PODD 10-K & 10-Q changes, risk factors and insider trading

Risks Related to Our Business and Industry

We currently rely on sales of our Omnipod product platform to generate nearlymost allof our revenue.

We expect to continue to derive nearly all our revenue from our Omnipod product platform. Accordingly, our ability to continue to generate revenue is highly reliant on our ability to successfully market and sell our Omnipod products to new and toexisting retaincustomers, consumerswhich who currently use the product. Our sales of Omnipod products maycould be negatively impacted by manythe factors,risks including:described throughout these Risk Factors. Failure to continue to successfully market and sell our Omnipod products or to retain and grow our customer base would have a negative impact our business, revenue, financial condition and results of operations.

A key to driving our revenue growth is the retention of a high percentage of our customers. Current uncertainty in global economic conditions, competition, higher levels of unemployment, changes in insurance reimbursement levels, and negative financial news may negatively affect product demand. If demand for our products fluctuatesdecreases as a result of economic conditions, competition, perceived inadequate customer service, product performance issues or otherwise, our ability to attract and retain customers could be harmed. The failure to retain a high percentage of our customers couldwould negatively impact our revenue growth and may have a material adverse effect on our business, financial condition, and results of operations.

As we continue to expand the number of customers we serve, driven in large part by significantincreasing demand for Omnipod 5, our international expansion and entrance into the insulin-requiring type 2 diabetes market, we expect to continue to increase our manufacturing capacity, our personnel, and the scope of our sales and marketing efforts. This growth, as well as any otherOur growth that we may experience in the future, will create challenges for our organization and may strain our managementmanagement, and operations resources, including our customer service. In order to manage future growth, we will be required to improve existing, and implement new, sales and marketing efforts, distribution channels,operations, and customer supportservice procedures. In addition, the form and function of our enterprise information technology systems will need to change and be improved upon as our business needs change. For example, we recently implemented a new enterprise resource planning system and plan to upgrade our customer relationship management system. We will also need to manage our supply chain and manufacturing effectively, including our sourcing of materials such as semiconductor chips. We may also need to partner with additional third-party suppliers to manufacture certain components of our Omnipod products and install additional manufacturing lines, including as a part of our newly constructed facility in Malaysia. A transition to new suppliers may result in additional costs or delays.resources. We may misjudge the amount of time or resources that will be required to effectively manage any anticipated or unanticipated growth in our business, or we may not be able to manufacture sufficient inventory, orand we may not be able to attract, hire, and retain sufficient personnel to meet our expanding needs. If we cannot scale our business appropriately, maintain control over expenses, manufacture our products in a cost-effective or timely manner, or otherwise adapt to anticipated and unanticipated growth, our business resources may become strained, customer experience may decline, and we may not be able to deliver our Omnipod products in a timely manner, andall of which would adversely affect our results of operations may be adversely affected.operations.

Failure to secure or retain adequate coverage or reimbursement for our products by third-party payors could adversely affect our business, revenue, financial condition, and results of operations.

We expect that sales of our Omnipod products,products which, for Omnipod 5, occur only through the pharmacy channel in the United States and for Omnipod DASH, primarily through the pharmacy channel, willwould be limited unlessif a substantial portion of their sales price is not paid for by third-party payors, including private insurance companies, health maintenance organizations, preferred provider organizations, federal and state government healthcare agencies, intermediaries, Medicare, Medicaid, and other managed care providers. In the United States, we currently have contracts establishing reimbursement for Omnipod products with national and regional third-party payors and government agencies that provide reimbursement in all 50 states. Medicare Part D Plan Sponsors may provide coverage for Omnipod products under the Medicare Part D prescription drug program, which requires negotiating with third-party payors in order to provide our product through the pharmacy channel in the United States. While we anticipate entering into additional contracts with other intermediaries and third-party payors, we cannot assurebe sure that our efforts will be successful,successful whichor couldthat limitwe thewill availabilitybe ofable Omnipodto products. In addition,maintain these contracts as they can generally be terminated by the third-party payor without cause. HealthcareFurther, marketwe initiativesanticipate inthat recently enacted and proposed legislative changes affecting Medicare, Medicaid, and the UnitedAffordable StatesCare Act may alsoimpact leadhealthcare third-partycoverage, payorswhich, toif declineimplemented orcould reduceadversely reimbursementaffect both demand for Omnipodand products. Moreover, compliance with administrative procedures or requirementspricing of third-partyour payors may result in delays in processing approvals by those payors for consumers to obtain coverage for the use of Omnipod products and for payment to be made for such use. Coverage decisions and rates of reimbursement increasingly require clinical evidence showing an improvement in user outcomes. Generating this clinical evidence requires substantial time and investment and there is no guarantee of a desired outcome.products.

As we expand our sales and marketing efforts internationally, we face additional risks associated with obtaining and maintaining reimbursement from foreign healthcare payment systems on a timely basis or at all. Guidelines for reimbursement vary from jurisdiction to jurisdiction and we may not have the needed experts or clinical evidence within a particular jurisdiction to achieve reimbursement and thereby patient access. Outside the U.S., several of our major markets have government involvement in their healthcare payment system that may impose negative pricing pressure or limit access to or reimbursement for our products. Failure to secure or retain adequate coverage or reimbursement for our products by third-party payors could limit our ability to expand internationally and have a material adverse effect on our business, revenue, financial condition, and results of operations.

Risks Related to Competition,Competition and Product Development and Intellectual Property

Our failure to compete effectively would negatively impact our revenue.revenue and results of operations.

The competitive landscape in our industry continues to undergo significant change. We compete with companies that produce insulin pumps, such as Medtronic and Tandem. In addition to the established insulin pump competitors, we compete with companies that provide products and supplies for MDI therapy. MDI therapy, including smart pens, can be substantially less expensive than pump therapy, and improvements in the effectiveness of MDI therapy may result in fewer people than we expect converting from MDI therapy to pump therapy, which could result in price pressure and decreased revenue.

Our current competitors or other companies may at any time develop additional products for the treatment of diabetes. Several companies are working to develop and market new insulin “patch” pumps, smart pens, and other methods for the treatment of insulin-dependent diabetes. If an existing or future competitor develops a product that competes with or is superior to our Omnipod products, we risk losing our position as the perceived technology leader in our field, and our revenue may decline. In addition, some of our competitors may compete by changing their pricing model or by lowering the price of their insulin delivery systems or ancillary supplies. If these competitors’ products were to gain acceptance by healthcare professionals, people with insulin-dependent diabetes, or third-party payors, we could experience pricing pressure. If prices were to fall, our results of operations could be materially adversely impacted.

The diabetes treatment market is subject to rapid technological change and product innovation. Our Omnipod products are based on our proprietary technology, but a number of companies, medical researchers, and pharmaceutical companies are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs, and other therapeutics for the monitoring, treatment, and/or prevention of insulin-dependent diabetes. In addition, well-capitalized biopharmaceutical companies like Vertex Pharmaceuticals, as well as the National Institutes of Health, and other supporters of diabetes research, are continually seeking ways to prevent, cure, or improve the treatment of diabetes. Any breakthroughs in diabetes monitoring, treatment, or prevention could reduce the potential market for our products or render our products obsolete altogether, which would significantly reduce our sales or cause our sales to grow at a slower rate than we currently expect. Further, increased availability and adoption of the GLP-1 class of drugs may delay the progression of type 2 diabetes in obese patients. In addition, even the perception that new products may be introduced, or that technological or treatment advancements could occur, could cause consumers to delay the purchase of our products or impact our stock price.

To help improve, market, and sell our Omnipod products, we have sponsored, and expect to continue to sponsor, marketclinical studies to assess various aspects of the functionality and relative efficacy of our products. The data obtained from the studies may be unfavorable to our products or may be inadequate to support satisfactory conclusions. In addition, in the future we may sponsor clinical trials to assess certain aspects of the efficacy of our products. If future clinical trials fail to support the efficacy of our current or future products, our sales may be adversely affected and we may lose an opportunity to secure clinical preference from prescribing clinicians,clinicians whichor reimbursement from third-party payors. In addition, clinical studies or articles regarding our existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than our products or that our products are not as effective or easy to use as we claim. Any of these events may have a material adverse effect on our business, financial condition, and results of operations.

WeRisks may be unableRelated to adequately protect our intellectualIntellectual property rights.Property

We may not be able to develop additional proprietary technologies that are patentable, and we cannot ensure that our pending patent applications will result in the issuance of patents to us. To protect our intellectual property, we may need to assert claims of infringement or misappropriation against third parties, as we are currently doing in several cases.parties. Any lawsuits that we initiate could be expensive, take significant time, and divert management’s attention from other business concerns. The outcome of litigation to enforce our intellectual property rightsrights, including the award of damages or other remedies (if any) is highly unpredictable. A court could determine that some or all of our asserted intellectual property rights are not infringed or misappropriated, or are invalid, or unenforceable. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially valuable. Additionally, we may provoke third parties to assert claims against us, and we may not be successful defending against these claims. The occurrence of any of these events could havelimit our ability to sell our products profitably or at all, or to effectively compete, resulting in a material adverse effect on our business, revenue, financial condition, and results of operations.

Such litigation, regardless of its outcome, could result in the expenditure of significant financial resources and the diversion of management’s time and resources. In addition, such litigation could cause negative publicity, adversely affect prospective users, cause product shipment delays, temporarily or permanently limit or prohibit us from manufacturing, marketing, or selling our current or future products, and/or require us to undertake other remedial activities such as develop non-infringing technology, make substantial payments to third parties, or enter into royalty or license agreements, which may not be available on acceptable terms or at all. If a successful claim of infringement were made against us and we could not develop non-infringing technology or license the infringed or similar technology on a timely and cost-effective basis, our revenue could decrease substantially, and we could be exposed to significant liability. A court could enter orders that temporarily, preliminarily, or permanently enjoin consumers from using our products or us from manufacturing, selling, or importing our products, or could enter an order mandating that we undertake certain remedial activities.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included in this annual report. The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs, which are subject to risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed under the headings “Risk Factors” and “Forward-Looking Statements.” Columns and rows within tables may not add due to rounding. Amounts have been calculated using actual, non-rounded figures; accordingly, amounts and percentages may not recalculate, and columns and rows within tables may not add due to rounding.

Our mission is to improvetransform the lives of people with diabetes. We are primarily engaged in the development, manufacture, and sale of our proprietary Omnipod product platform, a continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod platform primarily includes: theour most recent generation Omnipod 5,5 and its predecessorspredecessor Omnipod DASH and Classic Omnipod, all ofDASH, which eliminate the need for multiple daily injections using syringes or insulin pens or the use of pump and tubing. Omnipod 5, which builds on our Omnipod DASH mobile platform, is a tubeless automated insulin delivery system that integrates with a CGM to manage blood sugar and is fully controlled by a compatible personal smartphone or Omnipod 5 Controller. It is indicated for type 1 diabetes and, in the United States, for type 2 diabetes for ages 18 and up. The CGM is sold separately by third parties. The Pod currently integrates with Dexcom, Inc.’s G6 and G7 CGMs and with Abbott Diabetes Care, Inc.’s (“Abbott”) FreeStyle Libre 2 Plus sensor (“Libre 2 Plus”) in various markets. Omnipod DASH features a secure Bluetooth enabled Pod that is controlled by a smartphone-like PDM with a color touch screen user interface. We have been phasing-out Classic Omnipod as we launch Omnipod 5.

Our financial objective is to sustain profitable growth. To achieve this, we launched Omnipod 5 in the United States in 2022 and2022, in the United Kingdom and Germany in June2023, and August 2023, respectively. In June 2024, we launched our full market releases of Omnipod 5 in the Netherlands and France, and most recently,France in January2024. In 2025, we announced thatlaunched Omnipod 5 is now available in Italy,nine Denmark,additional Finland,countries. Norway, and Sweden. Additionally, weWe are also working on further building our international teams and advancing our regulatory, reimbursement, and market development efforts so we can bring Omnipod 5 to additionalnew international markets.

During 2024,2025, we completed participantthe enrollmentrandomized inportion of our RADIANT study in France, the United Kingdom, and Belgium,Belgium. whichThe RADIANT study is oura randomized controlled trial of Omnipod 5 with Libre 22, randomized controlled trial. Similar to the randomized control trial that we completed in the United States and France for Omnipod 5 with DexCom’s G6 CGM, the objective isdesigned to provide clinical data to support our pricing and market access initiatives as we roll out Omnipod 5 with multiple sensors across our international markets. In the U.S., we sell our products through the pharmacy channel, which expands access by improving affordable, as no upfront investment is required. We also continue to expand market access andincrease awareness of Omnipod products through our direct to consumerdirect-to-consumer advertising programs and through growing our presence in the U.S. pharmacy channel, where access to Omnipod 5 and Omnipod DASH is simpler and affordable, as no up-front investment is required.programs.

Finally, we continue to take steps to strengthen our global manufacturing capabilities. In 2024, weWe began producing product at our newly constructednew manufacturing plant in Malaysia.Malaysia Thisin 2024 and are already investing in another manufacturing plant providesin usCosta with increased capacityRica to satisfysupport our growingcontinued demand, supports our international expansion strategy, and is expected to drive higher gross margins over time.growth.

Our PodsPod areis intended to be used continuously for up to three days, after which it may be replaced with a new disposable Pod. We recently achieved a milestoneAs of 500,000December 31, 2025, we had more than 600,000 estimated active global customers using Omnipod products,users including 365,000 global customers using Omnipod 5.globally. The unique patented design of the Omnipod allows us to provide Pod therapy at a relatively low or no up-front investment in regions where reimbursement allows for it and our pay-as-you-go pricing model reduces the risk to third-party payors. As we grow our customer base, we expect to generate an increasing portion of our revenues through recurring sales of our disposable Pods, which provide recurring revenue.

Total revenue increased $374.5$636.6 million, or 22.1%,30.7%, to $2,708.1 million in 2025, compared with $2,071.6 million in 2024, compared with $1,697.1 million in 2023.2024. Constant currency revenue growth of 21.9%29.5% was primarily driven by higher sales volume largely attributable to our growing customer base and, to a lesser extent, higher price.

Revenue from the sale of Omnipod products in the U.S. increased $410.5 million, or 27.2%, in 2025 to $1,919.8 million, compared with $1,509.3 million in 2024. This increase primarily resulted from higher sales volume driven by growing our customer base. Revenue from the sale of Omnipod products in the U.S. includes $587.8$511.6 million of related party revenue in 2024,2025, compared with $473.7$587.8 million in 2023.2024. The $114.1$76.2 million increasedecrease primarily resulted from one quarter less of related party sales in the current year, partially offset by growth through the pharmacy channel. Additional information regarding our related party transactions is provided in Note 52 to our consolidated financial statements.

In 2025,2026, we expect strong U.S. revenue growth primarily driven by the benefits of our recurring revenue model and continued volume growth of Omnipod 5. Our recent type 2 indication for Omnipod 5, the launch of Omnipod 5 integrations with both Dexcom’s G7 CGM and Libre 2 Plus, and the launch our Omnipod 5 app for iPhone, are expected to contribute to an increase in our customer base.

Revenue from the sale of Omnipod products in our international markets increased $113.3$230.9 million, or 27.6%,44.1%, in 20242025 to $523.4$754.3 million, compared with $410.1$523.4 million in 2023.2024. Excluding the 0.7%4.8% favorable impact of currency exchange, the remaining 26.9%39.3% increase in revenue was primarily due to higher volumes from the launches of Omnipod 5 in the United Kingdom and Germany in the prior year, driven by our growing customer basebase, andlargely resulting from the favorableprior impactyear launches of conversions to Omnipod 5. A higher average selling price for Omnipod 55, compared with Omnipod DASH and Classic OmnipodDASH, also contributed to the revenue increase, although to a lesser extent.increase.

In 2025,2026, we expect higher International Omnipod revenue due to continued volume growth driven by new customers and higher price resulting from conversions to Omnipod 5 primarily due to the launch of Omnipod 5 in France and the Netherlands, growth from the earlier launches in Germany and the United Kingdom, and the continued roll out of Omnipod 5 in additional markets.5.

Substantially all of our Drug Delivery revenue consists of sales of pods to Amgen for use in the Neulasta® Onpro® kit, a delivery system for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy. Drug Delivery revenue increasedwas $2.9$34.1 million,million or 8.1%, toand $38.9 million in 2025 and 2024, compared with $36.0 million in 2023. This increase primarily resulted from an increase in orders from our partner, partially offset by a reimbursement from our partner to cover a portion of our increased production costs in the prior year, which did not repeat in the current year.respectively.

Cost of revenue for 20242025 increased $88.7$142.3 million, or 16.5%,22.7%, to $625.9$768.2 million, compared with $537.2$625.9 million in 2023.2024. Gross margin was 69.8%71.6% in 2024,2025, compared with 68.3%69.8% in 2023.2024. The 1.5180 pointbasis points increase in gross margin was primarily driven by pricing benefits in both the U.S. pharmacy channel and in our international markets, improved manufacturing and supply chain efficiencies, a higher average selling price, increased volume and procurement savings. These increases were partially offset by a $13.5 million charge in the prior year related to certain components utilized in Omnipod GO,OmnipodGO, which we decided not to commercialize, an $11.5 million accrual reversal during the prior year associated with the voluntary MDC notices we issued in 2022, which did not recur in the current year, and higher costs due to inflation.commercialize.

Other Income (Expense) Income,, net

Income Tax ExpenseTaxes

(25) Represents non-operatinglosses gainassociated or loss related to fair value adjustments of strategicwith debt and otherequity investments.

Adjusted EBITDA represents net income plus net interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation expense and other significant transactions or events, such as legal settlements, medical device corrections, gains (losses) on investments, and loss on extinguishment of debt, which affect the period-to-period comparability of our performances, as applicable. We present Adjusted EBITDA because management uses it as a supplemental measure in assessing our performance, and we believe that it is helpful to investors and other interested parties as a measure of our comparative performance from period to period. Adjusted EBITDA is a commonly used measure in determining business value and we use it internally to report results.

Free cash flow, a non-GAAP measure, represents the cash that we have available to pursue opportunities that we believe enhance shareholder value andflow is calculated as net cash provided by operating activities less capital expenditures. Management uses this non-GAAP measure, in addition to U.S. GAAP financial measures, to evaluate our operating results.

We believe that our current liquidity as further described below will be sufficient to meet our projected operating, investinginvesting, and debt service requirements for at least the next twelve months.

We have a $300$500 million senior secured revolving credit facility (the “Revolving Credit Facility”), which expires in 2028.2030. At December 31, 2024,2025, no amount was outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio when there are amounts of at least 35% of the aggregate Revolving Credit Facility outstanding. It also contains other customary covenants, none of which we consider restrictive to our operations. Additionally, we have a Term Loan B (“Term Loan”),B, which matures in 2031, whichthat contains covenants restricting or limiting our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness, and make acquisitions and other investments.

Additional information regarding our debt and equity is provided in Notes 1513 and 17 to the consolidated financial statements.

Our mission is to transform the lives of people with diabetes. We are primarily engaged in the development, manufacture, and sale of our proprietary Omnipod product platform, a continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod platform primarily includes our most recent generation Omnipod 5 and its predecessor Omnipod DASH, which eliminate the need for multiple daily injections using syringes or insulin pens or the use of pump and tubing. Omnipod 5, which builds on our Omnipod DASH mobile platform, is a tubeless automated insulin delivery system that integrates with a continuous glucose monitors (“CGM”) to manage blood sugar and is fully controlled by a compatible personal smartphone or Omnipod 5 Controller. It is indicated for type 1 diabetes and, in the United States, for type 2 diabetes for ages 18 and up. The CGM is sold separately by third parties. The Pod currently integrates with Dexcom, Inc.’s G6 and G7 CGMs and with Abbott Diabetes Care, Inc.’s (“Abbott”) FreeStyle Libre 2 Plus sensor (“Libre 2 Plus”) in various markets. In June 2026, we expanded compatibility with Abbott’s Freestyle Libre 3 Plus sensor (“Libre 3 Plus”) in the United States and announced the U.S. rollout of Omnipod 5 algorithm enhancements, including a lower 100mg/dL target glucose set point. Omnipod DASH features a secure Bluetooth enabled Pod that is controlled by a smartphone-like Personal Diabetes Manager (“PDM”) with a color touch screen user interface.

Our financial objective is to sustain profitable growth. To achieve this, we continue to roll out Omnipod 5 in additional countries. In February 2026, we launched Omnipod 5 and Omnipod DiscoverTM in five counties in the Middle East.East, and in July 2026, we launched Omnipod 5 and Omnipod DiscoverTM in Spain. Additionally, we are working on further building our international teams and advancing our regulatory, reimbursement, and market development efforts so we can bring Omnipod 5 to additionalmore international markets.

We continueare toalso focusfocused on our product development efforts, including choice of smartphone integration and CGM with Omnipod 5 and enhancing the customer experience through digital product and data capabilities. We are currently working to integrate Omnipod 5 with Abbott’s FreeStyle Libre 3 Plus (“Libre 3 Plus”) and developing Omnipod 6, our next generation AID product. During the first quarter of 2026, we completed a limited market release in the U.S. of Omnipod 5 algorithm enhancements, including a lower 100mg/dL target glucose set point. In addition, we completed a limited market release of the Omnipod 5 algorithm with Libre 3 Plus in the U.S. We also advanced development of our fully closed-loop AID system for people with type 2 diabetes, including recently enrolling the first participant in our EVOLVE pivotal study to support a planned 510(k) submission in 2027.

Total revenue for the three months ended MarchJune 31,30, 2026 increased $192.8$152.6 million, or 33.9%,23.5%, to $761.7$801.7 million, compared with $569.0$649.1 million for the three months ended MarchJune 31,30, 2025. Total revenue for the six months ended June 30, 2026 increased $345.3 million, or 28.4%, to $1.6 billion, compared with $1.2 billion for the six months ended June 30, 2025. Constant currency revenue growth of 30.1%22.7% and 26.2% for the three and six months ended MarchJune 31,30, 20262026, respectively, was primarily driven by higher sales volume largely attributable to our growing customer base and, to a lesser extent, higher price.

Revenue from the sale of Omnipod products in the U.S. increased $113.9$91.0 million, or 28.3%,20.1%, to $515.6$544.1 million for the three months ended MarchJune 31,30, 2026, compared with $401.7$453.2 million for the three months ended MarchJune 31,30, 2025. ThisRevenue increasefrom the sale of Omnipod products in the U.S. increased $204.8 million, or 24.0%, to $1,059.7 million for the six months ended June 30, 2026, compared with $854.9 million for the six months ended June 30, 2025. The increases for both the three and six months ended June 30, 2026 primarily resulted from higher sales volume driven by growing our customer base.

As discussed in note 1 to our consolidated financial statements, revenue from the sale of Omnipod products in the U.S. for the three months ended March 31, 2025 included $148.5$178.6 million and $327.1 million of sales to a related party.party for the three and six months ended June 30, 2025, respectively.

Revenue from the sale of Omnipod products in our international markets increased $90.5$66.0 million, or 59.4%,35.5%, to $242.9$251.8 million for the three months ended MarchJune 31,30, 2026, compared with $152.3$185.8 million for the three months ended MarchJune 31,30, 2025. Excluding the 14.2%2.7% favorable impact of currency exchange, the remaining 45.2%32.9% increase in revenue was primarily due to higher volumes from our growing customer base, and to a lesser extent, a higher average selling price for Omnipod 5, compared with Omnipod DASH.

Substantially all of our Drug Delivery revenue consists of sales of pods to Amgen for use in the Neulasta® Onpro® kit, a delivery system for Amgen’s Neulasta to help reduce the risk of infection after intense chemotherapy. Drug Delivery revenue was $3.3$5.8 million and $14.9$10.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $9.1 million and $25.1 million for the six months ended June 30, 2026 and 2025, respectively. The $4.4 million and $16.0 million decreases for the three and six months ended June 30, 2026, respectively, were driven by lower order volumes from our partner.

Cost of revenue for the three months ended MarchJune 31,30, 2026 increased $72.7$42.3 million, or 45.5%,21.5%, to $232.7$239.1 million, compared with $159.9$196.9 million for the three months ended MarchJune 31,30, 2025. Gross margin was 69.5%70.2% for the three months ended MarchJune 31,30, 2026, compared with 71.9%69.7% for the three months ended MarchJune 31,30, 2025. The 24050 basis point decreaseincrease in gross margin was primarily driven by animproved increasemanufacturing in inventory excess and obsolescence reserve as we transition to our new Pod configurationsefficiencies and, to a lesser extent, increased volumes from our growing customer base. These increases in gross margin were partially offset by higher warranty costs resulting from the voluntary medical device correction we issued in MarchMay 2026 relateddiscussed tounder specific“Factors lotsAffecting ofOperating Omnipod 5 Pods. These decreases in gross margin were partially offset by improved manufacturing efficiencies and a higher average selling price.Results.”

We estimate the voluntary medical device correction and related costs will be approximately $30 million, more than half of which we expect to incur in 2026, with the remainder expected to be incurred in 2027. The latter relates to incremental manual quality inspections expected to be performed until automated inspection systems are implemented. We do not expect tariffs to have a significant impact on our gross margin in 2026; however, the elimination of the current exemption for certain medical devices would have a material impact on our results of operations in future years.

Research and development expenses for the three months ended MarchJune 31,30, 2026 increased $30.1$14.7 million, or 50.6%,20.0%, to $89.7$88.1 million, compared with $59.6$73.4 million for the three months ended MarchJune 31,30, 2025. Research and development expenses as a percent of revenue was 11.8%11.0% and 10.5%11.3% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Research and development expenses for the six months ended June 30, 2026 increased $44.8 million, or 33.7%, to $177.8 million, compared with $133.0 million for the six months ended June 30, 2025. Research and development expenses as a percent of revenue was 11.4% and 10.9% for the six months ended June 30, 2026 and 2025, respectively. The increase in research and development expenses in both the three and six months ended June 30, 2026 were primarily due to continued investment in our Omnipod and pipeline products, including Omnipod 6, our next generation AID system, and a fully closed-loop AID system for type 2 diabetes and Omnipod 6, our next generation AID system.diabetes.

Interest expense increaseddecreased $5.5$6.1 million to $14.7$13.5 million for the three months ended MarchJune 31,30, 2026, compared with $9.2$19.6 million for the three months ended MarchJune 31,30, 2025 primarily due to Term Loan B refinancing fees in prior year which did not recur in the current year. Interest expense of $28.2 million for the six months ended June 30, 2026 was level with interest expense for the six months ended June 30, 2025 as the lack of refinancing fees was offset by higher expense resulting from the issuance of 6.5% senior unsecured notes in March 2025 and the renewal of interest rate swaps at higher rates in April 2025.

Interest income decreased $5.3$6.5 million to $4.9$3.6 million for the three months ended MarchJune 31,30, 2026, compared with $10.3$10.1 million for the three months ended MarchJune 31,30, 2025. Interest income decreased $11.8 million to $8.5 million for the six months ended June 30, 2026, compared with $20.3 million for the six months ended June 30, 2025. The decreasedecreases in interest income wasfor both the three and six months ended June 30, 2026 were driven by lower average cash balances and, to a lesser extent, lower average interest rates.

During three months ended MarchJune 31,30, 2025, the Companywe repurchased $125.2$294.7 million in principal ($124.5$293.1 million net of issuance costs) of Convertible Senior Notes for $162.5$377.6 million in cash, which resulted in a $39.5$84.4 million loss on extinguishment. We repurchased $419.9 million in principal ($417.6 million net of issuance costs) of Convertible Senior Notes for $541.5 million in cash during six months ended June 30, 2025, which resulted in a $123.9 million loss on extinguishment.

Our effective tax rate was 19.4%20.0% and 19.7% for the three and six months ended MarchJune 31,30, 2026, respectively, compared with 26.4%20.8% and 24.3% for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The decreasedecreases in the effective tax rate wasin both periods were primarily due to non-deductible charges from the extinguishment of convertible debt duringin the threeprior months ended March 31, 2025,year, as well as changes in the distributionjurisdictional ofprofit earnings among the jurisdictions in which we operate.mix.

The Organization for Economic Co-operation and Development (“OECD”) and participating countries continue to advance the implementation of a 15% global minimum corporate tax (“Pillar Two”). Certain jurisdictions in which we operate, including the Netherlands and the United Kingdom, enacted legislation implementing aspects of Pillar Two during 2025. In January 2026, the OECD issued additional administrative guidance introducing a “side-by-side” framework applicable to U.S.-parented multinational groups, which is expected to reduce the extent to which certain Pillar Two charging provisions, including the Income Inclusion Rule and the Undertaxed Profits Rule, apply. Notwithstanding this guidance, we remain subject to Qualified Domestic Minimum Top-Up Taxes enacted by certain jurisdictions. We expect ongoing legislative developments and additional administrative guidance related to Pillar Two throughout 2026. Pillar Two did not have a material impact on our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026; however, we continue to monitor developments and evaluate the potential impact of this legislation on future periods.

During 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, changes to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation includes multiple effective dates for various provisions through 2027. Our effective tax rate for 2026 is affected by changes to the allocation of research and development expenses for purposes of the Foreign-Derived Deduction-Eligible Income (“FDDEI”), as well as other international tax reforms enacted under OBBBA. The effects of the legislation were not material to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026.

(2) Represents estimated warranty and related costs associated with the voluntary medical device correction in March 2026, which are included in cost of revenue.MDCs. Refer to note“Factors 7Affecting toOperating the consolidated financial statementsResults” for additional information.

Net cash provided by operating activities of $113.8$202.2 million for the threesix months ended MarchJune 31,30, 2026 was primarily attributable to net income, as adjusted for depreciation and amortization, stock-based compensation expense, and deferred income taxes, partially offset by a $32.3$94.5 million working capital outflow. The working capital outflow was driven by a $69.3 million decrease in accrued expenses and other liabilities and a $30.6$76.9 million increase in accounts receivable, a $34.9 million increase in inventories, and a $28.1 million increase in prepaid expenses and other assets, partially offset by a $71.4$39.9 million increase in accounts payable. The decreaseincrease in accruedaccounts expenses and other liabilitiesreceivable was primarily driven by the annual payouttiming of cashdistributor bonuses for performanceorders in the priorUnited year.States. The increasesincrease in inventories was primarily driven by a planned inventory build to satisfy our growing demand. The increase in prepaid expenses and other assets was primarily driven by receivables from our contract manufacturer. The increase in accounts receivable and payable werewas primarily due to an increase in sales driven by our growing customer base and the timing of payments, respectively.payments.

Net cash used in investing activities was $27.7$65.1 million for the threesix months ended MarchJune 31,30, 2026, compared with $15.6$38.9 million for the threesix months ended MarchJune 31,30, 2025.

Capital Spending—Capital expenditures were $24.3$56.8 million for the threesix months ended MarchJune 31,30, 2026, compared with $12.3$30.9 million for the threesix months ended MarchJune 31,30, 2025. The $12.0$25.9 million increase primarily related to the purchase of machinery, equipment and tooling for our existing manufacturing facilities and initial investment in our Costa Rica manufacturing plant. We expect capital expenditures for 2026 to increase compared with 2025 to support our continued global manufacturing expansion plans. We expect to fund our capital expenditures using existing cash and financing.

Net cash used in financing activities was $319.9$315.9 million for the threesix months ended MarchJune 31,30, 2026, compared with net cash providedused byin financing activities of $277.7$65.8 million for the threesix months ended MarchJune 31,30, 2025.

Debt Issuance and Repayments—During the threesix months ended MarchJune 31,30, 2026, we repaid $9.1 million of debt, compared with payments of $26.4 million during the six months ended June 30, 2025. Additionally, during the six months ended June 30, 2025, we received net proceeds of $440.7 million from the issuance of Senior Unsecured Notes and used the proceeds along with proceeds of $23.1$75.7 million from the unwinding the related capped call options to partially fund the $163.9$541.5 million repurchase of a portion of our Convertible Senior Notes. During the six months ended June 30, 2025, we also received proceeds of $15.5 million from the refinancing of Term Loan B.

Proceeds and Repayments from Secured Borrowing—During the threesix months ended MarchJune 31,30, 2025, we received $15.4$36.1 million of cash advances from a third-party to whom we outsourced our insurance claim submissions process in a certain country.country Additionally, weand repaid $13.4$32.6 million of cash advances during the three months ended March 31, 2025.advances.

PaymentProceeds offrom TaxesOption forExercises—Proceeds Restrictedfrom Stockoption Net Settlements—Payments for taxes related to net restricted and performance stock unit settlementsexercises were $15.7$0.5 million and $21.2$12.6 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The $5.5$12.1 million decrease was primarily driven by taxfewer paymentsoption relatedexercises resulting from our lower stock price, and to thea vestinglesser ofextent, performanceoption andexercises restricted stock units forby a former executive in the prior year.

Repurchase of Common Stock—During the threesix months ended MarchJune 31,30, 2026,2026 and 2025, we paidrepurchased common stock for an aggregate purchase price of $300.0 million toand repurchase$30.1 commonmillion, sharesrespectively. Repurchases during the six months ended June 30, 2026 were made pursuant to accelerated share repurchase agreements discussed under “Capitalization—Share Repurchase Program.”

Free cash flow was $89.5$145.4 million for the threesix months ended MarchJune 31,30, 2026, compared with $51.6$229.4 million for the threesix months ended MarchJune 31,30, 2025. The $38.0$83.9 million increasedecrease in free cash flow primarily resulted from an increase in working capital outflow and an increase in capital expenditures, partially offset by an increase in operating income as adjusted for depreciation, amortization, and stock-based compensation expense, and a decrease in working capital outflow, partially offset by an increase in capital expenditures.expense.

We have a $500 million senior secured revolving credit facility (the “Revolving Credit Facility”), which expires in 2030. At MarchJune 31,30, 2026, no amount was outstanding under the Revolving Credit Facility. The Revolving Credit Facility contains a covenant to maintain a specified leverage ratio when there are amounts of at least 35% of the aggregate Revolving Credit Facility outstanding. It also contains other customary covenants, none of which are considered restrictive to our operations. Additionally, we have a Term Loan B, which matures in 2031, that contains covenants restricting or limiting our ability to incur additional indebtedness, make asset dispositions, create or permit liens, sell, transfer or exchange assets, guarantee certain indebtedness, and make acquisitions and other investments.

In February 2026, the Board of Directors extended our $125 million share repurchase program to December 31, 2027 and approved an additional $350 million in repurchases of common stock. Additionally, in February 2026, we entered into accelerated share repurchase agreements (“ASRs”) to repurchase $300 million of our common stock, which were completed by March 31, 2026. During the threesix months ended MarchJune 31,30, 2026, we repurchased approximately 1.25 million shares of common stock.

In 2026, we entered into a purchase agreement with NXP USA, Inc. pursuant to which we are committed to purchasing semi-conductor chips for approximately $96.9$77.4 million as of MarchJune 31,30, 2026.

•our ability to maintain and grow our customer basebase, including through expansion to additional international markets;

•our failure or that of our contract manufacturer or component suppliers to comply with the U.S. Food and Drug Administration’s quality system regulationsregulations, our or our contract manufacturer's ability to successfully implement quality inspection systems, or other manufacturing difficulties;

•potential adverse impacts resulting from a recall, or discovery of product safety issues, including potential adverse impacts relating to our recent medical device correctioncorrections;