PODDInsulet Corporation

We exercise significant judgment generally recognize revenue when control of our products is transferred to customers in an amount that reflects the net consideration we determine variable consideration adjustments. As discussed in Note 2 expect to our consolidated financial statements, we receive. Our products are subject to pricing rebates on pricing programs under arrangements with managed care organizations, such as including pharmacy benefit managers, governmental payors, and third-party commercial payors, primarily in the United States. Reductions These rebates represent amounts owed pursuant to our revenues contractual agreements or legal requirements after the product is dispensed to a benefit plan participant. Provisions for rebates on products sold through our distributors under these rebates, collectively referred to as pharmacy benefits rebates, are treated as variable consideration and are recorded as a reduction to revenue using the most significant component of variable consideration. In addition, pharmacy rebates are most expected value method. Although we record a rebate provision at risk for significant adjustment because of the time delay between of sale, the recording of the provision when revenue is recognized and its ultimate settlement, an interval that related rebate payments are generally ranges from made 30 to 90 days, but can last days thereafter and, in certain cases, may extend up to one year. Our estimates for As a result of this timing difference, revenue recognized in a given period may include adjustments to rebate provisions recorded in prior periods. Estimates of pharmacy rebates are developed based on historical experience, revenue growth, sales trends, levels of inventory in the distribution channel lag, contract amendments channel, and trends. Pharmacy rebates contractual terms. A significant portion of our rebate provisions relate to sales of the Company’s products in the United States. United States pharmacy rebate provisions charged against gross sales amounted to $654.7 million, $452.7 million, and $367.3 million, and $175.2 million in 2025, 2024, and 2023, and 2022, respectively. When To the extent that actual pharmacy rebate settlements payments differ from our estimates, we adjust revise our estimates, which affects reported assumptions and record the resulting adjustments to revenue in the period that in which such variances differences become known.

As we continue to expand the number of customers we serve, driven in large part by significant increasing 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 other Our growth that we may experience in the future, will create challenges for our organization and may strain our management 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, management, operations, and customer support 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. service 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, or and 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, and all of which would adversely affect our results of operations may be adversely affected. operations.

The Company’s Drug Delivery product line includes sales of a modified version of the Pod to a pharmaceutical and biotechnology companies company who use the Company’s technology as a delivery method for their drugs. For the majority of this product line, revenue is recognized, with an associated unbilled receivable, as the The product is produced pursuant to the customer’s firm purchase commitments. The commitments, the Company has an enforceable right to payment for performance completed to date date, and the inventory has no alternative use to the Company. The Company recognizes Accordingly, revenue is recognized over time using a blend of percentage-of-completion method, measured based on costs incurred to date relative to total estimated costs at completion and time incurred to date relative to total production time to measure progress toward completion, which results in the satisfaction recognition of its performance obligations. The Company believes that both incurred cost and elapsed time reflect the value generated, which best depicts the transfer of control to the customer. Contract costs include third-party costs as well as an allocation of manufacturing overhead. associated unbilled receivable.