What changed in this filing

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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-24 · 116 added, 116 removed, 381 unchanged (38% of the section changed)

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• adverse regulatory or legal actions relating to the Omnipod System;

• damage, destruction or loss of any of the facilities where our products are manufactured or stored or of the equipment therein or failure to successfully open or expand new facilities;

• damage, destruction or loss of any of the facilities where our products are manufactured or stored or of the equipment therein;

• failure to successfully open or expand new facilities;

• the inability of users to continue paying for our products;

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If we fail to expand and maintain an effective sales force or successfully develop our relationships with intermediaries, our business, prospects and brand may be materially and adversely affected.

In addition to promoting, marketing and selling the Omnipod System through our own direct sales force, we also utilize domestic and international intermediaries to distribute our product to end-users.

In addition to promoting, marketing, and selling the Omnipod System through our own direct sales force, we also utilize domestic and international intermediaries to distribute our product to users.

We need to expand our distribution network to maintain and grow our business and revenue.

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The form and function of our enterprise information technology systems will need to change and be improved upon as our business needs change.

We will need to manage our supply chain effectively, including the continued development of our manufacturing and our relationships with our contract manufacturers and other suppliers.

For example, we are currently working to implement a new enterprise resource planning system and significantly upgrade our customer relationship management system.

We will need to manage our supply chain effectively, including the continued development of our manufacturing and our relationships with our contract manufacturer and other suppliers.

We may also need to partner with additional third-party suppliers to manufacture certain components of the Omnipod System and install additional manufacturing lines.

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As the Medicaid coverage process and stakeholders are unique to each state, the timeline to gain coverage in each state may vary.

In the United States, we began selling Omnipod DASH in 2019, primarily through the pharmacy channel, which required negotiation of new or amended agreements with our intermediaries and payors.

We began our full market release of Omnipod DASH in 2019, primarily through the pharmacy channel, which required negotiation of new or amended agreements with our intermediaries and payors.

The availability of Omnipod DASH may be limited or restricted if we are unable to maintain these agreements and sustain an adequate level of reimbursement under these agreements.

As we expand our Omnipod System sales and marketing efforts outside of the United States, we face additional risks associated with obtaining and maintaining reimbursement from foreign health care payment systems on a timely basis or at all.

As we expand our Omnipod System sales and marketing efforts internationally, we face additional risks associated with obtaining and maintaining reimbursement from foreign healthcare payment systems on a timely basis or at all.

Failure to secure or retain adequate coverage or reimbursement for the Omnipod System by third-party payors could have a material adverse effect on our business, financial condition and results of operations.

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Moreover, to alleviate budget shortfalls, states have reduced or frozen payments to Medicaid managed care plans.

We cannot accurately predict the complete

impact of these healthcare reform initiatives, but they could lead to a decreased demand for our products and other outcomes that could adversely impact our business and financial results.

Some of the provisions of the ACA have yet to be fully implemented, and certain provisions have been subject to judicial and Congressional challenges.

In addition, there have been efforts to repeal or replace certain aspects of the ACA and to alter the implementation of the ACA and related laws.

For example, the Tax Cuts and Jobs Act that was signed into law on December 22, 2017 eliminated the shared responsibility payment for individuals who fail to maintain minimum essential coverage, commonly referred to as the “individual mandate”.

Further, the Bipartisan Budget Act of 2018 among other things, amended the Medicare statute to reduce the coverage gap in most Medicare drug plans, commonly known as the “donut hole,” by raising the manufacturer discount under the Medicare Part D coverage gap discount program to 70%.

It is unclear how the ACA and its implementation, as well as efforts to repeal or replace, or invalidate, the ACA, or portions thereof, will affect our business.

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We face competition from numerous competitors, many of whom have far greater resources than we have, and, as a result, we may not be able to compete effectively.

The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.

The medical device industry is intensely competitive, subject to rapid change resulting from technological advances and scientific discoveries as well as other market activities of industry participants.

The Omnipod System competes with several existing insulin delivery devices as well as other methods for the treatment of diabetes.

Medtronic has been the market leader for many years in the United States.

Other suppliers we compete with include Tandem in the United States and Roche and Ypsomed outside the United States.

In addition to the established insulin pump competitors, several companies are working to develop and market new insulin “patch” pumps and other methods for the treatment of diabetes.

We also compete with Medtronic and Tandem, among others.

Medtronic has been the insulin pump market leader for many years.

The competitive landscape in our industry continues to undergo significant change.

In addition to the established insulin pump competitors, several companies are working to develop and market new insulin “patch” pumps, smart pens, and other methods for the treatment of diabetes.

These companies are at various stages of development and the number of such companies continuously changes as they enter or exit the market on an ongoing basis.

Many of our competitors are large, well-capitalized companies with more resources than we have.

Some of our competitors are large, well-capitalized companies with more resources than we have.

These companies may have competitive advantages over us, including:

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We also compete with MDI therapy, including smart pens, which is substantially less expensive than pump therapy.

While we believe that pump therapy, in general, and the Omnipod System, in particular, have significant competitive and clinical advantages over traditional MDI therapy, improvements in the effectiveness of MDI therapy may result in fewer people with insulin-dependent diabetes converting from MDI therapy to pump therapy than we expect and may result in negative price pressure.

While we believe that pump therapy, in general, and the Omnipod System, in particular, have significant competitive and clinical advantages over MDI therapy, improvements in the effectiveness of MDI therapy may result in fewer people with insulin-dependent diabetes converting from MDI therapy to pump therapy than we expect and may result in negative price pressure.

Our current competitors or other companies may at any time develop additional products for the treatment of diabetes.

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The diabetes treatment market is subject to rapid technological change and product innovation.

The Omnipod System is based on our proprietary technology, but a number of companies, medical researchers and pharmaceutical companies are pursuing

new delivery devices, delivery technologies, sensing technologies, procedures, drugs and other therapeutics for the monitoring, treatment and/or prevention of insulin-dependent diabetes.

The Omnipod System is based on our proprietary technology, but a number of companies, medical researchers and pharmaceutical companies are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs and other therapeutics for the monitoring, treatment and/or prevention of insulin-dependent diabetes.

For example, FDA approval of a commercially viable “closed-loop” or “hybrid closed-loop” system that combines continuous “real-time” glucose sensing or monitoring and automatic continuous subcutaneous insulin infusion in a manner that delivers appropriate amounts of insulin on a timely basis with reduced user direction could have a material adverse effect on our revenue and future profitability.

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We rely on third parties, such as contract research organizations, medical institutions, clinical investigators, contract laboratories and other third parties to conduct some of our clinical trials and pre-clinical investigations.

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

If these third parties do

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

Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

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If future clinical trials fail to support the efficacy of our current or future products, our sales may be adversely affected and we may lose an opportunity to secure clinical preference from prescribing clinicians, which may have a material adverse effect on our business, financial condition and results of operations.

In addition, future clinical studies or other articles regarding our existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than the Omnipod System or that the Omnipod System is not as effective or easy to use as we claim.

In addition, future clinical studies or articles regarding our existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than the Omnipod System or that the Omnipod System is not as effective or easy to use as we claim.

Additionally, diabetes associations, healthcare providers that focus on diabetes, or other organizations that may be viewed as authoritative could endorse products or methods that compete with the Omnipod System or otherwise announce positions that are unfavorable to the Omnipod System.

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Our success depends in part on our ability to maintain the proprietary nature of our technologies.

We rely on a combination of patents, trade secrets, copyright and trademark laws, confidentiality, non-disclosure and assignment of invention agreements

and other contractual provisions and technical measures to protect our intellectual property rights.

We rely on a combination of patents, trade secrets, copyright and trademark laws, confidentiality, non-disclosure and assignment of invention agreements and other contractual provisions and technical measures to protect our intellectual property rights.

Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated.

Our ability to compete depends in part on our continued ability to develop or acquire commercially valuable patent rights and to protect those rights adequately.

Our ability to compete depends in part on our continued ability to develop or acquire commercially valuable intellectual property rights and to protect those rights adequately.

We may not be able to develop additional proprietary technologies that are patentable.

Further, we cannot ensure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors or that these patents will be found to be valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.

In addition, our ability to enforce and protect our intellectual property rights may be limited in certain circumstances outside the United States.

For example, we may not be able to protect our intellectual property rights effectively in China, where we rely on third-party contract manufacturers to produce our product.

Further, we cannot ensure that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by or to us in the past or in the future will not be challenged or circumvented by competitors or that these patents will be found to be valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.

In addition, our ability to enforce and protect our intellectual property rights internationally may be limited in certain circumstances.

For example, we may not be able to protect our intellectual property rights effectively in China, where we rely on a third-party contract manufacturer to produce our product.

The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.

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Claims that our current or future products infringe or misappropriate the proprietary rights of others could adversely affect our ability to sell those products and cause us to incur additional costs.

Substantial litigation over intellectual property rights exists in the medical device industry.

We operate in an industry characterized by extensive patent litigation.

We have settled infringement suits in the past and as disclosed in Note 17 to the consolidated financial statements included in Item 8, we are currently subject to patent infringement litigation with Roche Diabetes Care, Inc.

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Such litigation, regardless of its outcome, could result in the expenditure of significant financial resources and the diversion of management’s time and resources.

In addition, such litigation could cause negative publicity, adversely affect prospective users, cause product shipment delays, limit or prohibit us from manufacturing, marketing or selling our current or future products, require us to develop non-infringing technology, make substantial payments to third parties or enter into royalty or license agreements, which may not be available on acceptable terms or at all.

In addition, such litigation could cause negative publicity, adversely affect prospective users, cause product shipment delays, limit or prohibit us from manufacturing, marketing or selling our current or future products, and/or require us to develop non-infringing technology, make substantial payments to third parties, or enter into royalty or license agreements, which may not be available on acceptable terms or at all.

If a successful claim of infringement were made against us and we could not develop non-infringing technology or license the infringed or similar technology on a timely and cost-effective basis, our revenue could decrease substantially, and we could be exposed to significant liability.

A court could enter orders that temporarily, preliminarily or permanently enjoin our customers from using our products or us from manufacturing, selling, or importing our products, or could enter an order mandating that we undertake certain remedial activities.

A court could enter orders that temporarily, preliminarily or permanently enjoin consumers from using our products or us from manufacturing, selling, or importing our products, or could enter an order mandating that we undertake certain remedial activities.

Risks Related to Economic Conditions and Operating Internationally

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The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption in the markets we sell our products into and operate in and negatively impacted business and healthcare activity globally.

The pandemic and preventative measures taken to contain or mitigate the outbreak, have caused, and are continuing to cause, business slowdown or shutdown in affected areas and disruption in the financial markets globally.

This has led to a significant increase in unemployment and a loss of employee-sponsored insurance coverage for many people in the United States.

As a result, consumers may reduce their spending, new orders for our Omnipod System may decline and our customer attrition rate may increase, which could have a material adverse effect on our business, sales, financial condition and results of operations.

The pandemic and preventative measures taken to contain or mitigate the outbreak, including vaccine mandates, have caused, and are continuing to cause, business slowdown or shutdown in affected areas, supply chain disruptions, labor shortages, inflation and disruption in the financial markets globally.

As a result, consumers may reduce their spending, new orders for our Omnipod System may decline and our user attrition rate may increase, which could have a material adverse effect on our business, sales, financial condition and results of operations.

The COVID-19 pandemic also has the potential to significantly impact our supply chain if the manufacturing plants that produce our products or product components, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize our products, are disrupted, temporarily closed or experience worker shortages for a sustained period of time.

Although China, where we manufacture a significant portion of our product, has experienced a recovery and we are currently producing at pre-COVID-19 levels, should China suffer a COVID-19 relapse, it could hinder our ability to produce product and have a material adverse effect on our business and results of operations.

As a result of the COVID-19 pandemic, we have transitioned to a remote work environment for those employees who can perform their job function outside of our facilities.

The remote work environment has increased risks associated with our information technology systems and networks, including cyber-attacks, computer viruses, disruptions, or shutdowns that could result in a failure to protect our information technology systems and data integrity.

As a result of the COVID-19 pandemic, many employees have transitioned to a remote or hybrid work environment, which has increased risks associated with our information technology systems and networks.

These increased risks include cyber-attacks, computer viruses, disruptions, or shutdowns that could result in a failure to protect our information technology systems and data integrity.

The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, may impact our ability to carry out our business as usual.

For example, the COVID-19 pandemic may divert healthcare resources away from the conduct of clinical trials and interrupt the operations of the FDA and comparable foreign regulatory agencies, which could delay product approval timelines, including for our Omnipod 5.

Our financial condition or results of operations may be adversely affected by international business risks.

We sell the Omnipod System in Europe, Canada and the Middle East.

Our operations outside of the United States are subject to risks that are inherent in conducting business under non-U.S.

laws, regulations and customs.

Sales outside the United States made up approximately one third of our revenues in 2020 and we expect non-U.S.

sales to contribute significantly to our future growth.

In addition to the United States, we sell the Omnipod System in Europe, Canada, the Middle East and Australia.

Our international operations are subject to risks that are inherent in conducting business under foreign laws, regulations and customs.

International sales made up one third of our revenues in 2021 and we expect international sales to contribute significantly to our future growth.

dollar strengthens in relation to the currencies of other countries where we sell our products, such as the euro, our U.S.

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Changes in the relative values of currencies occur regularly and, in some instances, may have a significant effect on our operating results.

We also rely on third-party suppliers located outside the United States.

We also rely on third-party suppliers located in other countries.

For example, a significant portion of our Omnipod Systems are manufactured at third-party contract manufacturer facilities in China.

Our efforts to introduce or expand our current or future products in foreign markets may not be successful, in which case we may have expended significant resources without realizing the expected benefit.

Ultimately, the investment required for expansion into foreign markets could exceed the results of operations generated from this expansion.

Our efforts to introduce or expand our current or future products in international markets may not be successful, in which case we may have expended significant resources without realizing the expected benefit.

Ultimately, the investment required for expansion into international markets could exceed the results of operations generated from this expansion.

In addition to the risks discussed elsewhere in this Item 1A, other risks associated with doing business internationally, include:

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• negative consequences from changes in or interpretations of tax laws;

• difficulty in establishing, staffing and managing non-U.S.

• difficulty in establishing, staffing and managing international operations;

• difficulties associated with foreign legal systems, including increased costs associated with enforcing contractual obligations in foreign jurisdictions;

• changes in regulatory requirements;

• adapting to the differing laws and regulations, business and clinical practices, and consumer preferences in foreign markets;

• difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign partners, distributors or sales or marketing agents;

• adapting to the differing laws and regulations, business and clinical practices, and consumer preferences in international markets;

• difficulties in managing international relationships, including any relationships that we establish with foreign partners, distributors or sales or marketing agents;

• difficulty in collecting accounts receivable and longer collection periods.

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The FCPA, the U.K.

Bribery Act and similar anti-bribery laws enacted in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S.

officials for the purpose of obtaining or retaining business.

Bribery Act and similar anti-bribery laws enacted in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business.

Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws.

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Our policies mandate compliance with these anti-bribery laws.

in parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices.

We operate in parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices.

Despite our training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents.

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Our Omnipod System inventory is produced and maintained in a limited number of locations.

Our manufacturing of the Omnipod System is conducted in three locations, at our U.S.

manufacturing facility in Massachusetts and on manufacturing lines owned by us at two facilities located in China, which are operated by third-party contract manufacturers.

Political or financial instability, currency fluctuations, the outbreak of pandemics such as the COVID-19, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters, or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could materially disrupt our supply of product from China, increase our costs, and/or adversely affect our results of operations.

Our manufacturing of the Omnipod System is conducted in two locations, at our U.S.

manufacturing facility in Massachusetts and on manufacturing lines owned by us at a facility located in China that is operated by a third-party contract manufacturer.

Political or financial instability, currency fluctuations, the outbreak of pandemics such as COVID-19, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters, or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could materially disrupt our supply of product from China, increase our costs, and/or adversely affect our results of operations.

Further, following the COVID-19 pandemic there may be increased pressure for U.S.

medical device companies to reduce dependency on China for their supply chain.

In addition, substantially all our U.S.

In addition, substantially all of our U.S.

Omnipod System inventory is held at a single location in Massachusetts and our European Omnipod System inventory is maintained by a third-party logistics entity primarily in a single location in the Netherlands.

We take precautions to ensure that our third-party contract manufacturers and logistics entity safeguard our assets, including insurance, health and safety protocols, and off-site storage of computer data.

We take precautions to ensure that our third-party contract manufacturer and logistics entity safeguard our assets, including insurance, health and safety protocols, and off-site storage of computer data.

However, a natural or other disaster, such as a fire or flood, could cause substantial delays in our operations, damage or destroy our manufacturing equipment and/or inventory and cause us to incur additional expenses.

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Further, while efforts are made to diversify our sources of components and materials, in certain instances we acquire components and materials from a sole supplier.

In addition, due to the stringent regulations and requirements of the FDA and other similar non-U.S.

regulatory agencies regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for some components or materials.

In addition, due to the stringent regulations and requirements of the FDA and similar regulatory agencies in other countries regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for some components or materials.

A reduction or interruption in supply, and an inability to develop alternative sources for such supply, could hinder our ability to manufacture our products in a timely or cost-effective manner, and have a material adverse effect on our business and results of operations.

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We rely on suppliers who manufacture the components for and perform assembly of the Pods and PDMs.

In addition, two third-party contract manufacturers in China perform assembly and supply a significant portion of all finished Omnipod Systems.

We do not have long-term supply agreements with all our suppliers, and, in many cases, we, or our contract manufacturers, make purchases based on individual purchase orders.

In addition, a third-party contract manufacturer in China performs assembly and supplies a significant portion of all finished Omnipod Systems.

We do not have long-term supply agreements with all of our suppliers, and, in many cases, we, or our contract manufacturer, make purchases based on individual purchase orders.

In some cases, our agreements with suppliers can be terminated by either party upon short notice.

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Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including:

• we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours;

• our suppliers may give other customers’ needs higher priority than ours affecting their ability to deliver products to us in a timely manner, as we are not a major customer of many of our suppliers;

• we may not be able to obtain an adequate supply in a timely manner or on commercially reasonable terms;

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• switching components may require product redesign and submission to the FDA of a new 510(k);

• our suppliers manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacture for others may affect their ability to deliver products to us in a timely manner;

• thefts of our trade secrets and intellectual property could occur with the third-party supply process;

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For example, our rights to incorporate the FreeStyle blood glucose meter into the Omnipod are governed by a license agreement with Abbott.

In addition, we have a commercial agreement with Dexcom that allows us to launch Omnipod 5 with integration to Dexcom’s CGM and have a development agreement with Abbott to integrate Abbott’s CGM into Omnipod 5.

The loss of any of these rights could impair the functionality of the Omnipod or prevent us from selling our products without significant development and regulatory activities that may not be completed in time to prevent an interruption in the availability of the Omnipod to consumers.

In addition, we have a commercial agreement with Dexcom that allows us to sell Omnipod 5 with integration to Dexcom’s CGM and have a development agreement with Abbott to integrate Abbott’s CGM into Omnipod 5.

The loss of any of these rights could impair the functionality of the Omnipod System or prevent us from selling our products without significant development and regulatory activities that may not be completed in time to prevent an interruption in the availability of the Omnipod System to consumers.

This could result in a material adverse effect on our business, financial condition and results of operations.

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Our non-insulin drug delivery product line involves the development, manufacture and sale of a modified Omnipod System for delivery of a specific drug other than insulin.

Most of our commercialized drug delivery revenue consists of sales of a customized version of our product for use in Amgen’s Neulasta Onpro kit.

Most of our commercialized drug delivery revenue consists of sales of a customized version of our product for use in Amgen’s Neulasta Onpro kit under an agreement that expires in December 2023.

The marketing and sales initiatives driving this product line differ markedly from those on which we rely for our sales of Omnipod Systems to treat diabetes since the non-insulin drug delivery devices depend on marketing and sales to pharmaceutical companies, not to users and clinicians.

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• regulatory requirements and reimbursement rates associated with such drugs.

If we are unsuccessful in overcoming one or more of these challenges, or if our agreement with Amgen is terminated, our financial results could be materially and adversely impacted.

If we are unsuccessful in overcoming one or more of these challenges, or if our agreement with Amgen is terminated or not renewed, our financial results could be materially and adversely impacted.

Risks Related to Government Regulation and Litigation

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• design, development and manufacturing;

• testing, labeling, content and language of instructions for use and storage;

• testing, labeling, and content and language of instructions for use and storage;

• clinical trials;

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Before a new medical device, or a significant modification of a medical device, including a new use of or claim for an existing product, can be marketed in the United States, it must first receive either 510(k) clearance or PMA from the FDA, unless an exemption applies.

In December 2012, we received 510(k) clearance for our Omnipod.

We have since obtained clearance for modified versions of this device, including Omnipod DASH, which was cleared by the FDA in 2018 to be used as an integrated insulin pump in an interoperable AID system.

In December 2012, we received 510(k) clearance for our Omnipod Insulin Management System.

We have since obtained clearance for modified versions of this device, including Omnipod DASH, which was cleared by the FDA in 2018 and Omnipod 5, which was cleared by the FDA in January 2022.

We may be required to obtain a new 510(k) clearance or PMA for significant further post-market modifications to the Omnipod System.

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As part of this effort, the FDA is reviewing the adverse event reporting and recall processes for insulin pumps.

Any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.

The Omnipod is also sold in Canada and certain countries in Europe and the Middle East.

Any change in the laws or regulations that govern

the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.

The Omnipod System is also sold in Canada, Australia and certain countries in Europe and the Middle East.

As a result, we are required to comply with additional foreign regulatory requirements.

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Failure to fulfill foreign regulatory requirements on a timely basis or at all could adversely affect our ability to grow our business.

If we, our contract manufacturers or our component suppliers fail to comply with the FDA’s quality system regulations, the manufacturing and distribution of our devices could be interrupted, and our sales and operating results could suffer.

We, our contract manufacturers and our component suppliers are required to comply with the FDA’s QSR, which is a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance, sterilization, labeling, packaging, storage, shipping and servicing of our devices.

If we, our contract manufacturer or our component suppliers fail to comply with the FDA’s quality system regulations, the manufacturing and distribution of our devices could be interrupted, and our sales and operating results could suffer.

We, our contract manufacturer and our component suppliers are required to comply with the FDA’s QSR, which is a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance, sterilization, labeling, packaging, storage, shipping and servicing of our devices.

Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic, sometimes unannounced, inspections by the FDA.

We cannot assure you that our facilities or our contract manufacturers’ or component suppliers’ facilities would pass any future quality system inspection.

If our or any of our contract manufacturers’ or component suppliers’ facilities fails a quality system inspection, the manufacturing or distribution of our devices could be interrupted, and our operations disrupted.

Failure to take adequate and timely corrective action in response to an adverse quality system inspection could force a suspension or shutdown of our labeling operations or the manufacturing operations of our contract manufacturers, or a recall of our devices.

If we, or our manufacturers, fail to adhere to QSR requirements, this could delay production of our products and lead to fines, difficulties in obtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our financial condition or results of operations.

We cannot assure you that our facilities or our contract manufacturer or component suppliers’ facilities would pass any future quality system inspection.

If our or our contract manufacturers’ or component suppliers’ facilities fails a quality system inspection, the manufacturing or distribution of our devices could be interrupted, and our operations disrupted.

If we, or our manufacturer, fail to adhere to QSR requirements, this could delay production of our products and lead to fines, difficulties in obtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our financial condition or results of operations.

Malfunction of our products could lead to recalls or safety alerts and have a significant adverse impact on us.

Medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of our similar devices were to recur.

Any such adverse event involving our products could result in voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action.

Adverse events involving our products have been reported to us in the past, and we cannot guarantee that they will not occur in the future.

Any corrective action, whether voluntary or involuntary, such as our voluntary Medical Device Correction issued in February 2020, may require the dedication of our time and capital, could distract management from operating our business and potentially harm our reputation and financial results.

The FDA and similar governmental bodies in other countries have the authority to require the recall of our products if we or our contract manufacturers fail to comply with relevant regulations pertaining to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning the safety or efficacy of these products.

A government-mandated recall could occur if the FDA finds that there is a reasonable probability that the device would cause serious, adverse

health consequences or death.

The FDA and similar governmental bodies in other countries have the authority to require the recall of our products if we or our contract manufacturer fails to comply with relevant regulations pertaining to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning the safety or efficacy of these products.

A government-mandated recall could occur if the FDA finds that there is a reasonable probability that the device would cause serious, adverse health consequences or death.

A voluntary recall by us could occur as a result of any material deficiency in a device, such as manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with applicable regulations.

Recalls of any of our products would divert managerial and financial resources and could have an adverse effect on our reputation, results of operations and financial condition, and impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands.

We may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on our future sales and our ability to generate profits.

Adverse events involving our products have been reported to us in the past, and we cannot guarantee that they will not occur in the future.

Any corrective action, whether voluntary or involuntary, such as our voluntary Medical Device Corrections issued in February 2020 and January 2021, may require the dedication of our time and capital, could distract management from operating our business and potentially harm our reputation and financial results.

In the event of a recall, we may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on our future sales and our ability to generate profits.

Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA.

We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA.

We may initiate voluntary recalls involving our products in the future that we determine do not require notification to the FDA.

If the FDA disagrees with our determinations, they could require us to report those actions as recalls.

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In addition, the off-label use of our products may increase the risk of product liability claims.

Product liability claims are expensive to defend and could divert management’s attention, result in substantial damage awards against us, and harm our reputation.

Product liability claims are expensive to defend and could divert management’s attention, result in substantial damage awards against us, and

harm our reputation.

If we were found to be noncompliant with state DME licensure rules, we could lose our licensure in that state, which could prohibit us from selling our current or future products directly to consumers in that state .

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If we fail to comply with all applicable laws and government regulations, we could be subject to substantial penalties and/or be excluded from participation in government programs.

Our relationships with customers and third-party payors are subject to broadly applicable fraud and abuse and other health care laws and regulations that may constrain our sales, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs and certain customer and product support programs, we may have with hospitals, physicians, customers or other potential purchasers of medical devices.

These laws include, among others, the federal healthcare Anti-Kickback Statute, the federal civil False Claims Act, other federal health care false statement and fraud statutes, the Open Payments program, the Civil Monetary Penalties Law, and analogous fraud and abuse and transparency laws in most states, as described in “Item 1—Business—Government Regulation”.

Our relationships with customers and third-party payors are subject to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain our sales, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs and certain customer and product support programs, we may have with hospitals, physicians, customers or other potential purchasers of medical devices.

These laws include, among others, the federal healthcare Anti-Kickback Statute, the federal civil False Claims Act, other federal healthcare false statement and fraud statutes, the Open Payments program, the Civil Monetary Penalties Law, and analogous fraud and abuse and transparency laws in most states, as described in “Item 1—Business—Government Regulation”.

We conduct various marketing and product training activities that involve making payments to healthcare providers and entities.

While we believe and make every effort to ensure that our business arrangements with third parties and other activities and programs comply with all applicable laws, these laws are complex and our activities may be found not to be compliant with one of these laws, which may result in significant civil, criminal and/or administrative penalties, fines, damages, and exclusion from participation in federal health care programs.

Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to, and thus could have a material adverse effect on our business, financial condition and results of operations.

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We are subject to complex and evolving laws and regulations regarding privacy and data protection, many of which are subject to change and uncertain interpretation, which could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.

We are subject to a variety of laws and regulations in the United States and abroad relating to privacy and data protection, data security, data retention and deletion, personal information, electronic contracts and other communications.

We are subject to a variety of laws and regulations relating to privacy and data protection, data security, data retention and deletion, personal information, electronic contracts, and other communications.

The introduction of new products or expansion of our activities in certain jurisdictions may subject us to additional laws and regulations.

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privacy rules under HIPAA protect medical records and other personal health information by limiting their use and disclosure, giving individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended purpose.

In the state of California, the CCPA, which provides certain privacy rights and consumer protection for residents of the state became effective in 2020, and the CPRA, which amends and expands the CCPA, will take effect in 2023.

In California, the CCPA, which provides certain privacy rights and consumer protection for residents of the state became effective in 2020, and the CPRA, which amends and expands the CCPA, will take effect in 2023.

These consumer rights include the right to know what personal information is collected, the right to know whether the data is sold or disclosed and to whom, the right to request a company to delete the personal information collected, the right to opt-out of the sale of personal information and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right.

California and other states’ laws apply more broadly and now or in the future may reach data we hold that relates to employees and health care providers, not just customers.

Colorado and Virginia have enacted similar privacy laws that will also take effect in 2023.

California and other states’ laws apply more broadly and now or in the future may reach data we hold that relates to employees and healthcare providers, not just customers.

In addition, data security protection laws passed by the federal government and many states require notification to data subjects, including customers and others, when there is a security breach of personal data.

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If we fail to comply with these standards, we could be subject to criminal penalties and civil sanctions, including significant fines and penalties.

We rely on the proper function, availability and security of our product and information technology systems and a cyber-attack or other breach or disruption of our product or these systems could have a material adverse effect on our business and results of operations.

The increased scope of regulation around the world may require expanded compliance programs and resources.

As our efforts to gain insights from data increase for the operation of our products and services and for the improvement of business processes, including sales and marketing, our exposure to increasingly complex privacy regulation may impede our ability to use data in this way.

We rely on the proper function, availability and security of our product and information technology systems and a successful cyber-attack or other breach or disruption of our product or these systems could have a material adverse effect on our business and results of operations.

We rely on information technology systems to process, transmit and store electronic information in our day-to-day operations.

The form and function of such systems may change over time as our business needs change.

The nature of our business involves the receipt and storage of personal and financial information regarding our customers.

The nature of our business involves the receipt and storage of personal and financial information regarding our customers, including sensitive medical information.

We use our information technology systems to manage or support a variety of business processes and activities, including sales, shipping, billing, customer service, procurement, and supply chain, manufacturing and accounts payable.

In addition, we use enterprise information technology systems to record, process, and summarize transactions and other financial information and results of operations for internal reporting purposes and to comply with financial reporting, legal, and tax regulatory requirements.

Many of our information systems are cloud-hosted and managed by third-party vendors, some of which may have access to confidential business, employee, healthcare professional, and/or customer information.

Our information technology systems may be susceptible to damage, disruptions or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors or catastrophic events.

Any failure by us to maintain or protect our information technology systems and data integrity, including from cyber-attacks, intrusions, disruptions or shutdowns, could result in the unauthorized access to customer data and personally identifiable information, theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise our confidential or proprietary information and disrupt our operations.

Additionally, the FDA has warned that insulin pumps may have cybersecurity vulnerabilities and could be manipulated by hackers, causing danger to diabetes patients.

If our product is breached or our information technology systems are breached or suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may be materially and adversely affected.

Additionally, the FDA has warned that insulin pumps may have cybersecurity vulnerabilities and could be manipulated by hackers, causing danger to people with diabetes.

After extensive testing and research in conjunction with an independent third-party firm, a potential security vulnerability in the Omnipod was identified.

(This vulnerability does not exist in Omnipod DASH or Omnipod 5.) Successful exploitation of this vulnerability may allow an attacker to gain access to the Pod to intercept, modify, or interfere with the wireless RF communications to or from the PDM.

This may allow attackers to read sensitive data, change pump settings or control insulin delivery.

Insulet is aware of a specific group of people with diabetes who have been able to duplicate the Pod communication protocol using a smartphone and a bridge, which in turn allows the Pod to be controlled using an unauthorized device.

This practice is commonly referred to as Do-It-Yourself (DIY) and is not the intended use for the Omnipod System.

Insulet has not provided the DIY community with any type of information or input on the product, nor has Insulet been provided with any information proving that this form of off-label use is a safe use of the system.

This practice does not exist with Omnipod 5.

If our product is breached or our information technology systems are breached or suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our reputation, business, and operating results may be materially adversely affected.

Failure to maintain the privacy and security of our customer, third-party payor, employee, supplier or Company information could result in substantial costs and/or subject us to litigation, enforcement actions and reputational damage.

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We have implemented and regularly review and update processes and procedures to protect against unauthorized access to or use of secured data and to prevent data loss.

However, the ever-evolving threats mean we must continually evaluate and adapt our systems and processes, and our efforts may not be adequate to safeguard against all data security breaches, misuse of data or sabotage of our systems.

However, the ever-evolving threats mean we must continually evaluate and adapt our

systems and processes, and our efforts may not be adequate to safeguard against all data security breaches, misuse of data, or sabotage of our systems.

Any future significant compromise or breach of our data security, whether external or internal, or misuse of customer, third-party payor, employee, supplier, or Company data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation.

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We may not be able to generate sufficient cash flow from operations to service our debt, which is substantial.

As of December 31, 2020, we had debt of $1.3 billion, including $1.2 billion aggregate principal amount of Convertible Senior Notes, which mature between 2024 and 2026.

As of December 31, 2021, we had debt of $1.4 billion, including $800 million aggregate principal amount of Convertible Senior Notes, which mature in 2026.

Our ability to make scheduled payments or to refinance the Convertible Senior Notes or other debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.

We cannot guarantee that we will maintain a level of cash flows from operating activities sufficient to permit us to repay the principal or service our interest.

If our cash flows and capital resources are insufficient to fund these obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness, including the outstanding Convertible Senior Notes.

We cannot assure you that we would be able to take any of these actions, that these actions would permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our future debt agreements.

If we do not generate sufficient cash flow from operations, and additional borrowings, refinancings, or proceeds from asset sales are not available to us, we may not have sufficient cash to enable us to meet all of our obligations.

Our Credit Agreement imposes restrictions on us that may adversely affect our ability to operate our business.

Our Credit Agreement contains covenants that restrict our ability, and that of our subsidiaries, to engage in certain transactions, including, among other things, limitations on our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness and make acquisitions or other investments.

These restrictions may impair our ability to respond to changing business and economic conditions and may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.

Conversion of any of our Convertible Senior Notes may dilute the ownership interest of existing stockholders or depress our stock price.

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Any sales in the public market of any of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

In addition, the anticipated conversion of the Convertible Senior Notes into a combination of cash and shares of our common stock could depress the price of our common stock.

In addition, conversion of the Convertible Senior Notes could depress the price of our common stock.

Our ability to use net operating loss carryforwards may be subject to limitation.

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Our ability to use net operating losses may be limited by prior changes in our ownership and may be further limited by the issuance of common stock in connection with the conversion of our Convertible Senior Notes, or by the consummation of other transactions.

As a result, if we earn net taxable income, our ability to use net operating loss carryforwards to offset U.S.

federal taxable income may become subject to limitations, which could potentially result in increased future tax liabilities for us.

As a result, our ability to use net operating loss carryforwards to offset U.S.

federal taxable income may become subject to limitations.

General Risks

Our success will depend on our ability to attract and retain personnel.

Over the last several years, we have made significant changes to our senior management team and to many other positions throughout the Company.

We believe we will benefit substantially from the leadership and performance of these new and promoted employees.

Our success will depend on our ability to retain our employees and to attract and retain additional qualified personnel in the future.

In addition, it is important to the success of the Company that the transition of new and promoted employees and executives be largely seamless.

Competition for senior management personnel, and other highly

skilled personnel is intense and there can be no assurances that we will be able to retain our personnel.

The loss of the services of members of our senior management, and other highly skilled personnel could prevent or delay the implementation and completion of our objectives or divert management’s attention to seeking qualified replacements.

Our success depends on our ability to attract, motivate, and retain key personnel.

Our success depends on our ability to retain our employees and to attract and retain additional qualified personnel in the future.

We face intense competition for employees, particularly in light of recent labor shortages and as people are increasingly able to work remotely.

We face challenges in maintaining employee well-being, recognizing that the additional financial, family, and health burdens that many employees may be experiencing due to the COVID-19 pandemic and related economic uncertainties may adversely impact job performance and employee retention.

Losing members of our senior management, and other highly skilled personnel could prevent or delay the implementation and completion of our objectives or divert management’s attention to seeking qualified replacements and ensuring seamless transitions.

Additionally, the sale and after-sale support of the Omnipod System is logistically complex, requiring us to maintain an extensive infrastructure of field sales personnel, diabetes educators, customer support, insurance specialists, and billing and collections personnel.

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If we are presented with appropriate opportunities, we may pursue acquisitions or investments in complementary businesses, products or technologies.

For example, in January 2022, we acquired one of our suppliers.

We may not complete the transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the expected benefits of any acquisition or investment.

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We could also experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets and asset impairment charges if the acquisitions are not as successful as we originally anticipate.

We will likely face risks, uncertainties and disruptions associated with the integration process, including difficulties in the integration of the operations of any acquired company, integration of acquired technology with our products, and the potential loss of key employees, customers, distributors or suppliers of the acquired businesses.

Integration of an acquired business also may require management resources that otherwise would be available for development of our existing business.

Acquisitions present risks, uncertainties and disruptions associated with the integration process, including difficulties in the integration of the operations of any acquired company, integration of acquired technology with our products, and the potential loss of key employees, customers, distributors, or suppliers of the acquired businesses.

In addition, integration of an acquired business may require management resources that otherwise would be available for development of our existing business.

If an acquired business fails to operate as anticipated or cannot be successfully integrated into our existing business, our stock price, business, financial condition, and results of operations could be materially and adversely affected.

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• the number and timing of any acquisitions or other strategic transactions.

We may in the future seek additional funds from public and private stock offerings, borrowings under credit lines or other sources, and we may need to raise additional debt or equity financing to repay our outstanding Senior Convertible Notes.

We may in the future seek additional funds from public and private stock offerings, borrowings under credit lines, or other sources, and we may need to raise additional debt or equity financing to repay our outstanding Senior Convertible Notes or other debt obligations.

If we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders.

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manufacturing.

As of December 31, 2020, we leased a total of 15 facilities in 7 countries consisting of approximately 225,000 square feet of office, research and development and warehousing space and other related facilities, primarily in North America and Europe.

As of December 31, 2021, we leased a total of 17 facilities in 8 countries consisting of approximately 320,000 square feet of office, research and development, and warehousing space and other related facilities, primarily in North America, Asia and Europe.

Legal Proceedings

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors