INSULET CORP

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included in this quarterly report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs, which are subject to risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed under the headings “Risk Factors” and “Forward-Looking Statements” in both our Annual Report on Form 10-K for the year ended December 31, 2024 and in this quarterly report.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included in this quarterly report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs, which are subject to risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed under the headings “Risk Factors” and “Forward-Looking Statements” in both our Annual Report on Form 10-K for the year ended December 31, 2024 and in this quarterly report. Columns and rows within tables may not add due to rounding. Percentages have been calculated using actual, non-rounded figures.

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.

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 2025, our Omnipod 5 app for iPhone compatible with Dexcom’s G7 CGM became fully available in the United States.

Previous wording

Total revenue for the three months ended March 31, 2025 increased $127.3 million, or 28.8%, to $569.0 million, compared with $441.7 million for the three months ended March 31, 2024. Constant currency revenue growth of 29.8% was primarily drivenby higher sales volume largely attributable to our growing customer base and, to a lesser extent, an increase in inventory days on hand at distributors.

Current wording

Total revenue for the three months ended June 30, 2025 increased $160.6 million, or 32.9%, to $649.1 million, compared with $488.5 million for the three months ended June 30, 2024. Total revenue for the six months ended June 30, 2025 increased $287.9 million, or 30.9%, to $1.2 billion, compared with $930.2 million for the six months ended June 30, 2024. Constant currency revenue growth of 31.3% and 30.6% for the three and six months ended June 30, 2025, respectively, was primarily driven by higher sales volume largely attributable to our growing customer base. An increase in inventory days on hand at distributors also contributed to the total revenue growth for the six months ended June 30, 2025, although to a lesser extent.

Previous wording

Revenue from the sale of Omnipod products in the U.S. for the three months ended March 31, 2025 included $148.5 million of related party revenue, compared with $111.8 million for the three months ended March 31, 2024. The $36.7 million increase resulted from growth through the pharmacy channel.

Current wording

Revenue from the sale of Omnipod products in the U.S. increased $100.9 million, or 28.7%, to $453.2 million for the three months ended June 30, 2025, compared with $352.3 million for the three months ended June 30, 2024. This increase primarily resulted from higher sales volume driven by growing our customer base. Revenue from the sale of Omnipod products in the U.S. for the three months ended June 30, 2025 included $178.6 million of related party revenue, compared with $147.3 million for the three months ended June 30, 2024. The $31.3 million increase resulted from growth through the pharmacy channel.

Previous wording

Revenue from the sale of Omnipod products in the U.S. increased $84.0 million, or 26.4%, to $401.7 million for the three months ended March 31, 2025, compared with $317.7 million for the three months ended March 31, 2024. This increase primarily resulted from higher sales volume driven by growing our customer base, and, to a lesser extent, the impact of the acceleration of orders by pharmacy wholesalers in the fourth quarter of 2023 in advance of the implementation of our new ERP system on January 1, 2024. These increases were somewhat offset by a decrease in price associated with timing of rebates.

Current wording

Revenue from the sale of Omnipod products in the U.S. increased $184.9 million, or 27.6%, to $854.9 million for the six months ended June 30, 2025, compared with $670.0 million for the six months ended June 30, 2024. This increase primarily resulted from higher sales volume driven by growing our customer base, and, to a lesser extent, the impact of the acceleration of orders by pharmacy wholesalers in the fourth quarter of 2023 in advance of the implementation of our new ERP system on January 1, 2024. Revenue from the sale of Omnipod products in the U.S. for the six months ended June 30, 2025 included $327.1 million of related party revenue, compared with $259.1 million for the six months ended June 30, 2024. The $67.9 million increase resulted from growth through the pharmacy channel.

Previous wording

Revenue from the sale of Omnipod products in our international markets increased $37.1 million, or 32.2%, to $152.4 million for the three months ended March 31, 2025, compared with $115.3 million for the three months ended March 31, 2024. Excluding the 3.9% unfavorable impact of currency exchange, the remaining 36.1% increase in revenue was primarily due to higher volumes from our growing customer base, largely resulting from the prior year launches of Omnipod 5 and, to a lesser extent, from an increase in estimated inventory days-on-hand at distributors to support our 2025 Omnipod 5 launches. A higher average selling price for Omnipod 5, compared with Omnipod DASH and Classic Omnipod, also contributed to the revenue increase.

Current wording

Revenue from the sale of Omnipod products in our international markets increased $94.7 million, or 38.9%, to $338.1 million for the six months ended June 30, 2025, compared with $243.4 million for the six months ended June 30, 2024. Excluding the 1.4% favorable impact of currency exchange, the remaining 37.5% increase in revenue was primarily due to higher volumes from our growing customer base, largely resulting from the prior year launches of Omnipod 5 and, to a lesser extent, from an increase in estimated inventory days-on-hand at distributors to support our 2025 Omnipod 5 launches. A higher average selling price for Omnipod 5, compared with Omnipod DASH and Classic Omnipod, also contributed to the revenue increase.

Previous wording

For full year 2025, we expect higher International Omnipod revenue due to continued volume growth driven by new customers and higher price resulting from conversions to Omnipod 5 primarily due to the launch of Omnipod 5 in France and the Netherlands, growth from the prior year launches in Germany and the United Kingdom, and the continued roll out of Omnipod 5 in additional markets.

Current wording

For full year 2025, we expect higher International Omnipod revenue due to continued volume growth driven by new customers and higher price resulting from conversions to Omnipod 5 primarily due to the launch of Omnipod 5 in Australia, Canada and the Nordic countries, growth from the prior year launches, primarily France, and the continued roll out of Omnipod 5 in additional markets.

Previous wording

Drug Delivery revenue for the three months ended March 31, 2025 was $14.9 million, compared with $8.7 million for the three months ended March 31, 2024. The increase resulted from an increase in orders from our partner.

Current wording

Drug Delivery revenue was $10.2 million and $8.1 million for the three months ended June 30, 2025 and 2024, respectively and $25.1 million and $16.8 million for the six months ended June 30, 2025 and 2024, respectively. The $8.3 million increase for the six months ended June 30, 2025 resulted from an increase in orders from our partner.

Previous wording

Cost of revenue for the three months ended March 31, 2025 increased $25.1 million, or 18.6%, to $160.0 million, compared with $134.9 million for the three months ended March 31, 2024. Gross margin was 71.9% for the three months ended March 31, 2025, compared with 69.5% for the three months ended March 31, 2024. The 240 basis point increase in gross margin was primarily driven by improved manufacturing and supply chain efficiencies and, to a lesser extent, volume.

Current wording

Cost of revenue for the three months ended June 30, 2025 increased $39.3 million, or 25.0%, to $196.9 million, compared with $157.6 million for the three months ended June 30, 2024. Gross margin was 69.7% for the three months ended June 30, 2025, compared with 67.7% for the three months ended June 30, 2024. The 190 basis point increase in gross margin was primarily driven by a $13.5 million charge in the prior year related to certain components utilized in OmnipodGO, which we decided not to commercialize.

Previous wording

For full year 2025, we expect gross margin to be approximately 71.0%. We anticipate gross margin to increase compared with 2024 primarily due to improved manufacturing efficiencies and volume and pricing benefits, partially offset by the negative impact of tariffs, which we currently estimate to be approximately 50 basis points; however, should the exemption that is currently in place for certain medical devices be eliminated, tariffs would have a material impact on our results of operations.

Current wording

For full year 2025, we expect gross margin to be approximately 71.0%. We anticipate gross margin to increase compared with 2024 primarily due to improved manufacturing efficiencies, pricing benefits and volume, partially offset by the negative impact of tariffs, which we currently estimate to be approximately 20 basis points; however, should the exemption that is currently in place for certain medical devices be eliminated, tariffs would have a material impact on our results of operations.

Previous wording

Research and development expenses for the three months ended March 31, 2025 increased $9.4 million, or 18.7%, to $59.6 million, compared with $50.2 million for the three months ended March 31, 2024. The increase in research and development expense was primarily due to year-over-year headcount additions to support continued investment in our Omnipod and pipeline products and, to a lesser extent, higher consulting costs to support clinical trials and our Omnipod and next generation products. Research and development expenses as a percent of revenue decreased to 10.5% in 2025, compared with 11.4% in 2024 primarily due to an increase in sustaining costs for Omnipod 5, which are included in selling, general and administrative expenses. We expect research and development spending in 2025 to increase compared with 2024 as we continue to invest in advancing our innovation and clinical pipeline.

Current wording

Research and development expenses for the three months ended June 30, 2025 increased $19.5 million, or 36.2%, to $73.4 million, compared with $53.9 million for the three months ended June 30, 2024. Research and development expenses as a percent of revenue was 11.3% and 11.0% for the three months ended June 30, 2025 and 2024, respectively. Research and development expenses for the six months ended June 30, 2025 increased $28.9 million, or 27.8%, to $133.0 million, compared with $104.1 million for the six months ended June 30, 2024. Research and development expenses as a percentage of revenue was 10.9% and 11.2% for the six months ended June 30, 2025 and 2024, respectively. The increases in research and development expense in both the three and six months ended June 30, 2025 were primarily due to year-over-year headcount additions to support continued investment in our Omnipod and pipeline products and, to a lesser extent, higher consulting costs to support clinical trials and our Omnipod and next generation products.

Previous wording

We expect selling, general and administrative expenses to increase in 2025 compared with 2024 due to investments in our operating structure, primarily headcount additions, particularly in the areas of customer product support, sales, quality and regulatory support, international expansion and engineering support to facilitate continued growth globally. We also plan to make additional investments to continue to support the Omnipod platform and the phased launch of Omnipod 5 in our existing international markets and prepare for expansion into new countries.

Current wording

We expect selling, general and administrative expenses to increase in 2025 compared with 2024 due to investments in our operating structure, primarily headcount additions, particularly in the areas of customer and Omnipod 5 support, sales, quality and regulatory support, and international expansion to facilitate continued growth globally. We also plan to make additional investments to continue to support the Omnipod platform and the phased launch of Omnipod 5 in our existing international markets and prepare for expansion into new countries.

Previous wording

Our effective tax rate was 26.4% for the three months ended March 31, 2025, compared with 6.2% for the three months ended March 31, 2024. The increase in the effective tax rate was primarily due to non-deductible charges from the extinguishment of a portion of our convertible debt, partially offset by windfall tax benefits from employee stock-based compensation. In addition, the existence of a full valuation allowance against deferred tax assets in the prior year, most of which was released during the three months ended June 30 2024, contributed to the changes in effective tax rate.

Current wording

Our effective tax rate was 20.8% and 24.3% for the three and six months ended June 30, 2025, respectively, compared with a tax benefit of 269.3% and 126.6% for the three and six months ended June 30, 2024, respectively. The increases in the effective tax rates for both periods were primarily due to the existence of a full valuation allowance against deferred tax assets in the prior year, most of which was released during the three months ended June 30, 2024.

Previous wording

The Organization for Economic Co-operation and Development (“OECD”) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax. More than 50 countries, including the Netherlands and the United Kingdom (among others) in which we operate, have thus far enacted elements of the global minimum tax legislation which continue to be effective for us throughout fiscal 2025. The global minimum tax is a significant structural change to the international taxation framework. We anticipate further legislative activity and administrative guidance throughout 2025. Overall, the legislation as currently enacted did not impact our consolidated financial statements for the three months ended March 31, 2025. We are continuing to evaluate the potential impact on future periods.

Current wording

The Organization for Economic Co-operation and Development (“OECD”) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax. More than 50 countries, including the Netherlands and the United Kingdom (among others) in which we operate, have thus far enacted elements of the global minimum tax legislation which continue to be effective for us throughout fiscal 2025. The global minimum tax is a significant structural change to the international taxation framework. We anticipate further legislative activity and administrative guidance throughout 2025. Overall, the legislation as currently enacted did not impact our consolidated financial statements for the six months ended June 30, 2025. We are continuing to evaluate the potential impact on future periods.

Previous wording

During the three months ended March 31, 2025, we entered into a purchase agreement with NXP USA, Inc. pursuant to which we committed to purchasing semi-conductor chips for $71.6 million in 2025. See note 9 for information on the debt transactions that were executed during the three months ended March 31, 2025.

Current wording

In 2025, we entered into a purchase agreement with NXP USA, Inc. pursuant to which we are committed to purchasing semi-conductor chips for approximately $50 million as of June 30, 2025. See note 9 for information on the debt transactions that were executed during the three months ended June 30, 2025.

Previous wording

To finance our operations and global expansion, we have periodically issued convertible senior notes, which are convertible into our common stock. As discussed in note 9, in March and April 2025, we repurchased $420 million in principal of our Convertible Senior Notes. Subsequent to these transactions, the following Convertible Senior Notes were outstanding:

Current wording

As discussed in note 9, in March and April 2025, we repurchased $420 million in principal of our Convertible Senior Notes (the “Convertible Notes”). Subsequent to these transactions, the following Convertible Notes were outstanding, which are convertible into our common stock:

Previous wording

In March 2025, the Company’s Board of Directors authorized a program to repurchase up to $125 million of common stock through December 31, 2026 to offset dilution from stock-based compensation.

Current wording

In March 2025, the Company’s Board of Directors authorized a program to repurchase up to $125 million of common stock through December 31, 2026 to offset dilution from stock-based compensation. During the three and six months ended June 30, 2025, we repurchased approximately 93 thousand shares for $30.1 million under this program.

Previous wording

Net cash provided by operating activities of $63.8 million for the three months ended March 31, 2025 was primarily attributable to net income, as adjusted for loss on extinguishment of debt, depreciation and amortization, and stock-based compensation expense, partially offset by a $65.0 million working capital outflow. The working capital outflow was driven by a $48.7 million decrease in accrued expenses and other liabilities, a $33.4 million increase in accounts receivable, a $12.8 million increase in prepaid expenses and other assets, and a $6.6 million increase in inventories, partially offset by a $36.5 million increase in accounts payable. The decrease in accrued expenses and other liabilities was primarily driven by the annual payout of cash bonuses for performance in the prior year, partially offset by an increase in accrued rebates primarily due to higher revenue subject to pharmacy rebates. The increase in accounts receivable was primarily due to an increase in sales driven by our growing customer base. The increase in prepaid expenses and other assets was primarily driven by prepaid raw materials. The increase in inventories was primarily due to a planned inventory build to satisfy our growing demand. Finally, the increase in accounts payable was driven by the timing of payments.

Current wording

Net cash provided by operating activities of $260.3 million for the six months ended June 30, 2025 was primarily attributable to net income, as adjusted for loss on extinguishment of debt, depreciation and amortization, and stock-based compensation expense, partially offset by an $11.9 million working capital outflow. The working capital outflow was driven by a $66.9 million increase in accounts receivable and a $31.6 million increase in prepaid expenses and other assets, partially offset by a $72.6 million increase in accounts payable and a $18.7 million increase in accrued expenses and other liabilities. The increase in accounts receivable was primarily due to an increase in sales driven by our growing customer base. The increase in prepaid expenses and other assets was primarily driven by prepaid income taxes, cloud computing costs and raw materials. The increase in accounts payable was driven by the timing of payments. Finally, the increase in accrued expenses and other liabilities was primarily driven by an increase in accrued rebates primarily due to timing, changes in contract terms, and higher revenue and an increase in accrued compensation driven by headcount additions to support our growing business, partially offset by the annual payout of cash bonuses for performance in the prior year.

Previous wording

Net cash used in investing activities was $15.7 million for the three months ended March 31, 2025, compared with $24.0 million for the three months ended March 31, 2024.

Current wording

Net cash used in investing activities was $38.9 million for the six months ended June 30, 2025, compared with $48.9 million for the six months ended June 30, 2024.

Previous wording

Capital Spending—Capital expenditures were $12.3 million for the three months ended March 31, 2025, compared with $22.1 million for the three months ended March 31, 2024. The $9.8 million decrease primarily related to the purchase of machinery, equipment and tooling during three months ended March 31, 2024 for our Malaysia manufacturing facility which began operating mid-2024. We expect capital expenditures for 2025 to increase compared with 2024 as we continue to expand and optimize our manufacturing and supply chain operations as well as support our global expansion. We expect to fund our capital expenditures using existing cash.

Current wording

Capital Spending—Capital expenditures were $30.9 million for the six months ended June 30, 2025, compared with $44.6 million for the six months ended June 30, 2024. The $13.7 million decrease primarily related to the purchase of machinery, equipment and tooling during six months ended June 30, 2024 for our Malaysia manufacturing facility which began operating mid-2024. We expect capital expenditures for 2025 to increase compared with 2024 as we continue to expand globally and optimize our manufacturing and supply chain operations. We expect to fund our capital expenditures using existing cash.

Previous wording

Investments in Developed Software—Investments in developed software were $3.4 million and $1.9 million for the three months ended March 31, 2025 and 2024, 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 $8.0 million and $4.3 million for the six months ended June 30, 2025 and 2024, respectively, and primarily related to investments in projects to support our cloud-based capabilities.

Previous wording

Net cash provided by financing activities was $277.8 million for the three months ended March 31, 2025, compared with net cash used in financing activities of $14.1 million for the three months ended March 31, 2024.

Current wording

Net cash used in financing activities was $65.8 million for the six months ended June 30, 2025, compared with $5.3 million for the six months ended June 30, 2024.

Previous wording

Debt Issuance and Repayments—During the three months ended March 31, 2025, we received net proceeds of $440.7 million from the issuance of Senior Unsecured Notes and used $163.9 million of the proceeds to partially fund the repurchase of a portion of our Convertible Senior Notes. In addition, we received net proceeds of $23.1 million from the unwinding of a portion of the capped call options associated with the Convertible Notes. Additionally, during the three months ended March 31, 2025, we made $5.4 million in aggregate principal payments on our equipment financings, Term Loan B, and mortgage, compared with $9.1 million during the three months ended March 31, 2024.

Current wording

Debt Issuance and Repayments—During the six months ended June 30, 2025, we received net proceeds of $440.7 million from the issuance of Senior Unsecured Notes and used the proceeds along with proceeds of $75.7 million from the unwinding of a portion of the related capped call options to partially fund the $541.5 million repurchase of a portion of our Convertible Notes. In addition, during the six months ended June 30, 2025, we received proceeds of $15.5 million from the refinancing of Term Loan B and repaid $26.4 million of our Term Loan B, equipment financings, and mortgage, compared with payments of $15.9 million during the six months ended June 30, 2024.

Previous wording

Proceeds and Repayments from Secured Borrowing—During the three months ended March 31, 2025, we received $15.4 million of cash advances from a third-party to whom we outsource our insurance claim submissions process in a certain country. Additionally, we repaid $13.4 million of cash advances during the three months ended March 31, 2025.

Current wording

Proceeds and Repayments from Secured Borrowing—During the six months ended June 30, 2025 and 2024, we received cash advances net of repayments of $3.5 million and $9.7 million, respectively, from a third-party to whom we outsource our insurance claim submissions process in a certain country.

Previous wording

Finance Lease Repayments—During the three months ended March 31, 2024, we made finance lease repayments associated with our Malaysia manufacturing facility totaling $5.8 million.

Current wording

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

Previous wording

Proceeds from Option Exercises—Proceeds from option exercises were $2.5 million and $5.8 million for the three months ended March 31, 2025 and 2024, respectively. The $3.3 million decrease was primarily driven by option exercises by former executives in the prior year.

Current wording

Proceeds from Option Exercises—Proceeds from option exercises were $12.6 million and $6.9 million for the six months ended June 30, 2025 and 2024, respectively. The $5.7 million increase was primarily driven by more option exercises driven by an increase in our stock price.

Previous wording

Payment of Taxes for Restricted Stock Net Settlements—Payments for taxes related to net restricted and performance stock unit settlements were $21.2 million and $5.0 million for the three months ended March 31, 2025 and 2024, respectively. The $16.2 million increase was primarily driven by a higher 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 $22.9 million and $6.1 million for the six months ended June 30, 2025 and 2024, respectively. The $16.7 million increase was primarily driven by a higher fair market value of the restricted stock units that vested during the period.

Previous wording

Free cash flow was $51.5 million in the three months ended March 31, 2025, compared with $65.5 million in the three months ended March 31, 2024. Free cash flow is a non-GAAP measure, which should be considered supplemental to and not a substitute for our reported financial results prepared in accordance with U.S. GAAP. See "Non-GAAP Financial Measures." A reconciliation between net cash provided by operating activities (the most comparable U.S. GAAP measure) and free cash flow is as follows:

Current wording

Free cash flow is a non-GAAP measure, which should be considered supplemental to and not a substitute for our reported financial results prepared in accordance with U.S. GAAP. See "Non-GAAP Financial Measures." A reconciliation between net cash provided by operating activities (the most comparable U.S. GAAP measure) and free cash flow is as follows:

Previous wording

In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The adoption of ASU 2024-04 is not expected to impact our consolidated financial statements because we expect to repurchase our remaining convertible debt prior to the required January 2026 adoption date.

Current wording

In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The adoption of ASU 2024-04 is not expected to impact our consolidated financial statements because we have initiated the redemption of our remaining convertible debt outstanding and the transaction will settle prior to the required January 2026 adoption date.

Previous wording

•ability to raise additional funds on acceptable terms or at all;

Current wording

•ability to raise additional funds on acceptable terms or at all; and

Previous wording

•changes in tax laws or exposure to significant tax liabilities; and

Current wording

•changes in tax laws or exposure to significant tax liabilities.