— $711.6 
(1) Cash and cash equivalents are carried at face amounts, which approximate their fair values.
(2) Term debtFair value is determined using Level 2 inputs.
(3) Fair value represents the estimated amounts the Company would receive or pay to terminate the contracts and is determined using industry standard valuation models and market-based observable inputs, including credit risk and interest rate yield curves. The fair value of the swaps is included in other assets on the consolidated balance sheets.
(4) Fair value is determined using industry standard valuation models and market-based unobservable inputs, including credit spread and risk free rate. The range used for the risk free rate is 3.8% - 5.6%.
66

The following is a reconciliation of changes in fair value of investments, which were acquired during the year ended December 31, 2023:
(in millions)Debt SecuritiesOther InvestmentsTotal
Balance at December 31, 2022$— $— $— 
Purchases5.0 2.0 7.0 
Unrealized gain included in other income (expense), net— 1.8 1.8 
Unrealized loss on securities included in other comprehensive income(0.3)— (0.3)
Balance at December 31, 2023$4.7 $3.8 $8.5 
Assets Measured at Fair Value on a Non-Recurring Basis
Due to an observable price change in an orderly transaction during 2023, the Company adjusted the carrying value of certain investments in equity securities held as of December 31, 2023, which resulted in an unrealized gain of $0.8 million. The investments are classified as Level 12 in the fair value hierarchy. Fair value was determined using quoted market prices.
(3) The equipment financings and Mortgage are classified as Level 3 in the fair value hierarchy. The fair values were determined using the cost bases of the financial liabilities, which approximate their carrying values.
Note 16.18. Derivative Instruments
The Company manages interest rate exposure through the use of interest rate swap transactions with financial institutions acting as principal counterparties. In May 2021,Under the Company entered into 2Company’s interest rate swap agreements that expire on April 30, 2025. Under the interest rate swap agreements,2025, the Company receives variable rate interest payments and pays fixed interest rates of 0.95% and 0.96% on a total notional value of $480.0 million of its Term Loan. The Company has designated the interest rate swaps as cash flow hedges.
The fair valueAs of December 31, 2023, the Company estimates that $18.3 million of net gains related to the interest rate swaps which are classified as Level 2 in the fair value hierarchy, represent the estimated amounts the Company would receive or pay to terminate the contracts and is determined using industry standard valuation models and market-based observable inputs, including credit risk and interest rate yield curves. The fair value of the interest rate swap was $4.5 million at December 31, 2021 and was included in accumulated other assetscomprehensive income will be reclassified into the statement of operations over the next 12 months. When recognized, gains and losses on the consolidated balance sheet.cash flow hedges reclassified from accumulated other comprehensive income are recognized within interest expense, net.
Note 17.19. Commitments and Contingencies
Legal Proceedings
Between May 5, 2015 and June 16, 2015, 3 class action lawsuits were filed by shareholders in the U.S. District Court, for the District of Massachusetts, against the Company and certain then current and former executives of the Company. NaN suits subsequently were voluntarily dismissed. Arkansas Teacher Retirement System v. Insulet, et al., 1:15-cv-12345, (“ATRS”) alleged that the Company (and certain then current and former executives) committed violations of Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by making allegedly false and misleading statements about the Company’s business, operations, and prospects. On February 8, 2018, the parties executed a binding stipulation of settlement, under which all claims were released, and a payment was made into an escrow account for the plaintiffs and the class they purport to represent. On August 6, 2018, the Court issued an order approving the settlement. On June 25, 2021, the Court issued an order on the plaintiffs’ motion for fees and expenses, a final judgment approving the settlement, and an order of dismissal with prejudice. The Company had previously accrued fees and expenses in connection with this matter for the amount of the final settlement liability that was not covered by insurance, the amount of which was not material to the Company’s consolidated financial statements.
In addition, on April 26, 2017, a derivative action (Walker v. DeSisto, et al., 1:17-cv-10738) (“Walker”) was filed, and on October 13, 2017, a second derivative action (Carnazza v. DeSisto, et al., 1:17-cv-11977) (“Carnazza”) was filed, both on behalf of the Company, each by a shareholder in the U.S. District Court for the District of Massachusetts against the Company (as a nominal defendant) and certain individual then current and former officers and directors of the Company. The allegations in the actions are substantially similar to those alleged in the securities class action. The actions seek, among other things, damages, disgorgement of certain types of compensation or profits, and attorneys’ fees and costs. On July 11, 2018, the parties executed a binding stipulation of settlement, under which all claims were released, and a payment of attorneys’ fees and reimbursement of expenses will be paid to plaintiffs’ counsel, subject to the Court’s approval. On July 13, 2018, the plaintiffs filed a motion for preliminary approval of the settlement. On June 28, 2021, the Court issued an order preliminarily approving
62

the proposed settlement. On September 9, 2021, the Court held a hearing to decide whether the proposed settlement should be finally approved, and issued an order and final judgment the same day approving the settlement and the payment of attorneys’ fees and reimbursement of expenses to plaintiffs’ counsel, and dismissing the case with prejudice. Such fees and expenses paid to plaintiffs' counsel were covered by the Company’s insurance.
In June 2020, Roche Diabetes Care, Inc. (“Roche”) filed a patent infringement lawsuit against the Company in the United States District Court for the District of Delaware alleging that the Company’s manufacture and sale of its Omnipod Insulin Management System, including Pods, PDMs, and other components of the system, and kits in the United States infringed Roche’s now-expired U.S. Patent 7,931,613. Roche iswas seeking monetary damages and attorneys’ fees and costs. SinceIn July 2022, the Company entered into a Settlement and License Agreement (the “Settlement Agreement”) with Roche to settle the pending litigation. Pursuant to the Settlement Agreement, in exchange for a release of claims, mutual covenant not to sue for five years, and license to the patent expired in 2019,suit from Roche, is not seeking injunctive relief and the lawsuit will have no impact on ongoing salesCompany made a one-time payment of $20.0 million to Roche. On July 12, 2022, following the Company’s products. The Company believes that it has meritorious defenses to Roche’s claims and intends to vigorously defend against them. The court has setfiling by the parties of a trial dateStipulation of July 25, 2022. By Order ofDismissal, the Court on October 29, 2021, representatives of Rocheordered the case dismissed with prejudice. The $20.0 million charge is included in selling, general and administrative expenses for the Company participated in a mediation conference, the results of which were unsuccessful. At this time, based on available information regarding this litigation, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or range of estimates, of potential losses, which could be material.
In July 2020, the Company filed a patent infringement claim against Roche Diabetes Care Limited (“Roche Ltd.”) in the United Kingdom alleging that Roche Ltd.’s manufacture and sale of the Accu-Chek® Solo insulin pump and its consumable components infringes European Patent No. 1 335 764 in the United Kingdom. The Company was seeking an injunction to last until expiry of the patent and monetary damages. A trial was held in May 2021 and the judge ultimately sided with Roche Ltd. on non-infringement and invalidity of the patent, which was slated to expire in August 2021. Accordingly, no injunction was issued and no monetary damages were awarded.year ended December 31, 2022.
The Company is, from time to time, involved in the normal course of business in various legal proceedings, including intellectual property, contract, employment, and product liability suits. Other than as described above, theThe Company does not expect the outcome of these proceedings, either individually or in the aggregate, to have a material adverse effect on its results of operations.
Fees to Former European DistributorContract Dispute
FollowingThroughout 2022, the expiration ofCompany was engaged in negotiations over a contractual dispute involving in-licensed intellectual property. In December 2022, the Company entered into an agreement with a former European distributor on June 30, 2018,Automated Glucose Control LLC (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the Company made a one-time payment of $25.0 million for the acquisition of developed technology and patents and the release of future obligations, including any future royalty obligations. This amount, together with transaction costs, was required to pay a quarterly per-unit fee for Omnipod sales to certain customersallocated between the assets acquired and the settlement of the former European distributorcontractual dispute. A value of $12.0 million was allocated to acquired developed technology and a value of $9.5 million was allocated to acquired patents. The acquired developed technology and patents are being amortized over their useful lives of 13 years. The remaining $3.6 million was allocated to the settlement and is included in selling, general and administrative expenses for a one-year period through June 30, 2019. Thethe year ended December 31, 2022.
67

Letters of Credit
In 2022, the Company recognized a liability and an associated intangible asset for this fee as qualifying sales occurred. The methodology applicable for determining the total fee under the distribution agreement was subject to an arbitration proceeding in Switzerland. In December 2020, Insulet entered into a settlement agreement$20 million uncommitted letter of credit facility, and concurrently with the former distributor pursuantexecution of the Malaysia Purchase Agreement discussed in Note 15, a $16.5 million letter of credit was issued under the facility to backstop a bank guarantee for the same amount. The bank guarantee, to which the Company paidis not a party, serves as security for the distributor anbuilding until the Company purchases the property. In 2023, additional one-time paymentletters of $36.2credit totaling $3.5 million for a total fee of $41.2 million, representing the cost to acquire the customer relationships. This amount was recorded as an intangible assetwere issued under this facility. The Company pays interest on outstanding borrowings and commitment fees on the consolidated balance sheet. Sincemaximum amount available to be drawn under the customer relationships were acquiredletter of credit at a rate of between 1.65% and 2.25%, depending on July 1, 2018,the Company’s credit rating. The letter of credit includes customary covenants, none of which are considered restrictive to the Company’s operations. In aggregate, the Company recorded cumulative amortization in the amounthad letters of $14.6credit totaling $20.9 million during the fourth quarterand $18.6 million as of 2020, as if the total fee for the intangible asset had been amortized since the acquisition date.

December 31, 2023 and 2022, respectively.
Note 18.20. Stock-Based Compensation Expense
Equity Award Plan
In May 2017, the Company adopted the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which replaced its previous stock option and incentive plan (the “2007 Plan”). The 2017 Plan provides for a maximum of 5.2 million shares to be issued, in addition to the number of shares related to awards outstanding under the 2007 Plan that are terminated by expiration, forfeiture, or cancellation. The shares can be issued as stock options, restricted stock units, stock appreciation rights, deferred stock awards, restricted stock, unrestricted stock, cash-based awards, performance share awards, or dividend equivalent rights. As of December 31, 2021, 3.22023, 2.5 million shares remain available for future issuance under the 2017 Plan.
63

Stock-Based Compensation Expense
Compensation expense related to stock-based awards was recorded as follows:
Year Ended December 31,
Year Ended December 31,Year Ended December 31,
(in millions)(in millions)202120202019(in millions)202320222021
Cost of revenueCost of revenue$0.5 $1.2 $1.0 
Research and developmentResearch and development7.6 10.9 9.1 
Selling, general and administrativeSelling, general and administrative26.3 23.8 18.6 
TotalTotal$34.4 $35.9 $28.7 
Stock Options
Options are granted to purchase common shares at prices that are equal to the fair market value of the shares on the date the options are granted. Options generally vest in equal annual installments over a period of four years and expire 10 years after the date of grant. The grant-date fair value of options, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.
The following summarizes the activity under the Company’s stock option plans:
Number of
Options
Weighted Average
Exercise Price
Weighted Average Remaining Contractual Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 20201,078,488 $57.99 
Granted61,573 $279.29 
Exercised(363,535)$42.57 $86.5 
Forfeited and canceled(11,069)$136.45 
Outstanding at December 31, 2021765,457 $81.98 5.6$141.7 
Vested, December 31, 2021599,375 $52.34 4.9$128.1 
Vested or expected to vest, December 31, 2021748,363 $78.85 5.5$140.8 
Number of
Options
Weighted Average
Exercise Price
Weighted Average Remaining Contractual Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
Outstanding at December 31, 2022695,588 $109.73 
Granted72,209 $276.36 
Exercised(250,192)$67.30 $52.7 
Forfeited and canceled(81,511)$250.47 
Outstanding at December 31, 2023436,094 $135.37 3.8$43.2 
Vested, December 31, 2023335,862 $95.35 2.4$43.1 
Vested or expected to vest, December 31, 2023420,190 $130.18 3.6$43.2 
The aggregate intrinsic value of options exercised for the years ended December 31, 20202022 and 20192021 was $115.9$31.7 million and $119.2$86.5 million, respectively.
The Company uses the Black-Scholes pricing model to determine the fair value of options granted. The calculationassumptions used in the Black-Scholes pricing model are as follows:
Risk-free Interest Rate—The risk-free interest rate is the implied yield available on U.S. treasury zero-coupon issues with a remaining term equal to the option’s expected term on the grant date.
68

Table of Contents
Expected Term—The expected term of options granted represents the period of time for which the options are expected to be outstanding. The Company estimates the expected term using both historical and hypothetical exercise data for outstanding options.
Dividend Yield—The Company has never declared or paid any cash dividends on any of its capital stock and does not expect to do so in the foreseeable future. Accordingly, the Company uses an expected dividend yield of zero to calculate the grant-date fair value of a stock optionsoption.
Expected Volatility—The expected volatility is affecteda measure of the amount by which the Company’s stock price onis expected to fluctuate during the grant date,expected term of options granted. The Company determines the expected volatility based primarily upon the historical volatility of the Company’s common stock over a period commensurate with the option’s expected term of the award, the expected life of the award, the risk-free interest rate and the dividend yield. term.
The assumptions used in the Black-Scholes pricing model for options granted during each year, along with the weighted-average grant-date fair values, were as follows:
Years Ended December 31, Years Ended December 31,
202120202019 202320222021
Risk-free interest rateRisk-free interest rate0.5% - 0.6%0.3% - 1.4%1.8% - 2.6%Risk-free interest rate4.3%1.8%0.5% - 0.6%
Expected life of options (in years)Expected life of options (in years)4.2 - 4.44.54.4 - 4.8Expected life of options (in years)4.24.24.2 - 4.4
Dividend yieldDividend yield—%—%—%Dividend yield—%—%
Expected stock price volatilityExpected stock price volatility41.4% - 41.6%39.5% - 41.7%40.1% - 40.5%Expected stock price volatility45.7%42.8%41.4% - 41.6%
Fair value per optionFair value per option$95.92 $69.90 $34.98 
As of December 31, 2021,2023, there was $8.0$7.8 million of unrecognized compensation cost related to non-vested stock options. This cost is expected to be recognized over a weighted average period of 2.62.7 years.
Restricted Stock Units
Restricted Stock Units (“RSUs”) generally vest in equal annual installments over a three-year period, however during the fourth quarter of 2020, the Company issued a company-wide grant, a significant portion of which immediately vested.period. The grant-date fair value of RSUs, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The Company determines the fair value of restricted stock unitsRSUs based on the closing price of its common stock on the date of grant.
64

Table of Contents
RSU activityActivity for RSUs is as follows:
Number of
Shares
Weighted
Average
Fair Value
Outstanding at December 31, 2020259,687 $134.90 
Number of
Shares
Number of
Shares
Weighted
Average
Fair Value
Outstanding at December 31, 2022
GrantedGranted97,642 278.68 
VestedVested(139,372)121.78 
ForfeitedForfeited(16,245)208.09 
Outstanding at December 31, 2021201,712 $207.97 
Outstanding at December 31, 2023
The weighted-average grant-date fair value per share of RSUs granted was $211.77$248.02 and $96.62$278.68 for the years ended December 31, 20202022 and 2019,2021, respectively. The total fair value of RSUs vested was $17.0$24.1 million, $20.7$20.3 million, and $11.6$17.0 million for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively.
As of December 31, 2021,2023, there was $26.1$41.6 million of unrecognized compensation cost related to time-based RSUs, which is expected to be recognized over a weighted-average period of 1.9 years.
Performance Stock Units
Performance stock units (“PSUs”) generally vest over a three-year period from the grant date and include both a service and performance component. Stock-based payments that contain performance conditions are recognized when such conditions are probable of being achieved. Certain of these performance stock unitsPSUs could ultimately vest at up to 200% of the target award depending on the achievement of the performance criteria. The Company determines the fair value of PSUs based on the closing price of its common stock on the date of grant.
PSU activity
69

Table of Contents
Activity for PSUs is as follows:
Number of
Shares
Weighted
Average
Fair Value
Outstanding at December 31, 2020230,089 $110.63 
Granted97,824 273.79 
Vested(138,489)74.50 
Forfeited(6,981)161.67 
Outstanding at December 31, 2021 (1)
182,443 $171.02 
Number of
Shares
Weighted
Average
Fair Value
Outstanding at December 31, 2022180,301 $249.10 
Granted(1)
60,587 $276.36 
Vested(40,023)$217.34 
Forfeited(78,399)$272.53 
Outstanding at December 31, 2023(2)
122,466 $261.65 
(1) Includes a 7,636 share adjustment to awards granted in 2020 for the three-year performance cycle award period ended 2022, based on the actual performance achievement of 84%.
(2)Based on 101%111% achievement of the performance metrics, approximately 84,00018,000 shares of Insulet were earned for awards that were granted in 20192021 for the performance period ended December 31, 2021.2023. These shares vested in February 2022.2024.
The weighted-average grant-date fair value per share of PSUs granted was $202.23$250.25 and $95.91$273.79 for the years ended December 31, 20202022 and 2019,2021, respectively. The total fair value of PSUs vested was $10.3$8.7 million, $9.1$7.8 million, and $3.2$10.3 million for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively.
As of December 31, 2021,2023, there was $13.0$32.9 million of unrecognized compensation cost related to PSUs, which is expected to be recognized over a weighted-average period of 1.71.8 years.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (“ESPP”) authorizes the issuance of up to 880,000 shares of common stock to participating employees. Employees that participate in the Company’s ESPP may annually purchase up to a maximum of 800 shares per offering period or $25,000 worth of common stock by authorizing payroll deductions of up to 10% of their base salary. The purchase price for each share purchased is 85% of the lower of the fair market value of the common stock on the first or last day of the offering period. The Company issued 36,103, 38,31355,439, 52,724, and 51,50236,103 shares of common stock for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively, to employees participating in the ESPP. As of December 31, 2021, 472,6592023, 364,496 shares remain available for future issuance under the ESPP Plan.ESPP.
The Company uses the Black-Scholes pricing model to determine the fair value of shares purchased under the ESPP. The calculation of the fair value of shares purchased is affected by the stock price on the purchase date, the expected volatility of the Company’s stock over the expected term, the risk-free interest rate, and the dividend yield.
The estimated fair value of shares purchased under the ESPP were based on the following assumptions:
65

Table of Contents
Years Ended December 31, Years Ended December 31,
202120202019 202320222021
Risk-free interest rateRisk-free interest rate0.04% - 0.1%0.1% - 0.2%1.6% - 2.3%Risk-free interest rate 5.3% - 5.4%1.6% - 4.7%0.04% - 0.1%
Expected term (in years)Expected term (in years)0.50.50.5Expected term (in years)0.50.5
Dividend yieldDividend yield—%—%—%Dividend yield—%—%
Expected stock price volatilityExpected stock price volatility19.4% - 31.7%29.7% - 38.5%27.5% - 31.4%Expected stock price volatility29.1% - 47.0%44.3% - 50.1%19.4% - 31.7%
The weighted average grant date fair value of the six-month option inherent in the ESPP was $60.65, $55.10,$60.67, $74.50, and $46.30,$60.65, for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively.
As of December 31, 2021,2023, there was $1.1$1.8 million of unrecognized compensation cost related to the ESPP. This cost is expected to be recognized over a weighted average period of 0.4 years.
70

Table of Contents
Note 19.21. Accumulated Other Comprehensive Income (Loss) Income
Changes in the components of accumulated other comprehensive income (loss) income,, net of tax, were as follows:
(in millions)Foreign Currency Translation AdjustmentUnrealized (Losses) Gains on Available-for-sale SecuritiesUnrealized Gains on Cash Flow HedgesAccumulated Other Comprehensive Income (Loss)
Balance, December 31, 2018$(2.2)$(0.7)$— $(2.9)
Other comprehensive income0.6 1.1 — 1.7 
Balance, December 31, 2019(1.6)0.4 — (1.2)
Other comprehensive income (loss)6.8 (0.1)— 6.7 
Balance, December 31, 20205.2 0.3 — 5.5 
Other comprehensive (loss) income before reclassifications(11.9)(0.3)3.0 (9.2)
Amounts reclassified to net income  1.5 1.5 
Balance, December 31, 2021$(6.7)$— $4.5 $(2.2)

(in millions)Foreign Currency Translation AdjustmentUnrealized Gains (Losses) on SecuritiesUnrealized Gains on Cash Flow HedgesAccumulated Other Comprehensive Income (Loss)
Balance, December 31, 2020$5.2 $0.3 $— $5.5 
Other comprehensive (loss) income(11.9)(0.3)3.0 (9.2)
Amounts reclassified to net income— — 1.5 1.5 
Balance, December 31, 2021(6.7)— 4.5 (2.2)
Other comprehensive (loss) income before reclassifications(10.3)— 36.5 26.2 
Amounts reclassified to net income— — (4.0)(4.0)
Balance, December 31, 2022(17.0)— 37.0 20.0 
Other comprehensive income (loss) before reclassifications2.5 (0.3)6.1 8.3 
Amounts reclassified to net income  (20.3)(20.3)
Balance, December 31, 2023$(14.5)$(0.3)$22.8 $8.0 
Note 20.22. Defined Contribution Plan
The Company maintains a tax-qualified 401(k) retirement plan in the United States. The Company generally makes a matching contribution equal to 50% of each employee’s elective contribution to the plan up to 6% of the employee’s eligible pay. In addition, the Company offers defined contribution plans for eligible employees in its foreign subsidiaries. The total amount contributed by the Company to these defined contribution plans was $8.5$12.1 million, $6.7$9.8 million, and $5.3$8.5 million for the years ended December 31, 2021, 20202023, 2022, and 2019,2021, respectively.
Note 21. Interest Expense, Net
Interest expense, net of portion capitalized was as follows:
 Years Ended December 31,
(in millions)202120202019
Cash interest, net of interest rate swaps$27.1 $9.5 $9.5 
Accretion of debt discount36.7 42.3 32.8 
Amortization of debt issuance costs3.5 2.9 2.8 
Capitalized interest(5.6)(6.6)(10.5)
Interest expense, net of portion capitalized61.7 48.1 34.6 
Interest income(0.5)(3.0)(6.9)
Interest expense, net$61.2 $45.1 $27.7 

66

Table of Contents
Note 22.23. Income Taxes
The U.S. and foreign components of income before income taxes were as follows:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)202120202019(in millions)202320222021
U.S.U.S.$25.3 $(1.6)$2.5 
ForeignForeign(4.8)11.3 12.0 
Income before income taxesIncome before income taxes$20.5 $9.7 $14.5 
Income tax expense consists of the following: 
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in millions)(in millions)202120202019(in millions)202320222021
Current:Current:
U.S. StateU.S. State$0.5 $0.2 $0.2 
U.S. State
U.S. State
ForeignForeign2.0 4.0 3.4 
Total current expense2.5 4.2 3.6 
Total current tax expense
Deferred:Deferred:
U.S. Federal
U.S. Federal
U.S. FederalU.S. Federal— — (0.1)
ForeignForeign1.2 (1.3)(0.6)
Total deferred expense1.2 (1.3)(0.7)
Income tax expense$3.7 $2.9 $2.9 
Foreign
Foreign
Total deferred tax expense (benefit)
Total income tax expense
71

Table of Contents
Reconciliations of the U.S. federal statutory income rate to the Company’s effective income tax rate are as follows:
Years Ended December 31, Years Ended December 31,
202120202019 202320222021
U.S. statutory rateU.S. statutory rate21.0 %21.0 %21.0 %U.S. statutory rate21.0 %21.0 %21.0 %
Foreign rate differentialForeign rate differential4.8 7.0 4.2 
State taxes, net of federal benefitState taxes, net of federal benefit1.8 1.3 1.3 
Tax credits(16.8)(40.5)(15.4)
Federal and state R&D credits
Stock-based compensationStock-based compensation(117.0)(311.1)(158.7)
Extinguishment of debtExtinguishment of debt(57.5)— 14.8 
Capital loss carryforward expirationsCapital loss carryforward expirations52.1 — — 
Non-deductible officers’ compensationNon-deductible officers’ compensation45.7 30.0 1.9 
Permanent itemsPermanent items1.9 2.1 3.0 
Foreign income taxed in the U.S.Foreign income taxed in the U.S.— (21.0)19.0 
Change in valuation allowanceChange in valuation allowance77.2 336.2 130.6 
Tax rate changes
Change to prior year R&D credit
Intercompany transfer of intellectual propertyIntercompany transfer of intellectual property4.6 — — 
OtherOther0.4 4.6 (1.9)
Effective income tax rate18.2 %29.6 %19.8 %
Effective tax rateEffective tax rate3.9 %53.4 %18.2 %
For all periods presented, no provision for income taxes has been provided on undistributed earnings of the Company'sCompany’s foreign subsidiaries, except for Canada, because such earnings are indefinitely reinvested in the foreign operations. The Company has recorded a deferred tax liability for withholding tax that could be incurred upon repatriation of earnings from its Canadian subsidiary, the amount of which is not significant. A deferred tax liability related to the repatriation of approximately $24.6$32.7 million indefinitely reinvested earnings would not be material to the Company’s consolidated financial statements, primarily due to treaty-based withholding tax rates in the jurisdictions in which the Company operates.
During 2023 the Company commenced a multi-year research and development (“R&D”) credit study that resulted in an increase to U.S. federal and state R&D credit carryforwards related to the 2022 tax year. This has been reported as a favorable adjustment to prior year taxes in the effective tax rate and a corresponding increase to the valuation allowance.
The Company files federal, state, and foreign tax returns, which are subject to examination by the relevant tax authorities. The tax filings relating to the Company’s U.S. federal and state tax returns are currently open to examination for tax years 20182020 through 2020.2022. In addition, the Company'sCompany’s U.S. net operating loss carryforwards from 20012003 and forward may be subject to examination if the losses are utilized in future years.
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
(in millions)
Unrecognized tax benefits at December 31, 2022$— 
Additions related to current period tax positions2.6 
Additions related to prior period tax positions2.4 
Unrecognized tax benefits at December 31, 2023$5.0 
As of December 31, 2021, 20202023, the balance of unrecognized tax benefits, if recognized, would not impact the effective tax rate due to a full valuation allowance against the Company's U.S. deferred tax assets. As of December 31, 2022 and 20192021, the Company had no unrecognized tax benefits that would impact the effective tax rates. The Company does not anticipate that the amount of existing unrecognized tax benefits will materially increase or decrease within the next 12 months. No interest and penalties were recognized related to uncertain tax positions.positions for the years ended December 31, 2023, 2022 and 2021 and no interest and penalties were accrued for as of December 31, 2023 and 2022.
6772

Table of Contents
The components of the net deferred tax asset at the end of each year are as follows:consist of the following:
As of December 31, As of December 31,
(in millions)(in millions)20212020(in millions)20232022
Deferred tax assets:Deferred tax assets:
Net operating loss carryforwardsNet operating loss carryforwards$170.2 $173.8 
Net operating loss carryforwards
Net operating loss carryforwards
Tax creditsTax credits28.8 21.3 
Capital loss carryforwards— 12.2 
Capitalized research and development expenditures
Warranty
Accrued expenses
Amortization of debt discount
Inventory capitalizationInventory capitalization6.5 2.1 
Intangible assetsIntangible assets11.6 3.6 
Interest limitation carryforwardsInterest limitation carryforwards7.3 1.6 
Incentive compensation
Stock-based compensationStock-based compensation5.9 5.8 
OtherOther16.0 11.7 
Total deferred tax assetsTotal deferred tax assets246.3 232.1 
Deferred tax liabilities:Deferred tax liabilities:
Prepaid assetsPrepaid assets(4.8)(3.5)
Prepaid assets
Prepaid assets
Property, plant and equipmentProperty, plant and equipment(22.2)(10.5)
Amortization of debt discount(22.9)(60.6)
Capitalized contract acquisition costsCapitalized contract acquisition costs(9.2)(7.5)
Unrealized gains on cash flow hedges
OtherOther(4.0)(4.6)
Total deferred tax liabilitiesTotal deferred tax liabilities(63.1)(86.7)
Net deferred tax asset before valuation allowanceNet deferred tax asset before valuation allowance183.2 145.4 
Valuation allowanceValuation allowance(182.4)(143.4)
Net deferred tax assetNet deferred tax asset$0.8 $2.0 
The Company maintained a valuation allowance of $182.4$202.9 million and $143.4$222.8 million at December 31, 20212023 and 2020,2022, respectively, against U.S. federal, state, and certain foreign deferred tax assets, as management has determined that it is more-likely-than-not that these net deferred tax assets will not be realized. During 2021, the Company recorded a full valuation allowance against its U.K. deferred tax assets as a result of additional costs incurred in connection with a transfer of intellectual property. These valuation allowances are based on the weighting of positive and negative evidence, including a history of cumulative tax losses in the U.S. and U.K. and the uncertainty of generating future taxable income in these jurisdictions to utilize our loss and credit carryforwards.prior years. The $39.0$19.9 million increasedecrease in the Company’s valuation allowance during the year ended December 31, 20212023 was primarily due to the utilization of net operating losses and changes in temporary differences in the U.S. andUnited States.
As of December 31, 2023, the recording of a $11.0 million valuation allowance in the U.K.
The Company’s net operating loss carryforwards consist of the following:were as follows:
Years Ended December 31,
(in millions)20212020
U.S. Federal$708.8 $732.4 
State$327.3 $341.3 
Foreign$16.4 $5.4 
(in millions)Expiration PeriodNet Operating Loss Carryforwards
U.S. federalIndefinite$192.0 
U.S. federal2032 - 2037$150.2 
State2024 - 2042$238.3 
ForeignIndefinite$23.2 
As of December 31, 2021, $188.8 million of the U.S. federal net operating losses and the full amount of the foreign net operating losses have an indefinite carryforward period. The remaining U.S. federal carryforwards, if not utilized, expire through 2037, and the state net operating loss carryforwards expire through 2041. The utilization of such net operating loss carryforwards and the realization of tax benefits in future years depends predominantly upon2023, the Company’s ability to generate taxable income in the U.S. Research and development and other tax creditscredit carryforwards were $31.4 million and $22.8 million at December 31, 2021 and 2020, respectively. If not utilized, federal research and development credits will begin to expire in 2022. as follows:
(in millions)Expiration PeriodTax Credit Carryforwards
U.S. federal2024 - 2043$40.1 
State2024 - 2043$23.6 
These loss and credit carryforwards, which may be utilized in a future period, may be subject to limitations based on changes in the ownership of the Company ordinary shares.
6873

Table of Contents
Note 23.24. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share is computed using the weighted average number of common shares outstanding and, when dilutive, common share equivalents from outstanding stock options and restricted stock units (using the treasury-stock method), and potential common shares from the Company’s convertible notes (using the if-converted method).equivalents. The weighted-average number of common shares used in the computation of basic and diluted net income per share werewas as follows:
Years Ended December 31,
(in thousands)202120202019
Weighted average number of common shares outstanding, basic67,698 64,735 60,594 
Stock options686 1,025 1,487 
Restricted stock units195 186 223 
Weighted average number of common shares outstanding, diluted68,579 65,946 62,304 
Years Ended December 31,
(in millions, except share and per share data)202320222021
Net income$206.3 $4.6 $16.8 
    Add back interest expense, net of tax attributable to assumed conversion of convertible senior notes10.4 — — 
Net income, diluted$216.7 $4.6 $16.8 
Weighted average number of common shares outstanding, basic (in thousands)69,751 69,375 67,698 
Convertible Notes3,528 — — 
Stock options286 454 686 
Restricted stock units68 81 195 
Weighted average number of common shares outstanding, diluted (in thousands)73,633 69,910 68,579 
Net income per share
    Basic$2.96 $0.07 $0.25 
    Diluted$2.94 $0.07 $0.24 
The number of common share equivalents excluded from the computation of diluted net income per share because either the effect would have been anti-dilutive, or the performance criteria related to the units had not yet been met, were as follows:
Years Ended December 31,
Years Ended December 31,Years Ended December 31,
(in thousands)(in thousands)202120202019(in thousands)202320222021
1.375% Convertible Senior Notes2,024 4,319 4,319 
0.375% Convertible Senior Notes3,528 3,528 3,528 
Restricted stock units
Restricted stock units
Restricted stock unitsRestricted stock units166 282 431 
Stock optionsStock options53 58 13 
0.375% Convertible Senior Notes
1.375% Convertible Senior Notes
TotalTotal5,771 8,187 8,291 
Total
Total
Note 25. Supplemental Cash Flow Information
Years Ended December 31,
(in millions)202320222021
Cash paid for interest, net of amount capitalized$49.9 $34.2 $21.5 
Cash paid for taxes$8.1 $5.5 $7.0 
Purchases of property and equipment included in accounts payable and accrued expenses$7.1 $3.9 $6.1 
Purchases of property, plant and equipment included in long-term debt$12.9 $— $— 
Purchases of developed software included in accounts payable and accrued expenses$0.2 $0.4 $3.2 
Operating lease liabilities arising from obtaining right-of-use assets$5.4 $25.5 $0.7 
Finance lease liability arising from obtaining right-of-use assets$22.3 $— $— 
Lease payment made for amounts included in the measurement of operating lease liabilities$5.7 $4.6 $5.7 
74

Table of Contents
Note 24.26. Subsequent EventsEvent
In January 2022,2024, the Company paid $29 millionamended its Term Loan to acquirebear interest at a supplier to bring key intellectual property and expertise in-house, strengthen production capabilities and mitigate supply chain risks. In addition,rate of SOFR plus 3.00%, with a 0% SOFR floor. At the same time, the Company madeamended its Revolving Credit Facility such that outstanding borrowings bear interest at a $5 million strategic investment in another company.rate of SOFR plus an applicable margin of 2.375% to 3.00% based on the Company’s net leverage ratio and credit rating.
6975

Table of Contents
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
The following table sets forth activities in the Company’s valuation allowance accounts:
DescriptionDescriptionBalance at
Beginning of
Year
Additions Charged 
to Costs and
Expenses
Other(1)
DeductionsBalance at
End
of Year
DescriptionBalance at
Beginning of
Year
Additions Charged 
to Costs and
Expenses
Other(1)
DeductionsBalance at
End
of Year
(in millions)(in millions)
Year Ended December 31, 2021
Allowance for credit losses$2.9 $3.1 $— $(3.3)$2.7 
Year Ended December 31, 2023
Year Ended December 31, 2023
Year Ended December 31, 2023
Reserve for rebates
Reserve for rebates
Reserve for rebatesReserve for rebates$16.9 $143.3 $— $(126.1)$34.1 
Deferred tax valuation allowanceDeferred tax valuation allowance$143.4 $77.4 $— $(38.4)$182.4 
Year Ended December 31, 2020
Allowance for credit losses$3.8 $3.3 $1.1 $(5.3)$2.9 
Year Ended December 31, 2022
Reserve for rebates
Reserve for rebates
Reserve for rebatesReserve for rebates$12.1 $82.5 $— $(77.7)$16.9 
Deferred tax valuation allowanceDeferred tax valuation allowance$104.4 $61.7 $— $(22.7)$143.4 
Year Ended December 31, 2019
Allowance for doubtful accounts$3.6 $4.5 $— $(4.3)$3.8 
Year Ended December 31, 2021
Reserve for rebates
Reserve for rebates
Reserve for rebatesReserve for rebates$8.6 $59.1 $— $(55.6)$12.1 
Deferred tax valuation allowanceDeferred tax valuation allowance$126.3 $43.6 $— $(65.5)$104.4 
(1) IncreaseRepresents the increase in deferred tax valuation allowance for credit lossesresulting from the adoption of ASU 2016-13,2020-06, Credit Losses (Topic 326).Debt — Debt with Conversations and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. Refer to Note 82 to the consolidated financial statements included in Item 8 for additional information.
7076

Table of Contents
Item 9. Changes in and Disagreements With Accountants On Accounting And Financial Disclosure
None.
Item 9A. Controls and Procedures
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 as of December 31, 2021.2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2021,2023, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were not effective at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting duringdue to the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.material weakness identified and described below.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 (“COSO”) in Internal Control — Integrated Framework (the COSO criteria). Based on this evaluation, our assessment, we believechief executive officer and chief financial officer have concluded that during the period covered by this report, our internal control over financial reporting was not effective, due to a material weakness relating to information technology general controls (“ITGCs”). Specifically, the Company did not design and maintain effective ITGCs around systems that support the Company’s financial reporting outside of North America. Automated and manual business process controls that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely affected to the extent that they rely upon information and configurations from the affected systems.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Notwithstanding such material weakness in internal control over financial reporting, our management, including our chief executive officer and our chief financial officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods presented in this Form 10-K, in conformity with GAAP.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is currently taking actions to remediate the deficiencies in its internal controls over financial reporting were effective asand is implementing additional processes and controls designed to address the underlying causes associated with the above-mentioned material weakness.
Management is committed to remediating the deficiencies described above. Internal control remediation efforts are expected to include establishing and maintaining the following:
ITGCs over the system used by an outsourced provider, and
ITGCs over the Company’s newly implemented enterprise resource planning system outside of December 31, 2021.North America related to security access controls.
Management believes that these actions will remediate the material weakness. The weakness will not be considered remediated, however, until the applicable controls operate and management has concluded, through testing, that these controls are operating effectively.
The effectiveness of our internal control over financial reporting as of December 31, 20212023 has been audited by Grant Thornton LLP, an independent registered public accounting firm. Their report is included in Item 8 of this Form 10-K.
77

Table of Contents
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
78

Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Insulet Corporation

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, because of the effect of the material weakness described in the following paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment.
The Company did not maintain effective Information Technology General Controls (“ITGCs”) around systems that support the Company’s financial reporting outside of North America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2023. The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 22, 2024 which expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

79

Table of Contents
Other information
We do not express an opinion or any other form of assurance on the remediation plans or related actions described in Management’s Annual Report on Internal Control Over Financial Reporting.


/s/ GRANT THORNTON LLP

Boston, Massachusetts
February 22, 2024
80

Table of Contents

Item 9B. Other Information
None.Rule 10b5-1 Plans
On November 23, 2023, Prem Singh, the Company’s Senior Vice President, Global Operations, adopted a trading plan intended to satisfy Rule 10b5-1(c) under the Exchange Act to sell up to 775 shares of our common stock between February 23, 2024 and November 22, 2024, the date this plan expires. The trading plan will cease upon the earlier of November 22, 2024 or the sale of all shares subject to the trading plan.
During the fourth quarter of 2023, none of our other executive officers and none of our directors adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item will be set forth in our definitive proxy statement for our 20222024 Annual Meeting of Stockholders (the “Proxy Statement”) and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.
71

Table of Contents
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Other than as set forth below, the information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2021.2023. 
Plan CategoryPlan CategoryNumber of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available for
future issuance
(excluding securities
reflected in column (a))
(c)
Equity compensation plans approved by security holders (1)
Equity compensation plans approved by security holders (1)
765,457 $81.98 3,249,369 (2)
Equity compensation plans approved by security holders(1)
Equity compensation plans approved by security holders(1)
436,094 $135.37 2,524,732 (2)
Equity compensation plans not approved by security holdersEquity compensation plans not approved by security holders— $—  
TotalTotal765,457 $81.98 3,249,369 
Total
Total
(1) Includes our 2017 Plan and our 2007 Plan. Outstanding restricted stock units convert to common stock without the payment of consideration. As of December 31, 2021, 384,1552023, 494,126 restricted stock units were outstanding. The weighted-average exercise price of outstanding options as of such date issued under these Plans (excluding restricted stock units) was $81.98.$135.37. For more information relating to our equity compensation plans, see Note 1820 to our consolidated financial statements.
(2) The shares available for future issuance are under our 2017 Plan, which includes shares related to awards outstanding under the 2007 Plan that are terminated by expiration, forfeiture or cancellation.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.


7281

Table of Contents
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Financial Statements and Schedules
(1) and (2) The required information is set forth in Item 8—“Financial Statements and Supplementary Data.”
(3) Exhibit Index:
NumberDescription
3.1
3.2
4.1
4.2
4.3
4.4

4.54.3
10.1*
10.2*

10.3*
10.4*
10.5*
10.6*
10.7*10.5*
10.8*10.6*

10.9*10.7*
10.10*
10.11*10.8*
73

Table of Contents
10.12*10.9*
10.13*10.10*
10.14*10.11*
10.15*10.12*
10.16*10.13*

82

Table of Contents
10.17*

10.18*

10.19*10.14*
10.20*10.15*
10.21*10.16*
10.22*10.17*
10.23*10.18*
10.24*10.19*
10.25*10.20*
10.26*

10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33#
10.34

10.30*10.35
10.31+
7483

Table of Contents
10.32+10.36

10.33+10.37
10.34+10.38
10.39
10.3510.40
10.41
10.36+10.42+
10.43++
10.37+10.44+

10.3810.45++
10.39*
10.40*
10.41++
10.46++
10.47++
10.48++
10.49
10.43+10.50++#
10.44+10.51++#
10.52++
84

Table of Contents
10.53++
10.54++
10.55++
10.56++#
10.57++#
10.58++#
10.59++#
10.60+
10.61
10.62++
10.63++
10.64++#
21.1#
23.1#
24.1#
31.1#
31.2#
32.1**
97.1#
101The following materials from Insulet Corporation’s Annual Report on Form 10-K for the year ended December 31, 20212023 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income;Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows
75

Table of Contents
+Confidential treatment granted as to certain portions of this exhibit.
++Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations.
*Management contract or compensation plan.
#Filed herewith.
**Furnished herewith.
85

Table of Contents

Item 16. Form 10-K Summary
None.
7686

Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INSULET CORPORATION
 
(Registrant)
February 23, 202222, 2024/s/ Shacey PetrovicJames R. Hollingshead
Shacey PetrovicJames R. Hollingshead
Chief Executive Officer
(Principal Executive Officer)
 
February 23, 202222, 2024/s/ Wayde McMillanLauren D. Budden
Wayde McMillanLauren D. Budden
Interim Chief Financial Officer,
Group Vice President, Chief Accounting Officer and Controller
(duly authorized officer and Principal Financial and Accounting Officer)
7787

Table of Contents

POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Insulet Corporation, hereby severally constitute and appoint Shacey PetrovicJames R. Hollingshead and Wayde McMillan,Lauren D. Budden, and each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our names in the capacities indicated below, on all amendments to this Report, and generally to do all things in our names and on our behalf in such capacities to enable Insulet Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities on February 23, 2022.22, 2024.
Signature  Title
/s/    Shacey PetrovicJames R. HollingsheadChief Executive Officer
Shacey PetrovicJames R. Hollingshead  (Principal Executive Officer)
/s/    Wayde McMillanLauren D. BuddenInterim Chief Financial Officer,
Wayde McMillan(Principal Financial Officer)
/s/    Lauren Budden Group Vice President, Chief Accounting Officer and Controller
Lauren D. Budden(Principal Financial and Accounting Officer)
/s/    Luciana Borio, M.D.
Luciana Borio, M.D.  Director
/s/    Wayne A.I. Frederick, M.D.
Wayne A.I. Frederick, M.D.Director
/s/    James R. Hollingshead
James R. HollingsheadDirector
/s/    Jessica Hopfield
Jessica HopfieldDirector
/s/    David A. Lemoine
David A. LemoineDirector
/s/    Michael R. Minogue
Michael R. Minogue  Director
/s/    Corinne H. Nevinny
Corinne H. Nevinny  Director
Flavia H. PeaseDirector
/s/    Shacey Petrovic
Shacey PetrovicDirector
/s/    Timothy J. Scannell
Timothy J. ScannellDirector
Timothy C. StonesiferDirector
/s/    Elizabeth Weatherman
Elizabeth WeathermanDirector
7888