What changed in this filing

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Item 1A. Risk Factors

2023-02-24 compared with 2022-02-24 · 110 added, 141 removed, 356 unchanged (41% of the section changed)

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Our sales of the Omnipod System may be negatively impacted by many factors, including:

• the failure of the Omnipod System to achieve and maintain wide acceptance among opinion leaders in the diabetes treatment community, insulin-prescribing physicians, third-party payors, and people with insulin-dependent diabetes;

• failure of the Omnipod System to achieve and maintain wide acceptance among opinion leaders in the diabetes treatment community, insulin-prescribing physicians, third-party payors, and people with insulin-dependent diabetes;

• manufacturing problems or capacity constraints;

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• results of clinical studies relating to the Omnipod System or our competitors’ products;

• development of an effective patch pump by one or more competitors.

If any of these events occurs, our ability to generate revenue could be significantly reduced, which would adversely affect our business, financial condition, and results of operations.

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The failure to retain a high percentage of our customers could negatively impact our revenue growth and may have a material adverse effect on our business, financial condition, and results of operations.

If we do not effectively manage our growth, our business resources may become strained and we may not be able to deliver the Omnipod System in a timely manner, which could harm our results of operations.

As we continue to expand our sales, we expect to continue to increase our manufacturing capacity, our personnel and the scope of our sales and marketing efforts.

This growth, as well as any other growth that we may experience in the future, will provide challenges to our organization and may strain our management and operations resources.

In order to manage future growth, we will be required to improve existing, and implement new, sales and marketing efforts and distribution channels.

If we do not effectively manage our rapid growth, our business resources may become strained and we may not be able to deliver the Omnipod System in a timely manner, which could harm our results of operations.

As we continue to expand the number of customers we serve, driven in large part by significant demand for Omnipod 5, we expect to continue to increase our manufacturing capacity, our personnel, and the scope of our sales and marketing efforts.

This growth, as well as any other growth that we may experience in the future, will provide challenges to our organization and may strain our management and operations resources, including our customer service.

In order to manage future growth, we will be required to improve existing, and implement new, sales and marketing efforts, distribution channels, and customer support procedures.

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

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 will also need to manage our supply chain and manufacturing effectively, including our sourcing of materials such as semiconductor chips.

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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Failure to secure or retain adequate coverage or reimbursement for our products by third-party payors could adversely affect our business, financial condition, and results of operations.

We expect that sales of the Omnipod System will be limited unless a substantial portion of the sales price of the Omnipod System is paid for by third-party payors, including private insurance companies, health maintenance organizations, preferred provider organizations, federal and state government healthcare agencies and other managed care providers.

In the United States, we currently have contracts establishing reimbursement for the Omnipod System with national and regional third-party payors that provide reimbursement in all 50 states.

While we anticipate entering into additional contracts with other third-party payors, we cannot assure you that our efforts will be successful.

We expect that sales of the Omnipod System, which, in the U.S., occur only through the pharmacy channel for Omnipod 5 and primarily through the pharmacy channel for Omnipod DASH, will be limited unless a substantial portion of the sales price of the Omnipod System is paid for by third-party payors, including private insurance companies, health maintenance organizations, preferred provider organizations, federal and state government healthcare agencies, intermediaries, Medicare, Medicaid and other managed care providers.

In the United States, we currently have contracts establishing reimbursement for

the Omnipod System with national and regional third-party payors and government agencies that provide reimbursement in all 50 states.

Medicare Part D Plan Sponsors may provide coverage for the Omnipod System under the Medicare Part D prescription drug program, which requires negotiating with third-party payors in order to provide our product through the pharmacy channel in the United States.

While we anticipate entering into additional contracts with other intermediaries and third-party payors, we cannot assure you that our efforts will be successful, which could limit the availability of the Omnipod System.

In addition, these contracts can generally be terminated by the third-party payor without cause.

Healthcare market initiatives in the United States may also lead third-party payors to decline or reduce reimbursement for the Omnipod System.

Moreover, compliance with administrative procedures or requirements of third-party payors may result in delays in processing approvals by those payors for consumers to obtain coverage for the use of the Omnipod System.

Coverage decisions and rates of reimbursement increasingly require clinical evidence showing an improvement in user outcomes.

Generating this clinical evidence requires substantial time and investment and there is no guarantee of a desired outcome.

We are an approved Medicare supplier and CMS has issued guidance clarifying that Medicare Part D Plan Sponsors may provide coverage for products such as the Omnipod System under the Medicare Part D prescription drug program.

As a result, we must negotiate with third-party payors in order to provide our product through the pharmacy channel in the United States to users who are covered under Medicare Part D.

Compliance with administrative procedures or requirements of these third-party payors may result in delays in processing approvals by those payors for consumers to obtain Medicare Part D coverage for the use of the Omnipod System.

Medicaid coverage decisions are made by the governing authorities in each state.

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

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

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

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

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Efforts to control healthcare costs, including limiting access to care, alternative delivery models, and changes in the methods used to determine reimbursement scenarios and rates, are ongoing at the federal and state government levels.

The ACA and related healthcare reform laws, regulations and initiatives have significantly increased regulation of managed care plans and decreased reimbursement to Medicare managed care.

Some of these initiatives purport to, among other things, require that health plan members have greater access to drugs not included on a plan’s formulary.

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

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

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It is possible that the ACA, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have an adverse effect on our industry and on our ability to maintain or increase sales of any of our products.

Risks Related to Product Development, Market Access and Competition

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 resulting from technological advances and scientific discoveries as well as other market activities of industry participants.

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

We also compete with Medtronic and Tandem, among others.

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

Risks Related to Competition, Product Development and Intellectual Property

Our failure to compete effectively would negatively impact our revenue.

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.

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

We compete with companies that produce insulin pumps, such as Medtronic, Tandem, The Ypsomed Group and Roche Diabetes Care, Inc (“Roche”).

In addition to the established insulin pump competitors, we compete with companies that provide products and supplies for MDI therapy.

MDI therapy, including smart pens, can be substantially less expensive than pump therapy, and 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, which could result in price pressure and decreased revenue.

In addition, some of our competitors, such as Medtronic and Roche, are large, well-capitalized companies with more resources than we have.

These companies may have competitive advantages over us, including:

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As a result, we may not be able to compete effectively against these companies or their products, which may adversely impact our business.

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

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

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

Several companies are working to develop and market new insulin “patch” pumps, smart pens, and other methods for the treatment of diabetes.

If an existing or future competitor develops a product that competes with or is superior to the Omnipod System, our revenue may decline.

In addition, some of our competitors may compete by changing their pricing model or by lowering the price of their insulin delivery systems or ancillary supplies.

If these competitors’ products were to gain acceptance by healthcare professionals, people with insulin-dependent diabetes or third-party payors, we could experience pricing pressure.

If these competitors’ products were to gain acceptance by healthcare

professionals, people with insulin-dependent diabetes, or third-party payors, we could experience pricing pressure.

If prices were to fall, our results of operations could be materially adversely impacted.

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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.

Medtronic commercially launched a “hybrid closed-loop” system in 2017, and in 2020 Tandem launched an AID system, which could negatively impact our business.

For example, in 2020 Tandem launched an AID system, with which Omnipod 5 competes directly, and which could negatively impact our business.

In addition, the National Institutes of Health and other supporters of diabetes research are continually seeking ways to prevent, cure, or improve the treatment of diabetes.

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Our own new product development initiatives may prove to be ineffective or not commercially successful.

We have ongoing initiatives to develop products to improve the treatment of type 1 and type 2 diabetes.

We may be unable to effectively introduce and market new products or may fail to keep pace with advances in technology.

The healthcare industry is characterized by continuous technological change, resulting in changing consumer preferences and requirements.

The success of our business depends on our ability to introduce new products and adapt to these changing technologies and consumer demands.

If we are unable to introduce and market new products and keep pace with advances in technology, our business will be negatively impacted.

To compete in the marketplace, we must make substantial investments in new product development whether internally or externally through licensing or acquisitions.

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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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We may be unable to adequately protect our intellectual property rights.

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

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.

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

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

measures to protect our intellectual property rights.

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

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

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

Further, 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.

We may not be able to develop additional proprietary technologies that are patentable, and we cannot ensure that our pending patent applications will result in the issuance of patents to us.

We also cannot ensure 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.

These patents may be found to be invalid or not sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications.

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

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

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

Our efforts to safeguard our unpatented and unregistered intellectual property rights, including requiring employees, consultants, and other third parties to sign confidentiality, non-disclosure, or assignment of invention agreements, may not be successful.

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In addition, others may independently develop substantially equivalent or superior proprietary information and techniques or gain access to our trade secrets or disclose such technologies.

If we are unable to sufficiently protect our intellectual property rights and our intellectual property is disclosed or misappropriated, our competitiveness could be impaired, which would limit our growth and future revenue.

To protect our intellectual property, we may need to assert claims of infringement against third parties.

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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.

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.

In addition, we expect that we could be increasingly subject to third-party infringement claims as our revenue increases, the number of competitors grows and the functionality of products and technology in different industry segments overlaps.

While not a part of our business plans or operations, we have been involved in patent infringement suits in the past, including as disclosed in Note 17 to the consolidated financial statements included in Item 8.

As our revenue increases, the number of companies with whom we compete grows and the functionality of products and technology in different industry segments overlaps, the risk of third-party infringement claims increases.

Third parties may currently have, or may eventually be issued, patents on which our current or future products or technologies may infringe.

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

We rely on agreements or licenses to intellectual property or other rights in order to sell our current product and commercialize new products.

If we cannot retain or obtain these agreements, licenses, or other rights, we may not be able to sell, develop, or commercialize our products.

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

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

The loss of any of these rights could impair the functionality of the Omnipod System or prevent us from 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.

We also have a partnership with Glooko that allows the Omnipod System to connect with Glooko’s cloud-based diabetes data management system so that users and healthcare providers can monitor user data, including insulin delivery trends and blood

glucose levels.

Our agreement with Glooko expires in December 2025.

If this agreement is not renewed in the future, our business could be materially adversely impacted.

Risks Related to Economic Conditions and Operating Internationally

Our financial condition and results of operations have been and may to continue to be adversely affected by the COVID-19 pandemic.

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, 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.

Our financial condition and results of operations have been and may to continue to be adversely affected by the COVID-19 pandemic and worldwide economic issues, such as inflation.

The COVID-19 pandemic and preventative measures taken to contain or mitigate the outbreak have caused, and to some degree 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 of the pandemic as well as worldwide economic issues such as inflation, 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.

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, further disruption in China could hinder our ability to produce product and have a material adverse effect on our business and results of operations.

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

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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.

International sales made up over 25% of our revenues in 2022 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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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.

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

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.

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• 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 international markets;

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withdrew from the European Union, commonly referred to as “Brexit”.

The effects of Brexit will depend on the terms of the U.K.’s future relationship with the European Union.

Although it is unknown what those terms will be, it is possible that there could be greater restrictions on imports and exports and on the movement of people between the U.K.

and European Union countries, and increased regulatory complexities.

While the UK and the European Union entered into a Trade and Cooperation Agreement, a number of areas are still unsettled, and it is

possible that there could be greater restrictions on imports and exports and on the movement of people between the U.K.

and European Union countries as well as increased regulatory complexities.

Failure to comply with the U.S.

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Because we do business in the U.K., the U.K.

Bribery Act also extends to our interaction with public and private sector entities and persons outside the U.K., including in the U.S.

Bribery Act also extends to our interaction with public and private sector entities and persons outside the U.K., including in the United States.

Our policies mandate compliance with these anti-bribery laws.

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Violations of anti-bribery laws, or allegations of such violations, could disrupt our business and have a material adverse effect on our results of operations, financial condition, and cash flows.

Risks Related to Supply Chain, Operations and Third-Party Arrangements

Risks Related to Supply Chain, Operations, and Drug Delivery

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

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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 manufacturer 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 maintaining insurance, enacting health and safety protocols, and storing computer data offsite.

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

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With or without insurance, damage to our facility, manufacturing equipment, inventory or other property or to any of our suppliers, may have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to obtain sufficient components or raw materials on a timely basis or if we experience manufacturing difficulties, including not effectively managing the start-up of new manufacturing lines, our business may be harmed.

The manufacture of our product requires the timely delivery of sufficient amounts of quality components and materials.

We acquire our components and materials from many suppliers in various countries.

We are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations, and we may not be able to obtain sufficient components or raw materials on a timely basis at all.

The manufacture of our product requires the timely delivery of sufficient amounts of quality components and materials from many suppliers in various countries.

We work closely with our suppliers to ensure the continuity of supply, but we cannot guarantee these efforts will always be successful.

Further, while efforts are made to 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 similar regulatory agencies in other countries regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for some components or materials.

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

The manufacture of our product is highly exacting and complex, due in part to strict regulatory requirements.

Problems in the manufacturing process, including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials and environmental factors, could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation.

A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue.

Significant manufacturing problems or inability to obtain key components and materials could have a material adverse effect on our business, results of operations, financial condition and cash flows.

In addition, as we commence operation of new manufacturing lines, we could experience quality issues and unexpected operational delays that decrease our gross margins and cause a shortage of product supply.

We are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations.

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

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

For example, given the recent worldwide semiconductor chip shortage, we have entered into “take or pay” contracts with suppliers but cannot guarantee our suppliers will meet their obligations under these contracts.

We have also seen significant price increases for various components and raw materials, including for semiconductor chips.

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

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

Additionally, our suppliers may encounter problems during manufacturing for a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction, component part supply constraints and environmental factors, any of which could delay or impede their ability to meet our demand.

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

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

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

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

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

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

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

• our suppliers may make errors in manufacturing that could negatively affect the safety or efficacy of our products, cause delays in shipment, or negatively affect our reputation;

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• our suppliers may fail to comply with conflict minerals, anti-slavery, or other applicable laws, thus impairing our ability to source materials.

We may not be able to quickly establish additional or alternative suppliers, particularly for our sole-source suppliers, in part because of the FDA approval process and because of the custom nature of various parts.

An interruption or delay in obtaining products from our third-party suppliers, or our inability to obtain products from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competing products.

We rely on agreements or licenses to intellectual property or other rights in order to sell our current product and commercialize new products.

If we cannot retain or obtain these agreements, licenses, or other rights, we may not be able to sell, develop or commercialize our products.

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

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

Our agreement with Glooko expires in December 2025.

If this agreement is not renewed in the future, our business could be materially adversely impacted.

An interruption, delay, or inability to obtain components, products and raw materials from our third-party suppliers at acceptable prices in a timely manner, 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.

Our manufacturing process is highly complex and subject to regulation;

as demand for our products increase, we may experience manufacturing difficulties, including not effectively managing the start-up of new manufacturing lines or issues with our third-party contract manufacturer, which could harm our business.

The manufacture of our product is highly exacting and complex, due in part to strict regulatory requirements.

While we manufacture Omnipod Systems in the United States, a third-party contract manufacturer in China performs assembly and supplies a significant portion of all finished Omnipod Systems.

We and our contract manufacturer may encounter problems during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials, and environmental factors.

These issues could lead to launch delays, product shortage, unanticipated costs, lost revenues, and damage to our reputation.

A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in a quality or safety issue.

Significant manufacturing problems could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Our non-insulin Drug Delivery product line faces challenges which, if not met, may impair its future success.

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 under an agreement that expires in December 2023.

Substantially all 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.

We expect that the future results of our non-insulin drug delivery product line will face several challenges, including:

We expect that the future results of our Drug Delivery product line will face several challenges, including:

• our identification of drug delivery opportunities for a modified Omnipod System;

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• relatively small number of modified Omnipod Systems needed to address each drug-delivery opportunity;

• uncertainties regarding the market acceptance of such drugs and the modified Omnipod System as appropriate delivery device;

• uncertainties regarding the market acceptance of such drugs and the modified Omnipod System as an appropriate delivery device;

• uncertainties relating to the success of the pharmaceutical companies in marketing and selling such drugs as well as the modified Omnipod Systems as the appropriate delivery devices;

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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 Insulin Management System.

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

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

Obtaining 510(k) clearance or PMA for medical devices can be expensive and lengthy, and entail significant user fees.

Further, we may not be able to obtain additional 510(k) clearances or PMAs for new products or for modifications to, or additional indications for, the Omnipod System in a timely fashion or at all.

While we have received 510(k) clearance for our Omnipod Insulin Management System as well as modified versions of this device, including Omnipod DASH and Omnipod 5, we may be required to obtain a new 510(k) clearance or PMA for significant further post-market modifications.

Obtaining 510(k) clearance or PMA can be expensive and lengthy, and we may not be able to obtain them in a timely fashion or at all.

Delays in obtaining future clearances could adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn could harm our revenue and future profitability.

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

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis.

As described elsewhere in this 10-K, in October and November 2022, we issued voluntary Medical Device Corrections (“MDCs”) relating to the batteries and/or charging of our DASH PDMs and Omnipod 5 Controllers, which are manufactured for us by a third-party.

In addition, the FDA may change its clearance and approval policies, adopt additional regulations, revise existing regulations, or take other actions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis.

The FDA is in the process of reviewing the 510(k) approval process and criteria and has announced initiatives to improve the current pre- and post-market regulatory processes and requirements associated with infusion pumps and other home use medical devices.

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

Any change in the laws or regulations that govern

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.

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.

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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.

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

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

We cannot assure you that our facilities or our contract manufacturer or component suppliers’ 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.

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

If our or our contract manufacturers’ 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 manufacturer, or a recall of our devices.

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.

If we, or our contract 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.

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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.

Any corrective action, whether voluntary, such as our voluntary MDCs issued in October and November 2022, or involuntary, 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.

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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.

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

In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.

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Doctors may prescribe our products off-label, as the FDA does not restrict or regulate a doctor’s choice of treatment within the practice of medicine.

However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.

letter, injunction, seizure, civil fine, or criminal penalties.

It is also possible that other federal, state, or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

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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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Although we believe we are in compliance with all applicable state regulations regarding licensure requirements, if we were found to be noncompliant, we could lose our licensure in that state, which could prohibit us from selling our current or future products directly to consumers in that state.

The medical device industry is heavily regulated.

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

If we fail to comply with Medicare, Medicaid, fraud and abuse, and other healthcare regulations, we could be subject to substantial penalties and/or be excluded from participation in government programs.

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

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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.

In addition, data security protection laws passed by the federal government and many states

require notification to data subjects, including customers and others, when there is a security breach of personal data.

If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance.

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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.

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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.

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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.

We recently experienced a data security incident impacting a subset of our customers in which the impacted customer’s IP address, and whether the customer was a Omnipod DASH user and has a PDM, were inadvertently shared with website performance and marketing partners of Insulet through website “cookies” and other trackers.

These trackers have since been disabled, and no financial information, social security numbers, email addresses, or passwords were exposed.

All affected customers and relevant authorities were notified, and we did not view this as a material event.

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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Internal Revenue Code imposes an annual limit on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership or equity structure.

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

of other transactions.

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

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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.

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

Additionally, in December 2022 and February 2023, we acquired intangible assets from Automated Glucose Control LLC (“AGC”) and Bigfoot, which provided us important intellectual property.

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

Even if we are successful in making an acquisition, the products and technologies that we acquire may not be successful or may require significantly greater resources and investments than we originally anticipated.

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

Acquisitions 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.

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

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

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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 or other debt obligations.

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

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

In addition, if we raise additional funds through collaboration, licensing, or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies or grant licenses on terms that are not favorable to us.

Our ability to raise additional capital may be adversely impacted by current economic conditions, including any sustained disruption to the credit and financial markets from the COVID-19 pandemic.

If the macro-economic disruption continues for pro-longed periods, we may need to raise additional capital and capital may not be available on acceptable terms, or at all.

We cannot predict when the macro-economic disruption stemming from COVID-19 will ebb or when the economy will return to pre-COVID-19 levels, if at all.

Our ability to raise additional capital may be adversely impacted by current economic conditions, including inflation and worldwide political unrest, and we may not be able to raise any necessary capital on acceptable terms, or at all.

If we are unable to raise additional capital due to these or other factors, we may need to further manage our operational expenses, including potentially curtailing planned product development activities.

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The price of our common stock may be volatile.

The market price of our common stock is affected by a number of factors, including:

• failure to maintain and increase production capacity and reduce per unit production costs;

• changes in the availability of third-party reimbursement in the United States or other countries;

• volume and timing of orders for our products;

• developments in administrative proceedings or litigation related to intellectual property rights;

• issuance of patents to us or our competitors;

• the announcement of new products or product enhancements by us or our competitors;

• the announcement of technological or medical innovations in the treatment or diagnosis of diabetes;

• changes in governmental regulations or in the status of our regulatory approvals or applications;

• publication of clinical studies relating to our products or a competitor’s product;

• quarterly variations in our or our competitors’ results of operations;

• changes in earnings estimates or recommendations by securities analysts;

• general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

The market price of our common stock is affected by a number of factors, including factors related to our operating performance as a high-growth company and the operating performance of our competitors.

At times, the fluctuations in the market price of our common stock have been unrelated or disproportionate to our operating performance.

In particular, the U.S.

equity markets have at times experienced significant price and volume fluctuations that have affected the market prices of equity securities of many technology companies.

equity markets have at times experienced significant price and volume fluctuations that have affected the market prices of equity securities of many medical device and technology companies.

Broad market and industry factors such as these could materially and adversely affect the market price of our stock, regardless of our actual operating performance.

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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