What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-23 · 380 added, 325 removed, 880 unchanged (44% of the section changed)

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations for the Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Income for the Years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Comprehensive I ncome for the Years ended December 31, 2024, 2023 and 2022

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Insulet Corporation

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2024 expressed an adverse opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Opinions on the financial statements and internal control over financial reporting

We have audited the accompanying consolidated balance sheets of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

Basis for opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Variable consideration – Rebates to pharmacy benefit managers

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The principal consideration for our determination that the rebate estimate related to pharmacy benefit managers is a critical audit matter was the high degree of auditor judgment in applying procedures to evaluate the significant estimation made by management.

Management's estimate is based on historical experience adjusted for revenue growth, trends, specific known market events, and as available channel inventory data.

Management's estimate is based on historical experience adjusted for revenue growth, trends, and contract amendments.

Our audit procedures related to the rebate estimate included the following, among others;

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• Performed retrospective analysis comparing actual rebates incurred to the previously estimated amounts.

• We tested the design and operating effectiveness of controls related to management’s estimate.

Income taxes – Realizability of the U.S.

deferred tax assets

As described further in Note 23 to the financial statements, management records valuation allowances against deferred tax assets when a judgment is made, that it is more likely than not, that a tax benefit will not be realized.

The realization of deferred tax assets is dependent upon the generation of future U.S.

taxable income during the periods in which those temporary differences will become deductible.

We identified the realizability of the Company’s U.S.

deferred tax assets as a critical audit matter.

The principal consideration for our determination that the realizability of U.S.

deferred tax assets is a critical audit matter is the significant judgment regarding the weighting of available positive and negative evidence to determine that the existing valuation allowance on U.S.

deferred tax assets remains appropriate.

Our audit procedures related to the realizability of the U.S.

deferred tax assets included the following, among others.

With the involvement of tax professionals, including consultation with national office resources, we assessed the appropriateness of management’s evaluation of available positive and negative evidence supporting the valuation allowance position.

• Tested the design and operating effectiveness of controls related to management’s estimate.

/s/ GRANT THORNTON LLP

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Goodwill 51.5 51.7

Other assets 190.0 210.0

Deferred tax assets

Other assets (includes $ 10.2 and $ 31.3 at fair value)

Total assets $ 3,087.7 $ 2,588.2

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Additional paid-in capital 1,184.4 1,102.6

Accumulated deficit ( 378.0 ) ( 584.3 )

Accumulated other comprehensive income 8.0 20.0

Accumulated earnings (deficit)

40.3 ( 378.0 )

Accumulated other comprehensive (loss) income

Total stockholders’ equity 1,211.6 732.7

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INSULET CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31,

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Operating income 308.9 220.0 37.6

Interest expense ( 36.2 ) ( 36.0 ) ( 61.7 )

Interest expense, net of portion capitalized (Note 9)

( 42.7 ) ( 36.2 ) ( 36.0 )

Interest income 39.5 28.6 9.3

Loss on extinguishment of debt — — ( 42.4 )

Other income (expense), net 2.2 ( 1.1 ) ( 1.9 )

Other (expense) income, net ( 5.5 ) 2.2 ( 1.1 )

Income before income taxes 300.2 214.6 9.8

Income tax expense ( 8.3 ) ( 5.2 ) ( 3.7 )

Income tax benefit (expense)

118.1 ( 8.3 ) ( 5.2 )

Net income $ 418.3 $ 206.3 $ 4.6

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Unrealized loss on securities — ( 0.3 ) —

Total other comprehensive (loss) income, net of tax ( 12.0 ) 22.2 ( 7.7 )

Other comprehensive (loss) income, net of tax

( 21.2 ) ( 12.0 ) 22.2

Comprehensive income $ 397.1 $ 194.3 $ 26.8

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Capital Accumulated

Deficit Accumulated Other Comprehensive Income (Loss) Total

(Deficit) Earnings

Accumulated Other Comprehensive (Loss) Income

Stockholders’

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69,179 $ 0.1 $ 1,207.9 $ ( 649.5 ) $ ( 2.2 ) $ 556.3

Adoption of ASU 202-06 (Note 2)

— — ( 207.7 ) 60.6 — ( 147.1 )

Exercise of options to purchase common stock 147 — 6.9 — — 6.9

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Restricted stock units vested, net of shares withheld for taxes 132 — ( 16.8 ) — — ( 16.8 )

Extinguishment of conversion feature on 1.375 % Notes, net of issuance costs

— — ( 808.5 ) — — ( 808.5 )

Issuance of shares for debt extinguishment 2,586 — 722.4 — — 722.4

Net income — — — 4.6 — 4.6

Other comprehensive loss — — — — ( 7.7 ) ( 7.7 )

Other comprehensive income

— — — — 22.2 22.2

Balance, December 31, 2022

69,511 0.1 1,040.6 ( 584.3 ) 20.0 476.4

Adoption of ASU 2020-06 (Note 2) — — ( 207.7 ) 60.6 — ( 147.1 )

Exercise of options to purchase common stock 249 — 16.3 — — 16.3

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Net income — — — 206.3 — 206.3

Other comprehensive income — — — — 22.2 22.2

Other comprehensive loss

— — — — ( 12.0 ) ( 12.0 )

Balance, December 31, 2023

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Net income — — — 418.3 — 418.3

Other comprehensive loss — — — — ( 12.0 ) ( 12.0 )

Other comprehensive loss, net of tax

— — — — ( 21.2 ) ( 21.2 )

Balance, December 31, 2024

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Net income $ 418.3 $ 206.3 $ 4.6

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 80.8 72.8 63.2

Stock-based compensation expense 69.3 48.3 40.9

Deferred income taxes

( 136.9 ) 0.5 ( 1.0 )

Non-cash interest expense 7.3 6.7 5.8

Loss on extinguishment of convertible debt — — 42.4

Provision for credit losses ( 0.2 ) 2.3 4.2

Unrealized loss (gain) on investments

3.8 ( 2.6 ) —

Other 4.9 2.0 3.8

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Accrued expenses and other liabilities — related party ( 7.9 ) ( 3.5 ) 3.7

Net cash provided by (used in) operating activities 145.7 119.0 ( 68.1 )

Net cash provided by operating activities

430.3 145.7 119.0

Cash flows from investing activities

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Investments in developed software ( 9.1 ) ( 8.5 ) ( 12.9 )

Cash paid for investments ( 12.2 ) ( 7.2 ) ( 7.8 )

Acquisition of other intangible assets — ( 25.1 ) ( 21.5 )

Acquisition of a business — ( 3.0 ) ( 26.0 )

Cash paid for investments ( 7.2 ) ( 7.8 ) —

Receipts from the maturity or sale of marketable securities — — 40.0

Net cash used in investing activities ( 146.2 ) ( 119.4 ) ( 191.1 )

Cash flows from financing activities

Repayment of convertible debt — — ( 460.9 )

Proceeds from issuance of term loan, net of issuance costs 130.0 — —

Repayment of term loan ( 137.2 ) ( 5.0 ) ( 5.0 )

Proceeds from equipment financings, net — — 43.1

Repayment of equipment financings ( 19.0 ) ( 19.8 ) ( 17.4 )

Financing lease payments

( 22.7 ) — ( 15.3 )

Repayment of mortgage ( 2.4 ) ( 2.2 ) ( 2.1 )

Payment of debt issuance costs ( 0.3 ) — ( 4.0 )

Prepayments of financing lease obligation — ( 15.3 ) —

Proceeds from secured borrowing (Note 6)

Repayment of secured borrowing (Note 6)

Proceeds from exercise of stock options 8.2 16.3 6.9

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Payment of withholding taxes in connection with vesting of restricted stock units ( 7.6 ) ( 13.2 ) ( 16.8 )

Net cash (used in) provided by financing activities ( 13.6 ) ( 40.3 ) 40.7

Net cash used in financing activities

( 28.1 ) ( 13.6 ) ( 40.3 )

Effect of exchange rate changes on cash ( 6.8 ) 1.8 ( 4.3 )

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Cash, cash equivalents, and restricted cash, beginning of year 704.2 689.7 806.4

Cash, cash equivalents, and restricted cash, end of year (Note 6)

Cash, cash equivalents, and restricted cash, end of year

$ 953.4 $ 704.2 $ 689.7

Supplemental cash flow information (Note 25)

Supplemental cash flow information (Notes 14 and 24)

The accompanying notes are an integral part of these consolidated financial statements.

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Insulet Corporation (the “Company”) is primarily engaged in the development, manufacture, and sale of its proprietary continuous insulin delivery system for people with insulin-dependent diabetes.

Currently, the Omnipod platform’s revenue generating products include:

the Omnipod Insulin Management System (“Classic Omnipod”), its next generation Omnipod DASH ® Insulin Management System (“Omnipod DASH”), and its newest generation Omnipod ® 5 Automated Insulin Delivery System (“Omnipod 5”).

Each product features a small, lightweight, self-adhesive disposable tubeless Omnipod device (“Pod”) that the user fills with insulin and wears directly on the body for up to three days at a time, which delivers personalized doses of insulin, Omnipod DASH features a secure Bluetooth enabled Pod that is controlled by a smartphone-like Personal Diabetes Manager (“PDM”) with a color touch screen user interface.

Omnipod 5, which builds on our Omnipod DASH mobile platform, is a tubeless automated insulin delivery system, that integrates with a continuous glucose monitor (“CGM”) to manage blood sugar and is fully controlled by a compatible personal smartphone or Omnipod 5 Controller.

The CGM is sold separately by a third party.

The Company generates most of its revenue from sales of its Omnipod products, which are sold in the U.S., Europe, Canada, the Middle East, and Australia either directly to end-users or indirectly through intermediaries.

Intermediaries include independent distributors who resell Omnipod products to end-users and wholesalers who sell the Company’s product to end-users through the pharmacy channel in the United States.

The Company generates most of its revenue from sales of its Omnipod products.

The Omnipod platform includes:

Omnipod ® 5 and its predecessors Omnipod DASH and Classic Omnipod.

Each product features a small, lightweight, self-adhesive disposable tubeless Omnipod device (“Pod”) that the user fills with insulin and wears directly on the body for up to three days at a time, which delivers personalized doses of insulin and eliminates the need for multiple daily injections using syringes or insulin pens or the use of pump and tubing.

Omnipod 5, which builds on the Omnipod DASH mobile platform, is a tubeless automated insulin delivery system, that integrates with a continuous glucose monitor (“CGM”) to manage blood sugar and is fully controlled by a compatible personal smartphone or Omnipod 5 Controller.

The CGM is sold separately by third parties.

Omnipod DASH features a secure Bluetooth enabled Pod that is controlled by a smartphone-like Personal Diabetes Manager (“PDM”) with a color touch screen user interface.

Following the launch of Omnipod 5, the Company began phasing-out Classic Omnipod.

The Company’s Omnipod products are currently sold in the United States, Europe, Canada, the Middle East, and Australia either indirectly through intermediaries or directly to end-users.

Intermediaries include wholesalers who sell the Company’s product to end-users through the pharmacy channel in the United States and independent distributors who resell Omnipod products to end-users.

Substantially all of the Company’s Drug Delivery revenue consists of sales of pods to Amgen for use in the Neulasta ® Onpro ® kit, a delivery system for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy.

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The consolidated financial statements have been prepared in United States dollars, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of the consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses.

Actual results may differ from those estimates.

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dollars using exchange rates as of the balance sheet date, while income and expenses of foreign subsidiaries are translated using the average exchange rates in effect for the related month.

The net effect of these translation adjustments is reported in accumulated other comprehensive income (loss) within stockholders’ equity on the consolidated balance sheet.

Net realized and unrealized gains (losses) from foreign currency transactions are included in other income (expense), net in the consolidated statement of operations and were $( 0.4 ) million, $( 1.3 ) million and $( 2.0 ) million for the years ended December 31, 2023, 2022 and 2021, respectively.

The net effect of these translation adjustments is reported in accumulated other comprehensive income (loss) within stockholders’ equity on the consolidated balance sheets.

Net realized and unrealized losses from foreign currency transactions are included in other (expense) income, net in the consolidated statements of income and were $ 2.3 million, $ 0.4 million and $ 1.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Cash and Cash Equivalents

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government and agency bonds, that are carried at cost.

Restricted cash required to be set aside in connection with equipment financings or that serves as collateral for outstanding letters of credit and bank guarantees is included in other assets and cash and cash equivalents on the consolidated balance sheet.

Certain of the Company’s subsidiaries participate in a multi-currency, notional cash pooling arrangement with a third-party bank provider to manage global liquidity requirements.

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These investments are carried at cost less impairment, if any.

If an observable price change in orderly transactions for the identical or similar investment in the same issuer is identified, the investment is measured at its fair value as of the date that the observable transaction occurred with the adjustments reflected in other income (expense), net in the Company’s consolidated statements of operations.

If an observable price change in orderly transactions for the identical or similar investment in the same issuer is identified, the investment is measured at its fair value as of the date that the observable transaction occurred with the adjustments reflected in other (expense) income, net in the Company’s consolidated statements of income.

Investments in equity securities are recorded within other assets on the consolidated balance sheets.

The Company also has investments in debt securities of privately held companies, which are either classified as available-for-sale securities or for which the Company has elected the fair value option.

The available-for-sale securities are recorded at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity on the consolidated balance sheet.

The other investment is a debt security that contains embedded derivatives.

Unrealized gains and losses for this investment are recorded as a component of other income (loss), net in the consolidated statement of operations.

All investments in debt securities are recorded within other assets on the consolidated balance sheet.

Unrealized gains and losses for this investment are recorded as a component of other (expense) income, net in the consolidated statements of income.

Investments in debt securities are recorded within other assets on the consolidated balance sheets.

The Company may also invest in marketable securities, including term deposits, commercial paper, U.S.

government and agency bonds, and corporate bonds, which are classified as available-for-sale and carried at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity on the consolidated balance sheet.

Investments with a stated maturity date of more than one year from the balance sheet date and that are not expected to be used in current operations are classified as long-term investments within other assets on the consolidated balance sheet.

The Company reviews investments for other-than-temporary impairment when the fair value of an investment is less than its amortized cost.

If an available-for-sale security is other than temporarily impaired, the loss is included in other income (expense), net in the consolidated statement of operations.

If an available-for-sale security is other than temporarily impaired, the loss is included in other (expense) income, net in the consolidated statements of income.

Accounts Receivable and Allowance for Credit Losses

Trade accounts receivable consist of amounts due from third-party payors, customers, and intermediaries and are presented at amortized cost.

Trade accounts receivable consist of amounts due from intermediaries, third-party payors, and customers and are presented at amortized cost.

The allowance for credit losses reflects an estimate of losses inherent in the Company’s accounts receivable portfolio determined based on historical experience, specific allowances for known troubled accounts, and other available evidence.

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The Company incurs commission costs to obtain a contract related to new customer starts.

These costs are capitalized as contract assets in other assets on the consolidated balance sheet, net of the short-term portion included in prepaid and other current assets.

These costs are capitalized as contract assets in other assets on the consolidated balance sheet, net of the short-term portion included in prepaid expenses and other current assets.

Costs to obtain a contract are amortized to selling, general and administrative expense on a straight-line basis over the expected period of benefit, which considers future product upgrades.

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The Company has designated its interest rate swap contracts as cash flow hedges.

Additional information on the Company’s derivative instruments is included in Note 17 and fair values are included in Note 16.

Fair Value Measurements

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Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized.

Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of their short-term maturity.

Certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses and other current liabilities, are carried at cost, which approximates their fair value because of their short-term maturity.

Property, Plant and Equipment

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The Company may assess its goodwill for impairment initially using a qualitative approach to determine whether conditions exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.

If management concludes, based on its assessment of relevant events, facts, and circumstances that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any

Alternatively, the Company may elect to initially perform a quantitative analysis instead of starting with a qualitative analysis.

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Patents 8 to 15 years

Amortization expense is included in selling, general and administrative expenses in the consolidated statement of operations.

Amortization expense is included in selling, general and administrative expenses in the consolidated statement of income.

The Company reviews intangible assets for impairment by comparing the fair value of the assets, estimated using an income approach, with their carrying value.

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The Company determines if an arrangement includes a lease at inception.

Lease agreements generally have lease and non-lease components, which are accounted for separately.

At lease commencement, the Company recognizes lease liabilities equal to the present value of the future lease payments and lease assets representing the right to use the underlying asset throughout the lease term.

Certain leases may contain variable lease payments, including periodic payments that can be avoided by the Company.

Variable payments that do not depend on an index or rate are excluded from the right-of-use asset and lease liability and are recognized as expenses in the period in which the obligation for those payments is incurred.

Certain of the Company’s leases contain options to extend and/or terminate the lease, and/or to purchase the underlying asset.

The lease term used to calculate the right-of-use asset and related lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

The Company’s leases do not provide an implicit rate;

accordingly, the Company uses an incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments.

The Company uses an incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments, when the implicit rate is not readily determinable.

The Company’s incremental borrowing rate reflects a secured rate that considers the term of the lease, the nature of the underlying asset and the economic environment.

The Company excludes leases with an expected term of one year or less from recognition on the consolidated balance sheet.

Lease terms may include options to extend and/or terminate the lease.

These options are included in the lease term when it is reasonably certain that the Company will exercise that option.

Operating lease expense is recognized on a straight-line basis over the lease term.

Right-of-use assets are calculated as the initial measurement of the lease liability plus lease payments made prior to lease commencement and initial direct costs incurred, less lease incentives received.

Lease expense is recognized on a straight-line basis over the lease term.

For finance leases, the right-of-use asset is amortized to amortization expense and interest expense is recorded in connection with the lease liability.

Contingencies

The Company excludes leases with an expected term of one year or less from recognition on the consolidated balance sheet and does not separate lease and non-lease components.

Loss Contingencies

The Company records a liability on the consolidated balance sheet for loss contingencies when a loss is considered probable and the amount can be reasonably estimated.

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Product Warranty

The Company provides a four-year warranty on its PDMs and Controllers sold in the United States and Europe and a five-year warranty on PDMs sold in Canada and may replace Pods that do not function in accordance with product specifications.

Company estimates its warranty obligation at the time the product is shipped based on historical experience and the estimated cost to service the claims.

The Company provides a four-year warranty on its Controllers and PDMs Controllers sold in the United States and Europe and a five-year warranty on PDMs sold in Canada and may replace Pods that do not function in accordance with product specifications.

The Company estimates its warranty obligation at the time the product is shipped based on historical experience and the estimated cost to service the claims.

Costs to service the claims reflect the current product cost, reclaim costs, shipping and handling costs and direct and incremental distribution and customer service support costs.

Since the Company continues to introduce new products and versions, the anticipated performance of the product over the warranty period is also considered in estimating warranty reserves.

Warranty expense is recorded in cost of revenue in the consolidated statements of operations.

Warranty expense is recorded in cost of revenue in the consolidated statements of income.

Revenue Recognition

Revenue is recognized when a customer obtains control of the promised products.

The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these products.

To achieve this core principle, the Company applies the following five steps:

• Identify Contracts with Customers.

The Company’s contracts with its direct customers generally consist of a physician order form, a customer information form and, if applicable, third-party insurance (payor) approval.

Contracts with the Company’s intermediaries are generally in the form of master service agreements against which firm purchase orders are issued.

At the outset of the contract, the Company assesses the customer’s ability and intention to pay, which is based on a variety of factors including historical payment experience or, in the case of a new intermediary, credit references and other available financial information pertaining to the customer and, in the case of a new direct customer, an investigation of insurance eligibility.

• Identify Performance Obligations.

The performance obligations in contracts for the delivery of Omnipod products to new end-users, either directly to end-users or through intermediaries, primarily consist of the PDM/Controller, the initial and subsequent quantity of Pods ordered, and product training.

In the Company’s judgment, these performance obligations are capable of being distinct in the context of the contract in that the customer can benefit from each item in conjunction with other readily available resources and the transfer of the PDM/Controller and the Pods is separately identifiable in the contract with the customer.

• Determine Transaction Price.

The price charged for the PDM/Controller and Pods is dependent on the Company’s pricing as established with third-party payors and intermediaries.

The Company provides a right of return for sales of its Omnipod products to new end-users and certain of our distributors and wholesalers.

The Company also provides for certain rebates and discounts for sales of its product through intermediaries.

These rights of return, discounts, and rebates represent variable consideration and reduce the transaction price at the outset of the contract based on the Company’s estimates, which are primarily based on the expected value method using historical and other data (such as product return trends or forecasted sale volumes) related to actual product returns, discounts, and rebates paid in each market in which Omnipod products are sold.

Variable consideration is included in the transaction price if it is probable that a significant future reversal of cumulative revenue under the contract will not occur;

otherwise, the Company reduces the variable consideration.

The variable consideration in the Company’s contracts is not typically constrained and the Company’s contracts do not contain significant financing components.

• Allocate Transaction Price to Performance Obligations.

The Company allocates the transaction price to each performance obligation based on its relative stand-alone selling price, which is determined based on the price at which the Company typically sells the deliverable or, if the performance obligation is not typically sold separately, the stand-alone selling price is estimated based on cost plus a reasonable profit margin or the price that a third party would charge for a similar product or service.

• Recognize Revenue as Performance Obligations are Satisfied.

The Company transfers Omnipod products at a point in time, which is determined based on when the customer gains control of the product.

Generally, intermediaries in the United States, obtain control upon shipment based on the contractual terms, including right to payment and transfer of title and risk of ownership.

For sales directly to end-users and international intermediaries, control is generally transferred at the time of delivery based on customary business practices related to risk of ownership, including transfer of title.

The Company generates revenue from the sale of its Controller/PDM and Pods.

We generally recognize revenue when control is transferred to our customers in an amount that reflects the net consideration to which we expect to be entitled.

In determining how revenue should be recognized, a five-step process is used, which includes identifying performance obligations in the contract, determining whether the performance obligations are separate, allocating the transaction price to each separate performance obligation, estimating the amount of variable consideration to include in the transaction price, and determining the timing of revenue recognition for separate performance obligations.

• Contracts and Performance Obligations.

The Company generally considers customer purchase orders, which in most cases are governed by agreements with distributors or third-party payors, to be contracts with a customer.

The Company considers the obligation to transfer the Controller/PDM, the initial and subsequent quantity of Pods ordered, and product training, each of which are distinct, to be separate performance obligations.

• Transaction Price.

Transaction price for the Controller/PDM and Pods reflects the net consideration to which the Company expects to be entitled.

The prices charged depend on the Company’s pricing as established with third-party payors and intermediaries.

Variable consideration is estimated at the outset of the contract and includes, but is not limited to reductions for:

consideration payable to customers, such as rebates, chargebacks, and administrative fees paid to distributors;

product returns provision;

prompt payment discounts;

and various other promotional or incentive arrangements.

If a contract contains more than one performance obligation, the transaction price is allocated to each performance obligation based on relative standalone selling price.

The Company is subject to rebates on pricing programs with managed care organizations, such as pharmacy benefit managers, governmental and third-party commercial payors, primarily in the United States.

The Company estimates provisions for rebates primarily based on historical experience, revenue growth, distribution channel lag, and known events or trends.

• Chargebacks.

The Company participates in chargeback programs in the United States, under which pricing on products below negotiated list prices is provided to participating entities.

Distributors selling to participating entities receive a chargeback equal to the difference between their acquisition cost and the lower negotiated price.

The Company estimates provisions for chargebacks primarily based on historical experience on a program basis and current contract prices.

• Administrative fees paid to distributors.

The Company pays administrative fees to certain distributors, which is generally based on a fixed percentage multiplied by either gross purchases from Insulet or gross sales of Insulet products sold by the distributor.

These fees are not in exchange for a distinct good or service and therefore are recognized as a reduction of the transaction price.

The Company accrues for these fees based on gross sales and contractual fee rates negotiated with the customer.

• Product Returns.

The Company estimates product returns provision primarily based on historical experience by applying a historical return rate to the amounts of revenue estimated to be subject to returns.

Additionally, the Company considers other specific factors such as the estimated shelf life of inventory in the distribution channel and changes to customer terms.

The Company provides customers with prompt payment discounts, which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period.

The Company estimates prompt payment discount accruals based on actual gross sales and contractual discount rates.

• Other Arrangements.

Other incentive or promotional arrangements may be offered to customers, including but not limited to copayment assistance for users with commercial insurance.

We record a provision for the incentive earned based on the number of estimated claims and our estimate of the cost per claim related to product sales that have been recognized as revenue.

• Revenue Recognition.

The Company records revenue upon transfer of control of the product to the customers, which is generally when the product is shipped or delivered and title passes to the customer.

Revenue from product training is recognized in the period it is provided.

The Company records deferred revenue related to product training as there is generally a lag between when the customer is billed and when the end-user receives product training.

The Company records deferred revenue if a customer pays consideration, or the Company has the right to invoice, before the Company transfers a good or service to a customer.

Deferred revenue primarily represents product training as there is generally a lag between when the customer is billed and when the end-user receives training.

The Company’s Drug Delivery product line includes sales of a modified version of the Pod to pharmaceutical and biotechnology companies who use the Company’s technology as a delivery method for their drugs.

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The Company has an enforceable right to payment for performance completed to date and the inventory has no alternative use to the Company.

Judgment is required in the assessment of progress toward completion of in-process inventory.

The Company recognizes revenue over time using a blend of costs incurred to date relative to total estimated costs at completion and time incurred to date relative to total production time to measure progress toward the satisfaction of its performance obligations.

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Software development costs incurred after the establishment of technological feasibility and until the product is available for general release are capitalized, provided recoverability is reasonably assured.

Capitalized software development costs are amortized over their estimated useful life and recorded within cost of revenues.

Capitalized software development costs are amortized over their estimated useful life and recorded within cost of revenue.

Shipping and Handling Costs

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The Company expenses advertising costs as they are incurred.

Advertising expenses were $ 63.1 million, $ 41.2 million, and $ 44.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Advertising costs are included in selling, general and administrative expenses and were $ 84.3 million, $ 63.1 million, and $ 41.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Stock-Based Compensation Expense

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Interest and penalties are classified as a component of income tax expense.

The Company has not reclassified income tax effects within accumulated other comprehensive income (loss) to retained earnings due to its full valuation allowance.

Concentration Risk

Credit Risk— Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and accounts receivable.

The Company maintains most of its cash and investments with a limited number of financial institutions that have a high investment grade credit rating, which exceed Federal Deposit Insurance Corporation limits.

The Company maintains most of its cash and investments in money market funds with a limited number of financial institutions that have a high investment grade credit rating.

See Notes 4 and 6 for customer concentration.

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Recently Adopted Accounting Standards

Convertible Debt— Effective January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt – Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Segment Reporting— The Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures during the fourth quarter of 2024.

ASU 2023-07 requires incremental disclosures on reportable segments, primarily significant segment expenses.

The required disclosures are included in Note 3.

Convertible Debt— Effective January 1, 2022, the Company adopted ASU 2020-06, Debt – Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity using the modified retrospective method for convertible debt instruments outstanding as of the date of adoption.

Under ASU 2020-06, a convertible debt instrument is generally reported as a single liability at its amortized cost with no separate accounting for embedded conversion features.

Consequently, the effective interest rate of convertible debt instruments is closer to the coupon interest rate

under this guidance.

Consequently, the effective interest rate of convertible debt instruments is closer to the coupon interest rate under this guidance.

The cumulative effect of adopting ASU 2020-06 resulted in a $ 207.7 million decrease to the opening balance of additional paid-in-capital upon adoption resulting from the derecognition of the embedded conversion feature and debt issuance costs bifurcated to equity, a $ 60.6 million decrease to the opening balance of accumulated deficit representing the cumulative interest expense recognized related to the amortization of the bifurcated conversion option and debt issuance costs, and a $ 147.1 million increase in long-term debt resulting from the derecognition of the discount associated with the embedded conversion feature, offset by the remaining debt issuance costs reclassified out of equity.

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Accordingly, the Company did not have to assess whether the contract modification should be accounted for as a debt extinguishment.

Additionally, the Company was not required to dedesignate hedging relationships when the contractual terms changed.

Additionally, the Company was not required to de-designate hedging relationships when the contractual terms changed.

The adoption of these standards had no impact on our consolidated financial statements.

Segment and Geographic Data

The Company operates under one reportable segment.

As described in Note 1, the Company’s product offering primarily consists of the Omnipod platform and drug delivery device based on the Omnipod platform.

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the chief operating decision-maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance of the segment.

The Company has concluded that its Chief Executive Officer (“CEO”) is the CODM as the CEO is the ultimate decision maker for key operating decisions, determining the allocation of resources and assessing the financial performance of the Company.

These decisions, allocations, and assessments are performed by the CODM using consolidated financial information, as the Company’s current product offering primarily consists of the Omnipod platform and drug delivery device based on the Omnipod platform.

The Company operates under one reportable segment.

While decisions, allocations, and assessments are performed by the CODM using consolidated operating income, net income is also provided to the CODM.

Geographic information about revenue, based on customer location, is as follows:

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Total revenue $ 2,071.6 $ 1,697.1 $ 1,305.3

The following table presents selected financial information for the Company’s single operating segment, including significant expenses:

Years Ended December 31,

(in millions) 2024 2023 2022

Total revenue

2,071.6 1,697.1 1,305.3

Materials (1)

296.7 261.3 198.0

Factory conversion (2)

176.9 151.2 125.7

Depreciation and amortization (3)

25.9 26.3 21.9

Other costs of revenue (4)

126.4 98.4 154.1

Cost of revenue 625.9 537.2 499.7

478.4 398.4 343.7

Outside services (6)

260.5 225.4 157.6

Depreciation and amortization

47.0 40.7 28.9

Other operating expenses (7)

350.9 275.4 237.8

Operating income 308.9 220.0 37.6

Interest expense, net

( 3.2 ) ( 7.6 ) ( 26.7 )

Other (expense) income, net ( 5.5 ) 2.2 ( 1.1 )

Income tax benefit (expense)

118.1 ( 8.3 ) ( 5.2 )

Net income $ 418.3 $ 206.3 $ 4.6

(1) Consists of raw materials utilized included in cost of revenue.

(2) Consists of manufacturing labor, factory overhead and depreciation of plant and equipment primarily at our Acton manufacturing plant.

(3) Consists of depreciation and amortization included in cost of revenue, except for depreciation of plant and equipment included in factory conversion as described in Note 2 .

(4) Consists primarily of warranty expense, cost to manufacture Controllers/PDMs, provision for inventory reserves, cost of data plans and licensing, and costs to train users.

(5) Consists of labor expenses included in research and development expenses and selling, general and administrative expenses, excluding stock-based compensation expense.

(6) Consists primarily of contract labor and professional and consulting fees.

(7) Consists primarily of advertising expense, license fees, stock-based compensation expense and travel and expenses.

Geographic information about long-lived assets, net, excluding goodwill and other intangible assets is as follows:

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$ 475.9 $ 461.3

China 82.0 87.6

Malaysia 159.1 113.7

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Total Omnipod products

2,032.7 1,661.1 1,247.8

Drug Delivery 38.9 36.0 57.5

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Distributor C 21 % 19 % 17 %

* Represents less than 10% of revenue for the period.

Deferred revenue related to unsatisfied performance obligations was included in the following consolidated balance sheet accounts in the amounts shown:

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Related Party Transactions

In February 2021, the Company entered into a distribution agreement, the terms of which are consistent with those prevailing at arm’s length.

The spouse of one of the members of the Company’s Board of Directors is an executive officer of the distributor.

The spouse of one of the members of the Company’s Board of Directors is an executive officer of one of the Company’s distributors.

The terms of the distribution agreement are consistent with those prevailing at arm’s length.

The Company recorded $ 587.8 million, $ 473.7 million and $ 249.9 million of net revenues from the distributor for the years ended December 31, 2024, 2023, and 2022, respectively.

At each period end, related party transactions recorded on the consolidated balance sheets were as follows:

Related party transactions recorded on the consolidated balance sheets were as follows:

As of December 31,

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(1) Balances are included in accrued expenses and other current liabilities.

Cash and Cash Equivalents

The following table provides a summary of cash and cash equivalents as of December 31, 2023 and 2022:

As of December 31,

(in millions) 2023 2022

Cash $ 103.7 $ 136.1

Money market mutual funds 547.0 487.3

Term deposits

Restricted cash — 0.5

Total cash and cash equivalents 704.2 674.7

Restricted cash included in other assets — 15.0

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows $ 704.2 $ 689.7

Restricted cash included in other assets on the consolidated balance sheet as of December 31, 2022 was held as a compensating balance against long-term borrowings.

Accounts Receivable

At the end of each period, accounts receivable were comprised of the following:

Accounts receivable were comprised of the following:

As of December 31,

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Distributor C 15 % 18 %

The following table presents the activity in the allowance for credit losses, which is comprised primarily of the Company’s direct consumer receivable portfolio.

The allowance for credit losses of other portfolios is insignificant.

Year Ended December 31,

The following table presents the activity in the allowance for credit losses:

Years Ended December 31,

(in millions) 2024 2023 2022

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Credit losses at end of year $ 1.4 $ 2.5 $ 2.5

At the end of each period, inventories were comprised of the following:

The Company outsources the insurance claim submissions process to a third-party service provider in one country in which it operates.

Under this agreement, the Company transfers certain receivables in exchange for cash in advance.

If the third-party service provider is unable to collect on the transferred receivables, the third-party service provider has recourse to the Company.

This arrangement is accounted for as a secured borrowing with a pledge of collateral as the transfer does not meet the criteria for sale accounting.

Receivables pledged as collateral of $ 12.2 million are included in accounts receivable on the consolidated balance sheet as of December 31, 2024.

Liabilities associated with the secured borrowings of $ 12.2 million are included within accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2024.

No amounts were outstanding as of December 31, 2023.

The classification within current liabilities is based on the expected resolution of the underlying receivables.

The proceeds from and repayments of secured borrowings are reflected as cash flows provided by (used in) financing activities in the consolidated statement of cash flows.

Inventories were comprised of the following:

As of December 31,

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Total inventories $ 430.4 $ 402.6

Amounts charged to the consolidated statements of operations for excess and obsolete inventory for the years ended December 31, 2023, 2022, and 2021 were $ 3.7 million, $ 8.4 million, and $ 2.8 million, respectively.

Following the strategic decision to not move forward with the commercialization of Omnipod GO, the Company recorded a charge of $ 13.5 million related to certain inventory components that it no longer expected to utilize, which is included in cost of revenue in the consolidated statement of income for the year ended December 31, 2024.

Cloud Computing Costs

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Property, plant and equipment, net $ 723.1 $ 664.9

(1) Includes $ 6.5 million of land at December 31, 2023 related to the finance lease discussed in Note 15.

(2) Includes $ 31.7 million of building and building improvements and $ 0.4 million of accumulated depreciation at December 31, 2023 related to the finance lease discussed in Note 15.

Capitalized interest expense was $ 1.5 million, $ 1.6 million, and $ 1.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Depreciation expense related to property and equipment was $ 71.0 million, $ 62.6 million, and $ 56.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Construction in process primarily consists of manufacturing equipment for our new manufacturing facility being constructed in Malaysia and equipment and tooling for our existing manufacturing lines, most of which is expected to be placed into service during 2024.

Construction in process primarily consists of equipment and tooling expected to be placed into service during 2025.

Business Combination

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The change in the carrying amount of goodwill for the period is as follows:

Year Ended December 31,

Years Ended December 31,

(in millions) 2024

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$ 51.7 $ 51.7

Acquisition (Note 11)

Foreign currency translation ( 0.2 ) —

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Total intangible assets $ 159.1 $ ( 60.6 ) $ 98.5 $ 149.9 $ ( 51.2 ) $ 98.7

(1) Includes intangible assets acquired in December 2022.

See Note 19 for additional information.

Amortization expense for intangible assets was $ 9.8 million, $ 10.2 million, and $ 7.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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Equity Securities

In 2024, the Company made a strategic investment in equity securities of a privately held entity in the amount of $ 12.0 million.

As of December 31, 2024 and 2023, the total carrying value of the Company’s investments in equity securities without readily determinable fair values was $ 21.9 million and $ 9.7 million, respectively.

During 2023, the unrealized gain recorded due to changes in the fair value of equity investments was insignificant.

There were no adjustments as of December 31, 2022.

There were no unrealized gains or losses recorded due to changes in the fair value of equity investments during the years ended December 31, 2024 and 2022, and the unrealized gain recorded was insignificant for the year ended December 31, 2023.

Refer to “ Assets Measured at Fair Value on a Non-Recurring Basis ” in Note 16 for disclosures regarding equity securities without readily determinable fair values.

Debt Securities

In 2023, the Company made a strategic investment in debt securities of a privately held entity in the amount of $ 5.0 million.

In 2023, the Company made a strategic investment in debt securities of a privately held entity in the amount of $ 5.0 million, which is included in other assets on the consolidated balance sheets.

The debt securities mature in December 2026, unless converted earlier.

The amortized cost basis and fair value of the investment are $ 5.0 million and $ 4.7 million, respectively, as of December 31, 2023.

The unrealized loss recorded due to changes in the fair value of the investment during 2023 was insignificant.

The amortized cost basis of the debt securities was $ 5.0 million at both December 31, 2024 and December 31, 2023.

The amount of interest earned on the investment for the years ended December 31, 2024 and 2023 was insignificant.

Refer to Note 16 for the fair values.

In 2023, the Company made a strategic investment in a privately held entity in the amount of $ 2.0 million.

The investment is a debt security with embedded derivatives and is accounted for by applying the fair value option, as this approach best reflects the underlying economics of the transaction.

The fair value of the investment was calculated using a combination of the market approach and income approach methodologies.

During 2023, a $ 1.8 million unrealized gain on the investment was recorded in other income (loss), net in the consolidated statement of operations.

The fair value of the investment as of December 31, 2023 was $ 3.8 million and is reported within other assets on the consolidated balance sheet.

The amount of interest earned on the investment in 2023 was insignificant.

The fair value of the investment is calculated using a combination of the market approach and income approach methodologies and is reported within other assets on the consolidated balance sheet.

Refer to Note 16 for the fair values and unrealized losses recorded.

Accrued Expenses and Other Current Liabilities

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Accrued rebates

$ 148.3 $ 144.0

Employee compensation and related costs 142.8 122.0

Professional and consulting services 51.6 34.1

Warranty liability - current portion 4.8 57.3

Liability associated with secured borrowings

Other 68.9 73.6

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Product warranty liability at end of year $ 13.9 $ 10.3 $ 62.1

During the fourth quarter of 2022, the Company issued two voluntary medical device correction notices (“MDCs”), one for its Omnipod DASH PDM relating to its battery and the other for its Omnipod 5 Controller relating to its charging port and cable.

During the year ended December 31, 2022, the Company initially recorded an estimated liability of $ 68.9 million related to these MDCs, which was subsequent revised by $ 11.0 million, resulting in a net charge of $ 57.9 million for the year ended December 31, 2022.

The $ 11.0 million change in estimate primarily resulted from significantly fewer customers requesting a replacement Omnipod DASH PDM prior to the Company’s updated PDM being available.

During the year ended December 31, 2023, the Company revised the estimated liability for these MDCs by an additional $ 11.5 million.

This change in estimate primarily resulted from lower distribution costs.

The Company had a liability of $ 0.7 million and $ 54.6 million related to the MDCs included in its product warranty liability at December 31, 2023, and 2022, respectively.

In 2022, the Company issued two voluntary medical device correction notices (“MDCs”), one for its Omnipod DASH PDM relating to its battery and the other for its Omnipod 5 Controller relating to its charging port and cable.

The Company initially accrued an estimated liability of $ 68.9 million related to these MDCs, which was subsequently revised by $ 11.0 million due to significantly fewer customers requesting a replacement Omnipod DASH PDM prior the Company’s updated PDM being available, resulting in a net charge of $ 57.9 million for the year ended December 31, 2022.

During the year ended December 31, 2023, the Company further revised the estimated liability for these MDCs by 11.5 million.

This change in estimate primarily resulted from lower shipping costs for replacement DASH PDMs and lower expected distribution costs for Omnipod 5 Controllers.

The liability related to the MDCs included in product warranty liability at December 31, 2023 was insignificant and no amount was remaining as of December 31, 2024.

As of December 31, 2024, the Company leased certain automobiles and facilities for offices, laboratories, manufacturing, and warehousing, all of which were classified as operating leases.

Certain of the Company’s operating leases include escalating rental payments, some include the option to extend for up to 10 years, and some include options to terminate the leases at certain times within the lease term.

The Company also leases land and a manufacturing building in Malaysia, which are classified as finance leases.

The Company has the option to purchase the property at any point after the completion of construction and is contractually obligated to purchase the property nine months after completion, which occurred in December 2023.

Because the Company is reasonably certain to purchase the property, the lease term of each finance lease equals the economic life of the underlying asset.

As of December 31, 2023, the Company had not exercised the purchase option.

As of December 31, 2023, lease assets and lease liabilities were included in the following consolidated balance sheet accounts in the amounts shown:

In 2023, the Company also leased land and a manufacturing building in Malaysia, which were classified as finance leases until the Company exercised its option to purchase this property for $ 18.1 million in 2024.

Lease assets and lease liabilities were included in the following consolidated balance sheet accounts in the amounts shown:

Years Ended December 31,

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The Company’s operating and financing lease cost was as follows:

Year Ended December 31,

Years Ended December 31,

(in millions)

2023 2022 2021

Operating lease cost $ 7.3 $ 8.8 $ 8.8

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Total operating and financing lease cost $ 9.0 $ 9.8 $ 8.8

Maturities of lease liabilities as of December 31, 2023 are as follows:

Supplemental cash flow information related to leases is as follows:

Years Ended December 31,

(in millions) 2024 2023 2022

Years Ending December 31, Operating Leases

Right-of-use assets obtained in exchange for lease liabilities

Operating leases

$ 8.0 $ 5.4 $ 25.5

Finance lease

$ — $ 22.3 $ —

Lease payment made for amounts included in the measurement of operating lease liabilities

Cash paid for operating leases included in operating cash flows $ 5.8 $ 5.7 $ 4.6

Cash paid for finance lease included in operating cash flows

$ 1.1 $ — $ —

Cash paid for finance lease included in financing cash flows

$ 22.7 $ — $ —

Maturities of lease liabilities as of December 31, 2024 are as follows:

Years Ending December 31, (in millions)

Thereafter 40.1

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Present value of future minimum lease payments $ 42.1

(1) Excludes optional variable lease payments.

As of December 31, 2023, the weighted average remaining lease term and weighted-average discount rate for leases were as follows:

Operating Leases

Finance Leases

Weighted average remaining lease term 12.4 years 9 months

Weighted-average discount rate used to determine the lease liability 7.1 % 6.0 %

As of December 31, 2024, the weighted average remaining lease term for operating leases was 11.4 and the weighted-average discount rate used to determine the operating lease liability was 8.1 %.

The components of debt consisted of the following:

As of December 31,

(in millions) 2023 2022

Equipment financing due May 2024 $ 2.7 $ 9.5

Equipment financing due November 2025 15.2 22.5

5.15 % Mortgage due November 2025

0.375 % Convertible Senior Notes due September 2026

December 31, 2024 December 31, 2023

(in millions) Maturity Date

Effective Interest Rate

Equipment financing

Term loan due May 2028 487.5 492.5

Revolving Credit Facility expires June 2028 — —

Equipment financing due July 2028 29.0 34.4

2024 $ — 7.83 % $ 2.7 5.76 %

Equipment financing

2025 8.6 5.90 % 15.2 4.77 %

2025 61.0 5.74 % 63.3 5.73 %

Convertible Senior Notes

2026 800.0 0.76 % 800.0 0.76 %

Equipment financing

17.5 8.87 % 12.7 9.37 %

Revolving Credit Facility

Equipment financing

2028 23.4 4.27 % 29.0 4.27 %

2031 482.5 487.5

Finance lease obligation (1)

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Equipment Financings

In October 2020, the Company entered into a Master Equipment Lease Agreement for a loan of $ 60.0 million secured by two manufacturing lines located at the Company’s Acton, Massachusetts manufacturing facility.

The loan for the first manufacturing line is payable over 42 months and has an effective interest rate of 5.8 %.

The loan for the second manufacturing line is payable over 60 months and has an effective interest rate of 4.8 %.

In July 2021, the Company entered into a $ 43.1 million equipment financing transaction secured by one of the manufacturing lines located at the Company’s Acton, Massachusetts manufacturing facility.

The equipment financing is payable over 84 months and has an effective interest rate of 4.3 %.

In May 2023, the Company entered into an arrangement under which the Company may obtain up to $ 24.0 million of financing for manufacturing equipment.

The Company has two outstanding loans secured by manufacturing lines located at the Company’s Acton, Massachusetts manufacturing facility.

Additionally, in May 2023, the Company entered into an arrangement under which the Company may obtain up to $ 24.0 million of financing for manufacturing equipment.

The Company is involved in the construction of the manufacturing equipment;

accordingly, it is included in property, plant and equipment on the consolidated balance sheet at December 31, 2023.

accordingly, it is included in property, plant and equipment on the consolidated balance sheets.

The Company’s obligation reflects payments made to date by the third-party bank to the equipment manufacturer, net of discount and less repayment of principal.

The financing obligation will mature 36 months following completion of construction and has an effective interest rate of 9.4 %.

5.15 % Mortgage

In October 2020, the Company entered into a Mortgage Loan Agreement (the “Mortgage”), which provides for a $ 70.0 million loan with an effective interest rate of 5.7 %.

Proceeds under the Mortgage are secured by the Company’s Acton, Massachusetts headquarters.

The Mortgage is repayable in monthly installments of $ 0.5 million, with the outstanding principal balance of the loan due in November 2025.

The financing obligation will mature 36 months following completion of construction.

The Company has an outstanding loan that is secured by the Company’s Acton, Massachusetts headquarters.

The Mortgage contains non-financial customary covenants, none of which are considered restrictive to the Company’s operations.

Convertible Senior Notes

The Company has $ 800.0 million aggregate principal amount of 0.375 % Convertible Senior Notes due September 2026 (the “ 0.375 % Notes”) outstanding.

The notes are convertible into cash, shares of the Company’s common stock, or the combination of cash and shares of common stock, at the Company's election, at an initial conversion rate of 4.4105 shares of common stock per $1,000 principal amount of the notes, which is equivalent to a conversion price of $ 226.73 per share, subject to adjustment under certain circumstances.

The Company has $ 800.0 million aggregate principal amount of 0.375 % Convertible Senior Notes due September 2026 (the “Convertible Senior Notes”) outstanding.

The Convertible Senior Notes are convertible into cash, shares of the Company’s common stock, or the combination of cash and shares of common stock, at the Company's election, at an initial conversion rate of 4.4105 shares of common stock per $1,000 principal amount of the notes, which is equivalent to a conversion price of $ 226.73 per share, subject to adjustment under certain circumstances.

The notes will be convertible at the holder's election, from June 1, 2026 through August 28, 2026 and prior to then under certain circumstances as set forth in the agreement.

Additionally, on or after September 6, 2023, the Company may redeem for cash all or a portion of the Notes, if its stock price has been equal to or greater than $ 294.75 fo r at least 20 of the prior 30 consecutive trading days including the date which the Company provides notice of redemption .

Additionally, on or after September 6, 2023, the Company may redeem for cash all or a portion of the Convertible Senior Notes, if its stock price has been equal to or greater than $ 294.75 fo r at least 20 of the prior 30 consecutive trading days including the date which the Company provides notice of redemption .

Additional interest of 0.5 % per annum is payable if the Company fails to timely file required documents or reports with the Securities and Exchange Commission (“SEC”).

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The Company determined that the higher interest payments and tax payments required in certain circumstances were embedded derivatives that should be bifurcated and accounted for at fair value.

The Company assessed the value of the embedded derivatives at each balance sheet date and determined it had nominal value.

In conjunction with the issuance of the 0.375 % Notes, the Company purchased Capped Calls on the Company’s common stock with certain counterparties to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the 0.375 % Notes.

The Company assessed the value of the embedded derivatives at each balance sheet date and determined they had nominal value.

In conjunction with the issuance of the Convertible Senior Notes, the Company purchased capped call options (“Capped Calls”) on the Company’s common stock with certain counterparties to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of its cash payment obligation) if at the time of conversion its stock price exceeds the conversion price under the Convertible Senior Notes.

The Capped Calls have an initial strike price of $ 335.90 per share, which represents a premium of 100 % over the last reported sale price of the Company’s common stock of $ 167.95 per share on the date of the transaction.

1 unchanged sentence

As of December 31, 2024 and 2023, the net carrying amount of the Notes was $ 794.9 million and $ 791.8 million, respectively, net of unamortized issuance costs of $ 5.1 million and $ 8.2 million, respectively.

As of December 31, 2023, the effective interest rate was 0.76 %.

The components of interest expense related to the Notes were as follows:

5 unchanged sentences

Amortization of debt issuance costs

Total interest recognized on the Convertible Notes $ 6.0 $ 6.0 $ 4.9

Total interest recognized on the Convertible Senior Notes

$ 6.0 $ 6.0 $ 6.0

Senior Secured Credit Agreement

In May 2021, the Company entered into a senior secured credit agreement (the “Credit Agreement”), which includes a $ 500 million seven-year senior secured term loan B (the “Term Loan”) for net proceeds of $ 489.5 million, which was used to fund the cash portion of the repurchase of the 1.375 % Notes discussed below.

On November 30, 2022, the Company amended the Term Loan to bear interest at a rate of SOFR plus 3.25 %, with a 0.50 % SOFR floor.

In May 2021, the Company entered into a senior secured credit agreement (the “Credit Agreement”), which includes a $ 500 million seven-year senior secured term loan B (the “Term Loan”).

On November 30, 2022, the Company amended the Term Loan to bear interest at a rate of SOFR plus 3.25 %, with a 0.50 % SOFR floor and in January 2024, amended it again to bear interest at a rate of SOFR plus 3.0 %, with a 0 % SOFR floor.

At the same time, the Company amended its senior secured revolving credit facility (the “Revolving Credit Facility”) discussed below such that outstanding borrowings bear interest at a rate of SOFR plus an applicable margin of 2.375 % to 3.0 % (previously 2.625 % to 3.25 %) based on the Company’s net leverage ratio and credit rating.

In August 2024, the Company amended its Term Loan to bear interest at a rate of SOFR plus 2.5 % and extended the term to August 2031.

At the same time, the Company amended its Revolving Credit Facility such that outstanding borrowings bear interest at a rate of SOFR plus an applicable margin of 2 % to 2.5 % based on the Company’s net leverage ratio.

The Term Loan contains leverage and fixed charge coverage ratio covenants, both of which are measured upon the incurrence of future debt.

Under the same agreement, the Company obtained a senior secured revolving credit facility (the “Revolving Credit Facility”).

In 2023, the Company increased the borrowing capacity under the Revolving Credit Facility to $ 300.0 million and amended the agreement such that outstanding borrowings bear interest at a rate of SOFR plus an applicable margin of 2.625 % to 3.25 %

based on the Company’s net leverage ratio and credit rating and extended the maturity date to the earlier of June 2028 or 91 days prior to the maturity date of the Company's term loan if still outstanding.

Under the same agreement, the Company obtained a Revolving Credit Facility.

In 2023, the Company increased the borrowing capacity under the Revolving Credit Facility to $ 300.0 million and extended the maturity date to the earlier of June 2028 or 91 days prior to the maturity date of the Company's term loan if still outstanding.

The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio under certain conditions when there are amounts outstanding.

No amount was outstanding under the Revolving Credit Facility at December 31, 2023.

Borrowings under the Credit Agreement are guaranteed by certain wholly owned domestic subsidiaries of the Company and are secured by substantially all assets of the Company and of each subsidiary guarantor, subject to certain exceptions.

Additionally, borrowings under the Credit Agreement are senior to all of the Company’s unsecured indebtedness, including the convertible notes.

In January 2024, the Company amended its Credit Agreement.

Refer to Note 26 for additional information.

1.375 % Convertible Senior Notes

In 2021, the Company repurchased $ 370.4 million in principal ($ 305.7 million net of discount and issuance costs) of its 1.375 % Convertible Senior Notes due November 2024 (“ 1.375 % Notes”) for $ 460.8 million in cash and the issuance of 2.2 million shares with a fair value of $ 622.7 million.

The remaining $ 32.1 million in principal of the 1.375 % Notes were converted into approximately 0.4 million shares with a fair value of $ 99.8 million.

The debt repurchase and conversions resulted in a $ 42.4 million loss on extinguishment, including cash paid to the note holders as an inducement to convert and transaction costs.

Carrying Value

Additionally, borrowings under the Credit Agreement are senior to all of the Company’s unsecured indebtedness, including the Convertible Senior Notes.

The carrying value amounts of the Company’s debt were as follows:

1 unchanged sentence

(in millions) 2024 2023

Term loan due May 2028

$ 475.1 $ 479.2

1 unchanged sentence

Equipment financings

5.15 % Mortgage

Finance lease obligation — 22.9

5 unchanged sentences

Financial Instruments Disclosed at Fair Value

The following tables provide a summary of the significant financial instruments that are disclosed at fair value on a recurring basis as of December 31, 2023 and 2022:

The following tables provide a summary of the significant financial instruments disclosed at fair value on a recurring basis:

Fair Value Measurements at December 31, 2024

(in millions) Level 1 Level 2 Level 3 Total

Term loan due May 2028 (1)

Term Loan (1)

$ 485.8 $ — $ — $ 485.8

3 unchanged sentences

— — 49.3 49.3

5.15 % Mortgage (3)

— — 60.6 60.6

2 unchanged sentences

(in millions) Level 1 Level 2 Level 3 Total

Term loan due May 2028 (1)

Term Loan (1)

$ 490.2 $ — $ — $ 490.2

3 unchanged sentences

— — 59.3 59.3

5.15 % Mortgage (3)

— — 62.6 62.6

$ 490.2 $ 928.7 $ 121.9 $ 1,540.8

(1) Fair value of the Term Loan was determined using quoted market prices.

(2) Fair value of the notes was determined using the Company’s quoted stock price and the contractual conversion rate.

(3) The fair values of the equipment financings and mortgage approximate their carrying values and were determined using their cost basis.

(1) Fair value was determined using quoted market prices.

(2) Fair value was determined using market prices obtained from third-party pricing sources.

(3) Fair value approximates carrying value and was determined using the cost basis.

Assets Measured at Fair Value on a Recurring Basis

The following tables provide a summary of assets that are measured at fair value on a recurring basis as of December 31, 2023 and 2022:

The following tables provide a summary of assets that are measured at fair value on a recurring basis:

Fair Value Measurements at December 31, 2024

3 unchanged sentences

820.0 — — 820.0

Term deposits (2)

— 53.5 — 53.5

Interest rate swaps (2)

— 22.8 — 22.8

Debt securities (3)

Other investments (4)

$ 953.4 $ 5.5 $ 4.7 $ 963.6

6 unchanged sentences

— 53.5 — 53.5

Restricted cash (1)

Interest rate swaps (2)

— 22.8 — 22.8

Debt securities (3)

Other investments (3)

$ 650.7 $ 76.3 $ 8.5 $ 735.5

(1) Cash and cash equivalents are carried at face amounts, which approximate their fair values.

(2) Fair value is determined using Level 2 inputs.

(2) Fair value represents the estimated amounts the Company would receive or pay to terminate the contracts and is determined using industry standard valuation models and market-based observable inputs, including credit risk and interest rate yield curves.

2 unchanged sentences

The range used for the risk free rate is 4.0 % - 4.7 %.

The following is a reconciliation of changes in fair value of investments, which were acquired during the year ended December 31, 2023:

Judgement is involved in estimating inputs, such as discount rates, used in Level 3 fair value measurements.

Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized.

Below is a reconciliation of changes in fair value of debt and other investments:

(in millions) Debt Securities Other Investments Total

1 unchanged sentence

Purchases 5.0 2.0 7.0

Unrealized gain included in other income (expense), net — 1.8 1.8

Unrealized gain included in other (expense) income, net

Unrealized loss on securities included in other comprehensive income ( 0.3 ) — ( 0.3 )

Balance at December 31, 2023

Unrealized loss included in other (expense) income, net

— ( 3.8 ) ( 3.8 )

Balance at December 31, 2024

$ 4.7 $ — $ 4.7

Assets Measured at Fair Value on a Non-Recurring Basis

Due to an observable price change in an orderly transaction during 2023, the Company adjusted the carrying value of certain investments in equity securities held as of December 31, 2023, which resulted in an unrealized gain of $ 0.8 million.

As of both December 31, 2024 and December 31, 2023, cumulative gains were $ 0.8 million.

The investments are classified as Level 2 in the fair value hierarchy.

3 unchanged sentences

The Company has designated the interest rate swaps as cash flow hedges.

As of December 31, 2023, the Company estimates that $ 18.3 million of net gains related to the interest rate swaps included in accumulated other comprehensive income will be reclassified into the statement of operations over the next 12 months.

When recognized, gains and losses on cash flow hedges reclassified from accumulated other comprehensive income are recognized within interest expense, net.

Gains and losses on cash flow hedges reported in accumulated other comprehensive income are reclassified into interest expense, net in the consolidated statement of income when the hedged transactions affect earnings, that is, when interest expense is recognized for the Term Loan.

As of December 31, 2024, the Company estimates that $ 5.4 million of net gains related to the interest rate swaps included in accumulated other comprehensive income will be reclassified into the statement of income over the next 12 months.

Commitments and Contingencies

Legal Proceedings

On December 3, 2024, a jury verdict was returned in favor of the Company in the matter of Insulet Corporation vs.

EOFlow Co., Ltd.

pending in the U.S.

District Court of Massachusetts Case No.

1:23-cv-11780.

The jury found that EOFlow Co., Ltd.

(“EOFlow”) and several other defendants misappropriated certain of the Company’s trade secrets.

The jury awarded the Company $ 170 million in compensatory damages from EOFlow and an additional $ 282 million in exemplary damages from EOFlow for willful and malicious misappropriation, for a total damages award of $ 452 million.

On January 24, 2025, EOFlow moved for a directed verdict and for a new trial, as well as for a reduction of the jury award.

On January 24, 2025, the Company moved for a permanent worldwide injunction on the sale of EOFlow’s EOPatch 2 product and any other products that embody Insulet’s trade secrets.

EOFlow and other defendants may seek to appeal the verdict.

EOFlow may not be able to satisfy this damage award;

accordingly, it has not been recorded in the Company’s consolidated statement of income.

In June 2020, Roche Diabetes Care, Inc.

17 unchanged sentences

Letters of Credit

In 2022, the Company entered into a $ 20 million uncommitted letter of credit facility, and concurrently with the execution of the Malaysia Purchase Agreement discussed in Note 15, a $ 16.5 million letter of credit was issued under the facility to backstop a bank guarantee for the same amount.

The bank guarantee, to which the Company is not a party, serves as security for the building until the Company purchases the property.

In 2023, additional letters of credit totaling $ 3.5 million were issued under this facility.

The Company pays interest on outstanding borrowings and commitment fees on the maximum amount available to be drawn under the letter of credit at a rate of between 1.65 % and 2.25 %, depending on the Company’s credit rating.

The letter of credit includes customary covenants, none of which are considered restrictive to the Company’s operations.

In aggregate, the Company had letters of credit totaling $ 20.9 million and $ 18.6 million as of December 31, 2023 and 2022, respectively.

The Company had $ 0.8 million and $ 20.9 million of letters of credit outstanding as of December 31, 2024 and December 31, 2023, respectively.

The letters of credit outstanding at December 31, 2023 primarily served as security for our manufacturing facility in Malaysia until we purchased the property in 2024.

Stock-Based Compensation Expense

6 unchanged sentences

Compensation expense related to stock-based awards was recorded as follows:

Year Ended December 31,

Years Ended December 31,

(in millions) 2024 2023 2022

38 unchanged sentences

Risk-free interest rate 4.4 %

0.5 % - 0.6 %

Expected life of options (in years) 4.1

1 unchanged sentence

Expected stock price volatility 46.2 %

41.4 % - 41.6 %

Fair value per option $ 69.48 $ 115.32 $ 93.26

33 unchanged sentences

(2) Based on 169 % achievement of the performance metrics, approximately 83,000 shares of Insulet were earned for awards that were granted in 2022 for the performance period ended December 31, 2024.

These shares vested in February 2024.

These shares vest in February 2025.

The weighted-average grant-date fair value per share of PSUs granted was $ 276.36 and $ 250.25 for the years ended December 31, 2023 and 2022, respectively.

23 unchanged sentences

This cost is expected to be recognized over a weighted average period of 0.4 years.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive (Loss) Income

Changes in the components of accumulated other comprehensive income (loss), net of tax, were as follows:

(in millions) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Securities Unrealized Gains on Cash Flow Hedges Accumulated Other Comprehensive Income (Loss)

(in millions) Foreign Currency Translation Adjustment Unrealized Losses on Securities

Unrealized Gains on Cash Flow Hedges Accumulated Other Comprehensive (Loss) Income

Balance, December 31, 2021

$ ( 6.7 ) $ — $ 4.5 $ ( 2.2 )

Other comprehensive (loss) income ( 11.9 ) ( 0.3 ) 3.0 ( 9.2 )

Other comprehensive income (loss) before reclassifications

( 10.3 ) — 36.5 26.2

Amounts reclassified to net income — — ( 4.0 ) ( 4.0 )

1 unchanged sentence

( 17.0 ) — 37.0 20.0

Other comprehensive (loss) income before reclassifications ( 10.3 ) — 36.5 26.2

Other comprehensive income (loss) before reclassifications

2.5 ( 0.3 ) 6.1 8.3

Amounts reclassified to net income — — ( 20.3 ) ( 20.3 )

3 unchanged sentences

Amounts reclassified to net income (1)

— — 26.0 26.0

Balance, December 31, 2024

$ ( 22.3 ) $ ( 0.3 ) $ 9.4 $ ( 13.2 )

(1) Income tax expense on cash flow hedges in other comprehensive income (loss) before reclassification for the year ended December 31, 2024 was $ 3.9 million.

There was no tax impact for the years ended December 31, 2023 and 2022.

Additionally, there is no income tax impact on currency translation adjustments.

Defined Contribution Plan

7 unchanged sentences

$ 253.9 $ 199.5 $ 11.8

Foreign 15.1 ( 2.0 ) ( 4.8 )

46.3 15.1 ( 2.0 )

Income before income taxes $ 300.2 $ 214.6 $ 9.8

Income tax expense consists of the following:

The provision for income taxes consists of the following:

Years Ended December 31,

(in millions) 2024 2023 2022

State $ 3.7 $ 1.3 $ 0.5

Foreign 4.1 4.8 2.0

$ 5.8 $ — $ —

Total current tax expense

Federal 0.1 — —

Foreign 0.4 ( 0.9 ) 1.2

Total deferred tax expense (benefit)

( 111.1 ) 0.1 —

Total income tax expense $ 8.3 $ 5.2 $ 3.7

State ( 18.6 ) — —

( 7.2 ) 0.4 ( 0.9 )

Total deferred tax (benefit) expense

( 136.9 ) 0.5 ( 0.9 )

Income tax (benefit) expense

$ ( 118.1 ) $ 8.3 $ 5.2

Reconciliations of the U.S.

2 unchanged sentences

2024 2023 2022

statutory rate 21.0 % 21.0 % 21.0 %

Foreign rate differential 0.6 13.2 4.8

federal statutory rate

21.0 % 21.0 % 21.0 %

Foreign tax rate differential

State taxes, net of federal benefit 2.3 2.4 ( 5.0 )

2 unchanged sentences

Stock-based compensation 0.5 ( 3.2 ) ( 94.8 )

Extinguishment of debt — — ( 57.5 )

Capital loss carryforward expirations — — 52.1

Non-deductible officers’ compensation 0.6 1.3 52.4

4 unchanged sentences

Change to prior year R&D credit

Intercompany transfer of intellectual property — — 4.6

( 2.8 ) ( 2.8 ) —

Other 0.2 ( 0.6 ) 1.7

Effective tax rate ( 39.3 ) % 3.9 % 53.4 %

The income tax benefit in 2024 primarily resulted from the release of substantially all of the valuation allowance maintained against deferred tax assets discussed below and the completion of a research and development (“R&D”) credit study for the

periods 2017 through 2022, which resulted in a $ 8.3 million income tax benefit from the increase to U.S.

federal and state R&D credit carryforwards.

For all periods presented, no provision for income taxes has been provided on undistributed earnings of the Company’s foreign subsidiaries, except for Canada, because such earnings are indefinitely reinvested in the foreign operations.

The Company has recorded a deferred tax liability for withholding tax that could be incurred upon repatriation of earnings from its Canadian subsidiary, the amount of which is not significant.

A deferred tax liability related to the repatriation of approximately $ 32.7 million indefinitely reinvested earnings would not be material to the Company’s consolidated financial statements, primarily due to treaty-based withholding tax rates in the jurisdictions in which the Company operates.

During 2023 the Company commenced a multi-year research and development (“R&D”) credit study that resulted in an increase to U.S.

federal and state R&D credit carryforwards related to the 2022 tax year.

This has been reported as a favorable adjustment to prior year taxes in the effective tax rate and a corresponding increase to the valuation allowance.

The Company has recorded a deferred tax liability for the tax costs on these earnings to the extent they cannot be repatriated in a tax-free manner.

A deferred tax liability related to the repatriation of approximately $ 57.3 million indefinitely reinvested earnings has not been recorded.

Events that could trigger a tax liability include, but are not limited to, distributions, reorganizations or restructurings, and/or tax law changes.

Determining the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings is not practicable due to complexities associated with the hypothetical calculation.

The Company files federal, state, and foreign tax returns, which are subject to examination by the relevant tax authorities.

2 unchanged sentences

In addition, the Company’s U.S.

net operating loss carryforwards from 2003 and forward may be subject to examination if the losses are utilized in future years.

net operating loss carryforwards from 2001 and forward may be subject to examination in the periods that they are utilized.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

Years Ended December 31,

(in millions) 2024 2023

Unrecognized tax benefits at December 31, 2022 $ —

Unrecognized tax benefits at beginning of year

Additions related to current period tax positions

Additions related to prior period tax positions

Unrecognized tax benefits at December 31, 2023

As of December 31, 2023, the balance of unrecognized tax benefits, if recognized, would not impact the effective tax rate due to a full valuation allowance against the Company's U.S.

deferred tax assets.

As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits that would impact the effective tax rates.

Unrecognized tax benefits at end of year

As of December 31, 2024 and 2023, the Company had unrecognized tax benefits that would impact the effective tax rate if recognized of $ 12.8 million and $ 5.0 million, respectively.

As of December 31, 2022, the Company had no unrecognized tax benefits that would impact the effective tax rates.

No interest and penalties were recognized related to uncertain tax positions for the years ended December 31, 2024, 2023, and 2022, respectively, and no interest or penalties were accrued as of December 31, 2024 and 2023, respectively.

The Company does not anticipate that the amount of existing unrecognized tax benefits will materially increase or decrease within the next 12 months.

No interest and penalties were recognized related to uncertain tax positions for the years ended December 31, 2023, 2022 and 2021 and no interest and penalties were accrued for as of December 31, 2023 and 2022.

The components of the net deferred tax asset at the end of each year consist of the following:

The components of the net deferred tax asset were as follows:

As of December 31,

4 unchanged sentences

Capitalized research and development expenditures 78.8 53.3

Warranty 2.2 14.6

Accrued expenses 34.4 25.1

2 unchanged sentences

Intangible assets 6.4 8.0

Interest limitation carryforwards — 1.7

Incentive compensation 14.7 13.5

12 unchanged sentences

Net deferred tax asset $ 141.7 $ 1.2

The Company maintained a valuation allowance of $ 202.9 million and $ 222.8 million at December 31, 2023 and 2022, respectively, against U.S.

federal, state, and certain foreign deferred tax assets, as management has determined that it is more-likely-than-not that these net deferred tax assets will not be realized.

These valuation allowances are based on the weighting of positive and negative evidence, including a history of cumulative tax losses in prior years.

The $ 19.9 million decrease in the Company’s valuation allowance during the year ended December 31, 2023 was primarily due to the utilization of net operating losses and changes in temporary differences in the United States.

The Company regularly assesses the need for a valuation allowance against its deferred tax assets.

In making such assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets and, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

During the year ended December 31, 2024, the Company recorded a $ 182.5 million non-cash income tax benefit related to the release of a substantial portion of its valuation allowance against deferred tax assets.

This was based on the Company’s evaluation of the positive and negative evidence including cumulative income (loss) position, revenue growth, current profitability and expectations regarding future forecasted income.

The remaining change in the valuation allowance is comprised of a $ 4.8 million increase related to current year state R&D credits, partially offset by $ 1.3 million of federal R&D credits that will not be utilized prior to expiration.

The valuation allowance at December 31, 2024 primarily relates to certain U.S.

state tax credits and state net operating loss carryforwards.

As of December 31, 2024, the Company’s net operating loss carryforwards were as follows:

8 unchanged sentences

State 2025 - 2044 $ 30.7

These loss and credit carryforwards, which may be utilized in a future period, may be subject to limitations based on changes in the ownership of the Company ordinary shares.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period.

Diluted net income per share is computed using the weighted average number of common shares outstanding and, when dilutive, common share equivalents.

The computation of basic and diluted net income per share was as follows:

The above loss and credit carryforwards, which may be utilized in a future period, may be subject to limitations based on changes in the ownership of the Company ordinary shares.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period.

Diluted earnings per share is computed using the weighted average number of common shares outstanding and, when dilutive, common share equivalents.

The computation of basic and diluted earnings per share was as follows:

Years Ended December 31,

3 unchanged sentences

Net income, diluted $ 427.4 $ 216.7 $ 4.6

Weighted average number of common shares outstanding, basic (in thousands)

Weighted average number of common shares outstanding, basic

(in thousands)

70,076 69,751 69,375

Convertible Notes 3,528 — —

Convertible Senior Notes

3,528 3,528 —

Stock options 150 286 454

Restricted stock units 136 68 81

Weighted average number of common shares outstanding, diluted (in thousands)

Weighted average number of common shares outstanding, diluted

(in thousands)

73,890 73,633 69,910

Net income per share

Earnings per share

$ 5.97 $ 2.96 $ 0.07

$ 5.78 $ 2.94 $ 0.07

The number of common share equivalents excluded from the computation of diluted net income per share because either the effect would have been anti-dilutive, or the performance criteria related to the units had not yet been met, were as follows:

The number of common share equivalents excluded from the computation of diluted earnings per share because either the effect would have been anti-dilutive, or the performance criteria related to the units had not yet been met, were as follows:

Years Ended December 31,

3 unchanged sentences

Convertible Senior Notes

— 3,528 3,528

1.375 % Convertible Senior Notes

Total 673 485 3,892

6 unchanged sentences

Purchases of property, plant and equipment included in long-term debt $ 7.1 $ 12.9 $ —

Purchases of developed software included in accounts payable and accrued expenses $ 0.2 $ 0.4 $ 3.2

Operating lease liabilities arising from obtaining right-of-use assets $ 5.4 $ 25.5 $ 0.7

Finance lease liability arising from obtaining right-of-use assets $ 22.3 $ — $ —

Lease payment made for amounts included in the measurement of operating lease liabilities $ 5.7 $ 4.6 $ 5.7

Subsequent Event

In January 2024, the Company amended its Term Loan to bear interest at a rate of SOFR plus 3.00 %, with a 0 % SOFR floor.

At the same time, the Company amended its Revolving Credit Facility such that outstanding borrowings bear interest at a rate of SOFR plus an applicable margin of 2.375 % to 3.00 % based on the Company’s net leverage ratio and credit rating.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

6 unchanged sentences

Year Ended December 31, 2024

Reserve for rebates $ 77.3 $ 465.5 $ — $ ( 385.1 ) $ 157.7

Reserve for rebates, chargebacks and wholesaler fees

$ 157.7 $ 587.8 $ — $ ( 573.8 ) $ 171.7

Deferred tax valuation allowance $ 202.9 $ 5.1 $ — $ ( 184.1 ) $ 23.9

Year Ended December 31, 2023

Reserve for rebates $ 34.1 $ 247.1 $ — $ ( 203.9 ) $ 77.3

Reserve for rebates, chargebacks and wholesaler fees

$ 77.3 $ 465.5 $ — $ ( 385.1 ) $ 157.7

Deferred tax valuation allowance $ 222.8 $ 73.5 $ 3.7 $ ( 97.1 ) $ 202.9

Year Ended December 31, 2022

Reserve for rebates $ 16.9 $ 143.3 $ — $ ( 126.1 ) $ 34.1

Reserve for rebates, chargebacks and wholesaler fees

$ 34.1 $ 247.1 $ — $ ( 203.9 ) $ 77.3

Deferred tax valuation allowance (1)

(1) Represents the increase in deferred tax valuation allowance resulting from the adoption of ASU 2020-06, Debt — Debt with Conversations and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40):

$ 182.4 $ 72.5 $ 37.8 $ ( 69.9 ) $ 222.8

(1) Other represents the increase in deferred tax valuation allowance resulting from the adoption of ASU 2020-06, Debt — Debt with Conversations and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.

2 unchanged sentences

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 8. Financial Statements and Supplementary Data