Exhibit 99.1
Insulet Announces Pricing of Convertible Senior Notes Due 2026
ACTON, Mass., September 4, 2019 — Insulet Corporation (NASDAQ:PODD) (Insulet or the Company), a leader in tubeless insulin pump technology with its Omnipod® Insulin Management System (Omnipod System), has priced a private placement of $700 million aggregate principal amount of convertible senior notes due 2026 (the Notes). The Company upsized the offering to an aggregate principal amount of $700 million of the Notes. The Notes will bear interest at an annual rate of 0.375% and will mature on September 1, 2026, unless earlier converted, redeemed or repurchased. Insulet also granted the initial purchasers of the Notes an option to purchase up to an additional $100 million aggregate principal amount of Notes in the private placement. The closing of the private placement is expected to occur on September 6, 2019, subject to customary closing conditions.
The Notes will be convertible prior to the close of business on the business day immediately preceding June 1, 2026 only under certain circumstances and during certain periods, and irrespective of those circumstances, will be convertible on or after June 1, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date. The conversion rate will initially be 4.4105 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $226.73 per share of Insulet common stock, which represents a premium of approximately 35.0% to the $167.95 per share closing price of Insulet common stock on September 3, 2019), subject to adjustment in certain circumstances. Upon conversion, the Notes may be settled, at Insulet’s election, in cash, shares of Insulet’s common stock or a combination of cash and shares of Insulet’s common stock.
Insulet estimates that the net proceeds from the Notes offering will be approximately $684.3 million (or $782.0 million if the initial purchasers’ option to purchase additional Notes is exercised in full), after deducting discounts and before the cost of the capped call transactions described below and estimated offering expenses payable by Insulet.
The Company intends to use approximately $74.7 million of the net proceeds from the Notes offering to pay the cost of the capped call transactions described below. The Company intends to use approximately $455.0 million of the net proceeds from the Notes offering and to issue approximately 1.16 million shares of the Company’s common stock to repurchase $225 million aggregate principal amount of the Company’s outstanding 1.25% Convertible Senior Notes due 2021 (the 2021 Notes) pursuant to individually negotiated transactions. Such activity could affect the market price of the Company’s common stock. The Company expects that holders of the 2021 Notes that sell their 2021 Notes in such repurchases may purchase shares of the Company’s common stock in the market to unwind their hedge positions in connection with such repurchases, which could increase the market price of the Company’s common stock. Such repurchases are expected to close substantially concurrently with the closing of the Notes offering on September 6, 2019, in each case subject to customary closing conditions. Insulet intends to use the remainder of the net proceeds, together with cash on hand, (i) to satisfy the cash portion, if any, of the Company’s conversion obligations and/or fund the redemption, as applicable, of the 2021 Notes in accordance with the terms of the indenture governing such 2021 Notes, (ii) to pay fees and expenses relating to the offering of the Notes and related transactions and/or (iii) for general corporate purposes.
In connection with the pricing of the Notes, the Company entered into capped call transactions with certain financial institutions (the Option Counterparties). The capped call transactions are expected to generally reduce the potential dilutive effect on the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap which will initially be $335.90 per share, representing a premium of 100.0% over the last reported sale price of the Company’s common stock on September 3, 2019, subject to certain adjustments under the terms of the capped call transactions. If the initial purchasers exercise their option to purchase additional Notes, the Company expects to enter into additional capped call transactions with the Option Counterparties.
In connection with establishing their initial hedges of the capped call transactions, the Company understands that the Option Counterparties or their respective affiliates expect to enter into various derivative transactions with respect to the Company’s common stock and/or purchase shares of the Company’s common stock concurrently with or shortly after the pricing of the Notes (and, if applicable, the exercise by the initial purchasers of their option to purchase additional Notes). This activity could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the Notes at that time.
In addition, the Company understands that the Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company’s common stock and/or purchasing or selling the Company’s common stock or other securities of the Company in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during the valuation period for the capped call transactions, which is expected to occur during the 40 trading day period beginning on the 41st scheduled trading day prior to the maturity of the Notes). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the Notes, which could affect the ability of holders to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the number of shares and value of the consideration that holders will receive upon conversion of the Notes.
