What changed in this filing

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Item 1A. Risk Factors

2024-02-23 compared with 2023-02-24 · 131 added, 168 removed, 298 unchanged (50% of the section changed)

Risks Related to Our Business and Industry

We currently rely on sales of the Omnipod System, and tailored versions of the Omnipod System in our Drug Delivery product line, to generate nearly all our revenue.

Our main product is the Omnipod System, from which we expect to continue to derive nearly all our revenue.

Accordingly, our ability to continue to generate revenue is highly reliant on our ability to market and sell the Omnipod System and to retain consumers who currently use the product.

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

• 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;

We currently rely on sales of our Omnipod product platform to generate nearly all our revenue.

We expect to continue to derive nearly all our revenue from our Omnipod product platform.

Accordingly, our ability to continue to generate revenue is highly reliant on our ability to market and sell our Omnipod products and to retain consumers who currently use the product.

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

• development of an effective patch pump by one or more competitors or breakthrough diabetes treatments not requiring the delivery of insulin;

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

• manufacturing problems or capacity constraints;

• actual or perceived quality problems;

• reductions in reimbursement rates or coverage policies relating to the Omnipod System by third-party payors;

• claims that any portion of the Omnipod System infringes on intellectual property rights of others;

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

• reductions in reimbursement rates or coverage policies relating to Omnipod products by third-party payors;

• claims that any portion of Omnipod products infringes on intellectual property rights of others;

• adverse regulatory or legal actions relating to our Omnipod products;

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

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

• attrition rates of consumers who cease using the Omnipod System;

• attrition rates of consumers who cease using Omnipod products;

• competitive pricing;

• 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.

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 users.

• results of clinical studies relating to Omnipod products or our competitors’ products.

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

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

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

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

We cannot assure you that we will be able to successfully develop our relationships with third-party intermediaries.

If we fail to do so, our sales could fail to grow or could decline, and our ability to grow our business could be adversely affected.

Intermediaries that are in the business of selling other medical products may not devote a sufficient level of resources and the support required to generate awareness of our products and grow or maintain product sales.

If we are not able to successfully develop our relationships with third-party intermediaries, our sales could fail to grow or could decline, and our ability to grow our business could be adversely affected.

If our intermediaries are unwilling or unable to market and sell our products, or if they do not perform to our expectations, we could experience delayed or reduced market acceptance and sales of our products, which would adversely affect our business, financial condition, and results of operations.

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A key to driving our revenue growth is the retention of a high percentage of our customers.

We have developed retention programs aimed at both healthcare professionals and consumers, which include appeals assistance, ongoing customer communications, newsletters, support, training, and an automatic re-order program for certain customers.

We have had a satisfactory customer retention rate;

however, we cannot assure you that we will maintain this retention rate in the future.

Current uncertainty in global economic conditions, competition, higher levels of unemployment, changes in insurance reimbursement levels, and negative financial news may negatively affect product demand.

If demand for our products fluctuates as a result of economic conditions or otherwise, our ability to attract and retain customers could be harmed.

If demand for our products fluctuates as a result of economic conditions, competition or otherwise, our ability to attract and retain customers could be harmed.

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

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

If we do not effectively manage our rapid growth, our business resources may become strained and we may not be able to deliver our products in a timely manner, which could adversely affect 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.

This growth, as well as any other growth that we may experience in the future, will create challenges for 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.

In addition, 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 recently implemented a new enterprise resource planning system and plan to upgrade our customer relationship management system.

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.

We may also need to partner with additional third-party suppliers to manufacture certain components of our Omnipod products and install additional manufacturing lines, including as a part of our newly constructed facility in Malaysia.

A transition to new suppliers may result in additional costs or delays.

We may misjudge the amount of time or resources that will be required to effectively manage any anticipated or unanticipated growth in our business, or we may not be able to manufacture sufficient inventory, or attract, hire and retain sufficient personnel to meet our needs.

If we cannot scale our business appropriately, maintain control over expenses or otherwise adapt to anticipated and unanticipated growth, our business resources may become strained, we may not be able to deliver the Omnipod System in a timely manner, and our results of operations may be adversely affected.

If we cannot scale our business appropriately, maintain control over expenses or otherwise adapt to anticipated and unanticipated growth, our business resources may become strained, we may not be able to deliver our Omnipod products in a timely manner, and our results of operations may be adversely affected.

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, 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.

We expect that sales of our Omnipod products, which, for Omnipod 5, occur only through the pharmacy channel in the U.S.

and for Omnipod DASH, primarily through the pharmacy channel, will be limited unless a substantial portion of their sales price 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 Omnipod products with national and regional third-party payors and government agencies that provide reimbursement in all 50 states.

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

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 and for payment to be made for such use.

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

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

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

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

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.

As we expand our 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 our products by third-party payors could have a material adverse effect on our business, financial condition, and results of operations.

Healthcare reform laws could adversely affect our revenue and financial condition.

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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.

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

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

If these competitors’ products were to gain acceptance by healthcare

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

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

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

Technological breakthroughs in diabetes monitoring, treatment, or prevention could render the Omnipod System obsolete.

Technological breakthroughs in diabetes monitoring, treatment, or prevention could render our Omnipod products obsolete or less desirable.

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.

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.

Any technological breakthroughs in diabetes monitoring, treatment, or prevention could render the Omnipod System obsolete, which would have a material adverse effect on our business, financial condition, and results of operations.

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

In addition, well-capitalized biopharmaceutical companies like Vertex Pharmaceuticals, the National Institutes of Health, and other supporters of diabetes research, are continually seeking ways to prevent, cure, or improve the treatment of diabetes.

Any breakthroughs in diabetes monitoring, treatment or prevention could reduce the potential market for our products or render our products obsolete altogether, which would significantly reduce our sales or cause our sales to grow at a slower rate than we currently expect.

In addition, even the perception that new products may be introduced, or that technological or treatment advancements could occur, could cause consumers to delay the purchase of our products or impact our stock price.

In 2023, for example, ongoing adoption of the GLP-1 class of drugs in diabetes and news surrounding the expansion of use of GLP-1 drugs in obesity led to speculation regarding the impact on the insulin therapy market.

We believe this speculation was the cause of a decline in our stock price in 2023.

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

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

Future market or clinical studies may be unfavorable to the Omnipod System and its efficacy, which could hinder our sales efforts and have a material adverse effect on our business, results of operations, financial condition, and cash flows.

To help improve, market, and sell the Omnipod System, we have sponsored, and expect to continue to sponsor market studies to assess various aspects of the Omnipod System’s functionality and its relative efficacy.

The data obtained from the studies may be unfavorable to the Omnipod System or may be inadequate to support satisfactory conclusions.

In addition, in the future we may sponsor clinical trials to assess certain aspects of the efficacy of the Omnipod System.

Future market or clinical studies may be unfavorable to our Omnipod products and their efficacy, which could hinder our sales efforts and have a material adverse effect on our business, results of operations, financial condition, and cash flows.

To help improve, market, and sell our Omnipod products, we have sponsored, and expect to continue to sponsor market studies to assess various aspects of the functionality and relative efficacy of our products.

The data obtained from the studies may be unfavorable to our products or may be inadequate to support satisfactory conclusions.

In addition, in the future we may sponsor clinical trials to assess certain aspects of the efficacy of our products.

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

In addition, future clinical studies or articles regarding our existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than the Omnipod 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.

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 our products or that our products are not as effective or easy to use as we claim.

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

Any of these events may negatively affect our sales efforts and result in decreased revenue.

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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.

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.

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

The agreements may be breached and trade secrets and other proprietary information could be disclosed to our competitors.

Further, we may have inadequate remedies for any breach.

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

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

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

Any lawsuits that we initiate could be expensive, take significant time, and divert management’s attention from other business concerns.

The outcome of litigation to enforce our intellectual property rights is highly unpredictable.

A court could determine that some or all of our asserted intellectual property rights are not infringed, or are invalid, or unenforceable.

Additionally, we may provoke third parties to assert claims against us.

A court could determine that some or all of our asserted intellectual property rights are not infringed or misappropriated, or are invalid, or unenforceable.

We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially valuable.

Additionally, we may provoke third parties to assert claims against us, and we may not be successful defending against these claims.

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

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.

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.

We have been involved in patent infringement suits in the past and may be again in the future.

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.

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

Any of these third parties might make a claim of infringement against us.

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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.

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

In addition, we have a commercial agreement with Dexcom that allows us to sell

Omnipod 5 with integration to Dexcom’s CGM and have a development agreement with Abbott to integrate Abbott’s CGM with Omnipod 5.

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

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

We also have a partnership with Glooko that allows 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.

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

Our agreement with Glooko expires in December 2025.

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

If this agreement is not renewed in the future and we do not develop or contract for an alternative data management system, our business could be materially adversely impacted.

Risks Related to Economic Conditions and Operating Internationally

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

The continuing worldwide macroeconomic and geopolitical uncertainty as well as the impact of the COVID-19 or other global pandemics may adversely affect our business and prospects.

Continued concerns about the systemic impact of potential long-term and wide-spread recession and geopolitical issues, including wars and terrorism, have contributed to increased market volatility and diminished expectations for economic growth in the world.

Our business and results of operations may be adversely impacted by changes in macroeconomic conditions, including inflation, bank failures, rising interest rates and availability of capital markets.

Uncertainty about global economic conditions, particularly in countries with government-sponsored healthcare systems, may also cause decreased demand for our products, consumers may reduce their spending, new orders for our products 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.

Another global pandemic like COVID-19 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.

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, as it did for Omnipod 5.

Another global pandemic or new variants of COVID-19, and the requirements to take action to help limit the spread of illness, could impact our ability to carry out our business as usual.

For example, the COVID-19 pandemic diverted healthcare resources away from the conduct of clinical trials and interrupted the operations of the FDA, which delayed product approval timelines, including for Omnipod 5.

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

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

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

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

International sales made up over 25% of our revenues in 2022 and we expect international sales to contribute significantly to our future growth.

International sales made up 24% of our revenues in 2023 and we expect international sales to contribute significantly to our future growth as we launch Omnipod 5 in our international markets.

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 facility in China.

For example, a significant portion of our products are manufactured by a third-party contract manufacturer 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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• difficulty in collecting accounts receivable and longer collection periods.

In addition, in January 2020, the U.K.

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

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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Risks Related to Supply Chain, Operations, and Drug Delivery

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

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

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

While we expect to begin production at our newly constructed manufacturing facility in Malaysia in 2024, currently our products are manufactured in two locations, at our U.S.

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

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

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.

In addition, substantially all of our inventory in the United States is held at a single location in Massachusetts and our inventory in Europe is maintained by a third-party logistics entity primarily at a single location in the Netherlands.

We take precautions to ensure that our third-party contract manufacturer and logistics entity safeguard our assets, including maintaining insurance, enacting health and safety protocols, and storing computer data offsite.

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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.

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.

The manufacture of our products 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.

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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.

While we manufacture our products in the United States, a third-party contract manufacturer in China manufactures and supplies a significant portion of our inventory and we expect to begin additional manufacturing in our new facility in Malaysia during 2024.

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

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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.

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

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 2028.

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.

The marketing and sales initiatives driving this product line differ markedly from those on which we rely for our sales of Omnipod products 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 Drug Delivery product line will face several challenges, including:

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

• our identification of drug delivery opportunities for a modified Pod;

• our achievement of satisfactory development and pricing terms with the pharmaceutical companies that sell such drugs;

• our development of appropriate modifications to our Omnipod System technology to address the needs and parameters required for the respective drug-delivery opportunities;

• manufacturing issues relating to the modified Omnipod System;

• long lead-times associated with the development, regulatory approvals, and ramp up applicable to the use of modified Omnipod Systems for the delivery of such drugs;

• 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 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;

• our development of appropriate modifications to our Omnipod technology to address the needs and parameters required for the respective drug-delivery opportunities;

• manufacturing issues relating to the modified Pod;

• long lead-times associated with the development, regulatory approvals, and ramp up applicable to the use of modified Pods for the delivery of such drugs;

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

• uncertainties regarding the market acceptance of such drugs and the modified Pod 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 Pods as the appropriate delivery devices;

• intense competition in the drug-delivery industry, including from competitors which have substantially greater resources;

• demand for non-insulin drugs, including the impact of generics and biosimilars;

• maintaining appropriate gross margins;

• regulatory requirements and reimbursement rates associated with such drugs.

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

Risks Related to Government Regulation and Litigation

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• product import and export.

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

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.

Obtaining such regulatory clearance can be expensive and lengthy.

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

We also are subject to numerous post-marketing regulatory requirements, which include quality system regulations related to the manufacture of our devices, labeling regulations, and medical device reporting regulations.

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• operating restrictions, suspension or shutdown of production;

• refusing our requests for 510(k) clearance or PMA of new products, new intended uses or modifications to the Omnipod System;

• rescinding 510(k) clearance or suspending or withdrawing PMAs that have already been granted;

• refusing our requests for regulatory clearance of new products, new intended uses or modifications to our Omnipod products;

• rescinding, suspending or withdrawing clearance that has already been granted;

• criminal prosecution.

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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.

The FDA is in the process of reviewing the 510(k) clearance 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.

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.

We also sell our products in Canada, Australia and certain countries in Europe and the Middle East.

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

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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’ 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 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.

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

If our or our contract manufacturers’ facilities fails a quality system inspection or otherwise fails to adhere to QSR requirements, this could delay production of our products and lead to business disruption;

failure to take adequate and timely corrective action in response to an adverse quality system inspection or QSR violation could result in business disruption;

failure to take adequate and timely corrective action in response to an adverse quality system inspection or QSR violation could result in fines, difficulties in obtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our financial condition or results of operations.

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

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

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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, 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.

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

Any corrective action, whether voluntary 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.

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

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

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

If the FDA disagrees with our determinations, it could require us to report those actions as recalls and could take enforcement action against us for failing to report the recalls when they were conducted.

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

We may be subject to enforcement action if we engage in improper marketing or promotion of our products.

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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.

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

In that event, our reputation could be damaged, and adoption of the products could be impaired.

Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory agency could disagree with our characterization of certain statements and conclude that we have engaged in off-label promotion.

Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory

agency could disagree with our characterization of certain statements and conclude that we have engaged in off-label promotion.

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

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

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

Several states require that DME providers be licensed in order to sell products to customers in that state.

Certain of these states require, among other things, that DME providers maintain an in-state location.

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

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.

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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 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.

At least fifteen states have adopted new privacy laws in the past few years.

In California, the CCPA, which provides certain privacy rights and consumer protection for residents of the state became effective in 2020, and additional regulation under the CPRA, which amends and expands the CCPA, will take effect in 2024.

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

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

The California laws have served as a model for many subsequently adopted laws in other states.

In 2023, similar privacy laws became effective in Colorado and Virginia.

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

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

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

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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These changes or increased costs could negatively impact our business and results of operations in material ways.

For example, the GDPR imposes requirements in the European Economic Area relating to, among other things, consent to process personal data of individuals, the information provided to individuals regarding the processing of their personal data, the security and confidentiality of personal data, notifications in the event of data breaches, and use of third-party processors.

For example, the GDPR imposes requirements in the European Economic Area relating to, among other things, consent to process personal

data of individuals, the information provided to individuals regarding the processing of their personal data, the security and confidentiality of personal data, notifications in the event of data breaches, and use of third-party processors.

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

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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 radio frequency communications to or from the PDM.

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

Successful exploitation of this vulnerability may allow an attacker to gain access to the Pod to intercept, modify, or interfere with the wireless radio frequency communications to or from the PDM.

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

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

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

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

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

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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.

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.

In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs.

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

Section 382 of the U.S.

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.

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

federal taxable income may become subject to limitations.

Section 382 and 383 of the U.S.

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

The issuance of common stock in connection with the conversion of our Convertible Senior Notes, or the consummation of other equity transactions could limit our ability to utilize net operating loss and tax credit carryforwards to offset future U.S.

federal and state taxes payable.

General Risks

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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.

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

Additionally, during the second half of 2023 we introduced a new organizational operating model, which initially may be disruptive or confusing to some employees as job and reporting structures evolve, causing dissatisfaction or resulting in departures.

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

Additionally, the sale and after-sale support of the Omnipod 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.

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

We face considerable challenges in recruiting, training, managing, motivating, and retaining these employees, including managing geographically dispersed teams.

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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.

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We may need to raise additional funds in the future, and these funds may not be available on acceptable terms or at all.

Our capital requirements will depend on many factors, including:

• revenue generated by sales of our current products and any other future products that we may develop;

• costs associated with capital expenditures, including adding additional manufacturing capacity;

• costs associated with any expansion, including expanding our sales and marketing efforts globally;

• expenses we incur in manufacturing and selling our products;

• costs of developing new products or technologies and enhancements to our products;

• costs of complying with regulatory requirements, including obtaining and maintaining FDA approval or clearance of our current or future products;

• costs associated with litigation;

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

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

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

Also, in 2023, ongoing adoption of the GLP-1 class of drugs in diabetes and news surrounding the expansion of use of GLP-1 drugs in obesity led to speculation regarding the impact of GLP-1 drugs on the insulin therapy market.

We believe this negatively impacted the stock prices of companies in the medical device industry, including ours.

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

Unresolved Staff Comments

We own a 350,000 square foot facility in Acton, MA, which houses both our headquarters and our U.S.

manufacturing.

As of December 31, 2022, we leased a total of 22 facilities in 10 countries consisting of approximately 300,000 square feet of office, research and development, and warehousing space and other related facilities, primarily in North America, Asia and Europe.

Legal Proceedings

The information required by this Item is provided under “Legal Proceedings” in Note 17 to the consolidated financial statements included in Item 8 of this Form 10-K and is incorporated herein by reference.

Mine Safety Disclosures

Not applicable.

We have identified control deficiencies that have been determined to be a material weakness in our internal control over financial reporting.

This issue, if not remediated, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations.

As disclosed in Item 9A, “Controls and Procedures,” we have reported a material weakness because we did not maintain effective information technology general controls over systems that support our financial reporting outside of North America.

The material weakness will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are effective.

We cannot assure that the measures we take will remediate the material weakness or that additional material weaknesses will not arise in the future.

Any failure to remediate the material weakness, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a negative impact on our financial condition, results of operations or cash flows, restrict our ability to access the capital markets, require significant resources to correct the material weaknesses or deficiencies, subject us to fines, penalties or judgments, harm our reputation or otherwise cause a decline in investor confidence and cause a decline in the market price of our stock.

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