Insulet (PODD) 10-K risk factor changes: FY2019 vs FY2018

[removed: Risks] [added: Risks] Relating to Our [removed: Business][added: Business]

[removed: Although] [added: Although] we achieved [removed: operating income and net income] [added: profitability] in 2018, we previously incurred significant [removed: operating and net] losses since inception and cannot assure you that we will sustain [removed: profitability.][added: profitability.]

Prior to 2018 and since our inception in 2000, we incurred significant [removed: operating] losses.

Our [removed: net] losses [added: from continuing operations] for the years ended December 31, 2017, 2016 and 2015 were $26.8 million, [removed: $28.9] [added: $27.2] million and [removed: $73.52] [added: $61.6] million, respectively.

The extent of any future [removed: net] losses and the timing of profitability are uncertain, and we may not sustain profitability.

As of December 31, [removed: 2018,] [added: 2019,] we had an accumulated deficit of [removed: $683.6] [added: $672.0] million.

[removed: We] [added: We] may experience significant fluctuations in our quarterly results of [removed: operations.][added: operations.]

[removed: In particular, if] [added: If] our quarterly results of operations fail to meet or exceed the expectations of securities analysts or investors, our stock price could drop suddenly and significantly.

[removed: We] [added: We] currently rely on sales of the Omnipod System, and tailored versions of the Omnipod System in our drug delivery product line, to generate nearly all [removed: of] our revenue.

The failure of the Omnipod System to achieve and maintain significant market acceptance or any factors that negatively impact sales of this product will adversely affect our business, financial condition and results of [removed: operations.][added: operations.]

We expect to continue to derive nearly all [removed: of] our revenue from the sale of this product.

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

| • | conversion rate of [removed: patient] referrals to actual sales of the Omnipod System; |

| • | the inability of [removed: our customers] [added: users] to continue paying for our products; |

| • | attrition rates of [removed: customers] [added: consumers] who cease using the Omnipod System; |

[removed: Our] [added: Our] ability to sustain profitability may depend on our ability to sustain or further reduce the per unit cost of producing the Omnipod System by increasing customer orders, increasing manufacturing volume and productivity and reducing raw material and overhead costs per [removed: unit.][added: unit.]

[removed: Adverse] [added: Adverse] changes in general economic conditions in the United States and outside of the United States, predominantly in Europe, could adversely affect [removed: us.][added: us.]

For example, U.S. [removed: patients] [added: consumers] who have lost their jobs or healthcare coverage may no longer be covered by an [removed: employer-sponsored health insurance plan and patients reducing their overall spending may eliminate purchases requiring co-payments.][added: employer-]

Since the sale of the Omnipod System to a new [removed: patient] [added: user] is generally dependent on the availability of third-party reimbursement and [removed: normally requires] [added: may require] the [removed: patient] [added: user] to make a significant co-payment, an economic downturn [removed: on our potential customers] could reduce the referrals generated by our sales force and thereby reduce our [removed: customer] [added: sales] orders.

Similarly, existing [removed: customers] [added: users] could cease purchasing the Omnipod System and return to MDI or other less-costly therapies, which would cause our [added: consumer] attrition rate to increase.

Any decline in new [removed: customer] orders or increase in our [removed: customer] [added: consumer] attrition rate would reduce our revenue, which in turn would make it more difficult to achieve our per-unit cost-savings goals, which we are attempting to attain in part through increases in our manufacturing volume.

[removed: Healthcare] [added: Healthcare] reform laws could adversely affect our revenue and financial [removed: condition.][added: condition.]

There are provisions of law that provide for the creation of a new public-private Patient-Centered Outcomes Research Institute tasked with identifying comparative effectiveness research [removed: priorities.][added: priorities, including establishing a research project agenda and contracting with entities to conduct the research.]

[removed: In addition, the Affordable Care Act] [added: The ACA] and related healthcare reform laws, regulations and initiatives have significantly increased regulation of managed care plans and decreased reimbursement to Medicare managed care.

In addition, there have been efforts [removed: by the Trump administration] to repeal or replace certain aspects of the ACA and to alter the implementation of the ACA and related laws.

For example, the Tax Cuts and Jobs Act [removed: enacted] [added: that was signed into law] on December 22, [removed: 2017,] [added: 2017] eliminated the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, commonly referred to as the [removed: "individual mandate",] [added: “individual mandate”,] effective January 1, 2019.

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

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

| • | costs associated with [added: capital expenditures, including] adding further manufacturing capacity; |

| • | costs associated with expanding our sales and marketing efforts [removed: in the United States and internationally;] [added: globally;] |

| • | [removed: the cost] [added: costs] of [added: complying with regulatory requirements, including] obtaining and maintaining FDA approval or clearance of our current or future products; |

We believe that our current cash, cash equivalents and short-term investments of [removed: $288.9] [added: $376.1] million, together with the cash to be generated from expected product sales, will be sufficient to meet our projected operating requirements through at least the end of [removed: 2019.][added: 2020.]

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

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

Our ability to raise additional capital may be adversely impacted by current economic conditions, including the effects of any disruptions to the credit and financial [removed: markets in the United States and worldwide.][added: markets.]

As a result of these and other factors, we do not know whether additional capital will be available when needed, or [removed: that, if available, we will be able to obtain additional capital] on terms favorable to us or our stockholders.

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

[removed: If we cannot raise additional funds in the future on acceptable terms,] [added: In addition,] we may not be able to [removed: develop new products,] execute our business plan, take advantage of future opportunities or respond to competitive pressures or unanticipated customer requirements.

[removed: We] [added: We] may not be able to generate sufficient cash to service our indebtedness represented by our Convertible Senior Notes.

We may be forced to take other actions to satisfy our obligations under our indebtedness or we may experience a financial [removed: failure.][added: failure.]

sponsored health insurance plan and consumers reducing their overall spending may eliminate purchases requiring co-payments.

Our operations outside of the United States are subject to risks that are inherent in conducting business under non-U.S. laws, regulations and customs.

Sales outside the United States made up 34% of our revenues in 2019 and we expect non-U.S. sales to contribute significantly to our future growth.

If the U.S. dollar strengthens in relation to the currencies of other countries where we sell our products, such as the euro, our U.S. dollar reported revenue and income will decrease.

Changes in the relative values of currencies occur regularly and, in some instances, may have a significant effect on our operating results.

In addition to the risks discussed elsewhere in the risk factors included in this Item 1A, other risks associated with doing business internationally, include:

| • | political instability and actual or anticipated military or political conflicts; |

| • | economic instability and inflation or recession; |

| • | minimal or diminished protection of intellectual property in some countries; |

Most of our customer relationships outside of the United States are with governmental entities and we could be materially and adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws in non-U.S. jurisdictions.

The FCPA and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business.

Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws.

Our policies mandate compliance with these anti-bribery laws.

We operate in parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices.

Despite our training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents.

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

The long-term impacts on our business of the United Kingdom’s recent withdrawal from the European Union are unknown.

On January 31, 2020, the U.K. left the European Union.

MDI therapy involves a user injecting themselves with both long-acting and short-acting insulin with a syringe or insulin pen.

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

Additionally, the FDA has warned that insulin pumps may have cybersecurity vulnerabilities and could be manipulated by hackers, causing danger to diabetes patients.

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

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

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

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

Even if we can develop, manufacture and obtain regulatory and reimbursement approvals for our new products, the success of those products depends on market acceptance.

Market acceptance for our new products could be affected by several factors, including:

| • | the availability of alternative products from our competitors; |

| • | the price of our products; |

| • | the timing of our market entry; and |

| • | our ability to market and distribute our products effectively. |

Our failure to introduce new and innovative products in a timely manner could have a material adverse effect on our business, results of operations, financial condition and cash flows.

patents and other relevant technical information relating to the FreeStyle blood glucose meter through January 2023.

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

any future quality system inspection.

In the state of California, the CCPA, which provides certain privacy rights and consumer protection for residents of the state became effective January 2020.

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

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

The data obtained from the studies may be

Political or financial instability, currency fluctuations, the outbreak of pandemics such as the Coronavirus, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could materially disrupt our supply of product from China, increase our costs, and/or adversely affect our results of operation.

This Annual Report on Form 10-K contains forward-looking statements.

Forward-looking statements relate to future events or our future financial performance.

We generally identify forward looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words.

These statements are only predictions.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition.

The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described in this Item 1A Risk Factors and elsewhere in this Annual Report on Form 10-K.

Accordingly, you should not rely upon forward-looking statements as predictions of future events.

We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements.

The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date of this report.

We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

For the year ended December 31, 2018, we generated operating income of $27.4 million and net income of $3.3 million.

For example, establishing a research project agenda and contracting with entities to conduct the research in accordance with the agenda.

Sales of certain medical devices are subject to a 2.3% federal excise tax, subject to a suspension through 2019.

We believe that the sales of our products are exempt from this excise tax.

However, if it is subsequently determined that sales of one or more of our products are subject to this excise tax, these tax obligations could adversely affect our financial results.

| • | the cost of complying with regulatory requirements; |

| • | costs associated with capital expenditures; |

If we

As a result of our international sales, we are exposed to fluctuations in product demand and sales productivity outside the United States, which may be partially attributed to foreign exchange rate changes, and have to manage the risks associated with market acceptance of the Omnipod System in foreign countries.

We are subject to foreign regulatory and import or export requirements.

As a result, our business is subject to risks associated with doing business internationally, including:

| • | political instability and adverse economic conditions; |

| • | differing protection of intellectual property; |

Our assumption on July 1, 2018 of the commercial activities for our Omnipod System in Europe (including, among other things, distribution, sales, marketing, training and support) following the expiration of our prior third-party global distribution agreement creates several business and operational risks related to the future sales of our Omnipod System in Europe.

On July 1, 2018, we assumed all commercial activities (including, among other things, distribution, sales, marketing, training and support) of our Omnipod System across Europe following the expiration of our distribution agreement with our European distributor on June 30, 2018.

We expect to incur increased operating expenses as we invest in these European operations, and it is possible that the ultimate economic benefits that we derive from these investments could be less than anticipated, or that such expected economic benefits could fail to materialize at all.

In connection with the expiration of this distribution agreement on June 30, 2018, we are required to pay to the former European Distributor a quarterly per-unit fee for Omnipod sales by us between July 1, 2018 and June 30, 2019 to certain customers of the former European Distributor.

We are recognizing a liability and an associated intangible asset for this fee as qualifying sales occur.

The actual total fee could vary significantly depending on the number of customers who count for purposes of calculating the fee under the terms of the distribution agreement and the methodology applicable for determining this number under the agreement is subject to an active arbitration proceeding between the parties in Switzerland.We estimate that the final aggregate fee for the applicable twelve-month period could be in the range of approximately $10 million to $55 million.

Our establishment of commercial operations in Europe creates risk associated with Brexit

On June 23, 2016, in a referendum vote commonly referred to as “Brexit,” a majority of British voters voted to exit the European Union.

In March 2017, the U.K. government officially triggered the process to formally initiate negotiations for the terms of separation from the European Union.

In June 2017, the U.K. government began negotiations to leave the European Union.

We expect to sell Omnipod DASH primarily through the pharmacy channel.

MDI therapy has been made more effective by the introduction of long-acting insulin analogs that can be used in combination with bolus devices.

If prices were to fall, we may not improve our gross margins or sales growth sufficiently to achieve profitability.

operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements.

No assurances can be given that these or other development initiatives by us will be successful.

The failure to successfully bring any of these products to market could have an adverse effect on our business and results of operations.

the agreement.

We are primarily engaged in the development, [removed: manufacturing] [added: manufacture] and sale of our proprietary Omnipod System, an innovative, [removed: discreet and easy-to-use] continuous insulin delivery system for people with insulin-dependent diabetes.

Insulin pumps are used to perform continuous subcutaneous insulin infusion, or insulin pump therapy, and typically use a programmable device and an infusion set to administer insulin into [removed: the] [added: a] person’s body.

The Omnipod System features a small, lightweight, self-adhesive disposable tubeless Omnipod device [removed: which] [added: that] is worn on the body for [removed: approximately] [added: up to] three days at a time and its wireless companion, the handheld PDM.

The Omnipod System, which features two [removed: discreet,] [added: discreet and] easy-to-use devices, communicates wirelessly, provides for virtually pain-free automated cannula insertion and eliminates the need for traditional MDI therapy or the use of traditional pump and tubing.

We believe that the Omnipod System’s unique proprietary design and features allow people with insulin-dependent diabetes to manage their diabetes with unprecedented freedom, comfort, [removed: convenience,] [added: convenience] and ease.

We sell the Omnipod through direct sales to [removed: customers] [added: consumers] or through our distribution [removed: partners.][added: partners and most recently in the U.S. through the pharmacy channel.]

The Omnipod is currently available in [removed: multiple] [added: the United States, Canada and certain] countries in [removed: Europe, as well as Canada] [added: Europe] and [removed: Israel.][added: the Middle East.]

[removed: The majority] [added: Most] of our drug delivery revenue currently consists of sales of [removed: pods used] [added: Pods to Amgen for use] in [removed: Amgen's] [added: the] Neulasta Onpro kit, an innovative delivery system for Amgen’s white blood cell booster to help reduce the risk of infection [removed: during] [added: after] intense chemotherapy.

[removed: In June 2018, the FDA provided clearance for the commercial distribution of our] [added: Omnipod] DASH [removed: TM System, which] is our next-generation digital mobile Omnipod platform, featuring a [removed: secured] [added: secure] Bluetooth enabled Pod and PDM with a [added: color] touch screen [removed: color] user interface supported by smartphone connectivity.

[removed: Research] [added: Research] and [removed: development.][added: Development]

Research and development expenses also [removed: include] [added: increased due to] engineering and operational costs, such as training and start up activities, associated with our newly constructed U.S. manufacturing facility.

[removed: We generally expense research] [added: Research] and [removed: development costs as incurred.][added: Development]

[removed: Sales] [added: Sales] and [removed: marketing.][added: Marketing]

[removed: General] [added: General] and [removed: administrative.][added: Administrative]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: This section discusses] [added: The following discussion and analysis of] our [removed: consolidated] [added: financial condition and] results of operations [removed: for 2018 compared to 2017, as well as 2017 compared to 2016, and] should be read in conjunction with [removed: the] [added: our selected financial data and our] consolidated financial statements and [added: the] accompanying notes included [removed: under Item 8 of] [added: in] this [removed: Form 10-K.][added: annual report.]

| | [removed: Years] [added: Years] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | [removed: Years] [added: Years] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | |

| Gross margin | [removed: 65.7] [added: 65.1] | | [removed: %] [added: %] | | [removed: 59.8] [added: 65.7] | | % | | | | | | | | | [removed: 59.8] [added: 65.7] | | % | | [removed: 57.5] [added: 59.8] | | % | | | | | | | |

[removed: Comparison] [added: Comparison] of the Years Ended December [removed: 31, 2018 and] [added: 31, 2018 and] December [removed: 31, 2017][added: 31, 2017]

[removed: Revenue][added: Revenue]

[removed: Our total] [added: Total] revenue [added: for 2018] increased [removed: to $563.8 million, up $100.1] [added: $100.0] million, or 22%, [removed: in 2018 compared] to [added: $563.8 million, compared with $463.8 million in] 2017, primarily due to continued growth in our International and U.S. Omnipod revenue.

[removed: Our] International Omnipod revenue increased [removed: to $172.0 million, up $52.1] [added: $52.0] million, or 43%, [added: to $172.0 million,] primarily due to both higher volumes and pricing as a result of our [removed: commencement of] [added: shift to] direct sales of [removed: our] [added: the] Omnipod [removed: System across] [added: in] Europe [removed: following the expiration of our prior distribution agreement with our former European Distributor on June 30,] [added: in July] 2018.

[removed: Our] U.S. Omnipod revenue increased [removed: to $323.5 million, up] $51.9 million, or 19%, [removed: as we continue] to [removed: expand] [added: $323.5 million due to expanded] access to and awareness of the Omnipod System.

Our [removed: drug delivery] [added: Drug Delivery] revenue [removed: declined to $68.3 million, down] [added: decreased] $3.9 million, or 5%, [added: to $68.3 million,] primarily reflecting a lower number of shipments during the year, partially offset by the favorable impact of adoption of new accounting [removed: rules] [added: guidance] that [removed: require a portion of] [added: requires] our drug delivery revenue to be recognized as the product is produced rather than at time of shipment [removed: (as] [added: as] further described in Note 2 to the consolidated financial [removed: statements).][added: statements.]

For [removed: 2019,] [added: 2020,] we expect strong [added: Omnipod] revenue growth driven by continued [added: market penetration and continued volume growth of] Omnipod [removed: expansion globally,] [added: DASH, primarily in the U.S. pharmacy channel,] partially offset by lower [removed: drug delivery revenue.][added: Drug Delivery revenue, due to a lower demand forecast.]

In the U.S., we expect higher revenues primarily due to [removed: increasing] [added: an increase in] sales [added: volume] as a result of expanded payor [removed: coverage and] [added: coverage,] greater awareness and availability [removed: for] [added: of] the [removed: Omnipod.][added: Omnipod, commercial expansion strategies and the move into the pharmacy channel.]

[removed: Cost of Revenue][added: Revenue]

[removed: Gross Margin][added: Gross Margin]

The [added: significant] increase in gross margin was [removed: due] primarily [added: due] to [removed: (i)] favorable pricing [added: resulting from our shift to direct sales in Europe] following [added: the] expiration of our former distributor agreement [removed: in Europe] and [removed: (ii)] lower product cost as a result of continued improvements in manufacturing and supply chain operations.

Research and development expenses [added: for 2018] increased [removed: to $88.6 million, up $14.2] [added: $14.8] million, or [removed: 19%, in 2018 as compared] [added: 20%,] to [added: $90.5 million, compared with $75.7 million in] 2017.

[removed: The] [added: This] increase [removed: in research and development expenses] was primarily due to an increase in [added: research and development] expenses related to [removed: our development projects, including] Omnipod [removed: DASH,] [added: DASH] and our Omnipod Horizon automated insulin delivery system.

Research and development expenses also increased due to engineering and operational costs, such as training and start up activities, associated with our newly constructed U.S. manufacturing [removed: facility, with planned] [added: facility at which] production [removed: beginning] [added: began] in [removed: the first half of] 2019.

[removed: Sales] [added: Sales] and [removed: Marketing][added: Marketing]

Sales and marketing expenses [added: for 2018] increased [removed: to $142.3 million, up $20.7] [added: $22.0] million, or [removed: 17%,] [added: 18% to $146.2 million] in [removed: 2018 as] [added: 2018,] compared [removed: to] [added: with $124.2 million in] 2017.

[removed: The] [added: This] increase in sales and marketing expenses was primarily due to investments to support our [removed: assumption in] mid-2018 [removed: of] [added: transition to] direct [removed: commercial operations] [added: sales of Omnipod] in Europe as well as the expansion of our U.S. sales force and customer support personnel.

These increases were partially offset by the capitalization of commission costs related to new customer contracts [removed: (as further] [added: in connection with the adoption of new revenue recognition guidance] described in Note [removed: 8] [added: 2] to the consolidated financial [removed: statements).][added: statements.]

We expect sales and marketing expenses [removed: in 2019] [added: for the full year 2020] to increase [removed: as] compared [removed: to 2018] [added: with 2019] due to additional expansion of our U.S. sales force and customer support personnel to [removed: support] [added: facilitate] our continued growth and [removed: the full year effect of our mid-2018 assumption of direct commercial operations in Europe.][added: expected entry into five new countries.]

[removed: General] [added: General] and [removed: Administrative][added: Administrative]

General and administrative expenses [added: for 2018] increased [removed: to $111.8 million, up $23.3] [added: $21.4] million, or [removed: 26% in 2018 as compared] [added: 25%,] to [added: $106.1 million, compared with $84.7 million in] 2017.

[removed: General] [added: This increase in general] and administrative expenses [removed: in the current year include] [added: was primarily due to] $12.6 million of [removed: severance-related] [added: severance] charges associated with the retirement of our former CEO, of which $8.2 million related to stock-based compensation [added: expense] for the [removed: acceleration] [added: accelerated vesting] of [removed: share-based awards and the remainder represented cash severance benefits.][added: equity awards.]

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.”

Overview

Our mission is to improve the lives of people with diabetes.

To assist in achieving this mission, we are focused on the following strategic objectives:

| • | delivering consumer-focused innovation; |

| • | ensuring the best customer experience globally; |

| • | expanding our global footprint; and |

| • | driving operational excellence. |

In the first half of 2019, we began production at our new highly automated manufacturing facility in Acton, Massachusetts, which also serves as our new global headquarters.

As of December 31, 2019, we had made cumulative investments of approximately $320 million in property, plant and infrastructure related to the new facility.

We expect to continue to expand our investment in this facility in 2020 to support the growth of our business.

Additionally, in the first half of 2019, we completed a full market launch of Omnipod DASH in the United States.

In December of 2019, we introduced DASH to select European markets.

In late 2019, we completed our pre-pivotal trial for Omnipod Horizon, a closed loop control system that utilizes the DASH mobile platform to allow the Pod to communicate with a continuous glucose monitor and help control insulin delivery utilizing an algorithm located on the Pod.

In December 2019, we began patient enrollment in our pivotal trial.

We expect to launch Omnipod Horizon in the second half of 2020.

While we expect Horizon to contribute to our long-term revenue growth, we do not expect it to meaningfully contribute to growth in 2020.

To achieve this goal, we expect our efforts in 2020 to focus primarily on the launch of Omnipod Horizon in the United States.

In order to support our continued growth and the expected launch of Omnipod Horizon, in 2020 we also plan to focus on the startup of our second manufacturing line in our Acton facility and the installation of a third U.S. manufacturing line, which we expect to begin production on in 2021.

Additionally, in 2020, we

expect to enter five new countries in Western Europe and the Middle East and further roll out DASH in Europe and Canada to expand the commercial sale of Omnipod and our global footprint.

While we expect these new countries to contribute to our long-term revenue growth, we do not expect them to have a meaningful contribution in 2020.

Finally, we plan to continue our product development efforts and expand awareness of and access to our products.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (In millions) | 2019 | | | | 2018 | | | | Change $ | | | | Change % | | | 2018 | | | | 2017 | | | | Change $ | | | | Change % | |

| U.S. Omnipod | $ | 420.4 | | | $ | 323.5 | | | $ | 96.9 | | | 30 | % | | $ | 323.5 | | | $ | 271.6 | | | $ | 51.9 | | | 19 | % |

| International Omnipod | 253.1 | | | | 172.0 | | | | 81.1 | | | | 47 | % | | 172.0 | | | | 120.0 | | | | 52.0 | | | | 43 | % |

| Total Omnipod | 673.5 | | | | 495.5 | | | | 178.0 | | | | 36 | % | | 495.5 | | | | 391.6 | | | | 103.9 | | | | 27 | % |

| Drug Delivery | 64.7 | | | | 68.3 | | | | (3.6 | | ) | | (5 | )% | | 68.3 | | | | 72.2 | | | | (3.9 | | ) | | (5 | )% |

| Total revenue | 738.2 | | | | 563.8 | | | | 174.4 | | | | 31 | % | | 563.8 | | | | 463.8 | | | | 100.0 | | | | 22 | % |

| Cost of revenue | 257.9 | | | | 193.6 | | | | 64.3 | | | | 33 | % | | 193.6 | | | | 186.6 | | | | 7.0 | | | | 4 | % |

| Gross profit | 480.3 | | | | 370.2 | | | | 110.1 | | | | 30 | % | | 370.2 | | | | 277.2 | | | | 93.0 | | | | 34 | % |

| Research and development | 129.7 | | | | 90.5 | | | | 39.2 | | | | 43 | % | | 90.5 | | | | 75.7 | | | | 14.8 | | | | 20 | % |

| Sales and marketing | 185.1 | | | | 146.2 | | | | 38.9 | | | | 27 | % | | 146.2 | | | | 124.2 | | | | 22.0 | | | | 18 | % |

| General and administrative | 115.5 | | | | 106.1 | | | | 9.4 | | | | 9 | % | | 106.1 | | | | 84.7 | | | | 21.4 | | | | 25 | % |

| Total operating expenses | 430.3 | | | | 342.8 | | | | 87.5 | | | | 26 | % | | 342.8 | | | | 284.6 | | | | 58.2 | | | | 20 | % |

| Operating income (loss) | 50.0 | | | | 27.4 | | | | 22.6 | | | | 82 | % | | 27.4 | | | | (7.4 | | ) | | 34.8 | | | | 470 | % |

| Interest expense, net of portion capitalized | (34.6 | | ) | | (28.9 | | ) | | (5.7 | | ) | | 20 | % | | (28.9 | | ) | | (21.2 | | ) | | (7.7 | | ) | | 36 | % |

Executive Level Overview

We estimate that approximately one-third of the Type 1 diabetes population in the United States and less than one fifth of the Type 1 diabetes population outside of the United States use insulin pump therapy.

An even smaller portion of the Type 2 diabetes population in the United States who are insulin-dependent use insulin pump therapy.

We began commercial sale of the Omnipod in the United States in 2005.

On July 1, 2018 we assumed all commercial activities (including, among other things, distribution, sales, marketing, training and support) for our Omnipod System across Europe following the expiration of our prior distribution agreement with our former European Distributor on June 30, 2018.

We have substantially completed the construction of a highly-automated manufacturing facility in Acton, Massachusetts, with planned production out of the facility beginning in the first half of 2019.

The facility also serves as our global headquarters.

From the purchase of this facility in late 2016 through December 31, 2018, capital expenditures for the construction of the Acton facility and related equipment purchases have been approximately $193 million.

In 2019, we expect to invest additional capital in this facility to support our growth funded by our existing cash and investments.

In January 2018, we announced that the Centers for Medicare & Medicaid Services ("CMS") has issued guidance clarifying that Medicare Part D Plan Sponsors may provide coverage for products such as the Omnipod System under the Medicare Part D (prescription drug) program.

We have been securing coverage with Medicare Part D carriers to ensure beneficiaries living with diabetes have access to the Omnipod System.

Securing Medicare Part D coverage also provides us with a direct pathway to increased Medicaid coverage at the state level, as many state-run Medicaid programs follow CMS prescription drug guidance to determine coverage.

This allows access for lower-income individuals and families on Medicaid for whom Omnipod currently is not a covered option.

In April 2018, we also significantly increased our market access when we secured in-network coverage of Omnipod with United Healthcare, the largest commercial payer in the United States.

We commenced a U.S. limited commercial release of Omnipod DASH TM in the third quarter of 2018 prior to a U.S. full market launch in the first half of 2019.

2018 Revenue Results:

| | |

| --- | --- |

| • | Total revenue of $563.8 million |

| ◦ | U.S. Omnipod revenue of $323.5 million, a 19% increase year over year |

| ◦ | International Omnipod revenue of $172.0 million, a 43% increase year over year |

| ◦ | Drug Delivery revenue of $68.3 million, a 5% decrease year over year |

We expect our efforts in 2019 to focus primarily on commissioning our U.S. manufacturing facility, commencing a U.S. full market release of Omnipod DASH, continuing our

product development efforts, and continuing to work with Medicare, Medicaid and commercial payors and intermediaries to expand access.

Components of Financial Operations

Revenue.

We derive the majority of our revenue from global sales of the Omnipod System.

We also sell devices based on the Omnipod System technology to global pharmaceutical and biotechnology companies for the delivery of their drugs across therapeutic areas.

Cost of revenue.

Cost of revenue consists primarily of raw material, labor, warranty, inventory scrap and excess and obsolescence adjustments, and overhead costs such as freight-in and depreciation and the cost of products we acquire from third party suppliers.

Research and development expenses consist primarily of personnel costs, license fees and outside service expenses within our product development, regulatory and clinical functions and well as innovations related to our global supply chain and manufacturing process.

Sales and marketing expenses consist primarily of personnel costs within our sales, marketing, reimbursement support and customer care functions, as well as sales commissions paid to our sales representatives, costs associated with promotional activities and participation in industry trade shows.

Commission costs that are direct and incremental to obtaining a new customer are capitalized and amortized to sales and marketing expense over the expected period of benefit.

General and administrative expenses consist primarily of salaries and other related costs for personnel serving the executive, finance, legal, information technology and human resource functions, as well as legal fees, accounting fees, insurance costs, bad debt expenses, shipping, handling and facilities-related costs including depreciation of office facility-related property and equipment.

| TABLE 1: RESULTS OF OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | Change | | | | | | | | | | | | | | | Change | | | | | |

| (In Thousands) | 2018 | | | | 2017 | | | | $ | | | | % | | | 2017 | | | | 2016 | | | | $ | | | | % | |

| U.S. Omnipod | $ | 323,528 | | | $ | 271,597 | | | $ | 51,931 | | | 19 | % | | $ | 271,597 | | | $ | 229,785 | | | $ | 41,812 | | | 18 | % |

| International Omnipod | 172,020 | | | | 119,953 | | | | 52,067 | | | | 43 | % | | 119,953 | | | | 71,889 | | | | 48,064 | | | | 67 | % |

| Drug Delivery | 68,275 | | | | 72,218 | | | | (3,943 | | ) | | (5 | )% | | 72,218 | | | | 65,315 | | | | 6,903 | | | | 11 | % |

To minimize our exposure to an adverse shift in interest rates, we invest mainly in [added: cash equivalents and] short-term investments [added: in a variety of securities, including money market funds, U.S. Treasury debt] and [removed: cash equivalents.][added: corporate debt securities.]

As of December 31, [removed: 2018,] [added: 2019,] we had outstanding debt related to our convertible senior notes recorded on our consolidated balance sheet of [removed: $592.0] [added: $887.9] million, net of unamortized discount and issuance costs totaling [removed: $155.5] [added: $314.6] million.

The fair value of the debt, which [removed: is disclosed in Note 4 to the consolidated financial statements,] [added: was $1.35 billion as of December 31, 2019,] is also impacted by changes [removed: on] [added: in] our stock price.

Fluctuations in the rate of exchange between the United States dollar and foreign currencies, primarily the [removed: Euro and the] [added: Euro,] British [removed: Pound,] [added: Pound and Canadian Dollar,] could adversely affect our financial results, including our revenues, revenue growth rates, gross margins, income and losses as well as assets and liabilities.

*Interest Rate Risk*

Due to the short-term nature of our investments, we believe that we have no material exposure to interest rate risk.

*Market Price Sensitive Instruments*

In order to reduce potential equity dilution, in connection with the issuance of $800.0 million aggregate principal amount of 0.375% Notes, we entered into capped call options “Capped Calls”.

We expect the Capped Calls to reduce the potential dilution to our common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the 0.375% Notes.

The Capped Calls have an initial strike price of $335.90 per share and cover 3.5 million shares of common stock.

*Foreign Currency Exchange Risk*

Foreign currency risk arises from our investments in subsidiaries owned and operated in non-U.S. countries.

Such risk is also a result of transactions with customers in countries outside the United States.

Approximately 34% of our revenue was denominated in foreign currencies for the year ended December 31, 2019.

As our business in regions outside of the United States continues to increase, we will be increasingly exposed to foreign currency exchange risk related to our foreign operations.

The cost of revenue related to revenue generated outside of the United States is primarily denominated in U.S. dollars; however, operating costs related to these revenues are largely denominated in the same respective currencies, thereby partially limiting our transaction risk exposure.

We have intercompany receivables and payables from our foreign subsidiaries that are denominated in foreign currencies, principally the Euro, the British pound and the Canadian dollar.

Fluctuations from the beginning to the end of a reporting period result in the revaluation of our foreign currency-denominated intercompany receivables and payables, generating currency translation gains or losses.

Net realized and unrealized gains (losses) from foreign currency transactions are included in interest and other income, net in the consolidated statement of operations and amounted to $0.6 million for the year ended December 31, 2019.

We currently do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts.

Our financial instruments consist of cash, cash equivalents, short-term and long-term investments, accounts receivable, accounts payable, accrued expenses, debt and long-term obligations.

We do not believe that a 10% change in interest rates would have a material impact on the fair value of our investment portfolio or our interest income.

Our business is subject to risks, including, but not limited to: unique economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility.

A substantial portion of our operations are located in the United States, and the majority of our sales since inception have been made in United States dollars.

During 2018, following the assumption of direct operations in Europe, our business became more exposed to foreign currency exchange rate fluctuations.

We will continue to monitor and evaluate our internal processes relating to foreign currency exchange, including the potential use of hedging strategies.

[removed: Overview][added: Overview]

[removed: We are] [added: Insulet Corporation (“we” or the “Company”) is] primarily engaged in the development, [removed: manufacturing] [added: manufacture] and sale of [removed: our] [added: its] proprietary Omnipod® System, an innovative, discreet and easy-to-use continuous insulin delivery system for people with insulin-dependent [removed: diabetes.][added: diabetes, which we have been selling since 2005.]

We estimate that approximately one-third of the Type 1 diabetes population in the United States and [added: even] less [removed: than one fifth] of the Type 1 diabetes population outside the United States use insulin pump therapy.

An even smaller portion of the [removed: insulin-dependent] Type 2 diabetes population in [added: and outside of] the United States [added: who are insulin-dependent] use insulin pump therapy.

The Omnipod System features two [removed: discreet,] [added: discreet and] easy-to-use devices: a small, lightweight, self-adhesive disposable tubeless [removed: Pod ("Pod"), which] [added: Omnipod device (“Pod”) that] is worn on the body [removed: and provides] [added: for] up to three days [removed: of non-stop insulin delivery without the need to see or handle] [added: at] a [removed: needle;] [added: time,] and [removed: a] [added: its wireless companion, the] handheld Personal Diabetes Manager [removed: ("PDM").][added: (“PDM”).]

We believe that the Omnipod System’s unique proprietary design and features allow people with insulin-dependent diabetes to manage their diabetes with unprecedented freedom, comfort, [removed: convenience,] [added: convenience] and ease.

[removed: The majority] [added: Most] of our drug delivery revenue [removed: currently] consists of sales of Pods [removed: used] [added: to Amgen for use] in [removed: Amgen's Neulasta Onpro] [added: the Neulasta® Onpro®] kit, an innovative delivery system for Amgen’s white blood cell booster to help reduce the risk of infection [removed: during] [added: after] intense chemotherapy.

We expect that, following [removed: start-up] [added: start up] related activities, the new facility will allow us to lower our manufacturing costs, increase supply redundancy, add capacity closer to our [removed: largest] [added: North American] customer base and support [removed: our growth trajectory.][added: growth.]

[removed: Market] [added: Market] Opportunity: Management of [removed: Diabetes][added: Diabetes]

| • | Type 1 diabetes is characterized by the body’s nearly complete inability to produce insulin. It is frequently diagnosed during childhood or adolescence. Individuals with Type 1 diabetes require daily insulin therapy to survive. [removed: It is estimated] [added: We estimate] that [removed: approximately one million] [added: three] to [removed: two] [added: four] million people [removed: in the United States] have Type 1 [removed: diabetes.] [added: diabetes in the countries we currently serve.] |

| • | Type 2 diabetes, the more common form, is characterized by the body’s inability to either properly utilize insulin or produce enough insulin. Historically, Type 2 diabetes has occurred in later adulthood, but its incidence is increasing among the younger population, due primarily to increasing obesity. Initially, many people with Type 2 diabetes attempt to manage their diabetes with improvements in diet, exercise and/or oral medications. As their diabetes advances, some [removed: patients] [added: individuals] progress to multiple drug therapies, which often include insulin therapy. [removed: It is estimated] [added: We estimate] that approximately [removed: two million] [added: five] to [removed: three] [added: six] million people [removed: in the United States] have Type 2 diabetes [removed: that requires daily insulin administration.] [added: in the countries we currently serve.] |

[removed: Diabetes] [added: Diabetes] Management [removed: Challenges][added: Challenges]

Diabetes is often frustrating and difficult for [removed: patients] [added: people] to manage.

[removed: Patients] [added: Individuals with diabetes] attempting to control their blood glucose levels tightly to prevent the long-term complications associated with fluctuations in blood glucose levels are at greater risk for overcorrection and the resultant hypoglycemia.

As a result, many [removed: patients] [added: people] have difficulty managing their diabetes.

Additionally, the time spent managing fluctuations in blood glucose levels and the fear associated with hypoglycemia can be incredibly stressful [removed: to patients] [added: for individuals with diabetes] and their families.

[removed: Current] [added: Current] Insulin [removed: Therapy][added: Therapy]

MDI therapy may also require a separate injection of a long-acting (basal) insulin, to control glucose levels between meals; [removed: typically] [added: typically,] once or twice per day.

Insulin pump therapy allows individuals to customize their bolus and basal insulin doses to meet their insulin needs throughout the [removed: day,] [added: day] and is intended to more closely resemble the physiologic function of a healthy pancreas.

[removed: Our] [added: Our] Solution: The Omnipod [removed: System][added: System]

The Omnipod [removed: System's] [added: System’s] innovative design and differentiated features allow people with insulin-dependent diabetes to live their [removed: lives,] [added: lives] and manage their diabetes, with unprecedented freedom, comfort, convenience and ease.

| [removed: ] [added: ] | [removed: ] [added: ] | [removed: ] [added: ] |

| [removed: Pod] [added: Pod] | [removed: Omnipod PDM] [added: Omnipod PDM] | [removed: Omnipod] [added: Omnipod] DASH [removed: PDM] [added: PDM] |

| • | The Pod is a small, lightweight, self-adhesive device that the user fills with insulin and wears directly on the body. The Pod delivers precise, personalized doses of insulin into the body through a small flexible tube (called a cannula), based on instructions that the [removed: patient] [added: user] programs into the [removed: Pod's] [added: Pod’s] wireless companion, the PDM. |

| • | An extra dose of insulin can be delivered when [removed: a patient needs it] [added: needed] to match the carbohydrates in a meal or snacks or to correct high blood glucose. |

We have designed the Omnipod System to fit within the normal daily routines of [removed: patients.][added: users.]

As a result, the Omnipod System is easy [removed: for patients] to use, which [removed: also] reduces the training burden on healthcare professionals and end-users.

We believe that the Omnipod System’s overall ease of use, [removed: flexibility,] [added: flexibility] and substantially lower training burden make it very attractive to people with insulin-dependent diabetes and [removed: help] [added: helps] redefine [added: persons] for whom insulin pump therapy is appropriate, allowing healthcare professionals to prescribe pump therapy to a broader group of [removed: patients.][added: people with diabetes.]

The Omnipod System’s unique patented design and proprietary manufacturing process allow us to provide pump therapy at a relatively low [added: or no] up-front investment compared to conventional tubed insulin pumps.

[removed: We believe that our] [added: Our] pricing model, which includes little or no initial investment, reduces the risk to third-party payors of significant up-front investments commonly associated with traditional tubed insulin pumps.

Several publications over the past decade have found that compared to multiple daily injections therapy, the use of the Omnipod System by individuals with both Type 1 and Type 2 diabetes across all age groups is associated with good glycemic [removed: control, reduced total daily dose of insulin,] [added: control] and reduced frequency and severity of hypoglycemic episodes.

These results are consistent with other published literature of other continuous subcutaneous insulin infusion devices [removed: similar to] [added: like] the Omnipod System.

Glooko provides a cloud-based application for clinicians and [removed: patients] [added: users] accessible through a kiosk, home computer or a mobile application on the [removed: user's] [added: user’s] smartphone that provides [removed: patients] [added: users] and their health care providers access to insulin delivery trends, blood glucose levels and other integrated data.

[removed: Third-Party Reimbursement][added: Third-Party Reimbursement]

In Europe, in connection with of our [removed: recent] assumption of direct operations in [removed: mid-2018,] [added: 2018,] we have worked with local healthcare systems to [removed: establish] [added: transition] coverage and payment processes for the Omnipod [removed: System.][added: System as required.]

In certain non-U.S. locations in which we sell through a [removed: distributor,] [added: distributor or intermediary,] our distribution partners [added: and local intermediaries] establish appropriate reimbursement contracts with healthcare systems in those countries and provinces.

[removed: Markets] [added: Markets] and Distribution [removed: Methods][added: Methods]

[removed: In 2018, following FDA clearance, we also commenced a limited commercial release of Omnipod DASH directly to customers in the U.S.] For the year ended December 31, [removed: 2018,] [added: 2019,] approximately [removed: 46%] [added: 65%] of our Omnipod System sales [removed: in the United States] were through intermediaries.

Our sales and marketing efforts are focused on [removed: patient] [added: customer] retention and growing [removed: patient,] [added: user,] clinician and payor demand for the Omnipod System.

We have a uniform sales and marketing approach, aligned across [removed: patients,] [added: users,] physicians and providers, to capitalize on the unique benefits of our Omnipod System technology.

The Omnipod System consists of the following: the Omnipod Insulin Management System (“Omnipod”) and the Omnipod DASHTM Insulin Management System (“Omnipod DASH” or “DASH”), our next generation digital mobile Omnipod platform.

In the United States, our products are sold directly to wholesalers, private healthcare organizations, healthcare facilities, mail order pharmacies and independent retailers.

These entities, and the Company in some cases, seek reimbursement from health insurance companies and/or government administrative payors.

The Omnipod System is also marketed and sold through distributors, as well as marketed to physicians and consumers.

Our products are subject to regulatory changes and competition in technological innovation, price, convenience of use, service and product performance.

Consumers generally have commercial insurance, Medicare or Medicaid coverage that pays for the product.

The Omnipod System is currently available in the United States, Canada and in certain countries in Europe and the Middle East.

We sell the Omnipod System directly to consumers, through distribution partners and most recently in the U.S. through the pharmacy channel.

Revenue for customers comprising more than 10% of total revenue was as follows:

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | Years Ended December 31, | | | | |

| | | 2019 | | 2018 | | 2017 |

| Amgen, Inc. | | * | | 12% | | 15% |

| Ypsomed Distribution AG and affiliates | | * | | * | | 22% |

| Cardinal Health Inc. and affiliates | | 11% | | 12% | | 11% |

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

Training

Customer Support

In addition, we compete with Roche Holdings Ltd. (“Roche”) and The Ypsomed Group (“Ypsomed”) outside the United States.

Medtronic historically has held the majority share of the conventional tubed insulin pump market in the United States.

We are developing an automated insulin delivery system that utilizes the DASH mobile platform to allow the Pod, our automated insulin delivery algorithm located on the Pod and the glucose sensor values obtained directly from a third party’s continuous glucose monitor to predict glucose levels into the future and automatically adjust the insulin dose required to help reduce the occurrence of blood glucose highs and lows.

We plan to launch Omnipod Horizon with a continuous glucose monitor manufactured by Dexcom, Inc.; however, we have signed a development agreement to integrate Abbott Diabetes Care, Inc.’s continuous glucose monitor in the future.

“phone control”).

During 2019, we began producing product from our new highly automated manufacturing facility in Acton, Massachusetts.

Raw Materials

We use a diverse and broad range of raw materials in the assembly and manufacturing of the Omnipod System.

We purchase all our raw materials and select components used in the manufacturing of our products from external suppliers.

In addition, we purchase some supplies from a single or limited number of sources for reasons of proprietary know-how, quality assurance, cost-effectiveness, or constraints resulting from regulatory requirements.

We work closely with our suppliers to ensure continuity of supply while maintaining high quality and reliability.

We rely on a limited number of suppliers for certain of the components and sub-assemblies used in the manufacture of the Omnipod System, including with respect to application-specific integrated circuit chips, bluetooth low-energy chips and other specialized parts.

The design of certain of these components and sub-assemblies (including, in some instances, the raw materials used to manufacture the same) is proprietary and the intellectual property rights with respect thereto may be owned exclusively by one party.

Where such ownership exists, we are sole sourced with the supplier controlling such intellectual property rights.

These sole sourced components are critical to the design and functionality of the Omnipod System.

In the case of sole sourced parts, we manage risk through holding inventory ourselves and at the supplier to ensure continuity of supply and low risk of disruption.

We purchase other components and sub-assemblies from manufacturers with whom we are at least dual sourced.

Quality Assurance

facilitate compliance with our specifications.

Patents

The Omnipod System consists of two product lines: the Omnipod Insulin Management System (“Omnipod”), which we have been selling since 2005, and our next generation Omnipod DASHTM Insulin Management System ("Omnipod DASH" or "DASH"), which began a U.S. limited market release in 2018.

Collectively, we refer to these products as the "Omnipod System".

Insulin pumps are used to perform continuous subcutaneous insulin infusion and typically use a programmable device and an infusion set to administer insulin into the person’s body.

We began commercial sales of the Omnipod in the United States in 2005 and we sell the Omnipod directly to end-users or through intermediaries.

The Omnipod is also available in multiple countries in Europe, as well as in Canada and Israel.

On July 1, 2018, we commenced direct commercial operations for the Omnipod in Europe immediately following the expiration of our distribution agreement with our former European distributor.

In June 2018, the U.S. Food and Drug Administration ("FDA") cleared for commercial sale our Omnipod DASH, which is our next-generation digital mobile Omnipod platform within the Omnipod System family, featuring secured Bluetooth wireless technology for connectivity between the Pod and the color touchscreen smartphone PDM.

The DASH PDM is optimized for use with the CONTOUR® NEXT ONE Blood Glucose (BG) Meter for the direct transfer of blood glucose readings to the PDM's bolus calculator.

Bluetooth functionality will also provide connectivity to our smartphone apps.

We commenced a limited commercial release of Omnipod DASH in 2018 prior to a planned full market launch in the U.S. in the first half of 2019.

For the year ended December 31, 2018, approximately 69% of our consolidated revenue was from sales in the United States and approximately 31% from international sales.

In January 2018, the Centers for Medicare & Medicaid Services (“CMS”) issued guidance clarifying that Medicare Part D Plan Sponsors may provide coverage for products such as the Omnipod System under the Medicare Part D (prescription drug) program.

During 2018, we began securing coverage with Medicare Part D carriers to ensure beneficiaries living with diabetes have access to the Omnipod System.

Securing Medicare Part D coverage also provides a direct pathway to increased Medicaid coverage at the state level, as many state-run Medicaid programs follow CMS prescription drug guidance to determine coverage.

This increased Medicaid access allows access for lower-income individuals and families for whom Omnipod had previously not been a covered option.

In April 2018, we also significantly increased our market access when we secured in-network coverage of Omnipod with UnitedHealthcare, the largest commercial payer in the United States.

We have substantially completed the construction of a highly-automated manufacturing facility in Acton, Massachusetts, with planned production out of the facility beginning in the first half of 2019.

The facility also serves as our global headquarters.

As previously noted, there are two primary types of insulin therapy practiced today: MDI therapy and insulin pump therapy.

In the United States, our products are generally reimbursed by third-party payors when sold directly to end-users, and we bill those payors for products provided to end-users.

Prior to 2018, coverage was more limited in the United States due to the lack of an established mechanism for Medicare or broad Medicaid coverage for the majority of the Omnipod System.

In January 2018, CMS issued guidance clarifying that Medicare Part D Plan Sponsors may provide coverage for products such as the Omnipod System under the Medicare Part D (prescription drug) program.

We have been successful in securing coverage with Medicare Part D plans, which allows many additional people with diabetes to access our product.

The ability of Medicare Part D plans to cover the Omnipod System also provides us with a direct pathway to gain Medicaid coverage at the state level, as many state-run Medicaid look to Medicare to determine coverage.

This allows access for lower-income individuals and families on Medicaid for whom Omnipod is currently not an option.

In addition, in April 2018, we also significantly increased our third-party reimbursement when we secured in-network coverage of Omnipod with UnitedHealthcare, the largest commercial payer in the United States.

We continue to work with third-party payors in the United States to establish coverage and payment for the Omnipod System.

Our coverage contracts with third-party payors typically have a term of between one and three years and set coverage amounts during that term.

Typically, coverage contracts automatically renew for specified incremental periods upon expiration, unless one of the parties terminates the contract.

Our fulfillment and reimbursement systems are fully integrated such that product is generally shipped only after confirmation of a physician’s valid statement of medical necessity and current health insurance information.

We maintain an insurance benefits investigation department that works to simplify and expedite claims processing and to assist patients in obtaining third-party reimbursement.

Common medical criteria for third-party payors approving reimbursement for pump therapy may include a patient having elevated A1c levels, a history of recurring hypoglycemia, fluctuations in blood glucose levels prior to meals or upon waking or, severe glycemic variability.

Third-party payors may decline to reimburse for procedures, supplies or services determined not to be “medically necessary” or “reasonable.” Reimbursement may also be declined by insurers based upon the contract between the insurer and the insured group.

We sell the Omnipod directly to patients or indirectly through intermediaries, such as independent distributors and the pharmacy channel, in the United States, Canada, Europe, and Israel.

Consistent with CMS’s decision in 2018 that products such as the Omnipod System are coverable under the Medicare Part D prescription drug benefit, we have been expanding access to our Omnipod System through the pharmacy channel, which we believe provides several competitive advantages over the durable medical equipment ("DME") distribution method used by traditional pump companies.

Internationally, the majority of our sales are through intermediaries.

Training.

Customer Support.

For example, Animas Corporation, a division of Johnson & Johnson, exited the insulin pump market in the United States and other countries in late 2017.

Omnipod DASH.

The information required by this Item is provided under [removed: "Legal Proceedings"] [added: “Legal Proceedings”] in Note [removed: 14] [added: 13] to the consolidated financial statements included under Item 8 of this Form [removed: 10-K,] [added: 10-K] and is incorporated herein by reference.

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

| [removed: x] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

| | [removed: For] [added: For] the fiscal year ended December 31, [removed: 2018] [added: 2019] |

| [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

| | [removed: For] [added: For] the transition period from [removed: to] [added: to] |

[removed: Commission] [added: Commission] File [removed: Number 001-33462][added: Number 001-33462]

[removed: INSULET CORPORATION][added: INSULET CORPORATION]

[removed: (Exact] [added: (Exact] name of Registrant as specified in its [removed: charter)][added: charter)]

| [removed: Delaware] | [added: Delaware] | [removed: 04-3523891] | [added: | | 04-3523891 |]

| [added: |] (State or Other Jurisdiction of Incorporation or Organization) | | [added: | |] (I.R.S. Employer Identification No.) |

| [removed: 100] [added: | 100] Nagog [removed: Park Acton, Massachusetts] [added: Park] | [added: Acton] | [removed: 01720] [added: Massachusetts] | [added: | 01720 |]

| [added: |] (Address of Principal Executive Offices) | | [added: | |] (Zip Code) |

[removed: Registrant’s] [added: Registrant’s] telephone number, including area code: [added: (978) 600-7000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | [added: Trading Symbol(s)] | [removed: Name] [added: Name] of Each Exchange on Which [removed: Registered] [added: Registered] |

| Common Stock, $0.001 Par Value Per Share | [added: PODD] | The NASDAQ Stock Market, LLC |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [added: None]

Yes [removed: ¨] [added: ☐] No x

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

| [removed: Large accelerated filer x | |] Accelerated filer [removed: o] | [removed: | Non-accelerated filer o] [added: ¨] | | Smaller reporting company [removed: o] | [added: ☐ |]

The aggregate market value of the common stock held by non-affiliates of the registrant computed by reference to the last reported sale price of the Common Stock as reported on The NASDAQ Global Market on June 30, [removed: 2018] [added: 2019] was approximately [removed: $5.0] [added: $7.2] billion.

The number of shares [removed: outstanding] of [removed: each of the registrant’s classes of] common stock [added: outstanding] as of February 20, [removed: 2019:][added: 2020 was 62,863,402.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

The registrant intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, [removed: 2018.][added: 2019.]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

[removed: | [PART I](#sC23E4D0345475A9CB4C7293B5E0D6F50) | | |][added: PART I]

| Item 1 | [removed: [Business](#sAE3B5E6214835FBF90EC0C0832162015)] [added: [Business](#s3AD2D49FB68256B3A28AEEC7A75433BF)] | [removed: [3](#sAE3B5E6214835FBF90EC0C0832162015)] [added: [3](#s3AD2D49FB68256B3A28AEEC7A75433BF)] |

| Item 1A | [Risk [removed: Factors](#s2CAFFB15A273514FBD7B71778B9C8DB4)] [added: Factors](#sD48E6697508E5347A0E475BCE37848A9)] | [removed: [14](#s2CAFFB15A273514FBD7B71778B9C8DB4)] [added: [13](#sD48E6697508E5347A0E475BCE37848A9)] |

| Item 1B | [Unresolved Staff [removed: Comments](#s326D20514D055CD0BF8088CB3C4865F5)] [added: Comments](#s41A108E864885F3EBB0B7C54DCCCC4C7)] | [removed: [32](#s326D20514D055CD0BF8088CB3C4865F5)] [added: [31](#s41A108E864885F3EBB0B7C54DCCCC4C7)] |

| Item 2 | [removed: [Properties](#s79C5BB1C63835F9CA3A8584D3D4995B6)] [added: [Properties](#sCCDD9CF9C5CA513A819C375284E971FA)] | [removed: [32](#s79C5BB1C63835F9CA3A8584D3D4995B6)] [added: [31](#sCCDD9CF9C5CA513A819C375284E971FA)] |

| Item 3 | [Legal [removed: Proceedings](#sE3992B27F84D5CC488770733B8D0B4CB)] [added: Proceedings](#s1DB5BDF2398057579FDED8DAA678810C)] | [removed: [32](#sE3992B27F84D5CC488770733B8D0B4CB)] [added: [31](#s1DB5BDF2398057579FDED8DAA678810C)] |

| Item 4 | [Mine Safety [removed: Disclosures](#s1737D3A3BF485C4996014242B182E92F)] [added: Disclosures](#s641B5EC3D97A5205925461A8C28D0807)] | [removed: [32](#s1737D3A3BF485C4996014242B182E92F)] [added: [31](#s641B5EC3D97A5205925461A8C28D0807)] |

| Item 5 | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sA616FDA88EDB549985843E2B5D6F7B64)] [added: Securities](#sB9423EFC13C75850A587E9FB486DB1B4)] | [removed: [33](#sA616FDA88EDB549985843E2B5D6F7B64)] [added: [32](#sB9423EFC13C75850A587E9FB486DB1B4)] |

| Item 6 | [Selected Financial [removed: Data](#s4A746FF4B43756CF8B15519B7A2D3A43)] [added: Data](#sE4673E5C0FCF506DA601A59082A3C8E6)] | [removed: [34](#s4A746FF4B43756CF8B15519B7A2D3A43)] [added: [33](#sE4673E5C0FCF506DA601A59082A3C8E6)] |

| Item 7 | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sD4EA96519C5654C292CE2832F93BF3FE)] [added: Operations](#s2DD7D79D6C5A5DFDA586299C1A29FE6A)] | [removed: [36](#sD4EA96519C5654C292CE2832F93BF3FE)] [added: [34](#s2DD7D79D6C5A5DFDA586299C1A29FE6A)] |

| Item 7A | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sD5D7594CAE0C5A868CDC210F89EC2B62)] [added: Risk](#sEC81E697602A514D9346FD22D8EA10A4)] | [removed: [44](#sD5D7594CAE0C5A868CDC210F89EC2B62)] [added: [41](#sEC81E697602A514D9346FD22D8EA10A4)] |

| Item 8 | [Financial Statements and Supplementary [removed: Data](#s74AA98ADDDA35F578105BAD213F3C881)] [added: Data](#s560BC2F085E05CE79172A0B362282B7E)] | [removed: [44](#s74AA98ADDDA35F578105BAD213F3C881)] [added: [42](#s560BC2F085E05CE79172A0B362282B7E)] |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| | | | | | |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| Large accelerated filer | x | | Non-accelerated filer | ¨ |

| | | | | |

| | | | | |

| | | | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| [PART II](#sD3B4FC78DEE55FD285D140FAAB19385A) | | |

| [PART II](#sD3B4FC78DEE55FD285D140FAAB19385A)I | | |

| [PART I](#sD3B4FC78DEE55FD285D140FAAB19385A)V | | |

| | [SIGNATURES](#sE6C348C158EA5C45ADC746FD41A247CC) | [77](#sE6C348C158EA5C45ADC746FD41A247CC) |

10-K 1 podd-2018x12x31_10xk.htm 10-K_PODD-2018-12-31

| | | |

| --- | --- | --- |

(978) 600-7000

None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

(Check one):

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | (Do not check if a smaller reporting company) | | | | |

| Title of Class | | Shares Outstanding |

| Common Stock, $0.001 Par Value Per Share | | 59,278,993 |

| [PART II](#sE7C668342C0750D6B18FB35F8EBA0112) | | |

| [PART II](#sE7C668342C0750D6B18FB35F8EBA0112)I | | |

| [PART I](#sE7C668342C0750D6B18FB35F8EBA0112)V | | |

| | [SIGNATURES](#s5E981599A2B95F059576FBD3C849E5F7) | [81](#s5E981599A2B95F059576FBD3C849E5F7) |

| | [EXHIBIT INDEX](#s6DE703CC4A4A56AEB961112E90A459F4) | [83](#s6DE703CC4A4A56AEB961112E90A459F4) |

We also lease a total of approximately [removed: 149,000] [added: 200,000] square feet of office, research and development and warehousing space and other related facilities primarily in the U.S., Europe and Canada.

Our owned global headquarters, which encompasses our U.S. manufacturing and office facility in Acton, Massachusetts is approximately 300,000 square feet.

In December 2018, we substantially completed the construction of our 195,000 square foot U.S. manufacturing and office facility in Acton, Massachusetts.

The property serves as our global headquarters.

[removed: PART II][added: PART II]

[removed: MARKET] [added: MARKET] FOR [removed: REGISTRANT'S] [added: REGISTRANT’S] COMMON [removed: EQUITY][added: EQUITY]

Our common stock [removed: has been] [added: is] listed on The NASDAQ Global Market [added: (“NASDAQ”)] under the trading symbol [removed: “PODD” since our initial public offering on May 15, 2007.][added: PODD.]

As of February 20, [removed: 2019,] [added: 2020,] there were [removed: approximately 8] [added: 9] registered holders of record of our common stock.

[removed: Performance Graph][added: Performance Graph]

The historical stock price performance [removed: of our common stock shown in] [added: on] the [removed: performance] graph below is not necessarily indicative of future stock price performance.

[removed: ][added: ]

| | [removed: 2013] [added: 2014] | | | [removed: 2014] [added: 2015] | | | [removed: 2015] [added: 2016] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | | |

The material in this performance graph is not soliciting material, is not deemed filed with the [removed: Securities and Exchange Commission (“SEC”)] [added: SEC] and is not incorporated by reference in any filing of Insulet Corporation under the Securities Act of 1933, as amended [removed: (the “Securities Act”)] or the [added: Securities] Exchange Act of 1934, as amended, whether made on, before or after the date of this filing and irrespective of any general incorporation language in such filing.

We currently intend to retain [removed: future] [added: any] earnings [removed: for] [added: to finance research and development and] the [removed: development,] operation and expansion of our business and do not anticipate paying any cash dividends [removed: in] [added: for] the foreseeable future.

[removed: Issuer Repurchases] [added: Issuer Purchases] of Equity [removed: Securities][added: Securities]

The following graph shows the cumulative total return on $100 invested in each of our common stock, the NASDAQ Composite Index and the NASDAQ Health Care Index for the five-year period beginning on December 31, 2014, and ending on December 31, 2019, assuming reinvestment of all dividends.

| Insulet Corporation | $ | 100 | | $ | 82 | | $ | 82 | | $ | 150 | | $ | 172 | | $ | 372 | |

| NASDAQ Composite | $ | 100 | | $ | 106 | | $ | 114 | | $ | 146 | | $ | 140 | | $ | 189 | |

| NASDAQ Health Care | $ | 100 | | $ | 107 | | $ | 89 | | $ | 108 | | $ | 103 | | $ | 130 | |

Dividends

The following table sets forth the high and low closing sales prices of our common stock, as reported by The NASDAQ Global Market, for each of the periods listed.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | High | | | | Low | | |

| Fiscal Year 2017 | | | | | | | |

| First Quarter | $ | 47.22 | | | $ | 36.98 | |

| Second Quarter | $ | 51.31 | | | $ | 39.10 | |

| Third Quarter | $ | 59.46 | | | $ | 49.49 | |

| Fourth Quarter | $ | 71.80 | | | $ | 55.67 | |

| Fiscal Year 2018 | | | | | | | |

| First Quarter | $ | 87.20 | | | $ | 68.49 | |

| Second Quarter | $ | 101.93 | | | $ | 83.27 | |

| Third Quarter | $ | 108.13 | | | $ | 81.43 | |

| Fourth Quarter | $ | 105.19 | | | $ | 73.27 | |

The chart set forth below shows the value of an investment of $100 on December 31, 2013 in each of Insulet Corporation common stock, the NASDAQ Composite Index, and the NASDAQ Health Care Index.

All values assume reinvestment of the pre-tax value of dividends paid by companies included in these indices and are calculated as of December 31, 2018.

| Insulet Corporation | $ | 100 | | $ | 124 | | $ | 102 | | $ | 102 | | $ | 186 | | $ | 214 | |

| NASDAQ Composite | 100 | | | 115 | | | 123 | | | 133 | | | 172 | | | 166 | | |

| NASDAQ Health Care | 100 | | | 129 | | | 135 | | | 111 | | | 133 | | | 126 | | |

Dividend Policy

Securities Authorized For Issuance Under Equity Compensation Plans

The following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2018.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted average exercise price of outstanding options, warrants and rights (b) | | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | |

| Equity compensation plans approved by security holders(1) | 2,398,286 | | | $ | 40.38 | | | 4,439,383 | | |

| Equity compensation plans not approved by security holders(2) | 679,338 | | | $ | 34.87 | | | — | | |

| Total | 3,077,624 | | | $ | 39.16 | | | 4,439,383 | | |

(1) Includes our Amended and Restated 2017 and 2007 Stock Option and Incentive Plans.

Outstanding restricted stock units convert to common stock without the payment of consideration.

As of December 31, 2018, 752,207 restricted stock units were outstanding.

The weighted-average exercise price of outstanding options as of such date issued under these Plans (excluding restricted stock units) was $40.38.

For more information relating to our equity compensation plans, see Note 15 to our consolidated financial statements.

(2) Consists of the following inducement grants made to certain executive officers upon their initial hire by us:

| | |

| --- | --- |

| • | one inducement grant of 499,468 shares of non-qualified stock option awards made to Patrick J. Sullivan upon being hired by us in September 2014; |

| • | one inducement grant of 79,936 non-qualified stock options made to Shacey Petrovic upon being hired by us in February 2015; |

| • | one inducement grant of 58,852 non-qualified stock options made to Michael Levitz upon being hired by us in May 2015; |

| • | one inducement grant of 29,581 non-qualified stock options made to David Colleran (1,849 of which have been exercised as of December 31, 2018) upon being hired by us in June 2015; and |

| | [removed: Years] [added: Years] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| [removed: (In thousands,] [added: (in millions,] except [removed: share and] per share [removed: data)] [added: data)] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: Consolidated Statements] [added: Consolidated Statement] of Operations [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | |

| [removed: Net income] [added: Income] (loss) from continuing operations per share: | | | | | | | | | | | | | | | | | | | |

| Basic | [removed: $] [added: $] | [removed: 0.06] [added: 0.19] | | | $ | [removed: (0.46] [added: 0.06] | [removed: )] | | $ | [removed: (0.48] [added: (0.46] | ) | | $ | [removed: (1.08] [added: (0.48] | ) | | $ | [removed: (0.86] [added: (1.08] | ) |

| Diluted | [removed: $] [added: $] | [removed: 0.05] [added: 0.19] | | | $ | [removed: (0.46] [added: 0.05] | [removed: )] | | $ | [removed: (0.48] [added: (0.46] | ) | | $ | [removed: (1.08] [added: (0.48] | ) | | $ | [removed: (0.86] [added: (1.08] | ) |

| [removed: Consolidated] [added: Consolidated] Balance [removed: Sheets Data:] [added: Sheet Data:] | | | | | | | | | | | | | | | | | | | |

The following table presents selected financial and other data for Insulet Corporation.

The consolidated statement of operations data set forth below for 2019, 2018 and 2017, and the consolidated balance sheet data as of December 31, 2019 and December 31, 2018, are derived from our audited consolidated financial statements included elsewhere in this annual report.

The consolidated statement of operations data for 2016 and 2015 and the consolidated balance sheet data as of December 31, 2017, December 31, 2016 and December 31, 2015 are derived from our audited consolidated financial statements that are not included in this annual report.

The selected historical financial data presented below should be read in conjunction with our consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this annual report.

| Revenue | $ | 738.2 | | | $ | 563.8 | | | $ | 463.8 | | | $ | 367.0 | | | $ | 263.9 | |

| Gross profit | $ | 480.3 | | | $ | 370.2 | | | $ | 277.2 | | | $ | 211.1 | | | $ | 133.3 | |

| Operating income (loss) (1) | $ | 50.0 | | | $ | 27.4 | | | $ | (7.4 | ) | | $ | (10.7 | ) | | $ | (48.7 | ) |

| Income (loss) from continuing operations (2) | $ | 11.6 | | | $ | 3.3 | | | $ | (26.8 | ) | | $ | (27.2 | ) | | $ | (61.6 | ) |

| Weighted-average number of shares: | | | | | | | | | | | | | | | | | | | |

| Basic | 60.6 | | | | 58.9 | | | | 58.0 | | | | 57.3 | | | | 56.8 | | |

| Diluted | 62.3 | | | | 61.0 | | | | 58.0 | | | | 57.3 | | | | 56.8 | | |

| Total assets | $ | 1,142.9 | | | $ | 928.7 | | | $ | 816.7 | | | $ | 456.6 | | | $ | 275.1 | |

| Convertible debt, net | $ | 887.9 | | | $ | 592.0 | | | $ | 566.2 | | | $ | 332.8 | | | $ | 172.0 | |

| Shareholders’ equity | $ | 75.9 | | | $ | 212.1 | | | $ | 158.5 | | | $ | 63.2 | | | $ | 34.1 | |

(1) 2018 includes a charge of $12.6 million for severance costs associated with the retirement of the Company’s former CEO, of which $8.2 million represented stock-based compensation expense resulting from the accelerated vesting of equity awards.

(2) 2019 includes an $8.7 million loss on extinguishment of debt.

| Revenue | $ | 563,823 | | | $ | 463,768 | | | $ | 366,989 | | | $ | 263,893 | | | $ | 231,321 | |

| Cost of revenue | 193,655 | | | | 186,599 | | | | 155,903 | | | | 130,622 | | | | 104,195 | | |

| Gross profit | 370,168 | | | | 277,169 | | | | 211,086 | | | | 133,271 | | | | 127,126 | | |

| Total operating expenses | 342,745 | | | | 284,556 | | | | 221,790 | | | | 182,007 | | | | 136,000 | | |

| Operating income (loss) | 27,423 | | | | (7,387 | | ) | | (10,704 | | ) | | (48,736 | | ) | | (8,874 | | ) |

| Interest expense and other, net | (22,197 | | ) | | (19,187 | | ) | | (16,114 | | ) | | (12,654 | | ) | | (39,006 | | ) |

| Net income (loss) from continuing operations | 3,292 | | | | (26,831 | | ) | | (27,210 | | ) | | (61,602 | | ) | | (47,940 | | ) |

| Loss from discontinued operations, net of tax | — | | | | — | | | | (1,669 | | ) | | (11,918 | | ) | | (3,560 | | ) |

| Net income (loss) | $ | 3,292 | | | $ | (26,831 | ) | | $ | (28,879 | ) | | $ | (73,520 | ) | | $ | (51,500 | ) |

| Net loss from discontinued operations per share | — | | | | — | | | | (0.03 | | ) | | (0.21 | | ) | | (0.06 | | ) |

| Weighted-average number of shares used in calculating net income (loss) per share | | | | | | | | | | | | | | | | | | | |

| Basic | 58,859,574 | | | | 58,003,434 | | | | 57,251,377 | | | | 56,785,646 | | | | 55,628,542 | | |

| Diluted | 61,008,024 | | | | 58,003,434 | | | | 57,251,377 | | | | 56,785,646 | | | | 55,628,542 | | |

| | As of December 31, | | | | | | | | | | | | | | | | | | |

| (In thousands) | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |

| Cash and cash equivalents | $ | 113,906 | | | $ | 272,577 | | | $ | 137,174 | | | $ | 122,672 | | | $ | 151,193 | |

| Short-term investments | $ | 175,040 | | | $ | 167,479 | | | $ | 161,396 | | | $ | — | | | $ | — | |

| Working capital | $ | 345,629 | | | $ | 451,146 | | | $ | 314,263 | | | $ | 125,605 | | | $ | 163,900 | |

| Long-term investments | $ | 140,784 | | | $ | 125,549 | | | $ | — | | | $ | — | | | $ | — | |

| Total assets | $ | 928,744 | | | $ | 816,744 | | | $ | 456,647 | | | $ | 275,126 | | | $ | 297,182 | |

| Current portion of long-term debt and capital lease obligations | $ | — | | | $ | — | | | $ | 269 | | | $ | 5,519 | | | $ | 3,380 | |

| Long-term debt and capital lease obligations | $ | 591,978 | | | $ | 566,173 | | | $ | 332,768 | | | $ | 171,967 | | | $ | 166,283 | |

| Other long-term liabilities | $ | 9,010 | | | $ | 6,030 | | | $ | 5,032 | | | $ | 3,952 | | | $ | 2,774 | |

| Total stockholders’ equity | $ | 212,099 | | | $ | 158,516 | | | $ | 63,150 | | | $ | 34,051 | | | $ | 83,829 | |

Our financial statements as of December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] and for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the Report of the Registered Independent Public Accounting Firm are included in this report as listed in the index.

| [removed: INDEX] [added: INDEX] TO CONSOLIDATED FINANCIAL [removed: STATEMENTS] [added: STATEMENTS] | |

[removed: | [Report] [added: Report] of Independent Registered Public Accounting [removed: Firm](#s37F3B033B774504EB63735C438242F85) | [45](#s37F3B033B774504EB63735C438242F85) |][added: Firm]

| [removed: [Consolidated] [added: Consolidated] Balance Sheets as of December 31, [removed: 2018] [added: 2019] and [removed: 201](#s24BA22C9DEF85587BFE1F3BA8C750F93)7] [added: 2018] | [removed: [46](#s24BA22C9DEF85587BFE1F3BA8C750F93)] [added: [45](#s0B69F5B8B8375AE69A68448AD3677375)] |

| [removed: [Consolidated] [added: Consolidated] Statements of Operations for the Years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 201](#s5D09AC1455225460BB04066B6AA9B269)6] [added: 2017] | [removed: [47](#s5D09AC1455225460BB04066B6AA9B269)] [added: [46](#s2522917572B1530E91C9154BC563569A)] |

| [Consolidated Statements of Comprehensive [removed: I](#s058F8B111D7F571D993818CED1C849D1)ncome] [added: I](#s81CDC1964B545524AC6D483252F4E980)ncome] (Loss) for the Years Ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017] | [removed: [48](#s058F8B111D7F571D993818CED1C849D1)] [added: [47](#s81CDC1964B545524AC6D483252F4E980)] |

| [Consolidated Statements of [removed: Stockholders'] [added: Stockholders’] Equity for the Years ended December 31, [removed: 201](#sA50637552B375FD1A068C53B1E322083)8, 2017] [added: 201](#sB29B9327E2C856EDB0809CB83FB3AF2D)9, 2018] and [removed: 2016] [added: 2017] | [removed: [49](#sA50637552B375FD1A068C53B1E322083)] [added: [48](#sB29B9327E2C856EDB0809CB83FB3AF2D)] |

| [Consolidated Statements of Cash Flows for the Years ended December 31, [removed: 201](#s2E654B58A3795A60AAFE2B5C9242FA18)8, 2017] [added: 201](#sE90B94BE4BA8504FB4A25FFC32AF780E)9, 2018] and [removed: 2016] [added: 2017] | [removed: [50](#s2E654B58A3795A60AAFE2B5C9242FA18)] [added: [49](#sE90B94BE4BA8504FB4A25FFC32AF780E)] |

[removed: | [Notes to Consolidated Financial Statements](#s279D2DFE55AE5A8DB219071380139C47) | [51](#s279D2DFE55AE5A8DB219071380139C47) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

[removed: Report] [added: | [Report] of Independent Registered Public Accounting [removed: Firm][added: Firm](#s12B9CB1AFF555041B49BA509CD365A40) | [43](#s12B9CB1AFF555041B49BA509CD365A40) |]

[removed: Insulet Corporation][added: INSULET CORPORATION]

We have audited the accompanying consolidated balance sheets of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018, and] the related consolidated statements of operations, comprehensive income (loss), [added: changes in] stockholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] and the related notes and schedule (collectively referred to as the [removed: "financial statements").][added: “financial statements”).]

In our opinion, the financial statements [added: referred to above] present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019] in conformity with accounting principles generally accepted in the United States of America.

We also have [removed: audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"),] [added: audited] the Company’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: ("COSO"), and our report dated February 25, 2019 expressed an unqualified opinion.][added: (“COSO”).]

[removed: Basis] [added: Basis] for [removed: opinion][added: opinions]

Our responsibility is to express an opinion on the [removed: Company's] [added: Company’s] financial statements [added: 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 [removed: PCAOB] [added: Public Company Accounting Oversight Board (United States) (“PCAOB”)] and are required to be independent with respect to the Company in accordance with the [removed: U.S] [added: U.S.] federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Our audits [added: 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 [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

We believe that our audits provide a reasonable basis for our [removed: opinion.][added: opinions.]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

| [removed: | December] [added: December] 31, [removed: 2018] [added: 2018] | | | | [removed: December 31, 2017] | | | [added: | | | | |]

| [removed: (In thousands,] [added: (in millions,] except share and per share [removed: data)] [added: data)] | [added: 2019] | | | | [added: 2018] | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| [removed: Current Assets] [added: Current Assets] | | | | | | | |

[removed: | Cash] [added: Cash] and [removed: cash equivalents | $ | 113,906 | | | $ | 272,577 | |][added: Cash Equivalents]

| Unbilled receivable | [removed: 13,378] [added: 13.5] | | | | [removed: —] [added: 13.4] | | |

| Prepaid expenses and other current assets | [removed: 24,254] [added: 31.1] | | | | [removed: 9,949] [added: 24.3] | | |

[removed: | Property] [added: Property, Plant] and [removed: equipment, net | 258,379 | | | | 107,864 | | |][added: Equipment, Net]

| Other intangible assets, net | [removed: 10,383] [added: 13.2] | | | | [removed: 4,351] [added: 10.4] | | |

| Other assets | [removed: 18,266] | [removed: | | | 1,969] [added: $] | [added: 16.1] | |

| [removed: LIABILITIES] [added: LIABILITIES] AND STOCKHOLDERS’ [removed: EQUITY] [added: EQUITY] | | | | | | | |

| [removed: Current Liabilities] [added: Current Liabilities] | | | | | | | |

[removed: |] Accrued [removed: expenses] [added: Expenses] and [removed: other current liabilities | 88,973 | | | | 59,256 | | |][added: Other Current Liabilities]

| Other long-term liabilities | [removed: 9,010] [added: 5.1] | | | | [removed: 6,030] [added: 3.1] | | | [added: | 1.2 | | |]

[removed: |] Commitments and [removed: contingencies (Note 14) | | | | | | | |][added: Contingencies]

| [removed: Stockholders’ Equity] [added: Stockholders’ Equity] | | | | | | | |

| Authorized: 5,000,000 shares at December 31, [removed: 2018] [added: 2019] and [removed: 2017.] [added: 2018.] Issued and outstanding: zero shares at December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018.] | [removed: —] [added: —] | | | | — | | |

| Authorized: 100,000,000 shares at December 31, [removed: 2018] [added: 2019] and [removed: 2017.] [added: 2018.] Issued and outstanding: [removed: 59,188,758] [added: 62,685,492] and [removed: 58,319,348] [added: 59,188,758] shares at December 31, [removed: 2018] [added: 2019] and [removed: 2017, respectively] [added: 2018, respectively.] | [removed: 59] [added: 0.1] | | | | [removed: 58] [added: 0.1] | | |

Opinions on the financial statements and internal control over financial reporting

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

The Company’s management is responsible for these 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 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.

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 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 separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

*Revenue Recognition - Drug Delivery*

As described in Note 4 to the consolidated financial statements, the Company’s revenue from drug delivery was $64.7 million for the year ended December 31, 2019.

Drug delivery revenue is recognized over time based on the Company’s determination of the pattern over which control transfers to the customer.

This transfer of control begins during the manufacturing process and continues through the final quality control inspection process until there is complete satisfaction of the performance obligation.

We identified drug delivery revenue recognition and the associated unbilled receivable as a critical audit matter.

The principal considerations for our determination that this matter is a critical audit matter are as follows:

Accounting for drug delivery revenue requires the Company to select a method to measure progress towards the satisfaction of the performance obligation.

This election of the most meaningful measure of progress by which to recognize drug delivery revenue requires the application of significant Management judgment.

The Company elected the input method and selected a blend of cost and time to produce for measure of progress.

Given the nature of the revenue being recognized, additional audit effort including modification of the nature and extent of our procedures beyond that of the Company’s other revenue streams was required.

Our audit procedures included, but were not limited to, the following:

| • | We tested the design and operating effectiveness of controls relating to Management’s estimate of the measure of progress. |

| • | For the measure of progress, we inspected evidence related to the cost and length of the production cycle. |

| • | For revenue recognized on in-process or finished goods inventory not yet shipped to the customer (and the related unbilled receivable), we inspected customer orders, binding customer forecasts, inventory records, and confirmed inventory quantities directly with third parties when applicable. |

*Convertible Debt Offering and Note Repurchase*

As described in Note 12 to the consolidated financial statements, the Company completed a private placement offering of $800 million in 0.375% Convertible Senior Notes (the “New Notes”), with the proceeds partially used to repurchase the previously outstanding 1.25% Convertible Senior Notes (the “Existing Notes”).

We identified these transactions as a critical audit matter.

The principal considerations for our determination that this matter is a critical audit matter are as follows.

Accounting for the convertible debt offering and the repurchase of the Existing Notes was a significant unusual transaction that required extensive audit effort.

This included the involvement of technical accounting specialists to evaluate Management’s conclusions surrounding the bifurcation of the notes between debt and equity and the extinguishment conclusion for the repurchase of the Existing Notes.

Additionally, valuation specialists were included to determine the fair value of the equity component of the New Notes and the fair value of the Existing Notes utilized in the determination of the loss on extinguishment.

This included the evaluation of the market yield input, which was derived using a Binomial Option Pricing Model.

Our audit procedures included, but were not limited to, the following:

| • | We tested the control design and operating effectiveness related to the accounting for the transaction including Management’s evaluation of the qualifications of specialists and review of the work performed by the specialists. |

| • | We traced all key terms, and amounts to source documents, including the related offering memorandums and purchase agreements. |

| • | We supplemented the engagement team with technical accounting specialists to confirm Management’s accounting conclusions including the determination that the New Notes be bifurcated between debt and equity as well as the determination that the repurchase of a portion of the Existing Notes be accounted for as an extinguishment of debt. |

Opinion on the financial statements

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

February 25, 2019

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Short-term investments | 175,040 | | | | 167,479 | | |

| Accounts receivable, net | 63,294 | | | | 53,373 | | |

| Inventories | 71,414 | | | | 33,793 | | |

| Total current assets | 461,286 | | | | 537,171 | | |

| Long-term investments | 140,784 | | | | 125,549 | | |

| Goodwill | 39,646 | | | | 39,840 | | |

| Total assets | $ | 928,744 | | | $ | 816,744 | |

| Accounts payable | $ | 25,500 | | | $ | 24,413 | |

| Deferred revenue | 1,184 | | | | 2,356 | | |

| Total current liabilities | 115,657 | | | | 86,025 | | |

| Long-term debt, net | 591,978 | | | | 566,173 | | |

| Total liabilities | 716,645 | | | | 658,228 | | |

| Additional paid-in capital | 898,559 | | | | 866,206 | | |

| Accumulated deficit | (683,614 | | ) | | (707,255 | | ) |

| Total stockholders’ equity | 212,099 | | | | 158,516 | | |

| Revenue | $ | 563,823 | | | $ | 463,768 | | | $ | 366,989 | |

| Cost of revenue | 193,655 | | | | 186,599 | | | | 155,903 | | |

| Gross profit | 370,168 | | | | 277,169 | | | | 211,086 | | |

| Research and development | 88,606 | | | | 74,452 | | | | 55,710 | | |

| Sales and marketing | 142,321 | | | | 121,617 | | | | 94,483 | | |

| General and administrative | 111,818 | | | | 88,487 | | | | 71,597 | | |

| Total operating expenses | 342,745 | | | | 284,556 | | | | 221,790 | | |

| Operating income (loss) | 27,423 | | | | (7,387 | | ) | | (10,704 | | ) |

| Loss on extinguishment of long-term debt | — | | | | 609 | | | | 2,551 | | |

| Interest and other income (expense), net | (22,197 | | ) | | (19,187 | | ) | | (16,114 | | ) |

| Income (loss) from continuing operations before income taxes | 5,226 | | | | (26,574 | | ) | | (26,818 | | ) |

| Income tax expense | 1,934 | | | | 257 | | | | 392 | | |

| Net income (loss) from continuing operations | 3,292 | | | | (26,831 | | ) | | (27,210 | | ) |

| Loss from discontinued operations, net of tax | — | | | | — | | | | (1,669 | | ) |

| Net income (loss) | $ | 3,292 | | | $ | (26,831 | ) | | $ | (28,879 | ) |

| Net loss from discontinued operations per share basic and diluted | $ | — | | | $ | — | | | $ | (0.03 | ) |

| Balance, December 31, 2015 | 56,954,830 | | | $ | 57 | | | $ | 686,193 | | | $ | (651,545 | ) | | $ | (654 | ) | | $ | 34,051 | |

| Balance, December 31, 2016 | 57,457,967 | | | 57 | | | | 744,243 | | | | (680,424 | | ) | | (726 | | ) | | 63,150 | | |

| Net loss | | | | | | | | | | | | (26,831 | | ) | | | | | | (26,831 | | ) |

| Balance, December 31, 2017 | 58,319,348 | | | 58 | | | | 866,206 | | | | (707,255 | | ) | | (493 | | ) | | 158,516 | | |

[removed: Disclosure] [added: Disclosure] Controls and [removed: Procedures][added: Procedures]

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, [removed: 2018.][added: 2019.]

Based on the evaluation of our disclosure controls and procedures as of December 31, [removed: 2018,] [added: 2019,] our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

[removed: Changes] [added: Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting]

There were no changes in our internal control over financial reporting during the three months ended December 31, [removed: 2018] [added: 2019] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[removed: Management's] [added: Management’s] Annual Report on Internal Control Over Financial [removed: Reporting][added: Reporting]

Our management is responsible for establishing and maintaining adequate internal control over financial [removed: reporting as such term is defined in Exchange Act Rule 13a — 15(f).][added: reporting.]

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

Based on our [removed: assessment] [added: assessment,] we believe [removed: that, as of December 31, 2018,] [added: that] our internal [removed: control] [added: controls] over financial reporting [removed: is] [added: were] effective [removed: based on those criteria.][added: as of December 31, 2019.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] has been audited by Grant Thornton LLP, an independent registered public accounting [removed: firm, as stated in their report which appears below.][added: firm.]

[removed: The Company’s management is responsible for maintaining effective] [added: Management’s assessment included an evaluation of the design of the Company's] internal control over financial reporting and [removed: for its assessment] [added: testing] of the [added: operational] effectiveness of [added: our] internal control over financial [removed: reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.][added: reporting.]

Their report is included in Item 8 of this Form 10-K.

Our internal control system was designed to provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Insulet Corporation

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2018, 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 Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2018, and our report dated February 25, 2019 expressed an unqualified opinion on those financial statements.

Basis for opinion

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

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

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

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

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.

/s/ GRANT THORNTON LLP

Boston, Massachusetts

February 25, 2019

[removed: PART III][added: PART III]

The information required by this Item will be set forth in our definitive proxy statement for our 2020 Annual Meeting of Stockholders (the “Proxy Statement”) and is incorporated herein by reference.

Certain information required by this Item 10 relating to our directors, executive officers and corporate governance is incorporated by reference herein from our Proxy Statement in connection with our 2019 Annual Meeting of Stockholders, which Proxy Statement will be filed with the SEC not later than 120 days after the close of our year ended December 31, 2018.

The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Certain information required by this Item 11 relating to remuneration of directors and executive officers and other transactions involving management is incorporated by reference herein from our Proxy Statement in connection with our 2019 Annual Meeting of Stockholders, which Proxy Statement will be filed with the SEC not later than 120 days after the close of our year ended December 31, 2018.

Other than as set forth below, the information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2019.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted average exercise price of outstanding options, warrants and rights (b) | | | | Number of securities remaining available for future issuance (excluding securities reflected in column (a)) (c) | | |

| Equity compensation plans approved by security holders (1) | 1,246,226 | | | $ | 49.19 | | | 3,936,268 | | (2) |

| Equity compensation plans not approved by security holders (3) | 483,286 | | | $ | 35.59 | | | — | | |

| Total | 1,729,512 | | | $ | 45.39 | | | 3,936,268 | | |

(1) Includes our 2017 Stock Option and Incentive Plan and our Amended and Restated 2007 Stock Option and Incentive Plan.

Outstanding restricted stock units convert to common stock without the payment of consideration.

As of December 31, 2019, 651,443 restricted stock units were outstanding.

The weighted-average exercise price of outstanding options as of such date issued under these Plans (excluding restricted stock units) was $49.19.

For more information relating to our equity compensation plans, see Note 14 to our consolidated financial statements.

(2) Includes 3,936,268 shares available for future issuance under our 2017 Stock Option and Incentive Plan.

(3) Consists of the following inducement grants made to certain executive officers upon their initial hire by the Company:

| | |

| --- | --- |

| • | one inducement grant of 499,468 shares of non-qualified stock option awards made to Patrick J. Sullivan in September 2014 (109,468 of which have been exercised as of December 31, 2019); |

| | |

| --- | --- |

| • | one inducement grant of 79,936 non-qualified stock options made to Shacey Petrovic upon being hired by us in February 2015; and |

| | |

| --- | --- |

| • | one inducement grant of 30,511 non-qualified stock options made to Michael Spears (17,161 of which have been exercised as of December 31, 2019) upon being hired by us in July 2015. |

These non-qualified stock option awards were granted outside of our Amended and Restated 2007 Stock Option and Incentive Plan in compliance with Nasdaq Listing Rule 5635.

Certain information required by this Item 12 relating to security ownership of certain beneficial owners and management is incorporated by reference herein from our Proxy Statement in connection with our 2019 Annual Meeting of Stockholders, which Proxy Statement will be filed with the SEC not later than 120 days after the close of our fiscal year ended December 31, 2018.

For information on securities authorized for issuance under equity compensation plans, see the section entitled “Market for Registrant’s Common Equity, Related Stockholders Matters, and Issuer Purchases of Equity Securities “ in Part II, Item 5, in this Annual Report on Form 10-K.

The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Certain information required by this Item 13 relating to certain relationships and related transactions, and director independence is incorporated by reference herein from our Proxy Statement in connection with our 2019 Annual Meeting of Stockholders, which Proxy Statement will be filed with the SEC not later than 120 days after the close of our year ended December 31, 2018.

The information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

PART IV

Certain information required by this Item 14 regarding principal accounting fees and services is set forth under “Principal Accounting Fees and Services” in our Proxy Statement in connection with our 2019 Annual Meeting of Stockholders, which Proxy Statement will be filed with the SEC not later than 120 days after the close of our year ended December 31, 2018.

[removed: | (A)(1) FINANCIAL STATEMENTS | | |][added: (a) Financial Statements and Schedules]

(1) and (2) The required information is set forth in Item 8—“Financial Statements and Supplementary Data.”

(3) Exhibit Index:

| | |

| --- | --- |

| | |

| Number | Description |

| | |

| 3.1 | [Eighth Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-8 (No. 333-144636) filed July 17, 2007)](http://www.sec.gov/Archives/edgar/data/1145197/000095013507004336/b66092icexv3w1.txt) |

| | |

| 3.2 | [Amended and Restated By-laws of the Registrant (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed February 26, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000081/podd-2016x02x26xexx31.htm) |

| | |

| 4.1 | [Specimen Stock Certificate (Incorporated by reference to Exhibit 4.1 to Amendment No.2 to our Registration Statement on Form S-1 (File No. 333-140694) filed April 25, 2007)](http://www.sec.gov/Archives/edgar/data/1145197/000095013507002416/b63591a2exv4w1.htm) |

| | |

| 4.2 | [Indenture, dated as of November 10, 2017, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on November 13, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000119312517340998/d492303dex41.htm) |

| | |

| 4.3 | [Form of 1.375% Convertible Senior Notes due 2024 (included in Exhibit 4.2)](http://www.sec.gov/Archives/edgar/data/1145197/000119312517340998/d492303dex41.htm) |

| | |

| 4.4 | [Indenture, dated as of September 6, 2019, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed September 9, 2019).](http://www.sec.gov/Archives/edgar/data/1145197/000119312519240972/d766132dex41.htm) |

| | |

| 4.5 | [Form of 0.375% Convertible Notes due 2026 (included in Exhibit 4.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2019, filed November 5, 2019)](http://www.sec.gov/Archives/edgar/data/1145197/000119312519240972/d766132dex41.htm) |

| | |

| 10.1* | [Insulet Corporation 2017 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed May 19, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000115752317001624/a51562187_ex101.htm) |

| | |

| 10.2* | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Incentive Stock Option Agreement for Employees (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx104_20170630x10q.htm) |

| | |

| 10.3* | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Non-Qualified Stock Option Agreement for Employees (Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx105_20170630x10q.htm) |

| | |

| 10.4* | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Restricted Stock Unit Agreement for Employees (Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/a2017planrsuformemployee_e.htm) |

| | |

| 10.5* | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Performance Vesting Restricted Stock Unit Agreement for Officers (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017, filed November 3, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000017/podd-exx101_20170930x10q.htm) |

| | |

| 10.6* | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Non-Qualified Stock Option Agreement for Directors (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx102_20170630x10q.htm) |

| | |

| 10.7* | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Restricted Stock Unit Agreement for Directors (Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx103_20170630x10q.htm) |

| | |

| 10.8* | [Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule 14A filed on April 2, 2015)](http://www.sec.gov/Archives/edgar/data/1145197/000119312515117872/d864077ddef14a.htm#toc864077_12) |

| | |

| 10.9* | [Form of Vice President Restricted Stock Unit Agreement with Performance Component under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx101_2017331x10q.htm) |

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| 10.10* | [Form of Employee Restricted Stock Unit Agreement with Performance Component under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx102_2017331x10q.htm) |

| | | |

| --- | --- | --- |

| The following consolidated financial statements of Insulet Corporation are included in Item 8 hereof: | | |

| Report of Independent Registered Public Accounting Firm | | |

| Consolidated Balance Sheets - Years ended December 31, 2018 and 2017 | | |

| Consolidated Statements of Operations - Years ended December 31, 2018, 2017 and 2016 | | |

| Consolidated Statements of Comprehensive Income (Loss) - Years ended December 31, 2018, 2017 and 2016 | | |

| Consolidated Statements of Stockholders' Equity - Years ended December 31, 2018, 2017 and 2016 | | |

| Consolidated Statements of Cash Flows - Years ended December 31, 2018, 2017 and 2016 | | |

| Notes to Consolidated Financial Statements | | |

| (A)(2) FINANCIAL STATEMENT SCHEDULES | | |

| For the years ended December 31, 2018, 2017 and 2016, Schedule II – Valuation and Qualifying Accounts | | |

| Certain schedules to the consolidated financial statements have been omitted if they were not required by Article 9 of Regulation S-X or if, under the related instructions, they were inapplicable, or the information was contained elsewhere herein. | | |

| (A)(3) EXHIBITS | | |

| The exhibits listed in the Exhibit Index following the signature page of this Form 10-K are filed herewith or are incorporated herein by reference to other SEC filings. | | |

[removed: SIGNATURES][added: SIGNATURES]

| February 25, [removed: 2019] [added: 2020] | /s/ Shacey Petrovic |

| | Chief Financial Officer (Principal Financial [removed: and Accounting] Officer) |

[removed: POWER] [added: POWER] OF ATTORNEY AND [removed: SIGNATURES][added: SIGNATURES]

[removed: Levitz,] [added: We, the undersigned officers] and [added: directors of Insulet Corporation, hereby severally constitute and appoint Shacey Petrovic and Wayde McMillan, and] each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our names in the capacities indicated below, on all amendments to this Report, and generally to do all things in our names and on our behalf in such capacities to enable Insulet Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities on February 25, [removed: 2019.][added: 2020.]

| [removed: Signature] [added: Signature] | | [removed: Title] [added: Title] |

| /s/ [removed: Michael L. Levitz] [added: Wayde McMillan] | | Chief Financial Officer |

| /s/ John [added: A.] Fallon, M.D. | | |

| John [added: A.] Fallon, M.D. | | Director |

| /s/ [removed: Dr.] Jessica Hopfield | | |

| [removed: Dr.] Jessica Hopfield | | Director |

| David [added: A.] Lemoine | | Director |

| February 25, 2020 | /s/ Wayde McMillan |

| | Wayde McMillan |

| Wayde McMillan | | (Principal Financial Officer) |

| /s/ Lauren Budden | | Chief Accounting Officer and Controller |

| Lauren Budden | | (Principal Accounting Officer) |

| /s/ James R. Hollingshead | | |

| James R. Hollingshead | | Director |

| | | |

| | | |

| | |

| --- | --- |

| February 25, 2019 | /s/ Michael L. Levitz |

| | Michael L. Levitz |

We, the undersigned officers and directors of Insulet Corporation, hereby severally constitute and appoint Shacey Petrovic and Michael L.

| Michael L. Levitz | | (Principal Financial and Accounting Officer) |

EXHIBIT INDEX

Listed and indexed below are all Exhibits filed as part of this report.

| Number | Description |

| 3.1 | [Eighth Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-8 (No. 333-144636) filed July 17, 2007)](http://www.sec.gov/Archives/edgar/data/1145197/000095013507004336/b66092icexv3w1.txt) |

| 3.2 | [Amended and Restated By-laws of the Registrant (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed February 26, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000081/podd-2016x02x26xexx31.htm) |

| 4.1 | [Specimen Stock Certificate (Incorporated by reference to Exhibit 4.1 to Amendment No.2 to our Registration Statement on Form S-1 (File No. 333-140694) filed April 25, 2007)](http://www.sec.gov/Archives/edgar/data/1145197/000095013507002416/b63591a2exv4w1.htm) |

| 4.2 | [Indenture, dated as of November 10, 2017, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on November 13, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000119312517340998/d492303dex41.htm) |

| 4.3 | [Form of 1.375% Convertible Senior Notes due 2024 (included in Exhibit 4.2)](http://www.sec.gov/Archives/edgar/data/1145197/000119312517340998/d492303dex41.htm) |

| 4.4 | [Indenture, dated as of September 13, 2016, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed September 13, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000119312516708636/d257560dex41.htm) |

| 4.5 | [Form of 1.25% Convertible Senior Notes due 2021 (included in Exhibit 4.4)](http://www.sec.gov/Archives/edgar/data/1145197/000119312516708636/d257560dex41.htm) |

| 10.1 | [Insulet Corporation 2017 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed May 19, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000115752317001624/a51562187_ex101.htm) |

| 10.2 | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Incentive Stock Option Agreement for Employees (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx104_20170630x10q.htm) |

| 10.3 | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Non-Qualified Stock Option Agreement for Employees (Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx105_20170630x10q.htm) |

| 10.4 | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Restricted Stock Unit Agreement for Employees (Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/a2017planrsuformemployee_e.htm) |

| 10.5 | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Performance Vesting Restricted Stock Unit Agreement for Officers (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017, filed November 3, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000017/podd-exx101_20170930x10q.htm) |

| 10.6 | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Non-Qualified Stock Option Agreement for Directors (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx102_20170630x10q.htm) |

| 10.7 | [Form of Insulet Corporation 2017 Stock Option and Incentive Plan Restricted Stock Unit Agreement for Directors (Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, filed August 4, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000013/podd-exx103_20170630x10q.htm) |

| 10.8 | [Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule 14A filed on April 2, 2015)](http://www.sec.gov/Archives/edgar/data/1145197/000119312515117872/d864077ddef14a.htm#toc864077_12) |

| 10.9 | [Form of Vice President Restricted Stock Unit Agreement with Performance Component under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx101_2017331x10q.htm) |

| 10.10 | [Form of Employee Restricted Stock Unit Agreement with Performance Component under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx102_2017331x10q.htm) |

| 10.11 | [Form of Executive Officer 3 Year Performance Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx103_201733110q.htm) |

| 10.12 | [Form of Vice President 3 Year Performance Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx104_2017331x10q.htm) |

| 10.13 | [Form of Executive Officer Cliff Vesting Performance Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx105_2017331x10q.htm) |

| 10.14 | [Form of International 3 Year Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx106_201733110q.htm) |

| 10.15 | [Form of Executive Officer 3 Year Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed May 9, 2017)](http://www.sec.gov/Archives/edgar/data/1145197/000114519717000009/podd-exx107_2017331x10q.htm) |

| 10.16 | [Form of International Non-Qualified Stock Option Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016, filed August 4, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000094/podd-exx101_20160630x10q.htm) |

| 10.17 | [Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016, filed August 4, 2016](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000094/podd-exx103_20160630x10q.htm)) |

| 10.18 | [Form of Vice President Incentive Stock Option Agreement (Three Year Vest) under the Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016, filed August 4, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000094/podd-exx104_20160630x10q.htm) |

| 10.19 | [Form of Non-Executive Employee Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.59 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed February 29, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000083/podd-exx1059_20151231x10k.htm) |

| 10.20 | [Form of Non-Executive Employee Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.60 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed February 29, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000083/podd-exx1060_20151231x10k.htm) |

| 10.21 | [Form of Section 16 Officer Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.61 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed February 29, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000083/podd-exx1061_20151231x10k.htm) |

| 10.22 | [Form of Section 16 Officer Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.62 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed February 29, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000083/podd-exx1062_20151231x10k.htm) |

| 10.23 | [Form of Vice President Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.63 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed February 29, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000083/podd-exx1063_20151231x10k.htm) |

| 10.24 | [Form of Vice President Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.64 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed February 29, 2016)](http://www.sec.gov/Archives/edgar/data/1145197/000114519716000083/podd-exx1064_20151231x10k.htm) |