INSULET CORP

Previous wording

In June 2024, we submitted our 510(k) for an expanded indication of Omnipod 5 for type 2 diabetes to the U.S. Food and Drug Administration (“FDA”) for 510(k) clearance. Due to the positive results of our Omnipod 5 type 2 pivotal trial and the learnings from our Omnipod GO pilot, we made a strategic decision to drive growth in the type 2 diabetes market with Omnipod 5 and, accordingly, during the second quarter, we decided not to move forward with the commercialization of Omnipod GO.

Current wording

In June 2024, we submitted our 510(k) for an expanded indication of Omnipod 5 for type 2 diabetes to the U.S. Food and Drug Administration (“FDA”) for 510(k) clearance and in August 2024, we received FDA clearance for the expansion of Omnipod 5 for people with type 2 diabetes. Due to the positive results of our Omnipod 5 type 2 pivotal trial and the learnings from our Omnipod GO pilot, we made a strategic decision to drive growth in the type 2 diabetes market with Omnipod 5 and, accordingly, during the second quarter, we decided not to move forward with the commercialization of Omnipod GO.

Previous wording

We also continue to focus on our product development efforts, including automated insulin delivery (“AID”) offerings, such as choice of smartphone integration and CGM, and enhancing the customer experience through digital product and data capabilities. In June 2024, we began our full market release of Omnipod 5 with Dexcom’s G7 CGM in the United States. Similarly, in June 2024 we launched our full market release of Omnipod 5 with Libre 2 Plus for individuals aged two years and older with type 1 diabetes in both the U.K. and the Netherlands, where we now offer sensor of choice (integration with either Abbott’s Freestyle Libre 2 Plus sensor or Dexcom’s G6 CGM). Dexcom’s G6 CGM is also available in the UK and Germany. Additionally, in June 2024, we launched a limited market release of Omnipod 5 with our iOS app for iPhone in the United States.

Current wording

We also continue to focus on our product development efforts, including automated insulin delivery (“AID”) offerings, such as choice of smartphone integration and CGM, and enhancing the customer experience through digital product and data capabilities. In June 2024, we began our full market release of Omnipod 5 with Dexcom’s G7 CGM in the United States. Similarly, in June 2024 we launched our full market release of Omnipod 5 with Libre 2 Plus for individuals aged two years and older with type 1 diabetes in both the U.K. and the Netherlands, where we now offer sensor of choice (integration with either Abbott’s Freestyle Libre 2 Plus sensor or Dexcom’s G6 CGM). Omnipod 5 integration with Dexcom’s G6 CGM is also available in the U.K. and Germany. Additionally, in June 2024, we launched a limited market release in the U.S. of our Omnipod 5 app for iPhone compatible with Dexcom’s G6 CGM, and in October we launched our U.S. full market release.

Previous wording

During the three and six months ended June 30, 2024, we recorded a charge of $13.5 million related to certain inventory components which we no longer expect to utilize following the strategic decision to not move forward with the commercialization of Omnipod GO discussed above.

Current wording

Following our strategic decision to not move forward with the commercialization of Omnipod GO discussed above, we recorded a charge of $13.5 million related to certain inventory components that we no longer expect to utilize, which is included in our consolidated statement of income for the nine months ended September 30, 2024.

Previous wording

Total revenue for the three months ended June 30, 2024 increased $92.0 million, or 23.2%, to $488.5 million, compared with $396.5 million for the three months ended June 30, 2023. Total revenue for the six months ended June 30, 2024 increased $175.6 million, or 23.3%, to $930.2 million, compared with $754.6 million for the six months ended June 30, 2023. Constant currency revenue growth of 23.4% and 23.1% for the three and six months ended June 30, 2024, respectively, was primarily drivenby higher volume largely attributable to our growing customer base. A higher average selling price, in part due to growth in the pharmacy channel, also contributed to the increase in revenue for both periods, although to a lesser extent.

Current wording

Total revenue for the three months ended September 30, 2024 increased $111.2 million, or 25.7%, to $543.9 million, compared with $432.7 million for the three months ended September 30, 2023. Total revenue for the nine months ended September 30, 2024 increased $286.8 million, or 24.2%, to $1,474.1 million, compared with $1,187.3 million for the nine months ended September 30, 2023. Constant currency revenue growth of 25.4% and 23.9% for thethree and nine months ended September 30, 2024, respectively, was primarily drivenby higher volume largely attributable to our growing customer base and, to a lesser extent, higher price.

Previous wording

Revenue from the sale of Omnipod products in the U.S. increased $75.5 million, or 27.3%, to $352.3 million for the three months ended June 30, 2024, compared with $276.8 million for the three months ended June 30, 2023. This increase primarily resulted from higher volume driven by growing our customer base, somewhat offset by a decrease in estimated inventory days-on-hand at distributors as we manage the transition from Omnipod G6 Pods to G7 Pods in the distribution channel. To a lesser extent, the revenue increase was driven by a higher average selling price, in part due to growth in the pharmacy channel. Revenue from the sale of Omnipod products in the U.S. for the three months ended June 30, 2024 included $147.3 million of related party revenue, compared with $109.2 million for the three months ended June 30, 2023. The $38.1 million increase resulted from growth through the pharmacy channel.

Current wording

Revenue from the sale of Omnipod products in the U.S. increased $75.0 million, or 23.4%, to $395.6 million for the three months ended September 30, 2024, compared with $320.6 million for the three months ended September 30, 2023. This increase primarily resulted from higher volume driven by growing our customer base. To a lesser extent, the revenue increase was driven by a higher average selling price, due to a wholesale acquisition cost (“WAC”) increase implemented during the second quarter of 2024. Revenue from the sale of Omnipod products in the U.S. for the three months ended September 30, 2024 included $171.3 million of related party revenue, compared with $112.0 million for the three months ended September 30, 2023. The $59.3 million increase resulted from growth through the pharmacy channel.

Previous wording

Revenue from the sale of Omnipod products in the U.S. increased $134.2 million, or 25.0%, to $670.0 million for the six months ended June 30, 2024, compared with $535.8 million for the six months ended June 30, 2023. This increase primarily resulted from higher volume through the pharmacy channel driven by growing our customer base, partially offset by a decrease in estimated inventory days-on-hand at distributors and lower conversions to Omnipod 5 since the vast majority of U.S. conversions to Omnipod 5 occurred in 2023. We experienced a benefit from conversions to Omnipod 5 in the prior year following the launch of the product in the latter half of 2022 since users generally fill both their Omnipod 5 starter kit and their first month of refills simultaneously. To a lesser extent, the revenue increase was driven by a higher average selling price, in part due to growth in the pharmacy channel. Revenue from the sale of Omnipod products in the U.S. for the six months ended June 30, 2024 included $259.1 million of related party revenue, compared with $206.0 million for the six months ended June 30, 2023. The $53.1 million increase resulted from growth through the pharmacy channel.

Current wording

Revenue from the sale of Omnipod products in the U.S. increased $209.2 million, or 24.4%, to $1,065.6 million for the nine months ended September 30, 2024, compared with $856.4 million for the nine months ended September 30, 2023. This increase primarily resulted from higher volume through the pharmacy channel driven by growing our customer base, partially offset by a decrease in estimated inventory days-on-hand at distributors and lower conversions to Omnipod 5. Inventory days-on-hand declined to more normal levels following an acceleration of orders by U.S. pharmacy wholesalers in advance of the implementation of our new ERP system on January 1, 2024. We experienced a benefit from conversions to Omnipod 5 in the prior year following the launch of the product in the latter half of 2022 since users generally fill both their Omnipod 5 starter kit and their first month of refills simultaneously. Conversions to Omnipod 5 declined since the vast majority of U.S. conversions to Omnipod 5 occurred in 2023. To a lesser extent, the revenue increase was driven by a higher average selling price resulting from our annual WAC increases and growth in the pharmacy channel. Revenue from the sale of Omnipod products in the U.S. for the nine months ended September 30, 2024 included $430.4 million of related party revenue, compared with $318.0 million for the nine months ended September 30, 2023. The $112.4 million increase resulted from growth through the pharmacy channel.

Previous wording

For full year 2024, we expect strong U.S. revenue growth primarily driven by continued volume growth of Omnipod 5 due to an increase in our customer base and the benefits of our recurring revenue model, partially offset by a decrease in estimated inventory days-on-hand at distributors. A higher average selling price for Omnipod 5, due in part to growth in the pharmacy channel, is also expected to contribute to the year over year increase in revenue.

Current wording

For full year 2024, we expect strong U.S. revenue growth primarily driven by continued volume growth of Omnipod 5 due to an increase in our customer base and the benefits of our recurring revenue model, partially offset by a decrease in estimated inventory days-on-hand at distributors. A higher average selling price for Omnipod 5, resulting from our annual WAC increases and growth in the pharmacy channel, is also expected to contribute to the year over year increase in revenue.

Previous wording

Revenue from the sale of Omnipod products in our international markets increased $24.4 million, or 23.5%, to $128.1 million for the three months ended June 30, 2024, compared with $103.7 million for the three months ended June 30, 2023. Excluding the 0.9% unfavorable impact of currency exchange, the remaining 24.4% increase in revenue wasprimarily due to higher volumes from the launch of Omnipod 5 in the U.K. and Germany, including the favorable impact of conversions to Omnipod 5 as users in these countries generally obtain both their starter kit and refills simultaneously. A higher average selling price for Omnipod 5, compared with Omnipod DASH and Classic Omnipod, was largely offset by the timing of revenue recognition related to deferrals associated with our DASH MDC and a technology upgrade program in prior year.

Current wording

Revenue from the sale of Omnipod products in our international markets increased $36.6 million, or 36.1%, to $138.0 million for the three months ended September 30, 2024, compared with $101.4 million for the three months ended September 30, 2023. Excluding the 1.3% favorable impact of currency exchange, the remaining 34.8% increase in revenue wasprimarily due to higher volumes from the launches of Omnipod 5 in the U.K. and Germany in the prior year, driven by our growing customer base and, to a lesser extent, the favorable impact of conversions to Omnipod 5 as users generally obtain both their starter kit and refills simultaneously. A higher average selling price for Omnipod 5, compared with Omnipod DASH and Classic Omnipod, also contributed to the revenue increase.

Previous wording

Revenue from the sale of Omnipod products in our international markets increased $41.1 million, or 20.3%, to $243.4 million for the six months ended June 30, 2024, compared with $202.3 million for the six months ended June 30, 2023. Excluding the 0.6% favorable impact of currency exchange, the remaining 19.7% increase in revenue wasprimarily due to higher volumes from the launch of Omnipod 5 in the U.K. and Germany, including the favorable impact of conversions to Omnipod 5. A higher average selling price for Omnipod 5 compared with Omnipod DASH and Classic Omnipod also contributed to the revenue increase, although to a lesser extent.

Current wording

Revenue from the sale of Omnipod products in our international markets increased $77.7 million, or 25.6%, to $381.4 million for the nine months ended September 30, 2024, compared with $303.7 million for the nine months ended September 30, 2023. Excluding the 0.9% favorable impact of currency exchange, the remaining 24.7% increase in revenue wasprimarily due to higher volumes from the launches of Omnipod 5 in the U.K. and Germany in the prior year, including the favorable impact of conversions to Omnipod 5. A higher average selling price for Omnipod 5 compared with Omnipod DASH and Classic Omnipod also contributed to the revenue increase, although to a lesser extent.

Previous wording

For full year 2024, we expect higher International Omnipod revenue primarily due to last year's Omnipod 5 launches in the U.K. and Germany.

Current wording

For full year 2024, we expect higher International Omnipod revenue due to continued volume growth driven by new customers and conversions to Omnipod 5 primarily due to the launches of Omnipod 5 in the U.K. and Germany in the prior year.

Previous wording

Drug Delivery revenue of $16.8 million for the six months ended June 30, 2024 was relatively level with $16.5 million for the six months ended June 30, 2023 as the increase in orders from our partner was offset by the reimbursement from our partner in the prior year, which did not repeat in the current year. For full year 2024, we expect Drug Delivery revenue to decline in the range of $14 million to $18 million due to a lower forecast from our partner and a lower selling price.

Current wording

Drug Delivery revenue of $10.3 million and $27.1 million for the three and nine months ended September 30, 2024, respectively, were level with the comparative prior year periods. An increase in orders from our partner during thenine months ended September 30, 2024 was offset by a reimbursement from our partner to cover a portion of our increased production costs in the prior year, which did not repeat in the current year. For full year 2024, we expect Drug Delivery revenue to continue to approximate prior year.

Previous wording

Cost of revenue for the three months ended June 30, 2024 increased $26.0 million, or 19.8%, to $157.6 million, compared with $131.6 million for the three months ended June 30, 2023. Gross margin was 67.7% for the three months ended June 30, 2024, compared with 66.8% for the three months ended June 30, 2023. The 90 basis point increase in gross margin was primarily drivenby pricing benefits in both the U.S. pharmacy channel and in our international markets and improved manufacturing efficiencies. These increases were partially offset by a $13.5 million charge related to certain components utilized in Omnipod GO, which we decided not to commercialize.

Current wording

Cost of revenue for the three months ended September 30, 2024 increased $27.4 million, or 19.7%, to $166.8 million, compared with $139.4 million for the three months ended September 30, 2023. Gross margin was 69.3% for the three months ended September 30, 2024, compared with 67.8% for the three months ended September 30, 2023. The 150 basis point increase in gross margin was primarily drivenby pricing benefits in both the U.S. pharmacy channel and in our international markets and improved manufacturing efficiencies, partially offset by higher costs due to inflation.

Previous wording

Cost of revenue for the six months ended June 30, 2024 increased $43.3 million, or 17.4%, to $292.5 million, compared with $249.2 million for the six months ended June 30, 2023. Gross margin was 68.6% for the six months ended June 30, 2024, compared with 67.0% for the six months ended June 30, 2023. The 160 basis point increase in gross margin was primarily drivenby pricing benefits in both the U.S. pharmacy channel and in our international markets and improved manufacturing efficiencies. These increases were partially offset by the $13.5 million charge related to the discontinuance of Omnipod GO discussed above and an$8.8 million accrual reversal during thesix months ended June 30, 2023 associated with the voluntary Medical Device Correction(“MDC”)notices we issued in 2022, which did not recur in the current period.

Current wording

Cost of revenue for the nine months ended September 30, 2024 increased $70.7 million, or 18.2%, to $459.3 million, compared with $388.6 million for the nine months ended September 30, 2023. Gross margin was 68.8% for the nine months ended September 30, 2024, compared with 67.3% for the nine months ended September 30, 2023. The 150 basis point increase in gross margin was primarily drivenby pricing benefits in both the U.S. pharmacy channel and in our international markets and improved manufacturing efficiencies. This increase was partially offset by a $13.5 million charge related to certain components utilized in Omnipod GO, which we decided not to commercialize, a $10.7 million accrual reversal during thenine months ended September 30, 2023 associated with the voluntary Medical Device Correction(“MDC”)notices we issued in 2022, which did not recur in the current period and higher costs due to inflation.

Previous wording

For full year 2024, we expect gross margin to be in the range of 68% to 69%. We anticipate gross margin to increase due to higher average selling prices and improved manufacturing efficiencies. These increases will be partially offset by the $13.5 million charge related to certain components utilized in Omnipod GO and $11.5 million of income in the prior year associated with a reduction to our MDC warranty accrual, which will not recur in the current year.

Current wording

For full year 2024, we expect gross margin to be approximately 69%. We anticipate gross margin to increase due to higher average selling prices and improved manufacturing efficiencies. These increases will be partially offset by the $13.5 million charge related to the discontinuance of Omnipod GO discussed above and $11.5 million of income in the prior year associated with a reduction to our MDC warranty accrual, which will not recur in the current year.

Previous wording

Research and development expenses of $53.9 million for the three months ended June 30, 2024 were relatively level with the three months ended June 30, 2023. Research and development expenses as a percent of revenue declined to 11.0% for the three months ended June 30, 2024, compared with 13.9% for the three months ended June 30, 2023, primarily due to an increase in sustaining costs following the launch of Omnipod 5 in the United States and Europe, which are included in selling, general and administrative expenses.

Current wording

Research and development expenses of $54.9 million for the three months ended September 30, 2024 were relatively level with the three months ended September 30, 2023. Research and development expenses as a percent of revenue declined to 10.1% for the three months ended September 30, 2024, compared with 13.4% for the three months ended September 30, 2023, primarily due to an increase in sustaining costs following the launch of Omnipod 5 in the United States and Europe, which are included in selling, general and administrative expenses.

Previous wording

Research and development expenses of $104.1 million for the six months ended June 30, 2024 were relatively level with the six months ended June 30, 2023. Research and development expenses as a percent of revenue declined to 11.2% for the six months ended June 30, 2024, compared with 13.9% for the six months ended June 30, 2023, primarily due to an increase in sustaining costs following the launch of Omnipod 5 in the United States and Europe, which are included in selling, general and administrative expenses. We expect research and development spending for the full year 2024 to increase compared with 2023 as we continue to invest in advancing our innovation and clinical pipeline.

Current wording

Research and development expenses of $159.0 million for the nine months ended September 30, 2024 were relatively level with the nine months ended September 30, 2023. Research and development expenses as a percent of revenue declined to 10.8% for the nine months ended September 30, 2024, compared with 13.7% for the nine months ended September 30, 2023, primarily due to an increase in sustaining costs following the launch of Omnipod 5 in the United States and Europe, which are included in selling, general and administrative expenses.

Previous wording

Selling, general and administrative expenses for the three months ended June 30, 2024 increased $43.7 million, or 24.5%, to $222.4 million, compared with $178.7 million for the three months ended June 30, 2023. This increase was primarily attributable to year-over-year headcount additions due to an increase in sustaining costs, also to support commercial and international growth, as well as our new organizational structure that is designed to accelerate innovation and commercialization. To a much lesser extent, the increase was due to an increase in direct-to-consumer advertising spend and higher legal fees.

Current wording

Selling, general and administrative expenses for the three months ended September 30, 2024 increased $53.4 million, or 29.6%, to $234.1 million, compared with $180.7 million for the three months ended September 30, 2023. This increase was primarily attributable to year-over-year headcount additions to support commercial and international growth, to sustain Omnipod 5 and due to a $15.9 million increase in advertising expense. To a lesser extent, the increase was a result of our new organizational structure that is designed to accelerate innovation and commercialization and higher legal fees.

Previous wording

Selling, general and administrative expenses for the six months ended June 30, 2024 increased $80.7 million, or 23.6%, to $422.1 million, compared with $341.4 million for the six months ended June 30, 2023. This increase was primarily attributable to year-over-year headcount additions due to an increase in sustaining costs, also to support commercial and international growth, as well as our new organizational structure. To a lesser extent, the increase was due to higher legal fees and consulting costs to support our business growth, and higher costs associated with the continued commercial rollout of Omnipod 5 in international markets.

Current wording

Selling, general and administrative expenses for the nine months ended September 30, 2024 increased $134.1 million, or 25.7%, to $656.2 million, compared with $522.1 million for the nine months ended September 30, 2023. This increase was primarily attributable to year-over-year headcount additions to support commercial and international growth and sustain Omnipod 5 and as a result of our new organizational structure. To a lesser extent, the increase was due to an $18.9 million increase in advertising expense, higher legal fees to support our business growth, and higher costs associated with the continued commercial rollout of Omnipod 5 in international markets.

Previous wording

We expect selling, general and administrative expenses to increase in 2024 compared with 2023 due to investments in our operating structure, primarily headcount additions, to facilitate continued growth, including customer support. We also plan to make additional investments to support the Omnipod platform, including market acceptance and access, and the phased launch of Omnipod 5 in our international markets.

Current wording

We expect selling, general and administrative expenses to increase in 2024 compared with 2023 due to investments in our operating structure, primarily headcount additions, particularly in the areas of sales and engineering, to facilitate continued growth. We also plan to make additional investments to support the Omnipod platform, including market acceptance, access and awareness, as well as to support the phased launch of Omnipod 5 in our international markets and to defend our intellectual property.

Previous wording

Interest expense for the three months ended June 30, 2024 increased $1.3 million to $11.0 million, compared with $9.7 million for the three months ended June 30, 2023. Interest expense for the six months ended June 30, 2024 increased $2.6 million to $21.7 million, compared with $19.1 million for the six months ended June 30, 2023. The increases for both periods were primarily associated with our equipment financings. The increase for the six months ended June 30, 2024 was also due to fees paid to amend our Term Loan in January 2024, which is discussed in Note 9 to our consolidated financial statements.

Current wording

Interest expense for the three months ended September 30, 2024 increased $1.9 million to $12.3 million, compared with $10.4 million for the three months ended September 30, 2023. Interest expense for the nine months ended September 30, 2024 increased $4.5 million to $34.0 million, compared with $29.5 million for the nine months ended September 30, 2023. The increases for the three and nine months ended September 30, 2024 were primarily due to fees paid to amend our Term Loan.

Previous wording

Interest income for the three months ended June 30, 2024 increased $2.0 million to $9.3 million, compared with $7.3 million for the three months ended June 30, 2023. Interest income for the six months ended June 30, 2024 increased $4.9 million to $18.7 million, compared with $13.8 million for the six months ended June 30, 2023. The increases for both the three and six months ended June 30, 2024 was primarily driven by higher interest rates and increased average cash balances.

Current wording

Interest income for the three months ended September 30, 2024 increased $1.9 million to $10.5 million, compared with $8.6 million for the three months ended September 30, 2023. Interest income for the nine months ended September 30, 2024 increased $6.8 million to $29.2 million, compared with $22.4 million for the nine months ended September 30, 2023. The increases for both the three and nine months ended September 30, 2024 were primarily driven by increased average cash balances and higher interest rates.

Previous wording

Our effective tax rate was a tax benefit of 269.2% and 126.6% for the three and six months ended June 30, 2024, respectively, compared with a tax provision of 4.2% and 3.8% for the three and six months ended June 30, 2023, respectively. The decreases in the effective tax rates for both periods were primarily due to tax benefits related to the release of the majority of our valuation allowance against deferred tax assets, which resulted in a non-cash tax benefit of $146.9 million and $153.5 million for the three and six months ended June 30, 2024, respectively. Additionally, both the three and six months ended June 30, 2024 include a $4.8 million discrete tax benefit associated with a U.S. federal research and development tax credit recovery project for tax years 2017 through 2021. These tax benefits were partially offset by higher pre-tax income in the current periods, compared with the prior year.

Current wording

Our effective tax rate was 6.5% for the three months ended September 30, 2024, compared with 3.4% for the three months ended September 30, 2023. The increase in the effective tax rate was primarily due to changes in the distribution of income among the jurisdictions in which we operate and a corresponding reduction in available net operating loss carryforwards to reduce taxable income, partially offset by a $12.1 million non-cash tax benefit related to the valuation allowance release and a $2.7 million discrete tax benefit associated with a U.S. federal research and development tax credit recovery project for tax years 2017 through 2022.

Previous wording

The amount of the deferred tax asset considered realizable can change if estimates of future taxable income are revised. Refer to Note 15 for additional information regarding the release of our valuation allowance.

Current wording

Our effective tax rate was a benefit of 68.2% for the nine months ended September 30, 2024, compared with expense of 3.6% for the nine months ended September 30, 2023. The decrease in effective tax rate was primarily due to a $165.6 million non-cash tax benefit from releasing the majority of our valuation allowance against deferred tax assets and a $7.5 million discrete tax benefit associated with the research and development tax credit recovery project discussed above. The amount of the deferred tax asset considered realizable may change if estimates of future taxable income are revised. Refer to Note 15 for additional information regarding the release of our valuation allowance.

Previous wording

In 2021, the Organization for Economic Co-operation and Development (“OECD”) and G20 international forum released the Model Global Anti-Base Erosion (GloBE) rules (“Model Rules”) under Pillar Two. These Model Rules set forth the common approach for a Global Minimum Tax at 15% for multinational enterprises with revenue greater than €750 million and is expected to be applicable to Insulet. Pillar Two has been adopted by the Council of the European Union for implementation by European Union member states by December 31, 2023, with effect for tax years beginning 2024. Similar directives under Pillar Two are already adopted or expected to be adopted by taxing authorities in other countries where Insulet has business operations, with widespread implementation of the Global Minimum Tax in calendar years 2024 and 2025. While we currently do not expect the Model Rules for Pillar Two and related legislation to have a significant impact on our financial statements, we are continuing to evaluate their potential impact.

Current wording

In 2021, the Organization for Economic Co-operation and Development (“OECD”) and G20 international forum released the Model Global Anti-Base Erosion (GloBE) rules (“Model Rules”) under Pillar Two. These Model Rules set forth the common approach for a Global Minimum Tax at 15% for multinational enterprises with revenue greater than €750 million and is expected to be applicable to Insulet. Pillar Two has been adopted by the Council of the European Union for implementation by European Union member states by December 31, 2023, with effect for tax years beginning 2024. Similar directives under Pillar Two are already adopted or expected to be adopted by taxing authorities in other countries where Insulet has business operations, with widespread implementation of the Global Minimum Tax in calendar years 2024 and 2025. While we do not expect the Pillar Two Model Rules and related legislation to have a significant impact on our financial statements for 2024, we continue to evaluate their potential impact on future years.

Previous wording

These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. In addition, the above definitions may differ from similarly titled measures used by others. Non-

Current wording

These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. In addition, the above definitions may differ from similarly titled measures used by others. Non-GAAP financial measures exclude the effect of items that increase or decrease our reported results of operations; accordingly, we strongly encourage investors to review our consolidated financial statements in their entirety.

Previous wording

We have a $300.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), which expires in 2028. At June 30, 2024, no amount was outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio when there are amounts of at least 35% of the aggregate Revolving Credit Facility outstanding. It also contains other customary covenants, none of which are considered restrictive to our operations. Additionally, we have a term loan, which matures in 2028, that contains covenants restricting or limiting our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness, and make acquisitions and other investments.

Current wording

We have a $300.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), which expires in 2028. At September 30, 2024, no amount was outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio when there are amounts of at least 35% of the aggregate Revolving Credit Facility outstanding. It also contains other customary covenants, none of which are considered restrictive to our operations. Additionally, we have a Term Loan B (“Term Loan”), which matures in 2031, that contains covenants restricting or limiting our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness, and make acquisitions and other investments.

Previous wording

Net cash provided by operating activities of $184.1 million for the six months ended June 30, 2024 was primarily attributable to net income, as adjusted for deferred income taxes, depreciation and amortization, stock-based compensation expense. A $56.4 million increase in accounts payable was mostly offset by a $30.3 million increase in inventories, a $15.7 million increase in prepaid expenses and other assets and a $14.0 million decrease in accrued expenses and other liabilities. The increase in accounts payable was driven by the timing of payments. The increase in inventories was primarily due to a planned inventory build to satisfy our growing demand and, to a lesser extent, to mitigate supply chain risk. The increase in prepaid expenses and other assets was primarily driven by an increase in other receivables. Finally, the decrease in accrued expenses and other liabilities was primarily driven by the annual payout of cash bonuses for performance in the prior year and a decrease in accrued rebates mainly due to lower revenue subject to pharmacy rebates during the six months ended June 30, 2024.

Current wording

$32.6 million increase in accrued expenses and other liabilities and a $20.0 million increase in accounts payable. The increase in inventories was primarily due to a planned inventory build to satisfy our growing demand and, to a lesser extent, to mitigate supply chain risk. The increase in prepaid expenses and other assets was primarily driven by an increase in prepaid income taxes, cloud computing implementation costs and capitalized commissions. The increase in accounts receivable was primarily due to an increase in sales driven by our growing customer base. The increase in accrued expenses and other liabilities was primarily driven by an increase in accrued rebates due to higher revenue subject to pharmacy rebates and an increase in direct-to-consumer advertising spend, partially offset by the annual payout of cash bonuses for performance in the prior year. Finally, the increase in accounts payable was driven by the timing of payments.

Previous wording

Net cash used in investing activities was $48.9 million for the six months ended June 30, 2024, compared with $65.2 million for the six months ended June 30, 2023.

Current wording

Net cash used in investing activities was $78.2 million for the nine months ended September 30, 2024, compared with $87.8 million for the nine months ended September 30, 2023.

Previous wording

Capital Spending—Capital expenditures were $44.6 million and $26.2 million for the six months ended June 30, 2024 and 2023, respectively, and primarily related to the purchase of equipment to increase our manufacturing capacity. We expect capital expenditures for 2024 to increase compared with 2023 given the timing of spending on machinery, equipment and tooling for our new Malaysia manufacturing facility and to support continuous improvement efforts in our other manufacturing locations. To a lesser extent, we expect capital expenditures to increase due to investments in our information technology infrastructure. We expect to fund our capital expenditures using existing cash.

Current wording

Capital Spending—Capital expenditures were $71.3 million for the nine months ended September 30, 2024, compared with $46.3 million for the nine months ended September 30, 2023. The $25.0 million increase primarily related to the purchase of machinery, equipment and tooling to increase our manufacturing capacity for our new Malaysia manufacturing facility and continuous improvements at our other owned manufacturing facility. We expect capital expenditures for 2024 to increase compared with 2023 given the timing of spending on machinery, equipment and tooling for our new Malaysia manufacturing facility, as well as the purchase of land and manufacturing facility in Malaysia. We also expect capital expenditure to increase due to investments in our information technology infrastructure and continuous improvements at our other owned manufacturing facility. We expect to fund our capital expenditures using existing cash.

Previous wording

Investments in Developed Software—Investments in developed software were $4.3 million and $3.9 million for the six months ended June 30, 2024 and 2023, respectively, and primarily related to investments in projects to support our cloud-based capabilities.

Current wording

Investments in Developed Software—Investments in developed software were $6.7 million and $6.2 million for the nine months ended September 30, 2024 and 2023, respectively, and primarily related to investments in projects to support our cloud-based capabilities.

Previous wording

Acquisitions and Investments—During the six months ended June 30, 2023, we paid Bigfoot Biomedical, Inc. $25.1 million, including transaction costs, to acquire patent assets related to pump-based AID technologies. We also paid a purchase price holdback of $3.0 million associated with our 2022 acquisition of substantially all the assets related to the manufacture and production of shape-memory alloy wire assemblies used in the production of our product from Dynalloy, Inc. Additionally, during the six months ended June 30, 2023, we made strategic investments in private companies in the amount of $7.0 million.

Current wording

Acquisitions and Investments—During the nine months ended September 30, 2023, we paid Bigfoot Biomedical, Inc. $25.1 million, including transaction costs, to acquire patent assets related to pump-based AID technologies. We also paid a purchase price holdback of $3.0 million associated with our 2022 acquisition of substantially all the assets related to the manufacture and production of shape-memory alloy wire assemblies used in the production of our product from Dynalloy, Inc. Additionally, during the nine months ended September 30, 2023, we made strategic investments in private companies in the amount of $7.2 million.

Previous wording

Net cash used in financing activities was $15.0 million for the six months ended June 30, 2024, compared with $8.9 million for six months ended June 30, 2023.

Current wording

Net cash used in financing activities was $7.2 million for the nine months ended September 30, 2024, compared with $15.8 million for the nine months ended September 30, 2023.

Previous wording

Debt Repayments—During the six months ended June 30, 2024, we made $15.9 million in aggregate principal payments on our equipment financings, term loan, and mortgage, compared with $13.5 million during the six months ended June 30, 2023.

Current wording

Debt Issuance and Repayments—During the nine months ended September 30, 2024, we refinanced our Term Loan, which resulted in cash proceeds of $130.0 million, net of issuance costs, and the simultaneous repayment of $132.2 million of the Term Loan. Refer to Note 9 for more information regarding this refinancing. Additionally, during the nine months ended September 30, 2024, we made $21.1 million in aggregate principal payments on our equipment financings, Term Loan, and mortgage, compared with $20.3 million during the nine months ended September 30, 2023.

Previous wording

Finance Lease Repayments—During the six months ended June 30, 2024, we made $5.9 million in finance lease repayments associated with our Malaysia manufacturing facility.

Current wording

Finance Lease Repayments—During the nine months ended September 30, 2024, we made $6.0 million in finance lease repayments associated with our Malaysia manufacturing facility.

Previous wording

Proceeds from Option Exercises and Shares Issued Under Employee Stock Purchase Plan ("ESPP")—Total proceeds from option exercises and issuance of shares under the ESPP were $12.9 million and $17.8 million for the six months ended June 30, 2024 and 2023, respectively. The $4.9 million decrease was primarily driven by option exercises by former executives in the prior year.

Current wording

Proceeds from Option Exercises and Shares Issued Under Employee Stock Purchase Plan ("ESPP")—Total proceeds from option exercises and issuance of shares under the ESPP were $13.7 million and $17.9 million for the nine months ended September 30, 2024 and 2023, respectively. The $4.2 million decrease was primarily driven by option exercises by former executives in the prior year.

Previous wording

Payment of Taxes for Restricted Stock Net Settlements—Payments for taxes related to net restricted and performance stock unit settlements were $6.1 million and $12.9 million for the six months ended June 30, 2024 and 2023, respectively. The $6.8 million decrease was primarily driven by a lower fair market value of the restricted stock units that vested during the period.

Current wording

Payment of Taxes for Restricted Stock Net Settlements—Payments for taxes related to net restricted and performance stock unit settlements were $7.0 million and $13.1 million for the nine months ended September 30, 2024 and 2023, respectively. The $6.1 million decrease was primarily driven by a lower fair market value of the restricted stock units that vested during the period.

Previous wording

As of June 30, 2024, we had $16.8 million of letters of credit outstanding, primarily under our $20.0 million uncommitted letter of credit facility to backstop bank guarantees for the same amount. The bank guarantees primarily serve as security for our newly constructed manufacturing building in Malaysia until we purchase the property. We pay interest on outstanding borrowings and commitment fees on the maximum amount available to be drawn under the letters of credit at a rate of between 1.65% and 2.25%, depending on our credit rating. The letters of credit include customary covenants, none of which are considered restrictive to our operations. We had letters of credit outstanding totaling $20.9 million as of December 31, 2023.

Current wording

As of September 30, 2024, we had $19.2 million of letters of credit outstanding, primarily under our $20.0 million uncommitted letter of credit facility to backstop bank guarantees for the same amount. The bank guarantees primarily serve as security for our newly constructed manufacturing building in Malaysia until we purchase the property. We pay interest on outstanding borrowings and commitment fees on the maximum amount available to be drawn under the letters of credit at a rate of between 1.65% and 2.25%, depending on our credit rating. The letters of credit include customary covenants, none of which are considered restrictive to our operations. We had letters of credit outstanding totaling $20.9 million as of December 31, 2023.

Previous wording

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis, including enhanced disclosures about significant segment expenses. We are required to comply with these new disclosure requirements beginning with our annual filing for 2024. The guidance is applied retrospectively. We do not plan to early adopt ASU 2023-07.

Current wording

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis, including enhanced disclosures about significant segment expenses. We are required to comply with these new disclosure requirements beginning with our annual filing for 2024. The guidance is applied retrospectively. We do not plan to early adopt ASU 2023-07. ASU 2023-07 is not expected to impact the Company’s financial position or results of operations.

Previous wording

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 includes improvements to income tax disclosures primarily related to information about rate reconciliation and income taxes paid. The new guidance requires disclosure of specific categories and greater disaggregation of information in the rate reconciliation and adds a requirement to disaggregate income taxes paid by jurisdiction. The new guidance also requires disclosure of pretax income disaggregated between domestic and foreign, income tax expense (or benefit) disaggregated by federal, state, and foreign, and removes certain existing disclosure requirements. We are required to comply with these new disclosure requirements beginning with our annual filing for 2025. The guidance may be applied on a prospective basis or retrospective basis. We do not plan to early adopt the requirements of ASU 2023-09.

Current wording

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 includes improvements to income tax disclosures primarily related to information about rate reconciliation and income taxes paid. The new guidance requires disclosure of specific categories and greater disaggregation of information in the rate reconciliation and adds a requirement to disaggregate income taxes paid by jurisdiction. The new guidance also requires disclosure of pretax income disaggregated between domestic and foreign, income tax expense (or benefit) disaggregated by federal, state, and foreign, and removes certain existing disclosure requirements. We are required to comply with these new disclosure requirements beginning with our annual filing for 2025. The guidance may be applied on a prospective basis or retrospective basis. We do not plan to early adopt the requirements of ASU 2023-09. ASU 2023-09 is not expected to impact the Company’s financial position or results of operations.

Previous wording

•the potential violation of anti-bribery/anti-corruption laws; the concentration of manufacturing operations and storage of inventory in a limited number of locations;

Current wording

•the concentration of manufacturing operations and storage of inventory in a limited number of locations;