Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
��_____________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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 ParkActonMassachusetts 01720
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (978) 600-7000

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       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 such files).    Yes      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 filerAccelerated filer
Non-accelerated filerSmaller 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

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

As of July 29, 2022,April 27, 2023, the registrant had 69,403,60269,695,828 shares of common stock outstanding.




TABLE OF CONTENTS
 
Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2022March 31, 2023 and December 31, 20212022
Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30,March 31, 2023 and 2022 and 2021
Condensed Consolidated Statements of Comprehensive(Loss) Income (Unaudited) for the three and six months ended June 30,March 31, 2023 and 2022 and 2021
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the three and six months ended June 30,March 31, 2023 and 2022 and 2021
Condensed Consolidated Statements of Cash Flows (Unaudited) for the sixthree months ended June 30,March 31, 2023 and 2022 and 2021


Table of Contents
PART I - FINANCIAL INFORMATION
Item 1.Condensed Consolidated Financial Statements (Unaudited)
INSULET CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except share and per share data)(in millions, except share and per share data)June 30, 2022December 31, 2021(in millions, except share and per share data)March 31, 2023December 31, 2022
ASSETSASSETSASSETS
Current AssetsCurrent AssetsCurrent Assets
Cash and cash equivalentsCash and cash equivalents$708.6 $791.6 Cash and cash equivalents$620.7 $674.7 
Accounts receivable trade, less allowance for credit losses of $3.1 and $2.7154.1 135.2 
Accounts receivable trade, less allowance for credit losses of $3.1 and $2.5Accounts receivable trade, less allowance for credit losses of $3.1 and $2.5159.6 140.9 
Accounts receivable trade, net — related partyAccounts receivable trade, net — related party52.5 25.8 Accounts receivable trade, net — related party57.6 64.7 
InventoriesInventories320.4 303.2 Inventories386.1 346.8 
Prepaid expenses and other current assetsPrepaid expenses and other current assets73.5 74.0 Prepaid expenses and other current assets106.0 86.9 
Total current assetsTotal current assets1,309.1 1,329.8 Total current assets1,330.0 1,314.0 
Property, plant and equipment, netProperty, plant and equipment, net535.8 536.5 Property, plant and equipment, net596.6 599.9 
Other intangible assets, netOther intangible assets, net55.1 36.6 Other intangible assets, net100.2 75.5 
GoodwillGoodwill51.8 39.8 Goodwill51.7 51.7 
Other assetsOther assets161.9 106.1 Other assets210.6 210.0 
Total assetsTotal assets$2,113.7 $2,048.8 Total assets$2,289.1 $2,251.1 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY
Current LiabilitiesCurrent LiabilitiesCurrent Liabilities
Accounts payableAccounts payable$57.2 $37.7 Accounts payable$85.9 $30.8 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities192.5 164.3 Accrued expenses and other current liabilities263.6 301.0 
Accrued expenses and other current liabilities — related partyAccrued expenses and other current liabilities — related party3.3 1.7 Accrued expenses and other current liabilities — related party6.0 5.4 
Current portion of long-term debtCurrent portion of long-term debt26.3 25.1 Current portion of long-term debt27.8 27.5 
Total current liabilitiesTotal current liabilities279.3 228.8 Total current liabilities383.3 364.7 
Long-term debt, netLong-term debt, net1,385.2 1,248.8 Long-term debt, net1,368.8 1,374.3 
Other liabilitiesOther liabilities26.8 14.9 Other liabilities34.2 35.7 
Total liabilitiesTotal liabilities1,691.3 1,492.5 Total liabilities1,786.3 1,774.7 
Commitments and contingencies (Note 12)00
Commitments and contingencies (Note 11)Commitments and contingencies (Note 11)
Stockholders’ EquityStockholders’ EquityStockholders’ Equity
Preferred stock, $.001 par value, 5,000,000 authorized; none issued and outstandingPreferred stock, $.001 par value, 5,000,000 authorized; none issued and outstanding— — Preferred stock, $.001 par value, 5,000,000 authorized; none issued and outstanding— — 
Common stock, $.001 par value, 100,000,000 authorized; 69,386,057 and 69,178,691 issued and outstanding0.1 0.1 
Common stock, $.001 par value, 100,000,000 authorized; 69,694,363 and 69,511,286 issued and outstandingCommon stock, $.001 par value, 100,000,000 authorized; 69,694,363 and 69,511,286 issued and outstanding0.1 0.1 
Additional paid-in capitalAdditional paid-in capital1,011.2 1,207.9 Additional paid-in capital1,047.3 1,040.6 
Accumulated deficitAccumulated deficit(596.1)(649.5)Accumulated deficit(560.5)(584.3)
Accumulated other comprehensive income (loss)7.2 (2.2)
Accumulated other comprehensive incomeAccumulated other comprehensive income15.9 20.0 
Total stockholders’ equityTotal stockholders’ equity422.4 556.3 Total stockholders’ equity502.8 476.4 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$2,113.7 $2,048.8 Total liabilities and stockholders’ equity$2,289.1 $2,251.1 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
INSULET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
(in millions, except share and per share data)(in millions, except share and per share data)2022202120222021(in millions, except share and per share data)20232022
RevenueRevenue$243.9 $259.9 $490.9 $510.0 Revenue$261.3 $247.0 
Revenue from related partyRevenue from related party55.5 3.3 103.9 5.5 Revenue from related party96.8 48.4 
Total revenueTotal revenue299.4 263.2 594.8 515.5 Total revenue358.1 295.4 
Cost of revenueCost of revenue109.1 80.5 194.8 165.3 Cost of revenue117.6 85.7 
Gross profitGross profit190.3 182.7 400.0 350.2 Gross profit240.5 209.7 
Research and development expensesResearch and development expenses42.6 40.1 85.7 80.8 Research and development expenses50.1 43.1 
Selling, general and administrative expensesSelling, general and administrative expenses174.4 116.3 303.1 226.8 Selling, general and administrative expenses162.7 128.7 
Operating (loss) income(26.7)26.3 11.2 42.6 
Operating incomeOperating income27.7 37.9 
Interest expense, netInterest expense, net(8.3)(16.4)(17.2)(29.8)Interest expense, net(2.9)(8.9)
Loss on extinguishment of debt— (40.1)— (40.1)
Other (expense) income, netOther (expense) income, net(1.1)1.8 (0.8)(0.8)Other (expense) income, net(0.2)0.3 
Loss before income taxes(36.1)(28.4)(6.8)(28.1)
Income tax benefit (expense)1.1 3.4 (0.4)3.1 
Net loss$(35.0)$(25.0)$(7.2)$(25.0)
Income before income taxesIncome before income taxes24.6 29.3 
Income tax expenseIncome tax expense(0.8)(1.5)
Net incomeNet income$23.8 $27.8 
Net loss per share:
Net income per share:Net income per share:
BasicBasic$(0.50)$(0.37)$(0.10)$(0.38)Basic$0.34 $0.40 
DilutedDiluted$(0.50)$(0.37)$(0.10)$(0.38)Diluted$0.34 $0.40 
Weighted-average number of common shares outstanding
(in thousands):
Weighted-average number of common shares outstanding
(in thousands):
Weighted-average number of common shares outstanding
(in thousands):
BasicBasic69,356 66,696 69,305 66,406 Basic69,583 69,254 
DilutedDiluted69,356 66,696 69,305 66,406 Diluted70,096 69,858 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INSULET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
(in millions)(in millions)2022202120222021(in millions)20232022
Net loss$(35.0)$(25.0)$(7.2)$(25.0)
Net incomeNet income$23.8 $27.8 
Other comprehensive (loss) income, net of tax:Other comprehensive (loss) income, net of tax:Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustmentForeign currency translation adjustment(9.6)(1.8)(13.3)(3.9)Foreign currency translation adjustment1.7 (3.7)
Unrealized gain (loss) on cash flow hedges4.6 (0.6)22.7 (0.6)
Unrealized loss on available-for-sale securities— (0.1)— (0.3)
Unrealized (loss) gain on cash flow hedgesUnrealized (loss) gain on cash flow hedges(5.8)18.1 
Total other comprehensive (loss) income, net of taxTotal other comprehensive (loss) income, net of tax(5.0)(2.5)9.4 (4.8)Total other comprehensive (loss) income, net of tax(4.1)14.4 
Comprehensive (loss) income$(40.0)$(27.5)$2.2 $(29.8)
Comprehensive incomeComprehensive income$19.7 $42.2 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INSULET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)

Three Months Ended June 30, 2022March 31, 2023
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Shareholders’
Equity
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Shareholders’
Equity
(dollars in millions)(dollars in millions)Shares
(in thousands)
Amount(dollars in millions)Shares
(in thousands)
Amount
Balance at March 31, 202269,320 $0.1 $995.5 $(561.1)$12.2 $446.7 
Balance at December 31, 2022Balance at December 31, 202269,511 $0.1 $1,040.6 $(584.3)$20.0 $476.4 
Exercise of options to purchase common stockExercise of options to purchase common stock24 — 0.8 — — 0.8 Exercise of options to purchase common stock110 — 6.0 — — 6.0 
Issuance of shares for employee stock purchase plan27.0 — 4.9 — — 4.9 
Stock-based compensation expenseStock-based compensation expense— — 11.2 — — 11.2 Stock-based compensation expense— — 12.1 — — 12.1 
Restricted stock units vested, net of shares withheld for taxesRestricted stock units vested, net of shares withheld for taxes15.0 — (1.2)— — (1.2)Restricted stock units vested, net of shares withheld for taxes73 — (11.4)— — (11.4)
Net loss— — — (35.0)— (35.0)
Net incomeNet income— — — 23.8 — 23.8 
Other comprehensive lossOther comprehensive loss— — — — (5.0)(5.0)Other comprehensive loss— — — — (4.1)(4.1)
Balance at June 30, 202269,386 $0.1 $1,011.2 $(596.1)$7.2 $422.4 
Balance at March 31, 2023Balance at March 31, 202369,694 $0.1 $1,047.3 $(560.5)$15.9 $502.8 

Three Months Ended June 30, 2021March 31, 2022
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Shareholders’
Equity
(dollars in millions)Shares
(in thousands)
Amount
Balance at March 31, 202166,213 $0.1 $1,248.3 $(666.3)$3.2 $585.3 
Exercise of options to purchase common stock121 — 4.7 — — 4.7 
Issuance of shares for employee stock purchase plan17 — 3.8 — — 3.8 
Stock-based compensation expense— — 9.0 — — 9.0 
Restricted stock units vested, net of shares withheld for taxes17 — (1.2)— — (1.2)
Extinguishment of conversion feature on 1.375% Notes, net of issuance costs— — (737.7)— — (737.7)
Issuance of shares for debt extinguishment2,242 — 622.7 — — 622.7 
Net loss— — — (25.0)— (25.0)
Other comprehensive loss— — — — (2.5)(2.5)
Balance at June 30, 202168,610 $0.1 $1,149.6 $(691.3)$0.7 $459.1 
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive (Loss) IncomeTotal
Shareholders’
Equity
(dollars in millions)Shares
(in thousands)
Amount
Balance at December 31, 202169,179 $0.1 $1,207.9 $(649.5)$(2.2)$556.3 
Adoption of ASU 2020-06 (1)
— — (207.7)60.6 — (147.1)
Exercise of options to purchase common stock28 — 1.1 — — 1.1 
Stock-based compensation expense— — 9.5 — — 9.5 
Restricted stock units vested, net of shares withheld for taxes113 — (15.3)— — (15.3)
Net income— — — 27.8 — 27.8 
Other comprehensive income— — — — 14.4 14.4 
Balance at March 31, 202269,320 $0.1 $995.5 $(561.1)$12.2 $446.7 
(1) The Company recorded a cumulative effect adjustment to additional paid-in capital and retained earnings to reflect the adoption of Accounting Standards Update 2020-06, Debt – Debt With Conversion 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 2 of Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
Six Months Ended June 30, 2022INSULET CORPORATION
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive (Loss) IncomeTotal
Shareholders’
Equity
(dollars in millions)Shares
(in thousands)
Amount
Balance at December 31, 202169,179 $0.1 $1,207.9 $(649.5)$(2.2)$556.3 
Adoption of ASU 2020-06 (Note 1)— — (207.7)60.6 — (147.1)
Issuance of common stock— — — — — — 
Exercise of options to purchase common stock52.0 — 1.9 — — 1.9 
Issuance of shares for employee stock purchase plan27 — 4.9 — — 4.9 
Stock-based compensation expense— — 20.7 — — 20.7 
Restricted stock units vested, net of shares withheld for taxes128 — (16.5)— — (16.5)
Net loss— — — (7.2)— (7.2)
Other comprehensive income— — — — 9.4 9.4 
Balance at June 30, 202269,386 $0.1 $1,011.2 $(596.1)$7.2 $422.4 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
Six Months Ended June 30, 2021
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Shareholders’
Equity
(dollars in millions)Shares
(in thousands)
Amount
Balance at December 31, 202066,017 $0.1 $1,264.3 $(666.3)$5.5 $603.6 
Exercise of options to purchase common stock164 — 6.2 — — 6.2 
Issuance of shares for employee stock purchase plan17 — 3.8 — — 3.8 
Stock-based compensation expense— — 17.6 — — 17.6 
Restricted stock units vested, net of shares withheld for taxes170 — (27.3)— — (27.3)
Extinguishment of conversion feature on 1.375% Notes, net of issuance costs— — (737.7)— — (737.7)
Issuance of shares for debt extinguishment2,242 — 622.7 — — 622.7 
Net loss— — — (25.0)— (25.0)
Other comprehensive loss— — — — (4.8)(4.8)
Balance at June 30, 202168,610 $0.1 $1,149.6 $(691.3)$0.7 $459.1 

Three Months Ended March 31,
(in millions)20232022
Cash flows from operating activities
Net income$23.8 $27.8 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization17.2 15.3 
Stock-based compensation expense12.1 9.5 
Non-cash interest expense1.5 1.5 
Provision for credit losses1.2 0.8 
Other0.7 (0.6)
Changes in operating assets and liabilities:
Accounts receivable(19.2)(19.9)
Accounts receivable — related party7.1 (10.1)
Inventories(38.2)(13.0)
Prepaid expenses and other assets(20.7)(6.4)
Accounts payable51.5 14.7 
Accrued expenses and other liabilities(35.9)(33.7)
Accrued expenses and other liabilities — related party(0.6)0.4 
Net cash provided by (used in) operating activities0.5 (13.7)
Cash flows from investing activities
Capital expenditures(10.5)(12.8)
Investments in developed software(1.5)(3.1)
Acquisition of intangible assets(25.1)— 
Acquisition of a business(3.0)(26.0)
Cash paid for investments(2.0)(5.0)
Net cash used in investing activities(42.1)(46.9)
Cash flows from financing activities
Repayment of equipment financings(4.8)(4.3)
Repayment of term loan(1.3)(1.3)
Repayment of mortgage(0.6)(0.5)
Proceeds from exercise of stock options6.0 1.1 
Payment of withholding taxes in connection with vesting of restricted stock units(11.4)(15.3)
Net cash used in financing activities(12.1)(20.3)
Effect of exchange rate changes on cash(0.1)(0.6)
Net decrease in cash, cash equivalents and restricted cash(53.8)(81.5)
Cash, cash equivalents and restricted cash at beginning of period (Note 3)
689.7 806.4 
Cash, cash equivalents and restricted cash at end of period (Note 3)
$635.9 $724.9 
Supplemental noncash information:
Purchases of property and equipment included in accounts payable and accrued expenses$5.1 $7.8 
Purchases of developed software included in accounts payable and accrued expenses$0.8 $2.8 
Lease liabilities arising from obtaining right-of-use assets$0.1 $1.6 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INSULET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
(in millions)20222021
Cash flows from operating activities
Net loss$(7.2)$(25.0)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization31.1 28.0 
Stock-based compensation expense20.7 17.6 
Non-cash interest expense2.8 23.5 
Loss on extinguishment of debt— 40.1 
Provision for credit losses1.9 2.1 
Other1.0 1.1 
Changes in operating assets and liabilities:
Accounts receivable(24.7)(24.6)
Accounts receivable — related party(26.7)(1.3)
Inventories(24.0)(45.0)
Prepaid expenses and other assets(23.3)(23.6)
Accounts payable20.1 (4.4)
Accrued expenses and other liabilities38.2 (5.3)
Accrued expenses and other liabilities — related party1.7 — 
Net cash provided by (used in) operating activities11.6 (16.8)
Cash flows from investing activities
Capital expenditures(27.4)(52.8)
Acquisition of intangible assets(7.6)(3.8)
Acquisition(26.0)— 
Cash paid for investments(7.8)— 
Receipts from the maturity or sale of marketable securities— 22.5 
Net cash used in investing activities(68.8)(34.1)
Cash flows from financing activities
Proceeds from issuance of convertible debt, net of issuance costs— 489.5 
Repayment of convertible debt— (460.8)
Repayment of equipment financings(8.6)(6.4)
Repayment of mortgage(1.1)(1.0)
Repayment of term loan(2.5)— 
Payment of debt issuance costs— (4.0)
Proceeds from exercise of stock options1.9 6.2 
Proceeds from issuance of common stock under employee stock purchase plan4.9 3.8 
Payment of withholding taxes in connection with vesting of restricted stock units(16.5)(27.3)
Net cash used in financing activities(21.9)— 
Effect of exchange rate changes on cash(3.5)(1.7)
Net decrease in cash, cash equivalents and restricted cash(82.6)(52.6)
Cash, cash equivalents and restricted cash at beginning of period (Note 3)
806.4 922.0 
Cash, cash equivalents and restricted cash at end of period (Note 3)
$723.8 $869.4 
Supplemental noncash information:
Purchases of property and equipment included in accounts payable and accrued expenses$4.9 $5.6 
Purchases of intangible assets included in accounts payable and accrued expenses$2.4 $3.5 
Lease liabilities arising from obtaining right-of-use assets$12.0 $0.5 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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INSULET CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements reflect the consolidated operations of Insulet Corporation and its subsidiaries (“Insulet” or the “Company”). The unaudited 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 amounts 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. In management’s opinion, the unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the interim results reported. Operating results for the sixthree months ended June 30, 2022March 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022,2023, or for any other subsequent interim period.
The year-end balance sheet data was derived from audited consolidated financial statements. These unaudited consolidated financial statements do not include all of the annual disclosures required by GAAP; accordingly, they should be read in conjunction with the Company’s audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Reclassification of Prior Period Amounts
Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. 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 statement of cash flows in the amount of $6.4 million. There was no change to previously reported net cash used in operating activities.
InvestmentsRelated Party Transactions
The Company has investments in privately-held companies in whicha distribution agreement with a related party that contains terms consistent with those prevailing at arm’s length. The spouse of one of the members of the Company’s interestBoard of Directors is less than 20.0%, 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 is identified, the investment is measured at its fair value asexecutive officer of the date that the observable transaction occurred with the adjustments reflected in other (expense) income in the Company’s consolidated statements of operations.distributor.
Investments
In January and May 2022,February 2023, the Company made a $2.0 million strategic investments in two companies in the amount of $5.0 million and $2.8 million, respectively.investment. As of June 30, 2022March 31, 2023 and December 31, 2021,2022, the total carrying value of the Company’s investments primarily recorded at cost less impairment was $8.7$10.7 million and $0.9$8.7 million, respectively.
Shipping and Handling Costs
Shipping and handling costs are included in selling, general and administrative expenses and were $3.1$2.3 million and $2.6$3.1 million for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and were $6.2 million and $4.7 million for the six months ended June 30, 2022 and 2021, respectively.
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.
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 3 and 109 for financial assets and liabilities held at carrying amount on the consolidated balance sheet and Note 1110 for derivative instruments measured at fair value on a recurring basis.
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Recently Adopted Accounting Standard
Effective January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt - Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entitys 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 under the new guidance. The following table shows the adjustments made to the consolidated balance sheet as of January 1, 2022 as a result of adopting the new guidance.
(in millions)As Reported
Prior to ASU 2020-06
AdjustmentsAs Adjusted
Under ASU 2020-06
December 31, 2021January 1, 2022January 1, 2022
Long-term debt, net (1)
$1,248.8 $147.1 $1,395.9 
Additional paid-in-capital (2)
$1,207.9 $(207.7)$1,000.2 
Accumulated deficit (3)
$(649.5)$60.6 $(588.9)
(1) The increase in debt resulted from the derecognition of the discount associated with the embedded conversion feature, offset by the remaining debt issuance costs reclassified out of equity.
(2) The decrease in additional paid-in-capital resulted from the derecognition of the embedded conversion feature and debt issuance costs bifurcated to equity.
(3) The decrease to accumulated deficit represents the cumulative interest expense recognized related to the amortization of the bifurcated conversion option and debt issuance costs.
In addition to the adjustments in the table above, 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.
Note 2. Revenue and Contract Acquisition Costs
The following table summarizes the Company’s disaggregated revenue:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in millions)(in millions)2022202120222021(in millions)20232022
U.S. OmnipodU.S. Omnipod$196.4 $150.5 $370.5 $293.8 U.S. Omnipod$259.0 $174.1 
International OmnipodInternational Omnipod89.4 91.6 184.8 181.5 International Omnipod98.6 95.4 
Total OmnipodTotal Omnipod285.8 242.1 555.3 475.3 Total Omnipod357.6 269.5 
Drug DeliveryDrug Delivery13.6 21.1 39.5 40.2 Drug Delivery0.5 25.9 
Total revenueTotal revenue$299.4 $263.2 $594.8 $515.5 Total revenue$358.1 $295.4 
The percentages of total revenue for customers that represent 10% or more of total revenue waswere as follows:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,


2022202120222021

20232022
Distributor ADistributor A19%*18%*Distributor A28%16%
Distributor BDistributor B16%12%14%11%Distributor B16%13%
Distributor C*14%*14%
Distributor DDistributor D16%*13%*Distributor D20%*
* Represents less than 10% of revenue for the period.
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Deferred revenue related to unsatisfied performance obligations was included in the following consolidated balance sheet accounts in the amounts shown:
(in millions)(in millions)June 30, 2022December 31, 2021(in millions)March 31, 2023December 31, 2022
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities$6.3 $3.5 Accrued expenses and other current liabilities$22.2 $16.1 
Other liabilitiesOther liabilities1.6 1.5 Other liabilities1.7 1.6 
Total deferred revenueTotal deferred revenue$7.9 $5.0 Total deferred revenue$23.9 $17.7 
Revenue recognized from amounts included in deferred revenue at the beginning of each respective period was as follows:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in millions)(in millions)2022202120222021(in millions)20232022
Deferred revenue recognizedDeferred revenue recognized$0.3 0.2 $1.6 3.9 Deferred revenue recognized$9.9 $1.3 
Contract acquisition costs, representing capitalized commission costs related to new customers, net of amortization, were included in the following consolidated balance sheet captions in the amounts shown:
(in millions)(in millions)June 30, 2022December 31, 2021(in millions)March 31, 2023December 31, 2022
Prepaid expenses and other current assetsPrepaid expenses and other current assets$14.0 $13.3 Prepaid expenses and other current assets$16.0 $15.2 
Other assetsOther assets27.8 26.1 Other assets33.0 31.3 
Total capitalized contract acquisition costs, netTotal capitalized contract acquisition costs, net$41.8 $39.4 Total capitalized contract acquisition costs, net$49.0 $46.5 
The Company recognized $3.6$4.0 million and $3.0$3.4 million of amortization of capitalized contract acquisition costs during the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively. The Company recognized $7.0 million and $6.0 million
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Table of amortization of capitalized contract acquisition costs during the six months ended June 30, 2022 and 2021, respectively.Contents
Note 3. Cash and Cash Equivalents
The following table provides a summary of cash and cash equivalents:
(in millions)June 30, 2022December 31, 2021
Cash$106.2 $159.3 
Money market mutual funds551.2 630.7 
Time deposits50.0 — 
Restricted cash1.2 1.6 
Total cash and cash equivalents708.6 791.6 
Restricted cash included in other assets15.2 14.8 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows$723.8 $806.4 
The restricted cash included in other assets on the consolidated balance sheet is primarily held as a compensating balance against long-term borrowings.
(in millions)March 31, 2023December 31, 2022
Cash$131.2 $136.1 
Money market mutual funds387.5 487.3 
Time deposits102.0 50.8 
Restricted cash— 0.5 
Total cash and cash equivalents620.7 674.7 
Restricted cash included in other assets15.2 15.0 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows$635.9 $689.7 
All cash and cash equivalents are Level 1 in the fair value hierarchy. The restricted cash included in other assets on the consolidated balance sheet is held as a compensating balance against long-term borrowings.
Certain of the Company’s subsidiaries participate in a 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 used to offset amounts owed to the bank by other participating subsidiaries to the extent the overall balance in the cash pool is at least zero, providing legal rights of offset. As of March 31, 2023, the Company had a net cash position of approximately $3.1 million, consisting of a gross cash position of approximately $100.3 million less cash borrowings of approximately $97.2 million by participating subsidiaries, which is reflected as cash and cash equivalents in the consolidated balance sheet.
Note 4. Accounts Receivable, Net
At the end of each period, net accounts receivable were comprised of the following:
(in millions)June 30, 2022December 31, 2021
Accounts receivable trade, net$119.5 $101.2 
Unbilled receivable34.6 34.0 
Accounts receivable, net$154.1 $135.2 
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(in millions)March 31, 2023December 31, 2022
Accounts receivable trade, net$159.2 $128.6 
Unbilled receivable0.4 12.3 
Accounts receivable, net$159.6 $140.9 
The percentages of total net accounts receivable trade for customers that represent 10% or more of total net accounts receivable trade waswere as follows:

June 30, 2022December 31, 2021
Distributor A31%21%
Distributor B11%*
Distributor D19%15%
* Represents less than 10% of net accounts receivable trade as of period end.

March 31, 2023December 31, 2022
Distributor A28%34%
Distributor B13%11%
Distributor D24%23%
Note 5. Inventories
At the end of each period, inventories were comprised of the following:
(in millions)(in millions)June 30, 2022December 31, 2021(in millions)March 31, 2023December 31, 2022
Raw materialsRaw materials$87.3 $70.0 Raw materials$94.2 $79.1 
Work in processWork in process64.3 112.6 Work in process112.3 84.2 
Finished goodsFinished goods168.8 120.6 Finished goods179.6 183.5 
Total inventories Total inventories$320.4 $303.2  Total inventories$386.1 $346.8 
Amounts charged to the consolidated statements of operations for excess and obsolete inventory were $2.2 million and $1.1 million for the three months ended March 31, 2023 and 2022, respectively.
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Note 6. Cloud Computing Costs
Capitalized costs to implement cloud computing arrangements at cost and accumulated amortization were as follows: 
(in millions)(in millions)June 30, 2022December 31, 2021(in millions)March 31, 2023December 31, 2022
Short-term portionShort-term portion$16.1 $18.4 Short-term portion$20.0 $18.0 
Long-term portionLong-term portion68.2 49.2 Long-term portion95.0 87.1 
Total capitalized implementation costsTotal capitalized implementation costs84.3 67.6 Total capitalized implementation costs115.0 105.1 
Less: accumulated amortizationLess: accumulated amortization(9.4)(4.4)Less: accumulated amortization(21.4)(17.1)
Capitalized implementation costs, netCapitalized implementation costs, net$74.9 $63.2 Capitalized implementation costs, net$93.6 $88.0 
Amortization expense is recognized on a straight-line basis over the expected term of the hosting arrangements, which range from three to fiveten years. Amortization expense was $3.7$4.3 million and $0.8$1.3 million for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively, and was $5.0 million and $1.3 million for the six months ended June 30, 2022 and 2021, respectively.
Note 7. Acquisition
On January 3, 2022, the Company acquired substantially all of the assets related to the manufacture and production of Shape-Memory Alloy (“SMA”) wire assemblies that are used in the production of Omnipods 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. The Company retained the remaining $3.0 million as a holdback to satisfy any post-closing working capital adjustment and to secure the seller’s indemnification obligations under the purchase agreement. The Company will release any remaining holdback funds to the seller twelve months from the closing date. Transaction costs were expensed as incurred and were not material.
The following table summarizes the preliminary 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.
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Note 8.7. Goodwill and Other Intangible Assets, Net
The change in the carrying amount of goodwill for the period is as follows:
(in millions)
Goodwill at December 31, 2021$39.8 
Acquisition (Note 7)12.0 
Goodwill at June 30, 2022$51.8 
was $51.7 million at both March 31, 2023 and December 31, 2022.
The gross carrying amount, accumulated amortization and net book value of intangible assets at the end of each period were as follows:
June 30, 2022December 31, 2021March 31, 2023December 31, 2022
(in millions)(in millions)Gross
Carrying Amount
Accumulated AmortizationNet
Book Value
Gross
Carrying Amount
Accumulated AmortizationNet
Book Value
(in millions)Gross
Carrying Amount
Accumulated AmortizationNet
Book Value
Gross
Carrying Amount
Accumulated AmortizationNet
Book Value
Customer relationshipsCustomer relationships$43.3 $(25.5)$17.8 $43.4 $(23.4)$20.0 Customer relationships$43.2 $(28.3)$14.9 $43.2 $(27.5)$15.7 
Internal-use softwareInternal-use software32.3 (11.1)21.2 25.5 (10.2)15.3 Internal-use software36.8 (12.5)24.3 34.8 (12.0)22.8 
Developed technologyDeveloped technology15.4 (0.5)14.9 — — — Developed technology27.4 (1.5)25.9 27.4 (1.0)26.4 
Intellectual property1.5 (0.3)1.2 1.6 (0.3)1.3 
PatentsPatents36.1 (1.0)35.1 11.0 (0.4)10.6 
Total intangible assetsTotal intangible assets$92.5 $(37.4)$55.1 $70.5 $(33.9)$36.6 Total intangible assets$143.5 $(43.3)$100.2 $116.4 $(40.9)$75.5 
Amortization expense for intangible assets was $1.7$2.4 million and $1.8 million for the three months ended June 30,March 31, 2023 and 2022, and 2021, respectively. Amortization expense for intangible
In February 2023, the Company paid Bigfoot Biomedical, Inc. $25.1 million, including transaction costs, to acquire patent assets was $3.5 million and $3.5 million for the six months ended June 30, 2022 and 2021, respectively.related to pump-based automated insulin delivery technologies. The acquired patent assets have a useful life of 11 years.
Note 9.8. Accrued Expenses and Other Current Liabilities
The components of accrued expenses and other current liabilities were as follows:
(in millions)(in millions)June 30, 2022December 31, 2021(in millions)March 31, 2023December 31, 2022
Employee compensation and related costsEmployee compensation and related costs$56.8 $70.3 Employee compensation and related costs$55.2 $95.9 
Accrued rebatesAccrued rebates38.6 28.7 Accrued rebates82.6 69.6 
Warranty liability - current portionWarranty liability - current portion35.0 57.3 
Professional and consulting servicesProfessional and consulting services23.5 22.8 Professional and consulting services33.2 27.5 
Accrued legal settlement (Note 12)20.0 — 
Supplier purchases6.1 4.7 
OtherOther47.5 37.8 Other57.6 50.7 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities$192.5 $164.3 Accrued expenses and other current liabilities$263.6 $301.0 
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Product Warranty Costs
The Company provides a four-year warranty on Personal Diabetes Managers (“PDMs”) and Controllers sold in the United States and PDMs sold in 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 Company estimates its warranty obligation at the time the product is shipped based on historical experience and the estimated cost to service the claims. Cost to service the claims reflects the current product 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 operations. Cost to service the claims reflects the current product cost. Reconciliations of the changes in the Company’s product warranty liability were as follows: 
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in millions)(in millions)2022202120222021(in millions)20232022
Product warranty liability at beginning of periodProduct warranty liability at beginning of period$6.9 $6.7 $6.8 $6.7 Product warranty liability at beginning of period$62.1 $6.8 
Warranty expenseWarranty expense8.1 2.3 11.1 4.9 Warranty expense5.5 3.0 
Warranty claims settled(3.4)(2.5)(6.3)(5.1)
Change in estimateChange in estimate(8.0)— 
Warranty fulfillmentWarranty fulfillment(20.4)(2.9)
Product warranty liability at the end of periodProduct warranty liability at the end of period$11.6 $6.5 $11.6 $6.5 Product warranty liability at the end of period$39.2 $6.9 
13
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 three months ended March 31, 2023, the Company revised the estimated liability for these MDCs by $8.0 million. The change in estimate primarily relates to lower shipping costs for replacement DASH PDMs and lower expected distribution costs for Omnipod 5 Controllers. As of March 31, 2023, the Company had an estimated liability of $31.0 million related to the MDCs included in its product warranty liability.

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Note 10.9. Debt
The components of debt consisted of the following:
(in millions)(in millions)June 30, 2022December 31, 2021(in millions)March 31, 2023December 31, 2022
Revolving Credit Facility expires May 2024Revolving Credit Facility expires May 2024$— $— 
Equipment financing due May 2024Equipment financing due May 20247.8 9.5 
Equipment Financing due November 2025Equipment Financing due November 202520.7 22.5 
5.15% Mortgage due November 20255.15% Mortgage due November 202565.0 65.5 
0.375% Convertible Senior Notes due September 20260.375% Convertible Senior Notes due September 2026800.0 800.0 0.375% Convertible Senior Notes due September 2026800.0 800.0 
Term loan due May 2028Term loan due May 2028495.0 497.5 Term loan due May 2028491.3 492.5 
Revolving Credit Facility expires May 2024— — 
Equipment financing due May 202412.8 16.0 
Equipment financing due November 202526.1 29.6 
Equipment financing due July 202836.3 38.2 
5.15% Mortgage due November 202566.6 67.7 
Equipment Financing due July 2028Equipment Financing due July 202833.1 34.4 
Unamortized debt discountUnamortized debt discount(8.3)(159.9)Unamortized debt discount(7.3)(7.6)
Debt issuance costsDebt issuance costs(17.0)(15.2)Debt issuance costs(14.0)(15.0)
Total debt, netTotal debt, net1,411.5 1,273.9 Total debt, net1,396.6 1,401.8 
Less: current portionLess: current portion26.3 25.1 Less: current portion27.8 27.5 
Total long-term debt, netTotal long-term debt, net$1,385.2 $1,248.8 Total long-term debt, net$1,368.8 $1,374.3 
0.375% Convertible Senior Notes
The Company’s 0.375% Convertible Senior Notes due September 2026 (the “Notes”) have an effective interest rate of 0.76%. The Notes are convertible into the Company’s common stock 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 June 1, 2026 through August 28, 2026 by its holders for any reason, and prior to then under certain circumstances and be settled with cash, shares, or a combination of both.circumstances.
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.
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In conjunction with the issuance of the Notes, the Company paid $85.4 million to enter intopurchased capped call options (“Capped Calls”)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 Notes. The Capped Callscapped 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 Callscapped calls cover 3.5 million shares of common stock.
Senior Secured Credit Agreement
In May 2022, the Company increased the borrowing capacity under the Revolving Credit Facility by $10.0 million bringing the total borrowing capacity to $70.0 million.
1.375% Convertible Senior Notes
During the three months ended June 30, 2021, the Company repurchased $370.4 million in principal ($305.7 million net of discount and issuance costs) of its 1.375% Convertible Senior Notes due November 2024 (“1.375% Notes”) for $460.8 million in cash and the issuance of 2.2 million shares with a fair value of $622.7 million. The debt repurchase resulted in a $40.1 million loss on extinguishment, including cash paid to the note holders as an inducement to convert and transaction costs.
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Fair Value of Debt
The carrying amount and the estimated fair value of the Company’s debt were as follows:
June 30, 2022December 31, 2021
(in millions)Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value (1)
0.375% Convertible Senior Notes (1)
787.4 769.0 638.8 938.8 
Term loan (2)
483.7 467.8 485.2 498.1 
Equipment Financings (3)
75.1 75.1 83.7 83.7 
5.15% Mortgage (3)
65.3 65.3 66.2 66.2 
  Total$1,411.5 $1,377.2 $1,273.9 $1,586.8 
March 31, 2023December 31, 2022
(in millions)Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value (1)
Term loan due May 2028(1)
$481.4 $490.6 $482.1 $485.1 
0.375% Convertible Senior Notes(2)
789.6 1,125.4 788.8 1,038.7 
Equipment financings(3)
61.6 61.6 66.4 66.4 
5.15% Mortgage(3)
64.0 64.0 64.5 64.5 
  Total$1,396.6 $1,741.6 $1,401.8 $1,654.7 
(1) Term debt is classified as Level 1 in the fair value hierarchy. Fair value was determined using quoted market prices.
(2)The Notes are classified as Level 2 in the fair value hierarchy. Fair value was determined using the Company’s quoted stock price and the contractual conversion rate.
(2) Term debt is classified as Level 1 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 11.10. Derivative Instruments
The Company is exposed to certain risks relating to its business operations. Risks that relate tomanages interest rate exposure are managed by usingthrough the use of interest rate swapsswap transactions with financial institutions acting as principal counterparties. 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.
Under the Company’s interest rate swap agreements that expire on April 30, 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$480.0 million of its term loan through April 2025. As a result of the interest rate swaps 97% of the term loan exposed to interest rate risk from changes in LIBOR is fixed at a rate of 4.20%.Term Loan. The Company has designated the interest rate swaps as cash flow hedges.
The fair value of 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 swaps was $27.1$31.0 million and $4.5$36.9 million at June 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, and was included in other assets on the consolidated balance sheets. As of March 31, 2023, the Company estimates that $18.9 million of net gains related to the interest rate swaps included in accumulated other comprehensive income will be reclassified into the statement of operations over the next 12 months. When recognized, gains and losses on cash flow hedges reclassified from accumulated other comprehensive income are recognized within interest expense, net.
Note 12.11. Commitments and Contingencies
Legal Proceedings
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 OmniPods, Personal Diabetes Managers, and other components of the system, and kits in the United States infringed Roche’s expired U.S. Patent 7,931,613. Roche was seeking monetary damages and attorneys’ fees and costs. In 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 in suit from Roche, the Company made a one-time payment of $20 million to Roche. On July 12, 2022, following the filing by the parties of a Stipulation of Dismissal, the Court ordered the case dismissed with prejudice. The $20 million charge is included in selling, general and administrative expenses for both the three and six months ended June 30, 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. The 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.
Contract Dispute
The Company is engaged in negotiations over a contractual dispute involving in-licensed intellectual property. Offers to settle the dispute have been made by both the Company and the other party ranging from $5.7 million to $36 million. In connection with discussions to resolve this matter, during the three months ended June 30, 2022, the Company accrued an estimated liability of $5.7 million. The ultimate resolution of this matter is uncertain and could have a material effect on the Company’s results of operations.
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Note 13.12. Stock-Based Compensation Expense
Compensation expense related to stock-based awards was recorded as follows:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in millions)(in millions)2022202120222021(in millions)20232022
Cost of revenueCost of revenue$0.1 $0.1 $0.2 $0.2 Cost of revenue$0.1 $0.1 
Research and development expensesResearch and development expenses2.2 2.0 4.2 3.9 Research and development expenses2.8 2.0 
Selling, general and administrative expensesSelling, general and administrative expenses8.9 6.9 16.3 13.5 Selling, general and administrative expenses9.2 7.4 
TotalTotal$11.2 $9.0 $20.7 $17.6 Total$12.1 $9.5 
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Note 14.13. Accumulated Other Comprehensive Income (Loss)
Changes in the components of accumulated other comprehensive income, (loss), net of tax, were as follows:
Three Months Ended June 30, 2022Six Months Ended June 30, 2022Three Months Ended March 31, 2023
(in millions)(in millions)Foreign Currency Translation AdjustmentUnrealized Gain on Cash Flow HedgesAccumulated Other Comprehensive (Loss) IncomeForeign Currency Translation AdjustmentUnrealized Gain on Cash Flow HedgesAccumulated Other Comprehensive (Loss) Income(in millions)Foreign Currency Translation AdjustmentUnrealized Gain on Cash Flow HedgesAccumulated Other Comprehensive Income
Balance at beginning of periodBalance at beginning of period$(10.4)$22.6 $12.2 $(6.7)$4.5 $(2.2)Balance at beginning of period$(17.0)$37.0 $20.0 
Other comprehensive (loss) income before reclassifications(9.6)4.4 (5.2)(13.3)21.9 8.6 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications1.7 (1.4)0.3 
Amounts reclassified to net incomeAmounts reclassified to net income— 0.2 0.2 — 0.8 0.8 Amounts reclassified to net income— (4.4)(4.4)
Balance at the end of periodBalance at the end of period$(20.0)$27.2 $7.2 $(20.0)$27.2 $7.2 Balance at the end of period$(15.3)$31.2 $15.9 
Three Months Ended June 30, 2021Six Months Ended June 30, 2021Three Months Ended March 31, 2022
(in millions)(in millions)Foreign Currency Translation AdjustmentUnrealized Gain on Available-for-sale SecuritiesUnrealized Loss on Cash Flow HedgesAccumulated Other Comprehensive IncomeForeign Currency Translation AdjustmentUnrealized Gain on Available-for-sale SecuritiesUnrealized Loss on Cash Flow HedgesAccumulated Other Comprehensive Income(in millions)Foreign Currency Translation AdjustmentUnrealized Gain on Cash Flow HedgesAccumulated Other Comprehensive (Loss) Income
Balance at beginning of periodBalance at beginning of period$3.1 $0.1 $— $3.2 $5.2 $0.3 $— $5.5 Balance at beginning of period$(6.7)$4.5 $(2.2)
Other comprehensive loss before reclassifications(1.8)(0.1)(1.0)(2.9)(3.9)(0.3)(1.0)(5.2)
Amounts reclassified to net loss— — 0.4 0.4 — — 0.4 0.4 
Other comprehensive (loss) income before reclassificationsOther comprehensive (loss) income before reclassifications(3.7)17.6 13.9 
Amounts reclassified to net incomeAmounts reclassified to net income— 0.5 0.5 
Balance at the end of periodBalance at the end of period$1.3 $— $(0.6)$0.7 $1.3 $— $(0.6)$0.7 Balance at the end of period$(10.4)$22.6 $12.2 
Note 15.14. Interest Expense, Net
Interest expense, net was as follows: 
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in millions)(in millions)2022202120222021(in millions)20232022
Cash interest, net of interest rate swapsCash interest, net of interest rate swaps$8.1 $6.8 $16.0 $10.5 Cash interest, net of interest rate swaps$8.3 $7.9 
Accretion of debt discountAccretion of debt discount0.3 10.7 0.7 21.7 Accretion of debt discount0.4 0.4 
Amortization of debt issuance costsAmortization of debt issuance costs1.0 1.0 2.1 1.8 Amortization of debt issuance costs1.1 1.1 
Capitalized interestCapitalized interest(0.3)(1.9)(0.7)(3.8)Capitalized interest(0.4)(0.4)
Interest expense, net of portion capitalized Interest expense, net of portion capitalized9.1 16.6 18.1 30.2  Interest expense, net of portion capitalized9.4 9.0 
Interest incomeInterest income(0.8)(0.2)(0.9)(0.4)Interest income(6.5)(0.1)
Interest expense, netInterest expense, net$8.3 $16.4 $17.2 $29.8 Interest expense, net$2.9 $8.9 
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Note 16.15. Income Taxes
The Company’s effective tax rate was 3.4% and 5.1% for the three and six months ended June 30,March 31, 2023 and 2022, was 2.9% and (6.5)%, compared with 12.1% and 11.2% for the three and six months ended June 30, 2021, respectively. Income tax benefits have not been recorded for losses in jurisdictionsthe United Kingdom where a valuation allowances existallowance exists against net deferred tax assets. The Company had a full valuation allowance against its net deferred tax assets in the United Kingdom and the United States at June 30, 2022March 31, 2023 and December 31, 2021.2022. The Company had no uncertain tax positions at June 30, 2022March 31, 2023 and December 31, 2021.2022.
Note 17.16. Net LossIncome Per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and, when dilutive, common share equivalents. The weighted-average number of common shares used in the computation of basic and diluted net lossincome per share were as follows:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in thousands)(in thousands)2022202120222021(in thousands)20232022
Weighted average number of common shares outstanding, basicWeighted average number of common shares outstanding, basic69,356 66,696 69,305 66,406 Weighted average number of common shares outstanding, basic69,583 69,254 
Stock optionsStock options— — — — Stock options394 488 
Restricted stock unitsRestricted stock units— — — — Restricted stock units119 116 
Weighted average number of common shares outstanding, dilutedWeighted average number of common shares outstanding, diluted69,356 66,696 69,305 66,406 Weighted average number of common shares outstanding, diluted70,096 69,858 
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The number of common share equivalents excluded from the computation of diluted net lossincome 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:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended March 31,
(in thousands)
(in thousands)
2022202120222021
(in thousands)
20232022
1.375% Convertible Senior Notes due November 2024— 3,657 — 3,988 
0.375% Convertible Senior Notes due September 20260.375% Convertible Senior Notes due September 20263,528 3,528 3,528 3,528 0.375% Convertible Senior Notes due September 20263,528 3,528 
Restricted stock unitsRestricted stock units348 283 358 364 Restricted stock units238 251 
Stock optionsStock options635 788 607 809 Stock options155 90 
TotalTotal4,511 8,256 4,493 8,689 Total3,921 3,869 
Note 17. Subsequent Event
In May 2023, the Company entered into a $24.0 million financing transaction for manufacturing equipment in Acton, Massachusetts.
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Item 2. Managements 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 quarterly 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” in both our annual report on Form 10-K for the year ended December 31, 20212022 and in this quarterly report.
Overview
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 tubeless Omnipod (the “Pod”) device that is wornthe user fills with insulin and wears directly on the body for up to three days at a time;time, which delivers personalized doses of insulin, and itsthe PDM or Controller, a wireless companion,handheld device that programs the handheld PDM/Controller.Pod with the user’s personalized insulin-delivery instructions and wirelessly monitors the Pod’s operation. The Omnipod System includes: Classic Omnipod, its next generation Omnipod DASH, and the most recent generation Omnipod 5, all of which features discreet and easy-to-use devices, communicates wirelessly, provides for virtually pain-free automated cannula insertion and eliminateseliminate the need for MDI therapymultiple daily injections using syringes or insulin pens or the use of pump and tubing.
We believe that the Omnipod System’s unique proprietary design and features allow people with insulin-dependent diabetes to manage their diabetes with unprecedented freedom, comfort, convenience and ease.
In addition to the diabetes market space, we have partnered with pharmaceutical and biotechnology companies to tailoralso tailored the Omnipod System technology platform for the delivery of subcutaneous drugs acrossin other therapeutic areas. Most of our drug delivery revenue currently 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.
Our mission is to improve the lives of people with diabetes. To assist in achieving this mission, we are focused on the following key strategic imperatives:
expanding access and awareness;
delivering consumer-focused innovation;
growing our global addressable market; and
driving operational excellence.
Our long-term financial objective is to sustain profitable growth. To achieve this goal, our efforts have been focused on the launch ofwe launched Omnipod 5 which in January 2022 received FDA clearance for individuals aged six yearsin the United States and older with type 1 diabetes. Our limited market release of Omnipod 5 began in February and in August we launched our full market release. Accordingly, Omnipod 5 is now available through retail pharmacies. We are also working to bring Omnipod 5 to our international markets. Our submission forWe received CE Mark approval under the European MDR in Europe is under reviewSeptember 2022, and we are currently focused on further building our international teams and advancing our regulatory, reimbursement, and market development efforts. We plan to launch Omnipod 5 in the U.K. and Germany in 2023 and to continue our international roll out more broadly in 2024.
We also have begun enrolling individuals in a pivotal trial for Omnipod 5 with the goal of expanding Omnipod 5’s indication to type 2 users. Additionally, to accelerate our efforts to secure reimbursement for Omnipod 5, we have fully enrolled individuals in a randomized control trial in the U.S. and have enrolled the majority of the individuals in France. We also continue to expand market access and awareness of Omnipod through our direct to consumer advertising programs and through growing our presence in the U.S. pharmacy channel, where access to Omnipod 5 and Omnipod DASH is simpler and affordable, as no up-front investment is required. As we continue to increase our presence within our existing markets and expand internationally in a targeted and strategic manner. We recently opened an office in Dubai to serve as our primary local presence and regional infrastructuregrowth in the Middle East and launchedpharmacy channel, we plan to phase-out our Classic Omnipod in Saudi Arabia. the U.S. in 2023, since the vast majority of our customer base is no longer using this product.
We also expanded into the United Arab Emirates during the quarter.
In addition, we have been takingcontinue to take steps to further strengthen our global manufacturing capabilities. We are optimizing our operations in China by consolidating our production in that region into one location. We also broke ground oncurrently constructing a new manufacturing plant in Malaysia to support our international expansion strategy, further ensure product supply, and drive higher gross margins over time. We expect to begin production at this new manufacturing facility in 2024.
Finally, we plan to continue to expand awareness of and access to our products, while also focusingfocus on our product development efforts. Our direct to consumer advertising programs continue to drive increased awarenessefforts, including automated insulin delivery (“AID”) offerings, such as choice of Omnipod. To accelerate our efforts to secure reimbursement for Omnipod 5, we are currently enrolling individuals in a randomized control trial in Francecontinuous glucose monitor and the U.S. Our product development efforts includesmartphone integration, and enhancing the customer experience through digital product offerings. Achieving the above strategic imperatives is expected toand data capabilities. In April 2023, we received U.S. Food and Drug Administration (“FDA”) clearance for Omnipod GOTM, our basal-only Pod for individuals with type 2 diabetes age 18 or older who require additional investmentsinsulin. We expect commercialization of this product in certain initiatives and personnel, as well as enhancements to our supply chain operation capacity, efficiency and effectiveness.2024.
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Results of Operations
Factors Affecting Operating Results
Our Pods are intended to be used continuously for up to three days, after which it may be replaced with a new disposable Pod. The Omnipod System’s unique patented design allow us to provide pump therapy at a relatively low or no up-front investment whichin regions where reimbursement allows for it and our pay-as-you-go pricing model reduces the risk to third-party payors in the U.S., compared to tubed insulin pumps.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 provides predictable recurring revenue.
During 2022, we issued two voluntary Medical Device Corrections (“MDCs”), one in October for our Omnipod DASH PDM related to its battery and the other in November for our Omnipod 5 Controller related to its charging port and cable. In addition to the estimated liability we recorded in 2022, we have a performance obligation to replace Omnipod DASH PDMs and Omnipod 5 Controllers sold subsequent to the MDC issuances, which is expected to negatively impact gross margins and net income in 2023, most notably in the first half of the year. However, during the three months ended March 31, 2023, we recorded $8.0 million of income associated with a change in our estimated liability for the MDCs primarily due to lower shipping costs for replacement DASH
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PDMs and lower expected distribution costs for Omnipod 5 Controllers, which is expected to offset the negative impact to gross margin.
We continue to experience constrained supply andchallenges 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 this disruption and ensure uninterrupted supply to our customers by increasing our inventory levels and taking other measures. While our mitigation efforts and inflation are expected to negatively impact gross margins and net income throughout the year, we intend to continue to work to improve productivity to help offset these costs.
Revenue
Three Months Ended June 30,
(dollars in millions)20222021Percent
Change
Currency
Impact
Constant
Currency (1)
U.S. Omnipod$196.4 $150.5 30.5 %— %30.5 %
International Omnipod89.4 91.6 (2.4)%(11.3)%8.9 %
Total Omnipod285.8 242.1 18.1 %(4.2)%22.3 %
Drug Delivery13.6 21.1 (35.5)%— %(35.5)%
Total revenue$299.4 $263.2 13.8 %(3.9)%17.7 %
Six Months Ended June 30,Three Months Ended March 31,
(dollars in millions)(dollars in millions)20222021Percent
Change
Currency
Impact
Constant
Currency (1)
(dollars in millions)20232022Percent
Change
Currency
Impact
Constant
Currency (1)
U.S. OmnipodU.S. Omnipod$370.5 $293.8 26.1 %— %26.1 %U.S. Omnipod$259.0 $174.1 48.8 %— %48.8 %
International OmnipodInternational Omnipod184.8 181.5 1.8 %(8.9)%10.7 %International Omnipod98.6 95.4 3.4 %(6.2)%9.6 %
Total OmnipodTotal Omnipod555.3 475.3 16.8 %(3.4)%20.2 %Total Omnipod357.6 269.5 32.7 %(2.2)%34.9 %
Drug DeliveryDrug Delivery39.5 40.2 (1.7)%— %(1.7)%Drug Delivery0.5 25.9 (98.1)%— %(98.1)%
Total revenueTotal revenue$594.8 $515.5 15.4 %(3.1)%18.5 %Total revenue$358.1 $295.4 21.2 %(2.1)%23.3 %
(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 the three months ended June 30, 2022March 31, 2023 increased $36.2$62.7 million, or 13.8%21.2%, to $299.4$358.1 million, compared with $263.2$295.4 million for the three months ended June 30, 2021.March 31, 2022. Constant currency revenue growth of 17.7% was primarily driven by higher volume and favorable sales channel mix, partially offset by a decrease in Drug Delivery revenue.
Total revenue for the six months ended June 30, 2022 increased $79.3 million, or 15.4%, to $594.8 million, compared with $515.5 million for the six months ended June 30, 2021. Constant currency revenue growth of 18.5%23.3% was primarily driven by higher volume and, to a lesser extent, favorable sales channel mix.mix, partially offset by decreased drug delivery revenue.
U.S. Omnipod
U.S. Omnipod revenue for the three months ended June 30, 2022March 31, 2023 increased $45.9$84.9 million, or 30.5%48.8%, to $196.4$259.0 million, compared with $150.5$174.1 million for the three months ended June 30, 2021.March 31, 2022. This increase was primarily due to 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 due in part to the fact that we offer the PDM/Controller for no charge,charge. This increase was also driven by conversions to Omnipod 5 as well as an increaseusers generally fill both their starter kit and their first month of refills simultaneously. These increases were partially offset by a reduction in inventory days-on-hand at our distributors due to the launchhigher-than-expected consumption of Omnipod 5 and sales returns for Omnipod DASH and Omnipod Classic as retail pharmacies convert their inventory to Omnipod 5.
U.S. Omnipod revenue for the three months ended June 30, 2022March 31, 2023 includes $55.5$96.8 million of related party revenue, compared with $3.3$48.4 million for the three months ended June 30, 2021.March 31, 2022. The $52.2$48.4 million increase primarily resulted from a shift in certain revenues from one distributor to another.
U.S. Omnipod revenue for the six months ended June 30, 2022 increased $76.7 million, or 26.1%, to $370.5 million, compared with $293.8 million for the six months ended June 30, 2021. This increase was primarily due to 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 due in part to the fact that we offer the PDM/Controller for no charge.
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U.S. Omnipod revenue for the six months ended June 30, 2022 includes $103.9 million of related party revenue, compared with $5.5 million for the six months ended June 30, 2021. The $98.4 million increase primarily resulted from a shift in certain revenues from one distributor to another.channel.
For full year 2022,2023, we expect strong U.S. Omnipod revenue growth driven by continued volume growth of Omnipod 5 in the pharmacy channel, primarily driven by the continued increase insales of Omnipod DASH, sales volume and the full market releasebenefits of our recurring revenue model. We expect these increases to be partially offset by lower conversions to Omnipod 5.5 in the second half of the year compared to 2022.
International Omnipod
International Omnipod revenue for the three months ended June 30, 2022 decreased $2.2March 31, 2023 increased $3.2 million, or 2.4%3.4%, to $89.4$98.6 million, compared with $91.6$95.4 million for the three months ended June 30, 2021.March 31, 2022. Excluding the 11.3%6.2% unfavorable impact of currency exchange, the remaining 8.9%9.6% increase in revenue was primarily due to higher volumes as we continue to expand awareness and access to Omnipod DASH, partially offset by increased competition from automated insulin delivery (“AID”) systems and the impact of the pandemic on our recurring revenue.
International Omnipod revenue for the six months ended June 30, 2022 increased $3.3 million, or 1.8%, to $184.8 million, compared with $181.5 million for the six months ended June 30, 2021. Excluding the 8.9% unfavorable impact of currency exchange, the remaining 10.7% increase in revenue was primarily due to higher volumes as we continue to expand awareness and access to Omnipod DASH, partially offset by increased competition from automated insulin delivery (“AID”) systems and the impact of the pandemic on our recurring revenue.AID systems.
For full year 2022,2023, we expect higher International Omnipod revenue due to continued volume growth and market penetration aideddriven by the ongoing adoption of OmnipodOmnipod DASH, throughout our international markets, partially offset by competition from AID systems.
Drug Delivery
Drug Delivery revenue for the three months ended June 30, 2022 decreased $7.5 million, or 35.5%, to $13.6 million,March 31, 2023 was nominal compared with $21.1$25.9 million for the three months ended June 30, 2021. This decrease was primarily due to elevated volume in the prior year due to the pandemic.
Drug Delivery revenue for the six months ended June 30,March 31, 2022 of $39.5 million was relatively level compared with $40.2 million for the six months ended June 30, 2021. For full year 2022,2023, we expect Drug Delivery revenue to decline as production levels were elevated during the pandemic.$26 million to $32 million due to a lower demand forecast from our partner.
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Operating Expenses
Three Months Ended June 30,
20222021
(dollars in millions)AmountPercent of RevenueAmountPercent of Revenue
Cost of revenue$109.1 36.4 %$80.5 30.6 %
Research and development expenses$42.6 14.2 %$40.1 15.2 %
Selling, general and administrative expenses$174.4 58.2 %$116.3 44.2 %
Six Months Ended June 30,Three Months Ended March 31,
2022202120232022
(dollars in millions)(dollars in millions)AmountPercent of RevenueAmountPercent of Revenue(dollars in millions)AmountPercent of RevenueAmountPercent of Revenue
Cost of revenueCost of revenue$194.8 32.8 %$165.3 32.1 %Cost of revenue$117.6 32.8 %$85.7 29.0 %
Research and development expensesResearch and development expenses$85.7 14.4 %$80.8 15.7 %Research and development expenses$50.1 14.0 %$43.1 14.6 %
Selling, general and administrative expensesSelling, general and administrative expenses$303.1 51.0 %$226.8 44.0 %Selling, general and administrative expenses$162.7 45.4 %$128.7 43.6 %
Cost of Revenue
Cost of revenue for the three months ended June 30, 2022March 31, 2023 increased $28.6$31.9 million, or 35.5%37.2%, to $109.1$117.6 million, compared with $80.5$85.7 million for the three months ended June 30, 2021.March 31, 2022. Gross margin was 63.6%67.2% for the three months ended June 30, 2022,March 31, 2023, compared with 69.4%71.0% for the three months ended June 30, 2021.March 31, 2022. The 580380 basis point decrease in gross margin was primarily driven by higher expectedcosts associated with Omnipod 5 production, higher production costs and manufacturing inefficienciesin the U.S. as U.S. manufacturing continues to ramp and become a larger portion of our total production, and we transition product lines between manufacturing facilities to ensure redundancy. An increase in warranty costs driven by aging battery lives in Omnipod DASH PDMs and higherlower production of Drug Delivery pods. To a lesser extent, increased costs associated with Omnipod 5 productionwarranty, inventory reserves, inflation also contributed to the decline in margin. These decreases were partially offset by higher average selling price due to growth in the pharmacy channel.
Cost of revenuechannel and an approximate 220 basis point adjustment to our estimated warranty accrual for the six months ended June 30, 2022 increased $29.5 million, or 17.8%, to $194.8 million, compared with $165.3 million for the six months ended June 30, 2021. Gross margin of 67.2% for the six months ended June 30, 2022 was relatively level
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with the prior year as higher expected production costsvoluntary MDCs issued in the U.S. were mostly offset by improved manufacturing efficiencies and higher average selling price due to growth in the pharmacy channel.2022.
For full year 2022,2023, we expect gross margin to be in the range of 65% to 66%. We anticipate gross margin to increase due to significant costs associated with the MDCs in 2022, most of which we do not expect to recur in 2023, higher volume in the pharmacy channel and favorable geographical sales mix. We believe these increases will be negatively impactedpartially offset by higher production costs as we further scale U.S. manufacturing, unfavorable product line mix due to higher costs associated with Omnipod 5 and Drug Delivery production, increased component costs due to inflation, and higher warranty expense. We believe these higher costs will be partially offset by increased volume in the pharmacy channel.as we contend with inflation.
Research and Development Expenses
Research and development expenses for the three months ended June 30, 2022March 31, 2023 increased $2.5$7 million, or 6.2%16.2%, to $42.6$50.1 million, compared with $40.1$43.1 million for the three months ended June 30, 2021. Research and development expenses for the six months ended June 30, 2022 increased $4.9 million, or 6.1%, to $85.7 million, compared with $80.8 million for the six months ended June 30, 2021.March 31, 2022. The increases for both the three and six months ended June 30, 2022 wereincrease was primarily due to year-over-year headcount additions to support our continued investment in development of Omnipod products, partially offset by lower outside services used for clinical activities.products. We expect research and development spending in 20222023 to increase compared with 20212022 as we continue to invest in advancing our innovation and clinical pipeline and contend with inflation.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended June 30, 2022March 31, 2023 increased $58.1$34.0 million, or 50.0%26.4%, to $174.4$162.7 million, compared with $116.3$128.7 million for the three months ended June 30, 2021. Selling general and administrative expenses for the six months ended June 30, 2022 increased $76.3 million, or 33.6%, to $303.1 million, compared with $226.8 million for the six months ended June 30, 2021.March 31, 2022. The increases for both the three and six months ended June 30, 2022 wereincrease was primarily attributable to $27.3 million of legalhigher third-party customer service costs related to the settlement of a patent infringement lawsuit, associated legal fees,support Omnipod 5 adoption, year-over-year headcount additions, mainly in information technology and commercial operations, and an estimated liabilityincrease in software license fees driven by investments in new systems due to settle a contract dispute.our growing business and increased headcount. To a lesser extent, the increases wereincrease was due to year-over-year headcount additions, mainly to support information technology, commercial operations, and international expansion, an increase in investments to expand market acceptance and access to the Omnipod,higher consulting costs and higher travel and entertainment expenses due to increased activity as COVID-19 restrictions have lifted. Additionally, selling, general and administrative expenses for both the three and six months ended June 30, 2022 includes $3.4 million of costs associated with the retirement and advisory services of our former chief executive officer.direct-to-consumer advertising spend.
We expect selling, general and administrative expenses to increase in 20222023 compared with 20212022 primarily 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 operatingoperational efficiencies and continued growth.growth, including customer support and a new enterprise resource planning system. Additionally, we plan to make additional investments to support the Omnipod System, including market acceptance and access, and the phased launch of Omnipod 5 in our international markets. We expect these increases to be partially offset by $25.2 million of legal charges incurred in 2022, related to the settlement of patent infringement lawsuit, associated legal fees, and the settlement of a contract dispute, that are not expected to recur.
Non-Operating Items
Interest Expense, Net
Net interest expense decreased $8.1$6.0 million to $8.3$2.9 million for the three months ended June 30, 2022,March 31, 2023, compared with $16.4$8.9 million for the three months ended June 30, 2021.March 31, 2022. This decrease was primarily driven by the adoption of Accounting Standards Update 2020-06, Accounting for Convertible Debt Instruments and Contracts in an Entity's Own Equity (“ASU 2020-06”), which eliminated most of the non-cash interest expense associated with our convertible notes. Refer to Recently Adopted Accounting Standard in Note1 to the consolidated financial statements for additional information.
Net interest expense decreased $12.6 million to $17.2 million for the six months ended June 30, 2022, compared with $29.8 million for the six months ended June 30, 2021. This decrease was primarily driven by the adoption of ASU 2020-06 as discussed above.
Loss on Extinguishment of Debt
During the three and six months ended June 30, 2021, we incurred a $40.1 million loss on extinguishment of debt related to the repurchase of a portion of our 1.375% Convertible Senior Notes.
Other (Expense) Income, Net
During the three months ended June 30, 2022, we had other expense of $1.1 million, compared with other income of $1.8 million for the three months ended June 30, 2021. The $2.9 million increase in other expense was primarily driven by an increase in unrealized foreign currency losses.
During both the six months ended June 30, 2022 and the six months ended June 30, 2021, we had other expense of $0.8 million driven by net unrealized foreign currency losses.interest income resulting from higher interest rates.
Income Tax Expense Net
Income tax benefitexpense was $1.1$0.8 million for the three months ended June 30, 2022,March 31, 2023, compared with an income tax benefit of $3.4$1.5 million for the three months ended June 30, 2021,March 31, 2022, resulting in relatively consistent effective tax rates of 2.9%3.4% and 12.1%5.1%, respectively. Income tax expense was $0.4 million for the six months ended June 30, 2022, compared with an income tax benefit of $3.1 million for the six months ended June 30, 2021, resulting in effective tax rates of (6.5)% and 11.2%, respectively. The decreases in the effective tax rates for both the three and six months ended June 30, 2022 were primarily driven by the jurisdictional distribution of profits and losses. Additionally,
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the valuation allowance recorded against current year losses in the United Kingdom contributed to the decrease for the six months ended June 30, 2022.
Adjusted EBITDA
The table below presents reconciliations of Adjusted EBITDA, a non-GAAP financial measure, to net income, (loss), the most directly comparable financial measure prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”):
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Net loss$(35.0)$(25.0)$(7.2)$(25.0)
Interest expense, net8.3 16.4 17.2 29.8 
Income tax (benefit) expense(1.1)(3.4)0.4 (3.1)
Depreciation and amortization15.8 15.2 31.1 28.0 
Stock-based compensation expense8.9 9.0 18.4 17.6 
Legal costs(1)
27.3 — 27.3 — 
CEO transition costs(2)
3.4 — 3.4 — 
Loss on extinguishment of debt— 40.1 — 40.1 
Adjusted EBITDA$27.6 $52.3 $90.6 $87.4 
Three Months Ended March 31,
(in millions)20232022
Net income$23.8 $27.8 
Interest expense, net2.9 8.9 
Income tax expense0.8 1.5 
Depreciation and amortization17.2 15.3 
Stock-based compensation12.1 9.5 
Voluntary MDCs (1)
(8.0)— 
Adjusted EBITDA$48.8 $63.0 
(1) Includes a $20.0 million charge to settle patent infringement litigation with Roche Diabetes Care, Inc., associated legal fees, and an estimated liability to settle a contract dispute. Refer to Note12 to the consolidated financial statements for additional information.
(2) 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.
(1) Represents income resulting from an adjustment to estimated costs associated with the voluntary MDC notices issued in the fourth quarter of 2022, which is included in cost of revenue. Refer to Note 8 to the consolidated financial statements for additional information.
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 and other significant unusual items,transactions or events, such as legal settlements, medical device corrections, and loss on extinguishment of debt, that affect the period-to-period comparability of our 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 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.
Liquidity and Capital Resources
We believe that our current liquidity as further described below will be sufficient to meet our projected operating, investing and debt service requirements for at least the next twelve months.
Capitalization
The following table contains several key measures to gauge our financial condition and liquidity:
(in millions)March 31, 2023December 31, 2022
Cash and cash equivalents$620.7 $674.7 
Current portion of long-term debt$27.8 $27.5 
Long-term debt, net$1,368.8 $1,374.3 
Total debt, net$1,396.6 $1,401.8 
Total stockholders’ equity$502.8 $476.4 
Debt-to-total capital ratio74 %75 %
Net debt-to-total capital ratio41 %39 %
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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 June 30, 2022, we had $708.6 millionMarch 31, 2023, the following notes were outstanding:
Issuance DateCouponPrincipal Outstanding
(in millions)
Due Date
Conversion Rate (1)
Conversion Price per Share of Common Stock
September 20190.375%$800.0 September 20264.4105$226.73 
(1) Per $1,000 face value of notes
Additional information regarding our debt is provided in cash and cash equivalents. Additionally, weNote 9 to the consolidated financial statements.
Credit Agreement
We have a $70.0$100.0 million three-year senior secured revolving credit facility (the “Credit Facility”), which expires in 2024. At June 30, 2022,March 31, 2023, no amount was outstanding under the Credit Facility. The 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
Other Facilities
In May 2023, the Company entered into a $24 million financing transaction for at least the next twelve months.
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Debt
To finance our operations and global expansion, we have periodically issued convertible senior notes, which are convertible into our common stock. As of June 30, 2022, the following notes were outstanding:
Issuance DateCouponPrincipal Outstanding
(in millions)
Due Date
Conversion Rate (1)
Conversion Price per Share of Common Stock
September 20190.375%800.0 September 20264.4105$226.73 
(1) Per $1,000 face value of notes
Additional information regarding our debt is providedmanufacturing equipment in Note 10 to the consolidated financial statements.Acton, Massachusetts.
Summary of Cash Flows
Six Months Ended June 30,Three Months Ended March 31,
(in millions)(in millions)20222021(in millions)20232022
Cash provided by (used in):Cash provided by (used in):Cash provided by (used in):
Operating activitiesOperating activities$11.6 $(16.8)Operating activities$0.5 $(13.7)
Investing activitiesInvesting activities(68.8)(34.1)Investing activities(42.1)(46.9)
Financing activitiesFinancing activities(21.9)— Financing activities(12.1)(20.3)
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(3.5)(1.7)Effect of exchange rate changes on cash(0.1)(0.6)
Net decrease in cash, cash equivalents and restricted cashNet decrease in cash, cash equivalents and restricted cash$(82.6)$(52.6)Net decrease in cash, cash equivalents and restricted cash$(53.8)$(81.5)
Operating Activities
Net cash provided by operating activities of $11.6$0.5 million for the sixthree months ended June 30, 2022March 31, 2023 was primarily attributable to $56.0 million working capital cash outflow, partially offset by net loss,income, as adjusted for depreciation and amortization, and stock-based compensation expense and non-cash interest expense, partially offset by a $38.7 million working capital cash outflow.expense. The working capital outflow was driven by a $51.4$36.5 million increasedecrease in accounts receivable,accrued expenses and other liabilities, a $24.0$38.2 million increase in inventories, and a $23.3$20.7 million increase in prepaid expenses and other assets and a $12.1 million increase in accounts receivable, partially offset by a $39.9$51.5 million increase in accounts payable. The decrease in accrued expenses and other liabilities was primarily driven by the annual payout of cash bonuses for performance in the prior year and a $20.1 millionwarranty fulfillment associated with the DASH voluntary MDC issued in 2022, partially offset by an increase in accounts payable.accrued rebates mainly due to revenue growth in the pharmacy channel. The increase in inventories was primarily driven by a planned inventory build to satisfy demand. The increase in prepaid expenses and other assets was primarily driven by prepayments for inventory associated with the Omnipod 5 voluntary MDC. 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 driven by a planned inventory build. The increase in prepaid expenses and other assets was driven by an increase in cloud computing implementation costs and right-of-use assets. The increase in accrued expenses and other liabilities was primarily driven by a $20 million legal settlement that was accrued during the second quarter and an increase in rebates due to growth in the pharmacy channel and the launch of Omnipod 5. Finally, the increase in accounts payable was primarily driven by the timing of payments.
Investing Activities
Net cash used in investing activities was $68.8$42.1 million for the sixthree months ended June 30, 2022,March 31, 2023, compared with net cash used in investing activities of $34.1$46.9 million for the sixthree months ended June 30, 2021.March 31, 2022.
Capital Spending—Capital expenditures were $27.4$10.5 million and $52.8$12.8 million for the sixthree months ended June 30,March 31, 2023 and 2022, respectively, and 2021, respectively. The $25.4 million decrease was primarily driven by less spend on manufacturing equipment, duerelated to the additionpurchase of equipment to increase our manufacturing capacity in the prior year.capacity. We expect capital expenditures for 20222023 to increasedecrease compared with 2021 as we continue2022 given our significant investments to investbuild capacity in 2022, including the acceleration of some of our global manufacturing capabilities to supportspending on machinery and equipment for our growth.new Malaysia facility that is under construction. We expect to fund our capital expenditures using existing cash.
PurchasesInvestments in Developed Software—Investments in developed software were $1.5 million and Sales of Marketable Securities—The $22.5$3.1 million decrease in proceeds from maturities of marketable securities was driven byfor the prior year shift of a portion of our investment portfoliothree months ended March 31, 2023 and 2022, respectively, and primarily related to investments classified as cash equivalents.in projects to support our cloud-based capabilities.
Acquisition and InvestmentsAcquisitions—During the sixthree months ended June 30,March 31, 2023, we paid Bigfoot Biomedical, Inc. $25.1 million, including transaction costs, to acquire patent assets related to pump-based AID technologies. During the three months ended March 31, 2022, we paid $26.0
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million for the acquisition ofto acquire substantially all of the assets related to the manufacture and production of SMAshape-memory alloy wire assemblies that are used in the production of Omnipods from Dynalloy, Inc. In addition,The remaining $3 million purchase price for this acquisition was paid during the three months ended March 31, 2023.
Investments—During the three months ended March 31, 2023 and 2022, we paid $7.8 million formade strategic investments in two private companies.companies in the amount of $2.0 million and $5.0 million, respectively.
Financing Activities
We had $21.9 million of netNet cash used in financing activities was $12.1 million for the sixthree months ended June 30, 2022,March 31, 2023, compared with no cash used in financing activities$20.3 million for sixthree months ended June 30, 2021.March 31, 2022.
Debt Issuance and Repayments—During the sixthree months ended June 30, 2022,March 31, 2023, we made $12.2$6.7 million in aggregate principal payments on our equipment financings, mortgage, and term loan, and mortgage, compared with $7.4$6.1 million for the sixthree months ended June 30, 2021.March 31, 2022.
Proceeds from Option Exercises—Total proceeds from option exercises were $6.0 million and $1.1 million for the three months ended March 31, 2023 and 2022, respectively. The $4.8$4.9 million increase is due to entering the term loan and an additional equipment financing in the second and third quarter of 2021,was primarily driven by option exercises by former executives.
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respectively. Additionally, during the six months ended June 30, 2021, we received net proceeds of $489.5 million from the issuance of the term loan and used $460.8 million of cash to partially fund the repurchase of a portion of our 1.375% Notes.
Option Exercises and Payment of Taxes for Restricted Stock Net SettlementsSettlements——Total proceeds from option exercises and issuance of employee stock purchase plan shares was $1.9 million and $6.2 million for the six months ended June 30, 2022 and 2021, respectively. The $4.3 million decrease was primarily driven by option exercises in the prior year by our former chief executive officer who retired in 2018. Payments for taxes related to net restricted and performance stock unit settlements were $16.5$11.4 million and $27.3$15.3 million for the sixthree months ended June 30,March 31, 2023 and 2022, and 2021, respectively. The $10.8$3.9 million decrease was primarily driven by vestinglower achievement of the performance stock units in the prior year by our former chief executive officer who retired in 2018.
Commitments and Contingencies
We are engaged in negotiations over a contractual dispute involving in-licensed intellectual property. Offers to settle the dispute have been made by both parties ranging from $5.7 million to $36 million. In connection with discussions to resolve this matter,that vested during the three months ended June 30, 2022, we accrued an estimated liability of $5.7 million. The ultimate resolution of this matter is uncertain and could have a material effect on our results of operations.period.
Legal Proceedings
The significant estimates and judgments related to establishing litigation reserves are discussed under “Legal Proceedings” in Note 1211 to the consolidated financial statements included in this Form 10-Q.
Off-Balance Sheet Arrangements
As of March 31, 2023, we had various letters of credit totaling $18.1 million, primarily related to amounts issued under our $20 million uncommitted letter of credit facility to backstop a bank guarantee that serves as security for land and building in Malaysia while under construction.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with 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.
Our accounting policies for revenue recognition and contingencies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. There have been no significant changes to the above critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward looking statements by terminology 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. These statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition.
The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and assumptions. These risks and uncertainties include, but are not limited to:
adverse changes in general economic conditions as well as risks associated with public health crises and pandemics, such as the COVID-19 global pandemic, government actions and restrictive measures implemented in response, supply chain disruptions, delays in clinical trials, and other impacts to the business;business, our customers, suppliers, and employees;
dependence on a principal product platform;
ability to maintain and grow our customer base,base;
ability to scale our business to support revenue growth, maintain an effective sales force and expand our distribution network;
ability to secure and retain adequate coverage or reimbursement from third-party payors;
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impact of healthcare reform laws; 
impact of competitive products, technological change, and product innovation and innovation;
ability to design, develop, manufacture and commercialize future products; 
changesinability to maintain or termination of our license to incorporate a blood glucose meter into the Omnipod System or inability to enter into new license or other agreements with respect to the Omnipod System’scontinuous glucose monitors, data management systems or other rights necessary to sell our current product and/or commercialize future features;products;
challenges to the future development of our non-insulin drug delivery product line; 
international business risks, including regulatory, commercial and logistics risks;
supply problems or price fluctuations with sole source or third-party suppliers on which we are dependent;
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failure to retain key suppliers and/or supplier pricing discounts and achieve satisfactory gross margins;suppliers;
ability to protect our intellectual property and other proprietary rights and potential conflicts with the intellectual property of third parties;
extensive government regulation applicable to medical devices as well as complex and evolving privacy and data protection laws;
adverse regulatory or legal actions relating to the Omnipod System or future products;
failure of our contract manufacturer or component suppliers to comply with the FDA’s quality system regulations;
potential adverse impacts resulting from a recall, or discovery of serious safety issues, product liability lawsuits relating to off-label use, the potential violation of anti-bribery/anti-corruption laws, laws and regulations regarding privacy and data protection, andlaws; breaches or failures of our product or information technology systems, including by cyberattack;
unfavorable results of clinical studies, including issues with third parties conducting any studies, or future publication of articles or announcement of positions by diabetes associations or other organizations that are unfavorable;
the concentration of manufacturing operations and storage of inventory in a limited number of locations; 
loss of employees or inability to identify and recruit new employees; 
risks associated with potential future acquisitions or investments in new businesses; 
ability to generate sufficient cash to service our indebtedness or raise additional funds on acceptable terms or at all;
the volatility of the trading price of our common stock;
risks related to the conversion of any of outstanding Convertible Senior Notes; and
potential limitations on our ability to use our net operating loss carryforwards.
The risk factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20212022 and in this Quarterly Report 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. Actual results could differ materially from those projected in the forward-looking statements; accordingly, you should not rely upon forward-looking statements as predictions of future events. We expressly disclaim any obligation to update these forward-looking statements other than as required by law.
Item 3. 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 June 30, 2022, no amounts were outstanding under our Revolving Credit Facility. In May 2021, we entered into two interest rate swap agreements to effectively convert $480 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 as of June 30, 2022 would decrease or increase our annual earnings, respectively, by approximately $0.2 million.
Refer to “Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 20212022 for a discussion of our market price sensitive instruments and foreign currency exchange risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“the Exchange Act”), as amended, is recorded, processed, summarized and reported within the specified time periods, and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2022.March 31, 2023. Based on the evaluation, our chief executive officer and chief financial officer concluded that, as of that date, our disclosure controls and procedures were effective.
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Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended June 30, 2022March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Information regarding our material pending legal proceedings, which is incorporated herein by reference,if any, is provided in Note 1211 to the condensed consolidated financial statements in this Form 10-Q.10-Q and incorporated herein by reference.
Item 1A. Risk Factors
Refer to the “Risks Factors” section in our Annual Report on Form 10-K for the year ended December 31, 20212022 for a discussion of risks to which our business, financial condition, results of operations and cash flows are subject. There have been no material changes to the risk factors disclosed in the aforementioned Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
NumberDescription
10.1+
10.2+
10.3+
10.4+
31.1
31.2
32.1*
101The following materials from Insulet Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022March 31, 2023 formatted in iXBRL (Inline eXtensible Business Reporting Language), as follows:
(i) Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2022March 31, 2023 and December 31, 20212022
(ii) Condensed Consolidated Statements of Operations (Unaudited) for the Threethree months ended March 31, 2023 and Six Months Ended June 30, 2022 and 2021
(iii) Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Threethree months ended March 31, 2023 and Six Months Ended June 30, 2022 and 2021
(iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Threethree months ended March 31, 2023 and Six Months Ended June 30, 2022 and 2021
(v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30,three months ended March 31, 2023 and 2022 and 2021
(vi) Condensed Notes (Unaudited) to Consolidated Financial Statements
*Furnished herewith.
+Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations.
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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)
Date:AugustMay 4, 20222023/s/ James R. Hollingshead
James R. Hollingshead
Chief Executive Officer
(Principal Executive Officer)
 
Date:AugustMay 4, 20222023/s/ Wayde McMillan
Wayde McMillan
Chief Financial Officer
(Principal Financial Officer)

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