Insulet Annual Report 2016

Plain-text annual report

INSULET CORP FORM 10-K (Annual Report) Filed 02/28/17 for the Period Ending 12/31/16 Address Telephone CIK Symbol SIC Code 600 TECHNOLOGY PARK SUITE 200 BILLERICA, MA 01821 978-600-7000 0001145197 PODD 3841 - Surgical and Medical Instruments and Apparatus Industry Medical Equipment, Supplies & Distribution Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33462INSULET CORPORATION(Exact name of Registrant as specified in its charter)Delaware 04-3523891(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) 600 Technology Park Drive, Suite 200Billerica, Massachusetts 01821(Address of Principal Executive Offices) (Zip Code)Registrant’s telephone number, including area code:(978) 600-7000Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, $0.001 Par Value Per Share The NASDAQ Stock Market, LLCPreferred Stock Purchase Rights The NASDAQ Stock Market, LLCSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted 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 submitand post such files). Yes x No ¨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 ofregistrant’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. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o (Do not check if a smaller reporting company)Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No xThe 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 asreported on The NASDAQ Global Market on June 30, 2016 was approximately $1.7 billion .The number of shares outstanding of each of the registrant’s classes of common stock as of February 21, 2017 :Title of Class Shares OutstandingCommon Stock, $0.001 Par Value Per Share 57,651,012Preferred Stock Purchase Rights —DOCUMENTS INCORPORATED BY REFERENCEThe registrant intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2016 . Portions of such proxystatement are incorporated by reference into Part III of this Annual Report on Form 10-K.TABLE OF CONTENTS PART I Item 1Business3Item 1ARisk Factors14Item 1BUnresolved Staff Comments34Item 2Properties34Item 3Legal Proceedings35Item 4Mine Safety Disclosures35 PART II Item 5Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities36Item 6Selected Financial Data37Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations39Item 7AQuantitative and Qualitative Disclosures About Market Risk47Item 8Financial Statements and Supplementary Data47Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure86Item 9AControls and Procedures86Item 9BOther Information88 PART II I Item 10Directors, Executive Officers and Corporate Governance88Item 11Executive Compensation88Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters88Item 13Certain Relationships and Related Transactions, and Director Independence88Item 14Principal Accounting Fees and Services88 PART I V Item 15Exhibits, Financial Statement Schedules89Item 16Form 10-K Summary89 SIGNATURES89 EXHIBIT INDEX91Table of ContentsPART IItem 1. BusinessOverviewWe are primarily engaged in the development, manufacturing and sale of our proprietary Omnipod ® Insulin Management System (the“Omnipod System”), an innovative, discreet and easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes. TheOmnipod System features a small, lightweight, self-adhesive disposable tubeless Omnipod device which is worn on the body for approximately threedays at a time and its wireless companion, the handheld Personal Diabetes Manager (“PDM”). Conventional insulin pumps require people withinsulin-dependent diabetes to learn to use, manage and wear a number of cumbersome components, including up to 42 inches of tubing. Incontrast, the Omnipod System features only two discreet, easy-to-use devices that eliminate the need for a bulky pump, tubing and separate bloodglucose meter, provides for virtually pain-free automated cannula insertion, communicates wirelessly and integrates a blood glucose meter. Webelieve that the Omnipod System’s unique proprietary design and features allow people with insulin-dependent diabetes to manage their diabeteswith unprecedented freedom, comfort, convenience, and ease.We began commercial sale of the Omnipod System in the United States in 2005. We sell the Omnipod System in the United States throughdirect sales to customers or through our distribution partners. The Omnipod System is currently available in multiple countries in Europe, Canadaand Israel.In addition to using the Omnipod for insulin delivery, we also partner with global pharmaceutical and biotechnology companies to tailor theOmnipod System technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas.In June 2011, we acquired Neighborhood Holdings, Inc. and its wholly-owned subsidiaries (collectively, “Neighborhood Diabetes”). ThroughNeighborhood Diabetes, we provided customers with blood glucose testing supplies, traditional insulin pumps, pump supplies and pharmaceuticals,processing claims as either durable medical equipment or through pharmacy benefits. In February 2016, we sold Neighborhood Diabetes to LibertyMedical LLC ("Liberty Medical"). Additional information regarding the sale of Neighborhood Diabetes is provided in note 3 to the consolidatedfinancial statements included under Item 8 of this Form 10-K.Insulet Corporation is a Delaware corporation formed in 2000. Our principal offices are located at 600 Technology Park Drive, Suite 200,Billerica, Massachusetts 01821, and our telephone number is (978) 600-7000. Our website address is http://www.insulet.com . We make available,free of charge, on or through our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxystatements and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, asamended, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.The information on our website is not part of this Annual Report on Form 10-K for the year ended December 31, 2016 .Our MarketDiabetes is a chronic, life-threatening disease for which there is no known cure. Diabetes is caused by the body’s inability to produce oreffectively utilize the hormone insulin. This inability prevents the body from adequately regulating blood glucose levels. Glucose, the primary sourceof energy for cells, must be maintained at certain concentrations in the blood in order to permit optimal cell function and health. In people withdiabetes, blood glucose levels fluctuate between very high levels, a condition known as hyperglycemia, and very low levels, a condition calledhypoglycemia. Hyperglycemia can lead to serious short-term complications, such as confusion, vomiting, dehydration and loss of consciousnessand long-term complications, such as blindness, kidney disease, nervous system disease, occlusive vascular diseases, stroke and cardiovasculardisease, or death. Hypoglycemia can lead to confusion, loss of consciousness or death.3Table of ContentsDiabetes is typically classified as either Type 1 or Type 2:•Type 1 diabetes is characterized by the body’s nearly complete inability to produce insulin. It is frequently diagnosed during childhood oradolescence. Individuals with Type 1 diabetes require daily insulin therapy, typically administered via injections or continuous infusionthrough pump therapy, to survive.•Type 2 diabetes, the more common form of diabetes, is characterized by the body’s inability to either properly utilize insulin or produceenough insulin. Historically, Type 2 diabetes has occurred in later adulthood, but its incidence is increasing among the youngerpopulation, due primarily to increasing childhood obesity. Initially, many people with Type 2 diabetes attempt to manage their diabeteswith improvements in diet, exercise and/or oral medications. As their diabetes advances, some patients progress to multiple drugtherapy, which often includes insulin therapy.Throughout this Annual Report on Form 10-K, we refer to both Type 1 diabetes and insulin-requiring Type 2 diabetes as insulin-dependentdiabetes.In addition to the diabetes market space, we have partnered with multiple pharmaceutical and biotechnology companies that utilize acustomized form of the Omnipod System to deliver a drug over a specified interval of time, at a certain administered volume.Managing DiabetesDiabetes Management ChallengesDiabetes is often frustrating and difficult for patients to manage. Blood glucose levels can be affected by the carbohydrate and fat content ofmeals, exercise, stress, illness or impending illness, hormonal releases, variability in insulin absorption and changes in the effects of insulin on thebody. For people with insulin-dependent diabetes, many corrections, consisting of the administration of additional insulin or ingestion of additionalcarbohydrates, are needed throughout the day in order to maintain blood glucose levels within normal ranges. Achieving this result can be verydifficult without multiple daily injections of insulin or the use of continuous subcutaneous insulin infusion (“CSII”) therapy. Patients attempting tocontrol their blood glucose levels tightly to prevent the long-term complications associated with fluctuations in blood glucose levels are at greater riskfor overcorrection and the resultant hypoglycemia. As a result, many patients have difficulty managing their diabetes optimally. Additionally, the timespent in managing diabetes, the swings in blood glucose levels and the fear of hypoglycemia can all render diabetes management overwhelming topatients and their families.Current Insulin TherapyPeople with insulin-dependent diabetes need a continuous supply of insulin, known as basal insulin, to provide for background metabolicneeds. In addition to basal insulin, people with insulin-dependent diabetes require supplemental insulin, known as bolus insulin, to compensate forcarbohydrates ingested during meals or snacks or for a high blood glucose level.There are three primary types of insulin therapy practiced today: conventional therapy; multiple daily injection (“MDI”) therapy using syringes orinsulin pens; and CSII therapy using insulin pumps. Both MDI and CSII therapies are considered intensive insulin management therapies.Many healthcare professionals believe that intensive insulin management therapies are superior to conventional therapies in delaying theonset and reducing the severity of diabetes-related complications. As a result, we believe that the use of intensive insulin management therapieshas significantly expanded over the past decade, and that many Type 1 patients manage their diabetes using an intensive insulin managementtherapy. A significantly smaller percentage of people with insulin-requiring Type 2 diabetes manage their diabetes using an intensive insulinmanagement therapy.4Table of ContentsThe Omnipod SystemThe Omnipod Insulin Management System is an innovative continuous insulin delivery system that provides all the proven benefits of CSIItherapy in a way no conventional insulin pump can. The Omnipod System's innovative design and features allows people with insulin-dependentdiabetes to live their life, and manage their diabetes, with unprecedented freedom, comfort, convenience, and ease.The long-term health benefits of better blood glucose control are well known. Maintaining near-normal blood glucose levels can help peoplewith insulin-dependent diabetes live a longer, healthier life with fewer diabetes-related complications. The Omnipod System also has many practical,everyday benefits, including convenience, freedom, flexibility and ease of use.Continuous insulin delivery at preset rates eliminates the need for injections and the interruptions that come with them. In addition, with theOmnipod System, insulin delivery can be changed with the press of a button to adapt to snacks or unexpected changes in daily routine.The Omnipod System works much like the pancreas of a person without diabetes by delivering insulin in two ways:•A small, constant background supply of insulin (called a basal rate) is delivered automatically at a programmed rate, all day and night.•An extra dose of insulin (called a bolus) can be delivered when a patient needs it to match the carbohydrates in a meal or snacks or tocorrect high blood glucose.The Omnipod System is a discreet two part design, the Omnipod device ("Omnipod" or "Pod") and the PDM, that eliminates the need for theexternal tubing required with conventional pumps.5Table of Contents•The Pod is a small, lightweight, self-adhesive device that the patient fills with insulin and wears directly on the body. The Pod deliversprecise, personalized doses of insulin into the body through a small flexible tube (called a cannula), based on instructions that the patientprograms into the Pod's wireless companion, the PDM.•The PDM is a wireless, handheld device that programs the Pod with the patient's personalized insulin-delivery instructions, wirelesslymonitors the Pod's operation and includes a FreeStyle ® blood glucose meter.We have designed the Omnipod System to fit within the normal daily routines of patients. The Omnipod System consists of just two devices, asopposed to up to seven for conventional insulin pumps. As a result, the Omnipod System is easy for patients to use, which reduces the trainingburden on healthcare professionals. We believe that the Omnipod System’s overall ease of use makes it very attractive to people with insulin-dependent diabetes. We also believe that the Omnipod System’s ease of use and substantially lower training burden helps to redefine whichdiabetes patients are appropriate for CSII therapy, enabling healthcare professionals to prescribe CSII therapy to a broader pool of patients.The Omnipod System’s unique patented design and proprietary manufacturing process have enabled us to provide CSII therapy at a relativelylow up-front investment compared to conventional insulin pumps. We believe that our pricing model reduces the risk of investing in CSII therapy forthird-party payors and makes CSII therapy much more accessible for people with insulin-dependent diabetes.In 2016 there were three publications in peer-reviewed, scientific journals demonstrating the clinical and quality of life benefits associated withuse of the Omnipod System. Two publications reported results of a retrospective study of patients with Type 1 and Type 2 diabetes. The studydemonstrated clinically meaningful and statistically significant improvements in HbA1c (an important measure of blood glucose control), reduction intotal daily dose of insulin and reduction in the frequency and severity of self-reported hypoglycemic episodes after three months of Omnipod Systemuse compared to previous treatment with either multiple daily injections or traditional tubed insulin pumps. The third publication reported results of asecond study that surveyed current adult Omnipod System users of which the majority reported positive changes in quality of life including perceivedcontrol over their diabetes, reduced diabetes distress, improved overall well-being and sense of hypoglycemic safety since initiating treatment withthe Omnipod System. In addition, the majority of patients also reported significant improvement in glycemic control with more than one-thirdreporting a decrease in severe hypoglycemic episodes.Research and DevelopmentOur current research and development efforts are primarily focused on the development of mobile applications for the Omnipod System,including:•Omnipod Dash Insulin Management System. Development of a secured Bluetooth Low Energy enabled Pod and PDM with a touch screencolor user interface supported by web application and smart phone connectivity.•Omnipod Horizon Automated Glucose Control. Development of a hybrid closed loop control system that will utilize the Dash mobileplatform. Our Pod will communicate with a continuous glucose monitor and help control insulin delivery utilizing an algorithm located on thePod.•Concentrated Insulin Delivery. Development to support the use of concentrated insulins for Type 1 and Type 2 patients with higher insulin-requirements, utilizing the same form factor as our existing Pod.In addition to insulin delivery, we continue to work with multiple pharmaceutical and biotechnology companies on alternative uses for ourOmnipod System technology as a delivery platform for a range of different pharmaceuticals.Manufacturing and Quality AssuranceWe believe a key contributing factor to the overall attractiveness of the Omnipod System is the disposable Omnipod continuous insulin deliverydevice. In order to manufacture sufficient volumes and achieve a cost-effective per unit production price for the Omnipod, we have designed theOmnipod to be manufactured through a semi-automated process.6Table of ContentsWe are currently producing our devices on varying degrees of semi-automated manufacturing lines at a facility in China, operated by asubsidiary of Flex Ltd. (formerly Flextronics International Ltd.) (“Flex”). We purchase our devices pursuant to our agreement with Flex. The currentterm of the agreement expires in September 2021 and is subject to an automatic renewal thereafter, unless otherwise canceled by the parties underthe contract terms. The contract may be terminated by either party upon compliance with certain advance written notice provisions that are intendedto provide the parties with sufficient time to make alternative arrangements.We continue to invest in our supply chain operations to increase manufacturing capacity and reduce the per-unit production cost for theOmnipod System. As part of our investment strategy, in 2016 we announced our plan to establish a highly automated manufacturing operation in theUnited States and expect to begin production through this operation in 2019. In December 2016, we entered into an agreement to purchase propertyfor the planned facility in Acton, Massachusetts for a total purchase price of $9.3 million. Of the total purchase price, $0.5 million was paid as ofDecember 31, 2016 and the remaining $8.8 million was subsequently paid upon closing in February 2017. The new U.S. operation is intended toprovide manufacturing redundancy and additional production capacity to support growth and new product launches. The new operation will enablefurther improvements of manufacturing reliability and the lowering of production costs.We rely on outside vendors for the supply of components, sub-assemblies, and various services used in the manufacture of the OmnipodSystem. Although a number of these suppliers are sole-source suppliers, we continue to focus on identifying alternate supply sources and duplicatecustom tooling.Our outside vendors produce the components to our specifications and they are audited periodically by our Quality Assurance Department toensure conformity with the specifications, policies and procedures for the Omnipod System. Our Quality Assurance Department also inspects andtests the Omnipod System at various steps in the manufacturing cycle to facilitate compliance with our stringent specifications. We have receivedapproval of our Quality Management System from the BSI Group London, U.K., an accredited Notified Body for CE Marking and the InternationalStandards Organization (“ISO”). Processes utilized in the manufacture, test and release of the Omnipod System have been verified and validated asrequired by the U.S. Federal Food and Drug Administration ("FDA") and other regulatory bodies. As a medical device manufacturer and distributor,our manufacturing facilities and the facilities of our suppliers are subject to periodic inspection by the FDA, our notified body and certaincorresponding state agencies.Intellectual PropertyWe believe that to maintain a competitive advantage, we must develop and preserve the proprietary aspect of our technologies. We rely on acombination of copyright, patent, trademark, trade secret and other intellectual property laws, non-disclosure agreements and other measures toprotect our proprietary rights. Currently, we require our employees, consultants and advisors to execute non-disclosure agreements in connectionwith their employment, consulting or advisory relationships with us, where appropriate. We also require our employees, consultants and advisorswho we expect to work on our current or future products to agree to disclose and assign to us all inventions conceived during their work with us thatare developed using our property or which relate to our business. Despite any measures taken to protect our intellectual property, unauthorizedparties may attempt to copy aspects of the Omnipod System or to obtain and use information that we regard as proprietary.Patents. As of December 31, 2016 , we had obtained 23 issued United States patents with expiration dates ranging from 2020 through2034, and had 32 additional pending United States patent applications. We believe it will take up to four years, and possibly longer, for the mostrecent of these U.S. patent applications to result in issued patents. We are also seeking patent protection for our proprietary technology in othercountries and regions throughout the world. The issued patents and pending patent applications cover, among other things:•the basic architecture of the Omnipod System, including the pump and the PDM;•the Omnipod shape memory alloy drive system;•the Omnipod System cannula insertion system; •communication features between system components for the Omnipod System and next generation products;•software for controlling the Omnipod System and next generation products; and•various novel aspects of the Omnipod System, potential future generations of Omnipod Systems, and other mechanisms for the deliveryof pharmaceuticals.7Table of ContentsTrademarks. We have registered various trademarks associated with our business, including INSULET, OMNIPOD, DASH and theOMNIPOD design with the United States Patent and Trademark Office on the Principal Register and in other appropriate jurisdictions.Markets and Distribution MethodsWe sell our Omnipod System through a combination of direct sales representatives and independent distributors in both the United States andoutside of the United States. Independent distributors represent approximately 40% of our total revenue in the United States. We sell the OmnipodSystem in certain countries in Europe through our independent distributor, Ypsomed Distribution AG ("Ypsomed"). Our exclusive distributionagreement with Ypsomed expires in mid-2018.Comprehensive approach across three interrelated constituencies. Our sales and marketing effort for the Omnipod System is focused onpatient retention and growing patient, clinician and payor demand for the Omnipod System. We have a uniform sales and marketing approach,aligned across patients, physicians and providers, to capitalize on the unique benefits of our Omnipod System technology. We have three areas offocus:•First, build patient awareness about the features and benefits that the Omnipod System provides.•Second, build physician support by increasing the clinical evidence that clearly demonstrates the benefits that the Omnipod Systemprovides.•Third, provide payors with the clinical and economic justification of why the Omnipod System is a greater benefit for the patients whom theyinsure.Training. We believe that patient training is critical to ensure successful outcomes and retain patients on the Omnipod System. We havestreamlined our new patient training by developing improved online resources, a standardized approach as well as increasing our field clinician teamto directly train our new patients.Customer Support. We seek to provide our customers with high quality customer support, from product ordering to insurance investigation,order fulfillment and ongoing support. We have integrated our customer support systems with our sales, reimbursement and billing processes andalso offer support by telephone and through our website to provide customers with seamless and reliable customer support.CompetitionThe medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and othermarket activities of industry participants. The majority of our patients have previously undertaken MDI therapy, which is substantially less expensivethan CSII therapy. The Omnipod System competes with a number of existing insulin delivery devices as well as other methods for the treatment ofdiabetes. Medtronic MiniMed, a division of Medtronic, has historically held the majority share of the conventional insulin pump market in the UnitedStates. Other significant competitors in the United States are Animas Corporation, a division of Johnson & Johnson, and Tandem Diabetes Care,Inc. We also compete with drug delivery device companies such as West Pharmaceuticals.Several of our competitors are large, well-capitalized companies with significantly more market share and resources than we have. They areable to spend aggressively on product development, marketing, sales and other product initiatives. Some of these competitors have:•significantly greater name recognition;•established relations with healthcare professionals, customers and third-party payors;•larger and more established sales forces and distribution networks;•greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory approvalfor products; and•greater financial and human resources for product development, sales and marketing and patent litigation.In addition to the established insulin pump competitors, several companies are working to develop and market new insulin “patch” pumps andother methods for the treatment of diabetes, such as inhaled insulin. These companies are at various stages of development and the number ofsuch companies continuously change as they enter or exit the market on an ongoing basis.Government Regulation8Table of ContentsDomestic Regulation. The Omnipod System is a medical device subject to extensive and ongoing regulation by the FDA and other federal,state, and local regulatory bodies. FDA regulations govern, among other things, product design and development, pre-clinical and clinical testing,manufacturing, labeling, post-market adverse event reporting, post-market surveillance, complaint handling, repair or recall of products, productstorage, record keeping, pre-market clearance or approval, advertising and promotion, and sales and distribution.FDA’s Pre-Market Notification (510(k)) and Pre-Market Approval Requirements. Unless an exemption applies, each medical device we seekto commercially distribute in the United States will require either prior 510(k) clearance or pre-market approval (“PMA”) from the FDA. The FDAclassifies medical devices into one of three classes. Devices deemed to pose low to moderate risk are placed in either class I or II, which, absent anexemption, requires the manufacturer to submit to the FDA a premarket notification requesting permission for commercial distribution. This processis known as 510(k) clearance. Some low risk devices are exempt from this requirement. Devices deemed by the FDA to pose the greatest risk, suchas life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, areplaced in class III, requiring approval of a PMA application. We have obtained 510(k) clearance for the Omnipod System and expect that PMAapproval will be needed for some of our future products. We may be required to obtain a new 510(k) clearance or pre-market approval for significantpost-market modifications to the Omnipod System. Both the 510(k) clearance and PMA processes can be expensive and lengthy and entailsignificant user fees, unless an exemption is available.In order to obtain pre-market approval and, in some cases, a 510(k) clearance, a product sponsor must conduct well-controlled clinical trialsdesigned to test the safety and effectiveness of the product. Conducting clinical trials generally entails a long, costly and uncertain process that issubject to delays and failure at any stage. The data obtained from clinical trials may be inadequate to support approval or clearance of a submission.In addition, the occurrence of unexpected findings in connection with clinical trials may prevent or delay obtaining approval or clearance. If weconduct clinical trials, they may be delayed or halted, or be inadequate to support approval or clearance.•510(k) Clearance . To obtain 510(k) clearance for any of our potential future devices (or for certain modifications to devices that havepreviously received 510(k) clearance), we must submit a pre-market notification demonstrating that the proposed device is substantiallyequivalent to a previously cleared 510(k) device or a pre-amendment device that was in commercial distribution before May 28, 1976 forwhich the FDA has not yet called for the submission of a PMA application. The FDA’s 510(k) clearance pathway generally takes fromthree to twelve months from the date the application is completed, but can take significantly longer. After a medical device receives510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a significant change inits intended use, requires a new 510(k) clearance or, depending on the modification, could require a PMA application. The FDA requireseach manufacturer to make this determination initially, but the FDA can review any such decision and can disagree with a manufacturer’sdetermination.If the FDA disagrees with a manufacturer’s determination regarding whether a new premarket submission is required for themodification of an existing device, the FDA can, at its discretion, require the manufacturer to cease marketing and/or recall the modifieddevice until 510(k) clearance or approval of a PMA application is obtained. In addition, in these circumstances, we may be subject tosignificant regulatory fines or penalties for failure to submit the requisite PMA application(s).9Table of Contents•PMA. Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, devicesdeemed not substantially equivalent to a previously cleared 510(k) device or devices in commercial distribution before May 28, 1976 forwhich PMAs have not been required, generally require a PMA before they can be commercially distributed. A PMA application must besupported by extensive data, including technical information, pre-clinical and clinical trials, manufacturing and labeling to demonstratethe safety and effectiveness of the device to the FDA’s satisfaction. After a PMA application is complete, the FDA begins an in-depthreview of the submitted information, which generally takes between one and three years, but may take significantly longer. During thisreview period, the FDA may request additional information or clarification of information already provided. Also during the review period,an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and providerecommendations to the FDA as to the approvability of the device. In addition, the FDA will conduct a pre-approval inspection of themanufacturing facility to ensure compliance with Quality System Regulations, or QSRs, which impose elaborate design development,testing, control, documentation and other quality assurance procedures in the design and manufacturing process. The FDA may approvea PMA application with post-approval conditions intended to ensure the safety and effectiveness of the device including, among otherthings, restrictions on labeling, promotion, sale and distribution and collection of long-term follow-up data from patients in the clinicalstudy that supported approval. Failure to comply with the conditions of approval can result in materially adverse enforcement action,including the loss or withdrawal of the approval. After any pre-market approval, a new pre-market approval application or applicationsupplement may be required in the event of modifications to the device, its labeling, intended use or indication or its manufacturingprocess. PMA supplements often require submission of the same type of information as a PMA application, except that the supplementis limited to information needed to support any changes from the device covered by the original PMA application, and may not require asextensive clinical data or the convening of an advisory panel.Ongoing Regulation by FDA. Even after a device is placed on the market, regardless of its classification or premarket pathway, numerousregulatory requirements apply. These include, but are not limited to:•establishment registration and device listing;•quality system regulation, or QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing,control, documentation and other quality assurance procedures during all aspects of the manufacturing process;•labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses, and otherrequirements related to promotional activities;•medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributedto a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunctionwere to recur;•corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recallsor removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the Federal Food, Drug and CosmeticAct that may present a risk to health. In addition, FDA may order a mandatory recall if there is a reasonable probability that the devicewould cause serious adverse health consequences or death; and•post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety andeffectiveness data for the device.Failure to comply with applicable regulatory requirements can result in enforcement actions by the FDA and other regulatory agencies, whichmay include any of the following sanctions: untitled letters or warning letters, fines, injunctions, consent decrees, civil or criminal penalties, recall orseizure of our current or future products, operating restrictions, partial suspension or total shutdown of production, refusal of or delay in granting510(k) clearance or PMA approval of new products or modified products, rescinding previously granted 510(k) clearances or withdrawing previouslygranted PMA approvals, or refusal to grant export approval of our products.10Table of ContentsWe are subject to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of oursubcontractors. If, as a result of these inspections, the FDA determines that our equipment, facilities, laboratories or processes do not comply withapplicable FDA regulations and conditions of product approval, the FDA may seek civil, criminal or administrative sanctions and/or remedies againstus, including the suspension of our manufacturing operations. Since approval of the Omnipod System, we have been subject to FDA inspections ofour facility on multiple occasions. We cannot assure you that our facilities or our contract manufacturer or component suppliers’ facilities would passany future quality system inspection.Our facility located at 600 Technology Park Drive, Suite 200, Billerica, MA 01821 was inspected by the FDA in March 2015, which resulted infour inspectional observations (FDA Form 483) and a subsequent Warning Letter dated June 5, 2015. We have completed all of the commitmentsfrom the FDA Form 483 and Warning Letter responses. Our facility located in Billerica, MA was re-inspected by the FDA in November to December2015. This inspection also resulted in four inspectional observations. We responded to these inspectional observations on December 31, 2015. Ourfacility was again re-inspected in October 2016 and this FDA inspection focused on corrections to previous FDA inspections and resulted in oneinspectional observation. In January 2017, the FDA officially closed the FDA inspection that was conducted in October 2016. In July 2015 we implemented a field removal of certain lots of our product due to the possibility that some Omnipod Systems had a higher rateof failure than our current manufacturing standards. In January 2017, the FDA officially terminated this field action. In September 2015, as part ofour product quality monitoring process, we identified that certain lots of the Omnipod System had a slight increase (1% - 2%) in the reported casesin which the Pod’s cannula failed to deploy. On October 29, 2015, we implemented a field correction to advise patients of the possibility of a needledeployment failure and provided recommendations on how to manage such an event. Both field actions were initiated with the knowledge of theFDA and were reported to the agency in accordance with the requirements of 21 C.F.R. Part 806.International Regulation. International sales of medical devices are subject to foreign government regulations, which may vary substantiallyfrom country to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA clearance orapproval, and the requirements may differ. There is a trend towards harmonization of quality system standards among the European Union, UnitedStates, Canada and various other industrialized countries. In April 2009, we received CE Mark approval for the original Omnipod System, and inAugust 2011, we received CE Mark approval for our new Omnipod System. The CE Mark gives us authorization to distribute the Omnipod Systemthroughout the European Union and in other countries that recognize the CE Mark. In September 2009, we received Health Canada approval todistribute the original Omnipod System throughout Canada, and in March 2013, we received Health Canada approval for our new Omnipod System.We have been distributing the Omnipod System in certain countries in Europe, through Ypsomed, since 2010.Licensure. Several states require that durable medical equipment (“DME”) providers be licensed in order to sell products to patients in thatstate. Certain of these states require, among other things, that DME providers maintain an in-state location. Although we believe we are incompliance with all applicable state regulations regarding licensure requirements, if we were found to be noncompliant, we could lose our licensurein that state, which could prohibit us from selling our current or future products directly to patients in that state.In addition, we are subject to certain state laws regarding professional licensure. We believe that our certified diabetes educators are incompliance with all such state laws. However, if our educators or we were to be found non-compliant in a given state, we may need to modify ourapproach to providing education, clinical support and customer service.Federal Anti-Kickback and Self-Referral Laws. The Federal Anti-Kickback Statute prohibits the knowing and willful offer, payment,solicitation or receipt of any form of remuneration in return for, or to induce:•the referral of an individual;•furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid or other federal health careprograms; or•the purchase, lease, or order of, or the arrangement or recommendation of the purchasing, leasing, or ordering of any item or servicereimbursable under Medicare, Medicaid or other federal health care programs.The Federal Anti-Kickback Statute has been interpreted to apply to arrangements between drug and medical device manufacturers andsuppliers on one hand and prescribers, purchasers and formulary managers on the other,11Table of Contentsand liability may be established without a person or entity having actual knowledge of the statute or specific intent to violate it. In addition, claimsresulting from a violation of the Federal Anti-Kickback Statute constitute false or fraudulent claims for purposes of the Federal False Claims Act,which is addressed below. We provide the initial training to patients necessary for appropriate use of the Omnipod System either through our owndiabetes educators or by contracting with outside diabetes educators that have completed a Certified Pod Trainer training course. Outside diabeteseducators are reimbursed for their services at contracted rates deemed to be consistent with the market. Although there are a number of statutoryexemptions and regulatory safe harbors protecting certain common business practices from prosecution and administrative sanctions, and we havestructured our arrangements with diabetes educators and other business practices to comply with these exemptions and safe harbors wheneverpossible, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration that may be perceived as inducing theprescription, purchase, or recommendation of the Omnipod System may be subject to scrutiny under the law. In addition, because we may providesome coding and billing information to purchasers of the Omnipod System, and because we cannot assure that the government will regard anybilling errors that may be made as inadvertent, the federal anti-kickback legislation may apply to us. Noncompliance with the Federal Anti-KickbackStatute can result in exclusion from Medicare, Medicaid or other governmental programs, restrictions on operating in certain jurisdictions, as well ascivil and criminal penalties, any of which could have an adverse effect on our business and results of operations.Federal law also includes a provision commonly known as the “Stark Law,” which prohibits a physician from referring Medicare or Medicaidpatients to an entity providing “designated health services,” including a company that furnishes durable medical equipment, in which the physicianhas an ownership or investment interest or with which the physician has entered into a compensation arrangement. Violation of the Stark Law couldresult in denial of payment, disgorgement of reimbursements received under a noncompliant arrangement, civil penalties, and exclusion fromMedicare, Medicaid or other governmental programs. Although there are a number of statutory exemptions protecting certain common businesspractices from prosecution under the Stark Law, and we have structured our arrangements with physicians and other providers to comply with theseexemptions whenever possible, these arrangements may not expressly meet the requirements for applicable exceptions from the law.Federal False Claims Act. The Federal False Claims Act provides, in part, that the federal government may bring a lawsuit against anyperson whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federalgovernment, or who has made a false statement or used a false record to get a claim approved. In addition, amendments in 1986 to the FederalFalse Claims Act have made it easier for private parties to bring “qui tam” whistleblower lawsuits against companies under the Federal False ClaimsAct. Penalties include fines up to approximately $22,000 per false claim or statement, plus three times the amount of damages that the federalgovernment sustained because of the act of that person. In any event, we believe that we are in compliance with the federal government’s laws andregulations concerning the filing of reimbursement claims. However, many drug and medical device manufacturers have been investigated orsubject to lawsuits by whistleblowers and have reached substantial financial settlements with the federal government under the False Claims Act fora variety of alleged improper marketing activities, including providing free product to customers with the expectation that the customers would billfederal programs for the product; or causing submission of false claims by providing inaccurate coding or billing information to actual or prospectivepurchasers, and our business practices could be subject to scrutiny and enforcement under the Federal False Claims Act. We also may be subjectto other federal false claim laws, including federal criminal statutes that prohibit making a false statement to the federal government.Civil Monetary Penalties Law. We are also subject to the Federal Civil Monetary Penalties Law, which prohibits, among other things, theoffering or transferring of remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence thebeneficiary’s selection of a particular supplier of Medicare or Medicaid payable items or services. Noncompliance can result in civil money penaltiesof up to $10,000 for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the federalhealthcare programs.Federal Health Care Fraud Statutes. We are also subject to a federal health care fraud statute that, among other things, imposes criminal andcivil liability for executing a scheme to defraud any health care benefit program including non-governmental programs, and prohibits knowingly andwillfully falsifying, concealing or covering up a material fact or making any materially false or fraudulent statement or representation, or making orusing any false writing or document with knowledge that it contains a materially false or fraudulent statement in connection with the delivery of orpayment for health care benefits, items or services.12Table of ContentsState Fraud and Abuse Provisions. Many states have also adopted some form of anti-kickback and anti-referral laws and a false claims actanalogous to the Federal Anti-Kickback Statute and Federal False Claims Act, and in some cases these state laws apply regardless of the payer,including private payers. We believe that we are in conformance with such laws. Nevertheless, a determination of liability under such laws couldresult in fines and penalties and restrictions on our ability to operate in these jurisdictions.Administrative Simplification of the Health Insurance Portability and Accountability Act of 1996. The Health Insurance Portability andAccountability Act of 1996 (“HIPAA”) mandated the adoption of standards for the exchange of electronic health information in an effort to encourageoverall administrative simplification and enhance the effectiveness and efficiency of the healthcare industry. Ensuring privacy and security of patientinformation is one of the key factors driving the legislation. We believe we are in substantial compliance with the applicable HIPAA regulations.Patient Protection and Affordable Care Act . The Patient Protection and Affordable Care Act (“ACA”) enacted significant changes to theprovision of and payment for healthcare in the United States. Under the ACA and related laws and regulations, federal and state governmentinitiatives are focused on limiting the growth of healthcare costs and implementing changes to healthcare delivery structures. These reforms areintended in part to put increased emphasis on the delivery to patients of more cost-effective therapies and could adversely affect our business.Legislative changes to the ACA remain possible and appear likely in the 115th United States Congress and under the Trump Administration, whichcould include changes that adversely affect our business. While some uncertainty exists regarding the future aspects of the ACA, we expect that theACA will continue to have a significant impact on the delivery of healthcare in the United States and on our business in the near term.Physician Payments Sunshine Act . The Physician Payments Sunshine Act, which is being implemented as the Open Payments program,requires manufacturers of drugs and devices for which Medicare or Medicaid payment is available to track and publicly report many types ofpayments made and items of value provided to physicians and teaching hospitals. Moreover, several states have imposed similar or more restrictiverequirements, including requirements to disclose payments to HCPs, restrictions on marketing and other expenditures, and requirements to adopt acode of conduct or compliance program with specific elements. Our failure to adhere to these requirements could materially adversely impact ourbusiness and financial results.Additionally, as some of these laws are still evolving, we lack definitive guidance as to the application of certain key aspects of these laws asthey relate to our arrangements with providers with respect to patient training. We cannot predict the final form that these regulations will take or theeffect that the final regulations will have on us. As a result, our provider and training arrangements may ultimately be found not to be in compliancewith applicable federal law. Even if we are not found to have violated the law, responding to lawsuits, government investigations or enforcementactions, defending any claims raised, and paying any resulting settlement amounts would be expensive and time-consuming, and could have amaterial adverse effect on our reputation and business operations.Third-Party ReimbursementIn the United States, our products are generally reimbursed by third-party payors, and we bill those payors for products provided to patients.Our fulfillment and reimbursement systems are fully integrated such that product is generally shipped only after confirmation of a physician’s validstatement of medical necessity and current health insurance information. We maintain an insurance benefits investigation department that works tosimplify and expedite claims processing and to assist patients in obtaining third-party reimbursement.We continue to work with third-party payors in the United States to establish coverage and payment for the Omnipod System and otherdiabetes management supplies. Our coverage contracts with third-party payors typically have a term of between one and three years and setcoverage amounts during that term. Typically, coverage contracts automatically renew for specified incremental periods upon expiration, unless oneof the parties terminates the contract.13Table of ContentsThird-party payors may decline to reimburse for procedures, supplies or services determined not to be “medically necessary” or “reasonable.”In a limited number of cases, some third-party payors have declined to reimburse us for a particular patient because such patient failed to meet itscriteria, most often because the patient already received reimbursement for an insulin pump from that payor within the warranty period, which isgenerally four years, or because the patient did not meet their medical criteria for an insulin infusion device. Common medical criteria for third-partypayors approving reimbursement for CSII therapy include a patient having elevated A1c levels, a history of recurring hypoglycemia, fluctuations inblood glucose levels prior to meals or upon waking or, severe glycemic variability. Reimbursement may also be declined by insurers based uponlanguage in the contract between the insurer and the insured group. An example of this is certain employer self-insurance plans that may choose todecline coverage based on specific provisions within those individual plans.As part of our international distribution agreements, our distribution partners establish appropriate reimbursement contracts with third-partypayors in countries and provinces in which they distribute the Omnipod System prior to distributing the Omnipod System in each territory.Currently, there is not an established mechanism for Medicare or broad Medicaid coverage for the majority of the Omnipod System. However,we are continuing a dialogue with Centers for Medicare & Medicaid Services ("CMS") about Medicare coverage and with other public payors forMedicaid coverage.EmployeesAs of December 31, 2016 , we had 640 full-time employees. None of our employees are represented by a collective bargaining agreement,and we have never experienced any work stoppage. We believe that our employee relations are good.Item 1A. Risk FactorsThis Annual Report on Form 10-K contains forward-looking statements. Forward-looking statements relate to future events or our futurefinancial 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 othersimilar words. These statements are only predictions. We have based these forward-looking statements largely on our current expectations andprojections 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 thisItem 1A Risk Factors and elsewhere in this Annual Report on Form 10-K. Accordingly, you should not rely upon forward-looking statements aspredictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved oroccur, and actual results could differ materially from those projected in the forward-looking statements. The forward-looking statements made in thisAnnual 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 statementto reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.Risks Relating to Our BusinessWe have incurred significant operating losses since inception and cannot assure you that we will achieve profitability.Since our inception in 2000, we have incurred significant operating losses. We began commercial sales of the Omnipod System in 2005. Forthe year ended December 31, 2016 , our operating loss was $10.7 million . Our net losses for the years ended December 31, 2016 , 2015 and 2014were $28.9 million , $73.5 million and $51.5 million , respectively. The extent of our future operating losses and the timing of profitability are highlyuncertain, and we may never achieve or sustain profitability. As of December 31, 2016 , we had an accumulated deficit of $680.4 million .We may experience significant fluctuations in our quarterly results of operations.The fluctuations in our quarterly results of operations have resulted, and may continue to result, from numerous factors, including:•delays in shipping due to capacity constraints;14Table of Contents•practices of health insurance companies and other third-party payors with respect to reimbursement for our current or future products;•market acceptance of the Omnipod System;•our ability to manufacture the Omnipod System efficiently;•timing of regulatory approvals and clearances;•new product introductions;•competition; and•timing of research and development expenditures.These factors, some of which are not within our control, may cause the price of our stock to fluctuate substantially. In particular, if our quarterlyresults of operations fail to meet or exceed the expectations of securities analysts or investors, our stock price could drop suddenly and significantly.We believe the quarterly comparisons of our financial results are not necessarily meaningful and should not be the only indication of our futureperformance.We currently rely on sales of the Omnipod System to generate most of our revenue. The failure of the Omnipod System to achieve andmaintain significant market acceptance or any factors that negatively impact sales of this product will adversely affect our business,financial condition and results of operations.Our main product is the Omnipod System, which we introduced to the market in 2005. We expect to continue to derive a significant portion ofour revenue from the sale of this product. Accordingly, our ability to generate revenue is highly reliant on our ability to market and sell the devicesthat comprise the Omnipod System. Our sales of the Omnipod System may be negatively impacted by many factors, including:•the failure of the Omnipod System to achieve and maintain wide acceptance among opinion leaders in the diabetes treatmentcommunity, insulin-prescribing physicians, third-party payors and people with insulin-dependent diabetes;•manufacturing problems or capacity constraints;•actual or perceived quality problems;•changes in reimbursement rates or policies relating to the Omnipod System by third-party payors;•claims that any portion of the Omnipod System infringes on patent rights or other intellectual property rights owned by other parties;•adverse regulatory or legal actions relating to the Omnipod System;•damage, destruction or loss of any of the facilities where our products are manufactured or stored or of the equipment therein or failureto successfully open or expand new facilities;•conversion rate of patient referrals to actual sales of the Omnipod System;•write-offs of receivables from our customers;•attrition rates of customers who cease using the Omnipod System;•competitive pricing and related factors; and•results of clinical studies relating to the Omnipod System or our competitors’ products.If any of these events occurs, our ability to generate revenue could be significantly reduced.Our ability to achieve profitability from a current net loss level will depend on our ability to sustain or reduce the per unit cost ofproducing the Omnipod System by increasing customer orders, increasing manufacturing volume and productivity and reducing rawmaterial and overhead costs per unit.Currently, the gross profit from the sale of the Omnipod System is not sufficient to cover our operating expenses. To achieve profitability, weneed to, among other things, sustain or reduce the per unit cost of the Omnipod System. If we are unable to sustain or reduce raw material andmanufacturing overhead costs through volume purchase discounts, negotiation of improved pricing and increased productivity and productioncapacity, our ability to achieve profitability will be severely constrained. Any increase in manufacturing volumes must be supported by an associatedincrease in customer orders. Each Omnipod System contains limited amounts of precious metals, the costs of which have fluctuated over the recentpast. The occurrence of one or more factors that negatively impact the manufacturing or sales of the Omnipod System or increase our raw materialcosts may prevent us from achieving our desired increase in manufacturing volume, which would prevent us from attaining profitability.15Table of ContentsAdverse changes in general economic conditions in the United States and globally could adversely affect us.We are subject to the risks arising from adverse changes in general economic market conditions. A U.S. or global recession, could negativelyimpact our current and prospective customers, adversely affect the financial ability of health insurers to pay claims, adversely impact our expensesand ability to obtain financing of our operations, cause delays or other problems with key suppliers and increase the risk of counterparty failures.Healthcare spending in the United States could be negatively affected in the event of a downturn in the U.S. economic conditions. Forexample, patients who have lost their jobs or healthcare coverage may no longer be covered by an employer-sponsored health insurance plan andpatients reducing their overall spending may eliminate purchases requiring co-payments. Since the sale of the Omnipod System to a new patient isgenerally dependent on the availability of third-party reimbursement and normally requires the patient to make a significant co-payment, aneconomic downturn on our potential customers could reduce the referrals generated by our sales force and thereby reduce our customer orders.Similarly, existing customers could cease purchasing the Omnipod System and return to MDI or other less-costly therapies, which would cause ourattrition rate to increase. Any decline in new customer orders or increase in our customer attrition rate would reduce our revenue, which in turnwould make it more difficult to achieve our per-unit cost-savings goals, which we are attempting to attain in part through increases in ourmanufacturing volume.Healthcare reform laws could adversely affect our revenue and financial condition.During the past several years, the U.S. healthcare industry has been subject to an increase in governmental regulation at both the federal andstate levels. Efforts to control healthcare costs, including limiting access to care, alternative delivery models and changes in the methods used todetermine reimbursement scenarios and rates, are ongoing at the federal and state government levels. There are new provisions of law that providefor the creation of a new public-private Patient-Centered Outcomes Research Institute tasked with identifying comparative effectiveness researchpriorities. For example, establishing a research project agenda and contracting with entities to conduct the research in accordance with the agenda.Research findings published by this institute are publicly disseminated. It is difficult at this time to determine whether a comparative effectivenessanalysis impacting our business will be done, and assuming one is, what impact that analysis will have on the Omnipod System or our futurefinancial results.Beginning in 2013, sales of certain medical devices became subject to a 2.3% federal excise tax, subject to a two-year suspension of the tax in2016 and 2017. We believe, based on advice from our tax advisor, that the sales of our products are exempt from this excise tax. However, if it issubsequently determined that sales of one or more of our products are subject to this excise tax, these tax obligations could materially adverselyaffect our financial results.In addition, the Affordable Care Act and related healthcare reform laws, regulations and initiatives have significantly increased regulation ofmanaged care plans and decreased reimbursement to Medicare managed care. Some of these initiatives purport to, among other things, requirethat health plan members have greater access to drugs not included on a plan’s formulary. Moreover, to alleviate budget shortfalls, states havereduced or frozen payments to Medicaid managed care plans. We cannot accurately predict the complete impact of these healthcare reforminitiatives, but they could lead to a decreased demand for our products and other outcomes that could adversely impact our business and financialresults.Legislative and regulatory changes to the Affordable Care Act remain possible and appear likely in the 115th United States Congress andunder the Trump Administration. We expect that the Affordable Care Act, as currently enacted or as it may be amended in the future, and otherhealthcare reform measures that may be adopted in the future, could have an adverse effect on our industry generally and on our ability to maintainor increase sales of any of our products and achieve profitabilityWe may need to raise additional funds in the future, and these funds may not be available on acceptable terms or at all.Our capital requirements will depend on many factors, including:•revenue generated by sales of our current products and any other future products that we may develop;•costs associated with adding further manufacturing capacity;•costs associated with expanding our sales and marketing efforts in the United States and internationally;•expenses we incur in manufacturing and selling the Omnipod System;16Table of Contents•costs of developing new products or technologies and enhancements to the Omnipod System;•the cost of obtaining and maintaining FDA approval or clearance of our current or future products;•costs associated with any expansion;•the cost of complying with regulatory requirements;•costs associated with capital expenditures;•costs associated with litigation; and•the number and timing of any acquisitions or other strategic transactions.We believe that our current cash, cash equivalents and short-term investments, together with the cash to be generated from expected productsales, will be sufficient to meet our projected operating requirements through at least the end of 2017.We may in the future seek additional funds from public and private stock offerings, borrowings under credit lines or other sources. In June2014 we issued and sold $201.3 million in principal amount of 2% Convertible Senior Notes due in 2019 ("2% Notes"). In September 2016, weissued and sold $345 million in principal amount of 1.25% Convertible Senior Notes due in 2021 ("1.25% Notes"). In connection with the issuance ofthe $345 million in 1.25% Convertible Senior Notes, we repurchased $134.2 million of our outstanding 2% Convertible Senior Notes. We may needto raise additional debt or equity financing to repay our outstanding convertible notes. 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 thoseof our existing stockholders. In addition, if we raise additional funds through collaboration, licensing or other similar arrangements, it may benecessary to relinquish valuable rights to our potential future products or proprietary technologies, or grant licenses on terms that are not favorableto us.Our ability to raise additional capital may be adversely impacted by current economic conditions, including the effects of any disruptions to thecredit and financial markets in the United States and worldwide. As a result of these and other factors, we do not know whether additional capital willbe available when needed, or 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 expenses to reflectthese external factors, including potentially curtailing our planned development activities. If we cannot raise additional funds in the future onacceptable terms, we may not be able to develop new products, execute our business plan, take advantage of future opportunities or respond tocompetitive pressures or unanticipated customer requirements. If any of these events occur, it could adversely affect our business, financialcondition and results of operations.We may not be able to generate sufficient cash to service our indebtedness represented by our 2% Convertible Senior Notes dueJune 15, 2019 and our 1.25% Convertible Senior Notes due September 15, 2021. We may be forced to take other actions to satisfy ourobligations under our indebtedness or we may experience a financial failure.In 2014, we issued and sold $201.3 million in principal amount of 2% Convertible Senior Notes, due in 2019. In September 2016, we issuedand sold $345 million in principal amount of 1.25% Convertible Senior Notes due in 2021. In connection with the issuance of the $345 million of1.25% Convertible Senior Notes, we repurchased $134.2 million of our outstanding 2% Convertible Senior Notes. Our ability to make scheduledpayments or to refinance the 2% and 1.25% Convertible Senior Notes or other debt obligations depends on our financial and operating performance,which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. Wecannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, andinterest on our indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduceor delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness, including theoutstanding 2% and 1.25% Convertible Senior Notes. We cannot assure you that we would be able to take any of these actions, that these actionswould be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of ourfuture debt agreements. In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might berequired to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate thosedispositions or obtain sufficient proceeds from those dispositions to meet our debt service and other obligations when due.17Table of ContentsWe are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations.We rely on a number of suppliers who manufacture the components for and perform assembly of the Omnipods and PDMs. For example, werely on Phillips Medisize Corporation to manufacture and supply several injection molded components of the Omnipod and we rely on NXP USA tomanufacture and supply an application specific integrated circuit. In addition, a subsidiary of Flex in China performs assembly and supplies allfinished Omnipod Systems. We do not have long-term supply agreements with most of our suppliers, and, in many cases, we, or Flex on our behalf,make purchases on the basis of individual purchase orders. In some other cases, where we do have agreements in place, our agreements withsuppliers can be terminated by either party upon short notice. Additionally, our suppliers may encounter problems during manufacturing for a varietyof reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction,component part supply constraints and environmental factors, any of which could delay or impede their ability to meet our demand. Our reliance onthese third-party suppliers also subjects us to other risks that could harm our business, including:•we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher prioritythan ours;•we may not be able to obtain an adequate supply in a timely manner or on commercially reasonable terms;•our suppliers may make errors in manufacturing that could negatively affect the efficacy or safety of the Omnipod System or causedelays in shipment;•we may have difficulty locating and qualifying alternative suppliers for our sole-source supplies;•switching components may require product redesign and submission to the FDA of a new 510(k);•our suppliers manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacturefor others may affect their ability to deliver products to us in a timely manner;•the occurrence of a fire, natural disaster or other catastrophe, impacting one or more of our suppliers, may affect their ability to deliverproducts to us in a timely manner; and•our suppliers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet ourrequirements.We may not be able to quickly establish additional or alternative suppliers, particularly for our sole-source suppliers, in part because of theFDA approval process and because of the custom nature of various parts we require. Any interruption or delay in obtaining products from our third-party suppliers, or our inability to obtain products from alternate sources at acceptable prices in a timely manner, could impair our ability to meet thedemand of our customers and cause them to cancel orders or switch to competing products.Establishment of a competitive bid program by CMS for conventional insulin pumps could negatively affect our operating results.CMS has announced that it will establish a competitive bidding program nationwide for conventional insulin pumps effective January 1, 2019.Since the Omnipod System is not currently covered or reimbursed by Medicare as durable medical equipment or as a prosthetic device, we wouldnot be directly affected by this program. However, should this program commence in 2019 on a nationwide basis in 2019 as announced, it isexpected that there would be a reduction in the amount reimbursed by CMS for conventional insulin pumps. This may negatively impact our ability tonegotiate future pricing with private payors comparing the price of the Omnipod System to conventional insulin pumps.If we are required to pay sales tax on sales of certain products, our results of operations could be adversely affected.We believe that sales of most diabetes supplies are exempt from sales tax in most jurisdictions. However, if it is subsequently determined thatsales of one or more of our products are subject to sales tax in such jurisdictions, our obligation to pay such sales taxes could materially adverselyaffect our financial results.18Table of ContentsOur financial condition or results of operations may be adversely affected by international business risks.Ypsomed is our exclusive distributor of the Omnipod System through June 2018 in multiple countries in Europe including France, Germany,the United Kingdom, the Netherlands, Switzerland, Austria, Italy, Norway, and Sweden. Our agreement with Ypsomed also covers China and anumber of other countries. In addition to the Omnipod System, Ypsomed also markets and sells a suite of other products for the treatment ofdiabetes and has introduced and sells its own branded conventional insulin pump. Ypsomed could have a greater financial incentive to sell itsproprietary products rather than the Omnipod System. We also sell the Omnipod System in Canada. As a result of our international sales, we areexposed to fluctuations in product demand and sales productivity outside the United States, which may be partially attributed to foreign exchangerate changes, and have to manage the risks associated with market acceptance of the Omnipod System in foreign countries. Our efforts to introduceor expand our current or future products in foreign markets may not be successful, in which case we may have expended significant resourceswithout realizing the expected benefit. Ultimately, the investment required for expansion into foreign markets could exceed the results of operationsgenerated from this expansion. We do not have control over Ypsomed’s operational and financial condition, and we are subject to foreign regulatoryand export requirements.In addition, in order to reduce our cost of goods sold and increase our production capacity, we increasingly rely on third-party suppliers locatedoutside the United States. For example, currently all of our Omnipod Systems are manufactured at a facility in China operated by Flex. As a result,our business is subject to risks associated with doing business internationally, including:•political instability and adverse economic conditions;•trade protection measures, such as tariff increases, and import and export licensing and control requirements;•potentially negative consequences from changes in tax laws;•difficulty in staffing and managing widespread operations;•difficulties associated with foreign legal systems including increased costs associated with enforcing contractual obligations in foreignjurisdictions;•changes in foreign currency exchange rates;•differing protection of intellectual property;•unexpected changes in regulatory requirements;•failure to fulfill foreign regulatory requirements on a timely basis or at all to market the Omnipod System or other future products;•availability of, and changes in, reimbursement within prevailing foreign health care payment systems;•adapting to the differing laws and regulations, business and clinical practices, and patient preferences in foreign markets;•difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign partners,distributors or sales or marketing agents; and•difficulty in collecting accounts receivable and longer collection periods.In addition, expansion into foreign markets imposes additional burdens on our executive and administrative personnel, research and salesdepartments and general management resources. Our future success will depend in large part on our ability to anticipate and effectively managethese and other risks associated with doing business outside of the United States. Any of these factors may have a material adverse effect on ourproduction capacity and, consequently, our business, financial condition and results of operations.19Table of ContentsFailure to secure or retain adequate coverage or reimbursement for our products by third-party payors could adversely affect ourbusiness, financial condition and results of operations.We expect that sales of the Omnipod System will be limited unless a substantial portion of the sales price of the Omnipod System is paid for bythird-party payors, including private insurance companies, health maintenance organizations, preferred provider organizations, federal and stategovernment healthcare agencies and other managed care providers. We currently have contracts establishing reimbursement for the OmnipodSystem with national and regional third-party payors that provide reimbursement for patients residing in all 50 states. While we anticipate enteringinto additional contracts with other third-party payors, we cannot assure that we will be successful in doing so. In addition, these contracts cangenerally be terminated by the third-party payor without cause. Also, healthcare market initiatives in the United States may lead third-party payors todecline or reduce reimbursement for the Omnipod System. Moreover, compliance with administrative procedures or requirements of third-partypayors may result in delays in processing approvals by those payors for patients to obtain coverage for the use of the Omnipod System. We are anapproved Medicare supplier and current Medicare coverage for continuous subcutaneous insulin infusion, or CSII therapy exists. However, existingMedicare and broad Medicaid coverage for CSII therapy is based on conventional insulin pumps. We have been in the process for several years ofseeking appropriate Medicare and broad Medicaid coverage for the Omnipod System. No assurance can be provided that we will ever secureMedicare and broad Medicaid coverage of the Omnipod System. As a result, we have focused our efforts in establishing reimbursement for theOmnipod System by negotiating contracts with private insurers. In addition, coverage decisions and rates of reimbursement increasingly requireclinical evidence showing an improvement in patient outcomes. Generating this clinical evidence requires substantial time and investment and thereis no guarantee of a desired outcome. Finally, as we expand our sales and marketing efforts outside of the United States, we face additional risksassociated with obtaining and maintaining reimbursement from foreign health care payment systems on a timely basis or at all. Failure to secure orretain adequate coverage or reimbursement for the Omnipod System by third-party payors, including Medicare, could have a material adverse effecton our business, financial condition and results of operations.We face competition from numerous competitors, many of whom have far greater resources than we have, which may make it moredifficult for us to achieve significant market penetration and which may allow them to develop additional products for the treatment ofdiabetes that compete with the Omnipod System.The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and othermarket activities of industry participants. The Omnipod System competes with several existing insulin delivery devices as well as other methods forthe treatment of diabetes. Medtronic MiniMed, a division of Medtronic, has been the market leader for many years and has the majority share of theconventional insulin pump market in the United States. Other significant suppliers in the United States include Animas Corporation, a division ofJohnson & Johnson and Tandem Diabetes Care, Inc.In addition to the Omnipod System, our principal international distributor, Ypsomed, markets and sells a suite of other products for thetreatment of diabetes. Also, Ypsomed has introduced and sells its own branded conventional insulin pump. Ypsomed may have a greater financialincentive to sell its proprietary products rather than the Omnipod System.Many of our competitors are large, well-capitalized companies with significantly more market share and resources than we have. As aconsequence, they are able to spend more aggressively on product development, marketing, sales and other product initiatives than we can. Manyof these competitors have:•significantly greater name recognition;•different and more complete reimbursement profiles;•established relations with healthcare professionals, customers and third-party payors;•larger and more established distribution networks;•greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory approval;and•greater financial and human resources for product development, sales and marketing and patent litigation.20Table of ContentsWe also compete with MDI therapy, which is substantially less expensive than CSII therapy. MDI therapy has been made more effective by theintroduction of long-acting insulin analogs that can be used in combination with bolus devices such as pens or nasal inhalants. While we believe thatCSII therapy, in general, and the Omnipod System, in particular, have significant competitive and clinical advantages over traditional MDI therapy,improvements in the effectiveness of MDI therapy may result in fewer people with insulin-dependent diabetes converting from MDI therapy to CSIItherapy than we expect and may result in negative price pressure.In addition to the established insulin pump competitors, several companies are working to develop and market new insulin “patch” pumps andother methods for the treatment of diabetes, such as inhaled insulin. These companies are at various stages of development and the number ofsuch companies continuously change as they enter or exit the market on an ongoing basis.Our current competitors or other companies may at any time develop additional products for the treatment of diabetes. For example, otherdiabetes-focused pharmaceutical companies, including Abbott Diabetes Care, Inc. ("Abbott"), Eli Lilly and Company, Novo Nordisk A/S and TakedaPharmaceuticals Company Limited, are developing similar products. All of these competitors are large, well-capitalized companies with significantlygreater product development resources than we have. If an existing or future competitor develops a product that competes with or is superior to theOmnipod System, our revenue may decline. In addition, some of our competitors may compete by changing their pricing model or by lowering theprice 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, a downward pressure on prices could result. If prices were to fall, we may not improveour gross margins or sales growth sufficiently to achieve profitability.We rely on the proper function, availability and security of our information technology systems to operate our business and a cyber-attack or other breach or disruption of these systems could have a material adverse effect on our business and results of operations.We rely on information technology systems to process, transmit and store electronic information in our day-to-day operations. The form andfunction of such systems may change over time as our business needs change. The nature of our business involves the receipt and storage ofpersonal and financial information regarding our patients. We use our information technology systems to manage or support a variety of businessprocesses and activities, including sales, shipping, billing, customer service, procurement and supply chain, manufacturing and accounts payable. Inaddition, we use enterprise information technology systems to record, process, and summarize transactions and other financial information andresults of operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements. Our informationtechnology systems may be susceptible to damage, disruptions or shutdowns due to computer viruses, attacks by computer hackers, failures duringthe process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures,user errors or catastrophic events. Any failure by us to maintain or protect our information technology systems and data integrity, including fromcyber-attacks, intrusions, disruptions or shutdowns, could result in the unauthorized access to patient data and personally identifiable information,theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise our confidential orproprietary information and disrupt our operations. If our information technology systems are breached or suffer severe damage, disruption orshutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may be materially andadversely affected.Technological breakthroughs in diabetes monitoring, treatment or prevention could render the Omnipod System obsolete. Inaddition, our own new product development initiatives may prove to be ineffective or not commercially successful.The diabetes treatment market is subject to rapid technological change and product innovation. The Omnipod System is based on ourproprietary technology, but a number of companies, medical researchers and existing 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. For example, FDA approval of a commercially viable “closed-loop” or "hybrid closed-loop" system that combines continuous“real-time” glucose sensing or monitoring and automatic continuous subcutaneous insulin infusion in a manner that delivers appropriate amounts ofinsulin on a timely basis with reduced patient direction could have a material adverse effect on our revenue and future profitability. Medtronic hasdeveloped a "hybrid closed-loop" system with FDA-approval and has announced an anticipated commercial launch in 2017, which could negativelyimpact our business. In addition, 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 technological breakthroughs in diabetes monitoring, treatment or prevention could render theOmnipod System obsolete, which would have a material adverse effect on our business, financial condition and results of operations.21Table of ContentsWe also have ongoing initiatives to develop products to improve the treatment of Type 1 diabetes and to treat patients with highly insulinresistant Type 2 diabetes. For example, we are working with DexCom, Inc. to integrate its continuous glucose monitoring technology with theOmnipod System and we continue to explore partnership opportunities with other companies that have blood glucose monitoring and continuousglucose monitoring technologies. We are also developing with Eli Lilly and Company a new version of the Omnipod System specifically designed todeliver Humulin® R U-500 and U-200 insulin, which are more concentrated forms of insulin than traditional U-100 insulin for patients with higherinsulin-resistance. In each of these cases, these projects are at an early stage of development, will require substantial clinical support and aresubject to regulatory approvals. No assurances can be given that these or other development initiatives by us will be successful. The failure tosuccessfully bring any of these products to market could have an adverse effect on our business and results of operations.If our existing license agreement with Abbott is terminated or we fail to enter into new license agreements allowing us to incorporate ablood glucose meter into the Omnipod System, or if Abbott's FreeStyle meter is less desirable to our current and potential customers, ourbusiness may be materially adversely impacted.Our rights to incorporate the FreeStyle blood glucose meter into the Omnipod System are governed by a development and license agreementwith Abbott. This agreement provides us with a non-exclusive, fully paid, non-transferable and non-sublicensable license in the United States underpatents and other relevant technical information relating to the FreeStyle blood glucose meter during the term of the agreement. As amended, thisagreement runs through January 2020. The agreement may be terminated or limited in geographical scope by Abbott under certain circumstances.Termination of this agreement could require us to either remove the blood glucose meter from PDMs to be sold in the future, which could impair thefunctionality of the Omnipod System, or attempt to incorporate an alternative blood glucose meter into the PDM, either of which would requiresignificant development and regulatory activities that might not be completed in time to prevent an interruption in the availability of the OmnipodSystem to our customers, which could have a material adverse effect on our business, financial condition and results of operations.The FreeStyle blood glucose meter in our PDM is only approved for use with FreeStyle test strips. Not all third party payors reimburse patientsfor the purchase and use of FreeStyle test strips to the same extent as they reimburse patients for other brands of test strips. The absence orreduction in such reimbursement may make the Omnipod System less desirable to our current and potential customers.In the future, we may need additional agreements or licenses to intellectual property or other rights in order to sell our current product orcommercialize new products. If we cannot obtain these agreements, licenses, or other rights, we may not be able to sell, develop or commercializethese products. Our rights to use technologies licensed to us by third parties are not entirely within our control, and we may not be able to continueselling the Omnipod System or sell future products without these rights.Our growing non-insulin drug delivery business faces challenges which, if not met, may impair its future success and continuedgrowth.Our non-insulin drug delivery business has grown substantially over the past years. This business typically involves the development,manufacturing and sale of a modified Omnipod System for delivery of a specific drug other than insulin. The marketing and sales initiatives drivingthis business differ markedly from those on which we rely for our sales of Omnipod Systems to treat diabetes since the non-insulin drug deliverydevices depend on marketing and sales to pharmaceutical companies, not to patients and clinicians. We expect that the continued growth of ournon-insulin drug delivery business will face several challenges, including:•our identification of drug delivery opportunities appropriate for a modified Omnipod System;•our achievement of satisfactory development and pricing terms with the pharmaceutical companies that sell such drugs;•our development of appropriate modifications to our Omnipod System technology to address the needs and parameters required for therespective drug-delivery opportunities;•manufacturing issues relating to the modified Omnipod System;•long lead-times associated with the development, regulatory approvals and ramp up applicable to the use of modified Omnipod Systemsfor the delivery of such drugs;•relatively small number of modified Omnipod Systems needed to address each drug-delivery opportunity;22Table of Contents•uncertainties regarding the market acceptance of such drugs and the modified Omnipod Systems as appropriate delivery devices;•uncertainties relating to the success of the pharmaceutical companies in marketing and selling such drugs as well as the modifiedOmnipod Systems as the appropriate delivery devices;•intense competition in the drug-delivery industry, including from competitors which have substantially greater resources than we do;•maintaining appropriate gross margins; and•regulatory requirements and reimbursement rates associated with such drugs.If we are unsuccessful in overcoming one or more of these challenges, our ability to capitalize on these opportunities and to continue to growour non-insulin drug delivery business could be significantly impaired, which in turn could materially and adversely impact our business and financialresults.The patent rights on which we rely to protect the intellectual property underlying our products may not be adequate, which couldenable third parties to use our technology and would harm our continued ability to compete in the market.Our success will depend in part on our continued ability to develop or acquire commercially-valuable patent rights and to protect these rightsadequately. Our patent position is generally uncertain and involves complex legal and factual questions. The risks and uncertainties that we facewith respect to our patents and other related rights include the following:•the pending patent applications we have filed or to which we have exclusive rights may not result in issued patents or may take longerthan we expect to result in issued patents;•the claims of any patents that are issued may not provide meaningful protection;•we may not be able to develop additional proprietary technologies that are patentable; and•other companies may design around technologies we have patented, licensed or developed.We also may not be able to protect our patent rights effectively in some foreign countries. For a variety of reasons, we may decide not to filefor patent protection. Our patent rights underlying the our products may not be adequate, and our competitors or customers may design around ourproprietary technologies or independently develop similar or alternative technologies or products that are equal or superior to ours without infringingon any of our patent rights. In addition, the patents licensed or issued to us may not provide a competitive advantage. The occurrence of any ofthese events may have a material adverse effect on our business, financial condition and results of operations.Other rights and measures we have taken to protect our intellectual property may not be adequate, which would harm our ability tocompete in the market.In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, confidentiality, non-disclosure and assignmentof invention agreements and other contractual provisions and technical measures to protect our intellectual property rights. Despite these measures,any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated. While we currently require employees,consultants and other third parties to enter into confidentiality, non-disclosure or assignment of invention agreements, or a combination thereofwhere appropriate, any of the following could still occur:•the agreements may be breached;•we may have inadequate remedies for any breach;•trade secrets and other proprietary information could be disclosed to our competitors; or•others may independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain accessto our trade secrets or disclose such technologies.If, for any of the above reasons, our intellectual property is disclosed or misappropriated, it would harm our ability to protect our rights and havea material adverse effect on our business, financial condition and results of operations.23Table of ContentsWe may need to initiate lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive and,if we lose, could cause us to lose some of our intellectual property rights, which would harm our ability to compete in the market.We rely on patents to protect a portion of our intellectual property and our competitive position. The patent laws that relate to the scope ofclaims in the technology fields in which we operate are still evolving and, consequently, certain patent positions in the medical device industry aregenerally uncertain. In order to protect or enforce our patent rights, we may initiate patent litigation against third parties, such as infringement suitsor interference proceedings. Litigation may be necessary to:•assert claims of infringement;•enforce our patents;•protect our trade secrets or know-how; or•determine the enforceability, scope and validity of the proprietary rights of others.Any lawsuits that we initiate could be expensive, take significant time and divert management’s attention from other business concerns.Litigation also puts our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. Additionally, wemay provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remediesawarded, if any, may not be commercially valuable. The occurrence of any of these events could have a material adverse effect on our business,financial condition and results of operations.Claims that our current or future products infringe or misappropriate the proprietary rights of others could adversely affect our abilityto sell those products and cause us to incur additional costs.Substantial litigation over intellectual property rights exists in the medical device industry, and we have settled infringement suits in the past.We expect that we could be increasingly subject to third-party infringement claims as our revenue increases, the number of competitors grows andthe functionality of products and technology in different industry segments overlaps. Third parties may currently have, or may eventually be issued,patents on which our current or future products or technologies may infringe. Any of these third parties might make a claim of infringement againstus.Such litigation, regardless of its outcome, could result in the expenditure of significant financial resources and the diversion of management’stime and resources. In addition, such litigation could cause negative publicity, adversely affect prospective customers, cause product shipmentdelays, limit or prohibit us from manufacturing, marketing or selling our current or future products, require us to 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 asuccessful claim of infringement were made against us and we could not develop non-infringing technology or license the infringed or similartechnology on a timely and cost-effective basis, our revenue could decrease substantially and we could be exposed to significant liability. A courtcould enter orders that temporarily, preliminarily or permanently enjoin us or our customers from making, using, selling, offering to sell or importingour current or future products, or could enter an order mandating that we undertake certain remedial activities.We are subject to extensive government regulation, both in the United States and abroad, which could restrict the sales andmarketing of our products and could cause us to incur significant costs.Our medical device products and operations are subject to extensive regulation by the FDA and various other federal, state, local and foreigngovernment authorities. Government regulation of medical devices is meant to assure their safety and effectiveness, and includes regulation of,among other things:• design, development and manufacturing;• testing, labeling, content and language of instructions for use and storage;• clinical trials;• product safety;• marketing, sales and distribution;• regulatory clearances and approvals including premarket clearance and approval;• conformity assessment procedures;• product traceability and record keeping procedures;• advertising and promotion;24Table of Contents• product complaints, complaint reporting, recalls and field safety corrective actions;• post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to deathor serious injury;• post-market studies; and• product import and export.The regulations to which we are subject are complex and have tended to become more stringent over time. Regulatory changes could result inrestrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales.Before a new medical device, or a significant modification of a medical device, including a new use of or a new use of or claim for an existingproduct, can be marketed in the United States, it must first receive either 510(k) clearance or PMA from the FDA, unless an exemption applies. Inthe 510(k) clearance process, the FDA must determine that a proposed device is "substantially equivalent" to a device legally on the market, knownas a "predicate" device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing.Clinical data is sometimes required to support substantial equivalence. In December 2012 we received 501(k) clearance for our new OmnipodSystem. We have since obtained clearance for modified versions of this device. We may be required to obtain a new 510(k) clearance or pre-marketapproval for significant further post-market modifications to the Omnipod System. Obtaining 510(k) clearance or pre-market approval for medicaldevices can be expensive and lengthy, and entail significant user fees, unless an exemption is available. The FDA’s process for obtaining 510(k)clearance usually takes three to twelve months, but it can last longer. In the PMA approval process, the FDA must determine that a proposed deviceis safe and effective for its intended use based, in part, on extensive data, including but not limited to, technical, pre-clinical, clinical trial,manufacturing and labeling data. The process for obtaining pre-market approval is much more costly and uncertain and it generally takes from oneto three years, or longer, from the time the application is filed with the FDA. Modifications to products that are approved through a PMA applicationgenerally need FDA approval. We expect that some of our future products will require PMA approval. In addition, the FDA may demand that weobtain a PMA prior to marketing future changes of our existing Omnipod System. Further, we may not be able to obtain additional 510(k) clearancesor pre-market approvals for new products or for modifications to, or additional indications for, the Omnipod System in a timely fashion or at all.Delays in obtaining future clearances could adversely affect our ability to introduce new or enhanced products in a timely manner which in turn couldharm our revenue and future profitability.We also are subject to numerous post-marketing regulatory requirements, which include quality system regulations related to themanufacturing of our devices, labeling regulations and medical device reporting regulations. The last of these regulations requires us to report to theFDA if our devices cause or contribute to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or seriousinjury. If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by theFDA, which may include any of the following sanctions:•untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;•customer notification, or orders for repair, replacement or refunds;•voluntary or mandatory recall or seizure of our current or future products;•administrative detention by the FDA of medical devices believed to be adulterated or misbranded;•imposing operating restrictions, suspension or shutdown of production;•refusing our requests for 510(k) clearance or pre-market approval of new products, new intended uses or modifications to the OmnipodSystem;•rescinding 510(k) clearance or suspending or withdrawing pre-market approvals that have already been granted; and•criminal prosecution.The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.25Table of ContentsIn addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take otheractions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved orcleared products on a timely basis. For example, as part of the 21 st Century Act passed in 2016, Congress enacted several reforms that furtheraffect medical device regulation both pre- and post-approval. While those changes are still being implemented by FDA, this serves as an example ofthe rapidly changing regulatory environment in which we operate. In addition, regulatory requirements may change in the future in a way thatadversely affects us. For instance, the FDA is in the process of reviewing the 510(k) approval process and criteria and has announced initiatives toimprove the current pre-market and post-market regulatory processes and requirements associated with infusion pumps and other home usemedical devices. As part of this effort, the FDA is reviewing the adverse event reporting and recall processes for insulin pumps. Any change in thelaws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult andcostly to obtain clearance or approval for new products, or to produce, market and distribute existing products.The Omnipod System is also sold in a number of European countries and Canada. As a result, we are required to comply with additionalforeign regulatory requirements. For example, in April 2009, we first received CE Mark approval for our Omnipod System. The CE Mark gives usauthorization to distribute the Omnipod System throughout the European Union and in other countries that recognize the CE Mark. Additionally, inSeptember 2009, we first received Health Canada approval to distribute the Omnipod System throughout Canada. As we expand our sales effortsinternationally, we may need to obtain additional foreign approval certifications.There is no guarantee that the FDA will grant 510(k) clearance or PMA approval of our future products, and failure to obtainnecessary clearances or approvals for our future products would adversely affect our ability to grow our business.Some of our new or modified products will require FDA clearance of a 510(k) or FDA approval of a PMA. The FDA may not approve or clearthese products for the indications that are necessary or desirable for successful commercialization. Indeed, the FDA may refuse our requests for510(k) clearance or premarket approval of new products. Even early stage review may result in issues. For example, the FDA has issued guidancedocuments intended to explain the procedures and criteria the FDA will use in assessing whether a 510(k) and PMA submissions meets a minimumthreshold of acceptability and should be accepted for substantive review. Under the “Refuse to Accept” guidance, the FDA conducts an early reviewagainst specific acceptance criteria to inform 510(k) and PMA submitters if the submission is administratively complete, or if not, to identify themissing element(s). Submitters are given the opportunity to provide the FDA with the identified information. If the information is not provided within adefined time, the submission will not be accepted for FDA review. Significant delays in receiving clearance or approval, or the failure to receiveclearance or approval for our new products would have an adverse effect on our ability to expand our business.If we, our contract manufacturer or our component suppliers fail to comply with the FDA’s quality system regulations, themanufacturing and distribution of our devices could be interrupted, and our product sales and operating results could suffer.We, our contract manufacturer and our component suppliers are required to comply with the FDA’s quality system regulations ("QSR"), whichis a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance,labeling, packaging, sterilization, storage and shipping of our devices. Compliance with applicable regulatory requirements is subject to continualreview and is monitored rigorously through periodic, sometimes unannounced, inspections by the FDA. We cannot assure you that our facilities orour contract manufacturer or component suppliers’ facilities would pass any future quality system inspection. If our or any of our contractmanufacturer or component suppliers’ facilities fails a quality system inspection, the manufacturing or distribution of our devices could be interruptedand our operations disrupted. Failure to take adequate and timely corrective action in response to an adverse quality system inspection could forcea suspension or shutdown of our labeling operations or the manufacturing operations of our contract manufacturer, or a recall of our devices.If we, or our manufacturers, fail to adhere to QSR requirements, this could delay production of our products and lead to fines, difficulties inobtaining regulatory clearances, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could, inturn, have a material adverse effect on our financial condition or results of operations.Our facility located at 600 Technology Park Drive, Suite 200, Billerica, MA 01821 was inspected by the FDA in March 2015, which resulted infour inspectional observations (FDA Form 483) and a subsequent Warning Letter dated June 5, 2015. We have completed all of the commitmentsfrom the FDA Form 483 and Warning Letter responses. Our facility located in Billerica, MA was re-inspected by the FDA in November to December2015. This ins26Table of Contentspection also resulted in four inspectional observations. We responded to these inspectional observations on December 31, 2015. Our facility wasagain re-inspected in October 2016 and this FDA inspection focused on corrections to previous FDA inspections and resulted in one inspectionalobservation. In January 2017, the FDA officially closed the FDA inspection that was conducted in October 2016. If our products, or malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medicaldevice reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA information that a devicehas or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death orserious injury if the malfunction of the device or one of our similar devices were to recur. Any such adverse event involving our products couldresult in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action.Adverse events involving our products have been reported to us in the past, and we cannot guarantee that they will not occur in the future. Anycorrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating ourbusiness and may harm our reputation and financial results.Our current or future products may be subject to product recalls even after receiving FDA clearance or approval. A recall of ourproducts, either voluntarily or at the direction of the FDA, or the discovery of serious safety issues with our products, could have asignificant adverse impact on us.The FDA and similar governmental bodies in other countries have the authority to require the recall of our current or future products if we orour contract manufacturers fail to comply with relevant regulations pertaining to manufacturing practices, labeling, advertising or promotionalactivities, or if new information is obtained concerning the safety or efficacy of these products. For example, under the FDA’s medical devicereporting, or MDR, regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death orserious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.Repeated product malfunctions may result in a voluntary or involuntary product recall. A government-mandated recall could occur if the FDA findsthat there is a reasonable probability that the device would cause serious, adverse health consequences or death. A voluntary recall by us couldoccur as a result of any material deficiency in a device, such as manufacturing defects, labeling deficiencies, packaging defects or other failures tocomply with applicable regulations. In general, if we decide to make a change to our product, we are responsible for determining whether to classifythe change as a recall. It is possible that the FDA could disagree with our initial classification. The FDA requires that certain classifications of recallsbe reported to the FDA within 10 working days after the recall is initiated. In general if any change or group of changes to a device addresses aviolation of the Federal Food, Drug, and Cosmetic Act, that change would generally constitute a medical device recall and require submission of arecall report to the FDA.Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, results ofoperations and financial condition, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet ourcustomers’ demands. We may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negativeimpact on our future sales and our ability to generate profits. Companies are required to maintain certain records of recalls, even if they are notreportable to the FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA.If the FDA disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm ourreputation with customers and negatively affect our sales. In addition, the FDA could take enforcement action for failing to report the recalls whenthey were conducted.In July 2015 we implemented a field removal of certain lots of our product due to the possibility that some Omnipod Systems had a higher rateof failure than our current manufacturing standards. In January 2017, the FDA officially terminated this field action. In September 2015, as part ofour product quality monitoring process, we identified that certain lots of the Omnipod System had a slight increase (1% - 2%) in the reported casesin which the Pod’s cannula failed to deploy. On October 29, 2015, we implemented a field correction to advise patients of the possibility of a needledeployment failure and provided recommendations on how to manage such an event. Both field actions were initiated with the knowledge of theFDA and were reported to the agency in accordance with the requirements of 21 C.F.R. Part 806.Further, under the FDA’s medical device reporting, or MDR, regulations, we are required to report to the FDA any incident in which ourproduct may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur,would likely cause or contribute to death or serious27Table of Contentsinjury. Repeated product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources,impair our ability to manufacture our products in a cost-effective and timely manner, and have an adverse effect on our reputation, results ofoperations and financial condition. We are also required to follow detailed recordkeeping requirements for all firm-initiated medical devicecorrections and removals, and to report such corrective and removal actions to FDA if they are carried out in response to a risk to health and havenot otherwise been reported under the MDR regulations. In addition, in October 2014, the FDA issued guidance intended to assist the FDA andindustry in distinguishing medical device recalls from product enhancements. Per the guidance, if any change or group of changes to a deviceaddresses a violation of the Federal Food, Drug, and Cosmetic Act, that change would generally constitute a medical device recall and requiresubmission of a recall report to the FDA.If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform ascontractually required or expected, we may not be able to obtain regulatory clearance or approval or commercialize our products.We rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories toconduct some of our clinical trials and pre-clinical investigations. If these third parties do not successfully carry out their contractual duties orregulatory obligations or meet expected deadlines, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhereto our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended,delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on atimely basis, if at all, and our business, operating results and prospects may be adversely affected. Furthermore, our third-party clinical trialinvestigators may be delayed in conducting our clinical trials for reasons outside of their control.We may be subject to enforcement action if we engage in improper marketing or promotion of our products.Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition ofthe promotion of unapproved, or off-label, use. Doctors may use our products off-label, as the FDA does not restrict or regulate a doctor’s choice oftreatment within the practice of medicine. However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including theissuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreignenforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, whichcould result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event,our reputation could be damaged and adoption of the products could be impaired. Although our policy is to refrain from statements that could beconsidered off-label promotion of our products, the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensiveto defend and could divert our management’s attention, result in substantial damage awards against us, and harm our reputation.We are subject to federal and state laws prohibiting “kickbacks” and false or fraudulent claims, and other fraud and abuse laws,transparency laws, and other health care laws and regulations, which, if violated, could subject us to substantial penalties. Additionally,any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thuscould harm our business.Our relationships with customers and third-party payers are subject to broadly applicable fraud and abuse and other health care laws andregulations that may constrain our sales, marketing and other promotional activities by limiting the kinds of financial arrangements, including salesprograms, we may have with hospitals, physicians, patients or other potential purchasers of medical devices. These laws include the Federal Anti-Kickback Statute, the Federal False Claims Act, other federal health care false statement and fraud statutes, the Open Payments program, the CivilMonetary Penalties Law, and analogous fraud and abuse and transparency laws in most states, as described in greater detail in the section aboveentitled “Government Regulation”. 28Table of ContentsWe conduct various marketing and product training activities that involve making payments to healthcare providers and entities. While webelieve and make every effort to ensure that our business arrangements with third parties and other activities comply with all applicable laws, theselaws are complex and our activities may be found not to be compliant with one of these laws, which may result in significant civil, criminal and/oradministrative penalties. Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respondto, and thus could have a material adverse effect on our business, financial condition and results of operations. Our compliance with Medicare andMedicaid regulations may be reviewed by federal or state agencies, including the United States Department of Health and Human Services’ Office ofthe Inspector General (“OIG”), CMS, and the Department of Justice. To ensure compliance with Medicare, Medicaid and other regulations,government agencies conduct periodic audits of us to ensure compliance with various supplier standards and billing requirements.If we are found to have violated laws protecting the confidentiality of patient health information, we could be subject to civil or criminalpenalties, which could increase our liabilities and harm our reputation or our business.There are a number of federal and state laws protecting the confidentiality of certain patient health information, including patient records, andrestricting the use and disclosure of that protected information. In particular, the U.S. Department of Health and Human Services promulgatedpatient privacy rules under HIPAA. These privacy rules protect medical records and other personal health information by limiting their use anddisclosure, giving individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosuresof health information to the minimum amount reasonably necessary to accomplish the intended purpose. If we are found to be in violation of theprivacy rules under HIPAA, we could be subject to civil or criminal penalties, which could increase our liabilities, harm our reputation and have amaterial adverse effect on our business, financial condition and results of operations.Product liability suits, whether or not meritorious, could be brought against us due to an alleged defective product or for the misuse ofour devices. These suits could result in expensive and time-consuming litigation, payment of substantial damages, and an increase in ourinsurance rates.If our current or future products are defectively designed or manufactured, contain defective components or are misused, or if someone claimsany of the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation. Misusing our devices or failing toadhere to the operating guidelines of the Omnipod System or other products based on the Omnipod System technology could cause significantharm to patients, including death. In addition, if our operating guidelines are found to be inadequate, we may be subject to liability. Product liabilityclaims could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us. Whilewe believe that we are reasonably insured against these risks, we may not have sufficient insurance coverage for all future claims. Any productliability claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuingcoverage, could harm our reputation in the industry and could reduce revenue. Product liability claims in excess of our insurance coverage would bepaid out of cash reserves harming our financial condition and adversely affecting our results of operations.Our ability to grow our revenue depends in part on our retaining a high percentage of our customer base.A key to driving our revenue growth is the retention of a high percentage of our customers. We have developed retention programs aimed atboth healthcare professionals and patients, which include appeals assistance, ongoing patient communications, newsletters, support, training andan automatic re-order program for certain patients. We have had a satisfactory customer retention rate; however, we cannot assure you that we willmaintain this retention rate in the future. Current uncertainty in global economic conditions, higher levels of unemployment, changes in insurancereimbursement levels and negative financial news may negatively affect product demand. If demand for our products fluctuates as a result ofeconomic conditions or otherwise, our ability to attract and retain customers could be harmed. The failure to retain a high percentage of ourcustomers would negatively impact our revenue growth and may have a material adverse effect on our business, financial condition and results ofoperations.Under our distribution model, we depend on a small number of customers, including distributors, for a large portion of our business, andchanges in orders from such customers could have a significant impact on our operating results. If a major customer, either in our insulin or non-insulin drug delivery businesses significantly reduces the amount of business it does with us, there would be an adverse impact on our operatingresults.29Table of ContentsRevenue for customers comprising more than 10% of total revenue were as follows: Twelve Months Ended December 31, 2016 2015 2014Amgen, Inc. 17% 10% *Ypsomed Distribution AG 16% 12% 19%RGH Enterprises, Inc. 10% 13% 14%* Customer represents less than 10% of revenue for the period.We have sponsored, and expect to continue to sponsor market studies seeking to demonstrate certain aspects of the efficacy of theOmnipod System, which may fail to produce favorable results.To help improve, market and sell the Omnipod System, we have sponsored, and expect to continue to sponsor market studies to assessvarious aspects of the Omnipod System’s functionality and its relative efficacy. The data obtained from the studies may be unfavorable to theOmnipod System or may be inadequate to support satisfactory conclusions. In addition, in the future we may sponsor clinical trials to assess certainaspects of the efficacy of the Omnipod System. If future clinical trials fail to support the efficacy of our current or future products, our sales may beadversely affected and we may lose an opportunity to secure clinical preference from prescribing clinicians, which may have a material adverseeffect on our business, financial condition and results of operations.If future clinical studies or other articles are published, or diabetes associations or other organizations announce positions that areunfavorable to the Omnipod System, our sales efforts and revenue may be negatively affected.Future clinical studies or other 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 the Omnipod System or that theOmnipod System is not as effective or easy to use as we claim. Additionally, diabetes associations, healthcare providers that focus on diabetes orother organizations that may be viewed as authoritative could endorse products or methods that compete with the Omnipod System or otherwiseannounce positions that are unfavorable to the Omnipod System. Any of these events may negatively affect our sales efforts and result in decreasedrevenue.Substantially all of our operations related to the Omnipod System are conducted at a single location and substantially all of ourOmnipod System inventory is held at a single location. Any disruption at either of these locations could increase our expenses.Substantially all of our manufacturing of complete Omnipod Systems is currently conducted at a single location on manufacturing lines ownedby us at a facility located in China, operated by a subsidiary of Flex. We take precautions to ensure that Flex safeguards our assets, includinginsurance and health and safety protocols. However, a natural or other disaster, such as a fire or flood, could cause substantial delays in ouroperations, damage or destroy our manufacturing equipment, and cause us to incur additional expenses. The insurance we maintain may not beadequate to cover our losses in any particular case. With or without insurance, damage to our manufacturing equipment, or to any of our suppliers,may have a material adverse effect on our business, financial condition and results of operations.In addition, substantially all of our Omnipod System inventory is held at a single location in Bedford, Massachusetts. We take precautions tosafeguard our facility, including insurance, health and safety protocols and off-site storage of computer data. However, a natural or other disaster,such as a fire or flood, could cause substantial delays in our operations, damage or destroy our inventory, and cause us to incur additionalexpenses. The insurance we maintain may not be adequate to cover our losses in any particular case. With or without insurance, damage to ourfacility or our other property may have a material adverse effect on our business, financial condition and results of operations.If we do not effectively manage the construction of our planned manufacturing facility in the U.S., our results of operations may beadversely affected.To lower our manufacturing costs, increase supply redundancy and add capacity to support growth, we intend to construct a highly-automatedmanufacturing facility in the U.S. As of December 31, 2016 we had outstanding purchase commitments with various suppliers for the construction ofthe facility, including $22.8 million with ATS Automation Tooling Systems Inc. for equipment purchases. Also, in December 2016, we entered into anagreement to purchase property for the planned manufacturing facility in Acton, Massachusetts for a total purchase price of $9.3 million. Of the totalpurchase price, $0.5 million was paid as of December 31, 2016 and the remaining $8.830Table of Contentsmillion was subsequently paid upon closing in February 2017. The cost of construction for our planned manufacturing facility in the U.S. couldincrease significantly and there is no assurance that the final cost of the facility will not be materially higher than anticipated. There may be designchanges, material cost escalations or budgetary overruns associated with the construction.We may experience delays in the construction of our planned manufacturing facility in the U.S. We may also encounter defects in materialsand/or workmanship in connection with construction which could lead to a failure to adhere to compliance requirements. Any defects could delay thecommencement of operations of the facility, lead to fines from non-compliance of regulatory requirements, or, if such defects are discovered afteroperations have commenced, could halt or discontinue the facility indefinitely.Our success will depend on our ability to attract and retain personnel.Over the last two years, we have made significant changes to our senior management team and to many other positions throughout theCompany. We believe we will benefit substantially from the leadership and performance of these new employees. As such, our success will dependon our ability to retain our new employees and to attract and retain additional qualified personnel in the future. In addition, it is important to thesuccess of the Company that the transition of the new employees be largely seamless. Our failure to effect this seamless transition may result in adisruption to our business. Competition for senior management personnel, and other highly skilled personnel is intense and there can be noassurances that we will be able to retain our personnel. The loss of the services of members of our senior management, and other highly skilledpersonnel could prevent or delay the implementation and completion of our objectives, or divert management’s attention to seeking qualifiedreplacements.Additionally, the sale and after-sale support of the Omnipod System is logistically complex, requiring us to maintain an extensive infrastructureof field sales personnel, diabetes educators, customer support, insurance specialists, and billing and collections personnel. We face considerablechallenges in recruiting, training, managing, motivating and retaining these teams, including managing geographically dispersed efforts. If we fail tomaintain and grow an adequate pool of trained and motivated personnel, our reputation could suffer and our financial position could be adverselyaffected.If we do not effectively manage our growth, our business resources may become strained, we may not be able to deliver the OmnipodSystem in a timely manner and our results of operations may be adversely affected.Since the commercial launch of the Omnipod System, we have progressively expanded our marketing efforts to cover the entire United States.In addition, the Omnipod System is sold in a number of European countries and Canada. As we continue to expand our sales internationally, we willneed to obtain regulatory approvals and reimbursement agreements with government agencies or private third-party payors in those countries.Failure to obtain such agreements would limit our ability to successfully penetrate those foreign markets. In addition, the geographic expansion ofour business will require additional manufacturing capacity to supply those markets as well as additional sales and marketing resources.We expect to continue to increase our manufacturing capacity, our personnel and the scope of our U.S. and international sales and marketingefforts. This growth, as well as any other growth that we may experience in the future, will provide challenges to our organization and may strain ourmanagement and operations resources. In order to manage future growth, we will be required to improve existing, and implement new sales andmarketing efforts and distribution channels. The form and function of our enterprise information technology systems will need to change and beimproved upon as our business needs change. We will need to manage our supply chain effectively, including the development of our U.S.manufacturing, our relationship with Flex and other suppliers going forward. We may also need to partner with additional third-party suppliers tomanufacture certain components of the Omnipod System and complete additional manufacturing lines in the future. A transition to new suppliersmay result in additional costs or delays. We may misjudge the amount of time or resources that will be required to effectively manage anyanticipated or unanticipated growth in our business or we may not be able to manufacture sufficient inventory, or attract, hire and retain sufficientpersonnel to meet our needs. If we cannot scale our business appropriately, maintain control over expenses or otherwise adapt to anticipated andunanticipated growth, our business resources may become strained, we may not be able to deliver the Omnipod System in a timely manner and ourresults of operations may be adversely affected.If we choose to acquire or invest in new businesses, products or technologies, instead of developing them ourselves, theseacquisitions or investments could disrupt our business and could result in the use of significant amounts of equity, cash or acombination of both.31Table of ContentsFrom time to time we may seek to acquire or invest in new businesses, products or technologies, instead of developing them ourselves.Acquisitions and investments involve numerous risks, including:•the inability to complete the acquisition or investment;•disruption of our ongoing businesses and diversion of management attention;•difficulties in integrating the acquired entities, products or technologies;•risks associated with acquiring intellectual property;•difficulties in operating the acquired business profitably;•the inability to achieve anticipated synergies, cost savings or growth;•potential loss of key employees, particularly those of the acquired business;•difficulties in transitioning and maintaining key customer, distributor and supplier relationships;•risks associated with entering markets in which we have no or limited prior experience; and•unanticipated costs.In addition, any future acquisitions or investments may result in one or more of the following:•dilutive issuances of equity securities, which may be sold at a discount to market price;•the use of significant amounts of cash;•the incurrence of debt;•the assumption of significant liabilities;•increased operating costs or reduced earnings;•financing obtained on unfavorable terms;•large one-time expenses; and•the creation of certain intangible assets, including goodwill, the write-down of which in future periods may result in significant charges toearnings.Any of these factors could materially harm our stock price, business, financial condition and results of operations.We need to expand our distribution network to maintain and grow our business and revenue. If we fail to expand and maintain aneffective sales force or successfully develop our relationships with distributors, our business, prospects and brand may be materiallyand adversely affected.We currently promote, market and sell the majority of our Omnipod Systems through our own direct sales force. We currently utilize a limitednumber of domestic distributors to augment our sales efforts. In addition, in January 2010 we entered into an exclusive distribution agreement withYpsomed to promote, advertise, distribute and sell the Omnipod System in certain countries. This agreement expires in mid-2018. In addition to theOmnipod System, Ypsomed also markets and sells a suite of other products for the treatment of diabetes and has introduced and sells its ownbranded conventional insulin pump. We cannot assure you that we will be able to successfully develop our relationships with third-party distributors.If we fail to do so, our sales could fail to grow or could decline, and our ability to grow our business could be adversely affected. Distributors that arein the business of selling other medical products may not devote a sufficient level of resources and support required to generate awareness of ourproducts and grow or maintain product sales. If our distributors are unwilling or unable to market and sell our products, or if they do not perform toour expectations, we could experience delayed or reduced market acceptance and sales of our products.32Table of ContentsIf we are unable to successfully maintain effective internal control over financial reporting, investors may lose confidence in ourreported financial information and our stock price and our business may be adversely impacted.As a public company, we are required to maintain internal control over financial reporting and our management is required to evaluate theeffectiveness of our internal control over financial reporting as of the end of each fiscal year. Additionally, we are required to disclose in our AnnualReports on Form 10-K our management’s assessment of the effectiveness of our internal control over financial reporting along with a registeredpublic accounting firm’s attestation report on the effectiveness of our internal controls. If we are not successful in maintaining effective internalcontrol over financial reporting, there could be inaccuracies or omissions in the consolidated financial information we are required to file with theSecurities and Exchange Commission. Additionally, even if there are no inaccuracies or omissions, we will be required to publicly disclose theconclusion of our management that our internal control over financial reporting or disclosure controls and procedures are not effective. These eventscould cause investors to lose confidence in our reported financial information, adversely impact our stock price, result in increased costs toremediate any deficiencies, attract regulatory scrutiny or lawsuits that could be costly to resolve and distract management’s attention, limit our abilityto access the capital markets or cause our stock to be delisted from The NASDAQ Global Market or any other securities exchange on which it isthen listed.The price of our common stock may be volatile.The market price of our common stock is affected by a number of factors, including:•failure to maintain and increase production capacity and reduce per unit production costs;•changes in the availability of third-party reimbursement in the United States or other countries;•volume and timing of orders for the Omnipod System;•developments in administrative proceedings or litigation related to intellectual property rights;•issuance of patents to us or our competitors;•the announcement of new products or product enhancements by us or our competitors;•the announcement of technological or medical innovations in the treatment or diagnosis of diabetes;•changes in governmental regulations or in the status of our regulatory approvals or applications;•developments in our industry;•publication of clinical studies relating to the Omnipod System or a competitor’s product;•quarterly variations in our or our competitors’ results of operations;•changes in earnings estimates or recommendations by securities analysts; and•general market conditions and other factors, including factors unrelated to our operating performance or the operating performance ofour competitors.At times, the fluctuations in the market price of our common stock have been unrelated or disproportionate to our operating performance. Inparticular, the U.S. equity markets have at times experienced significant price and volume fluctuations that have affected the market prices of equitysecurities of many technology companies. Broad market and industry factors such as these could materially and adversely affect the market price ofour stock, regardless of our actual operating performance.Conversion of any of our 2% and 1.25% Convertible Senior Notes may dilute the ownership interest of existing stockholders or depressour stock price.The conversion of some or all of the 2% and 1.25% Convertible Senior Notes may dilute the ownership interests of existing stockholders. Anysales in the public market of any of our common stock issuable upon such conversion could adversely affect prevailing market prices of our commonstock. In addition, the anticipated conversion of the Convertible Senior Notes into a combination of cash and shares of our common stock coulddepress the price of our common stock.Furthermore, the price of our common stock also could be affected by possible sales of our common stock by investors who view the 2% and1.25% Convertible Senior Notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expectwill develop involving our common stock. A decline in the price of shares of our common stock might impede our ability to raise capital through theissuance of additional shares of our common stock or other equity securities.We could be subject to indemnification obligations in connection with the disposition of our former Neighborhood Diabetes suppliesbusiness.33Table of ContentsIn February 2016, we sold Neighborhood Diabetes to Liberty Medical for $6.2 million in cash, which included $1.2 million of closingadjustments finalized in June 2016 and paid by Liberty Medical. Under the terms of the sale, we agreed to indemnify Liberty Medical for certaincustomary matters primarily related to our pre-closing operation of the business. Although we currently do not expect any material indemnificationobligations to arise, we could be required to reimburse Liberty Medical for such claims in the event that they were to arise.Our ability to use net operating loss carryforwards may be subject to limitation.Section 382 of the U.S. Internal Revenue Code of 1986, as amended, imposes an annual limit on the amount of net operating losscarryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership or equitystructure. Our ability to use net operating losses may be limited by prior changes in our ownership, and may be further limited by the issuance ofcommon stock in connection with the conversion of our Convertible Senior Notes, or by the consummation of other transactions. As a result, if weearn net taxable income, our ability to use net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations,which could potentially result in increased future tax liabilities for us.Anti-takeover provisions in our organizational documents, our shareholder rights plan and Delaware law may discourage or prevent achange of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely andprevent attempts by our stockholders to replace or remove our current management.Our certificate of incorporation and bylaws contain provisions that could delay or prevent a change of control of our company or changes in ourboard of directors that our stockholders might consider favorable. Some of these provisions:•authorize the issuance of preferred stock which can be created and issued by the board of directors without prior stockholder approval,with rights senior to those of our common stock;•provide for a classified board of directors, with each director serving a staggered three-year term;•prohibit our stockholders from filling board vacancies, calling special stockholder meetings or taking action by written consent;•provide for the removal of a director only with cause and by the affirmative vote of the holders of 75% or more of the shares then entitledto vote at an election of our directors; and•require advance written notice of stockholder proposals and director nominations.We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinationswith stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our certificate of incorporation, bylaws andDelaware law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that areopposed by our then-current board of directors, including a merger, tender offer or proxy contest involving our company. Any delay or prevention ofa change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.In addition, in November 2008, our board of directors adopted a shareholder rights plan, implementing what is commonly known as a “poisonpill.” This poison pill significantly increases the costs that would be incurred by an unwanted third party acquirer if such party owns or announces itsintent to commence a tender offer for more than 15% of our outstanding common stock or otherwise “triggers” the poison pill by exceeding theapplicable stock ownership threshold. The existence of this poison pill could delay, deter or prevent a takeover of us.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe lease a total of approximately 133,000 square feet of office space, laboratory, warehousing and other related facilities. Approximately100,000 of the total square footage consists of laboratory and office space for our corporate headquarters in Billerica, Massachusetts under leasesexpiring in November 2022.Additionally, we lease approximately 29,000 square feet of warehousing space in Billerica, Massachusetts under a lease expiring in September2019. We lease other facilities in Canada, China, California and Tennessee containing a total of approximately 4,000 square feet under leasesexpiring from May 2017 to May 2018.In December 2016, we entered into an agreement to purchase property for the planned manufacturing facility in Acton, Massachusetts. Theproperty includes 195,000 square feet of manufacturing and office space.34Table of ContentsItem 3. Legal ProceedingsThe information required by this Item is provided under "Legal Proceedings" in note 15 to the consolidated financial statements included underItem 8 of this Form 10-K, and is incorporated herein by reference.Item 4. Mine Safety DisclosuresNot applicable.35Table of ContentsPART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMARKET FOR REGISTRANT'S COMMON EQUITYOur common stock has been listed on The NASDAQ Global Market under the trading symbol “PODD” since our initial public offering onMay 15, 2007. The following table sets forth the high and low closing sales prices of our common stock, as reported by The NASDAQ GlobalMarket, for each of the periods listed. High LowFiscal Year 2015 First Quarter$45.18 $29.39Second Quarter$31.85 $26.23Third Quarter$34.39 $25.64Fourth Quarter$39.32 $26.36Fiscal Year 2016 First Quarter$37.54 $24.68Second Quarter$35.15 $26.89Third Quarter$45.07 $30.46Fourth Quarter$40.72 $30.73As of February 21, 2017 , there were approximately 10 registered holders of record of our common stock. The number of beneficialstockholders of our shares is greater than the number of stockholders of record.Performance GraphThe chart set forth below shows the value of an investment of $100 on December 31, 2011 in each of Insulet Corporation common stock, theNASDAQ Composite Index, and the NASDAQ Health Care Index. All values assume reinvestment of the pre-tax value of dividends paid bycompanies included in these indices and are calculated as of December 31, 2016 . The historical stock price performance of our common stockshown in the performance graph below is not necessarily indicative of future stock price performance. 201120122013201420152016Insulet Corporation$100$113$197$245$201$200NASDAQ Composite100116165189200217NASDAQ Health Care10012419324625721236Table of ContentsThe material in this performance graph is not soliciting material, is not deemed filed with the Securities and Exchange Commission (“SEC”)and is not incorporated by reference in any filing of Insulet Corporation under the Securities Act of 1933, as amended (the “Securities Act”) or theExchange Act of 1934, as amended, whether made on, before or after the date of this filing and irrespective of any general incorporation language insuch filing.Dividend PolicyWe currently intend to retain future earnings for the development, operation and expansion of our business and do not anticipate paying anycash dividends in the foreseeable future.Securities Authorized For Issuance Under Equity Compensation PlansThe following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December31, 2016 . Plan CategoryNumber of securities to beissued upon exercise ofoutstanding options,warrants and rights(a) Weighted averageexercise price ofoutstanding options,warrants and rights(b) Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a))(c) Equity compensation plans approved by securityholders (1)3,576,322 $24.45 4,487,991 Equity compensation plans not approved by securityholders (2)827,200 $28.54 — Total (4)4,403,522 $25.22 4,487,991(3) (1) Includes our Amended and Restated 2007 Stock Option and Incentive Plan. Outstanding restricted stock units convert to common stock without the payment ofconsideration. As of December 31, 2016 , 860,123 restricted stock units were outstanding. The weighted-average exercise price of outstanding options as of such dateissued under these Plans (excluding restricted stock units) was $32.76.(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 stockoption awards made to Patrick J. Sullivan upon being hired by us in September 2014; one inducement grant of 26,756 non-qualified stock options and 18,182 restrictedstock units (6,060 and 6,061 of which vested during the years ended December 31, 2015 and 2016, respectively) made to Bradley Thomas upon being hired by us inNovember 2014; one inducement grant of 79,936 non-qualified stock options and 56,965 restricted stock units (18,988 of which vested during the year ended December 31,2016) made to Shacey Petrovic upon being hired by us in February 2015; one inducement grant of 58,852 non-qualified stock options and 43,028 restricted stock units(14,342 of which vested during the year ended December 31, 2016) made to Michael Levitz upon being hired by us in May 2015; one inducement grant of 29,581 non-qualified stock options and 21,627 restricted stock units (7,209 of which vested during the year ended December 31, 2016) made to David Colleran upon being hired by us inJune 2015; and one inducement grant of 30,511 non-qualified stock options and 22,431 restricted stock units (7,477 of which vested during the year ended December 31,2016) made to Michael Spears upon being hired by us in July 2015. These non-qualified stock option awards and restricted stock units were granted outside of ourAmended and Restated 2007 Stock Option and Incentive Plan in compliance with Nasdaq Listing Rule 5635.(3) The maximum number of shares of our common stock that remain available for future issuance under our 2007 Stock Option and Incentive Plan as of December 31, 2016 is4,487,991 shares.(4) As of December 31, 2016 , 962,219 restricted stock units were outstanding. The weighted-average exercise price of outstanding options as of such date issued asinducement grants (excluding restricted stock units) was $35.08.For more information relating to our equity compensation plans, see footnote 16 to our consolidated financial statements.Issuer Repurchases of Equity SecuritiesWe did not repurchase any of our equity securities during the quarter ended December 31, 2016 , nor issue any securities that were notregistered under Securities Act.Purchases of Equity Securities by the Issuer and Affiliated PurchasersNone.Item 6. Selected Financial Data37Table of Contents Years Ended December 31,(In thousands, except share and per share data)2016 2015 2014 2013 2012Consolidated Statements of Operations Data: Revenue$366,989 $263,893 $231,321 $185,139 $148,898Cost of revenue155,903 130,622 104,195 95,364 80,430Gross profit211,086 133,271 127,126 89,775 68,468Operating expenses: Research and development55,710 43,208 27,900 21,765 24,359Sales and marketing94,483 78,407 50,552 45,176 40,436General and administrative (1)71,597 60,392 57,548 49,509 34,642Total operating expenses221,790 182,007 136,000 116,450 99,437Operating loss(10,704) (48,736) (8,874) (26,675) (30,969)Interest and other income (loss), net(16,114) (12,654) (39,006) (15,783) (15,702)Loss from continuing operations before income taxes(26,818) (61,390) (47,880) (42,458) (46,671)Income tax expense (benefit)392 212 60 22 (9)Net loss from continuing operations(27,210) (61,602) (47,940) (42,480) (46,662)Loss from discontinued operations, net of tax (2)(1,669) (11,918) (3,560) (2,494) (5,205)Net loss$(28,879) $(73,520) $(51,500) $(44,974) $(51,867)Net loss per share basic and diluted: Net loss from continuing operations per share(0.48) (1.08) (0.86) (0.78) (0.97)Net loss from discontinued operations per share(0.03) (0.21) (0.06) (0.05) (0.11)Weighted-average number of shares used in calculating net lossper share (3)57,251,377 56,785,646 55,628,542 54,010,887 47,924,324 As of December 31,(In thousands)2016 2015 2014 2013 2012Consolidated Balance Sheets Data: Cash and cash equivalents$137,174 $122,672 $151,193 $149,727 $57,293Short-term investments (4)$161,396 $— $— $— $—Working capital$314,263 $125,605 $163,900 $155,824 $61,650Total assets$456,647 $275,126 $297,182 $286,541 $196,055Current portion of long-term debt and capital lease obligations$269 $5,519 $3,380 $2,637 $14,429Long-term debt and capital lease obligations (5)$332,768 $171,967 $166,283 $117,627 $101,726Other long-term liabilities$5,032 $3,952 $2,774 $1,943 $1,867Total stockholders’ equity$63,150 $34,051 $83,829 $124,597 $44,176 (1) Included a charge of $6.1 million related to in-process internally developed software in 2016. See note 12 to our consolidated financial statements included in this AnnualReport on Form 10-K.(2) Included an impairment charge of $9.0 million in 2015 related to the impairment of the Neighborhood Diabetes asset group. See note 13 to our consolidated financialstatements included in this Annual Report on Form 10-K.(3) In January 2013, we issued and sold 4.7 million shares of common stock to the public. In July 2014, we issued 0.3 million shares of common stock in connection with therepurchase of the 3.75% Senior Convertible Notes. See note 7 to our consolidated financial statements included in this Annual Report on Form 10-K.(4) We invested in short-term investments beginning in 2016. See note 6 to our consolidated financial statements included in this Annual Report on Form 10-K.(5) In June 2008, we issued and sold $85.0 million principal amount of 5.375% Convertible Senior Notes due June 2013. In June 2011, we issued and sold $143.8 million of3.75% Convertible Notes due June 2016 and repurchased $70 million in principal of the 5.375% Notes. In June 2014, we issued and sold $201.3 million of 2%Convertible Notes due June 2019 and repurchased $114.9 million in 3.75% Notes. In July 2014, the remaining principal balance of the 3.75% Notes were converted andthe principal was settled in cash. In September 2016, we issued $345.0 million of 1.25% Convertible Notes due September 2021 and repurchased $134.2 million inprincipal of the 2% Notes. In 2013 and 2014 we acquired $9.0 million and $1.5 million, respectively, of manufacturing equipment under capital leases. See notes 7 and 8to our consolidated financial statements included in this Annual Report on Form 10-K.38Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsExecutive Level OverviewWe are primarily engaged in the development, manufacturing and sale of our proprietary Omnipod System, an innovative, discreet and easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod System features a small, lightweight, self-adhesivedisposable tubeless Omnipod device which is worn on the body for approximately three days at a time and its wireless companion, the handheldPDM. Conventional insulin pumps require people with insulin-dependent diabetes to learn to use, manage and wear a number of cumbersomecomponents, including up to 42 inches of tubing. In contrast, the Omnipod System features only two discreet, easy-to-use devices that eliminate theneed for a bulky pump, tubing and separate blood glucose meter, provides for virtually pain-free automated cannula insertion, communicateswirelessly and integrates a blood glucose meter. We believe that the Omnipod System’s unique proprietary design and features allow people withinsulin-dependent diabetes to manage their diabetes with unprecedented freedom, comfort, convenience, and ease.We began commercial sale of the Omnipod System in the United States in 2005. We sell the Omnipod System in the United States throughdirect sales to customers or through our distribution partners. The Omnipod System is currently available in multiple countries in Europe, Canadaand Israel. In July 2015, we executed an asset purchase agreement with GlaxoSmithKline (GSK) whereby we acquired assets associated with theCanadian distribution of our products and we assumed the distribution, sales, marketing, training and support activities for the Omnipod system inCanada. Additional information regarding this acquisition is provided in note 4 to the consolidated financial statements included under Item 8 of thisForm 10-K.In addition to using the Pod for insulin delivery, we also partner with global pharmaceutical and biotechnology companies to tailor the OmnipodSystem technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas. In June 2011, we acquired Neighborhood Diabetes. Through Neighborhood Diabetes, we provided customers with blood glucose testingsupplies, traditional insulin pumps, pump supplies and pharmaceuticals and had the ability to process claims as either durable medical equipment orthrough pharmacy benefits. In February 2016, we sold Neighborhood Diabetes to Liberty Medical. Additional information regarding the sale ofNeighborhood Diabetes is provided in note 3 to the consolidated financial statements included under Item 8 of this Form 10-K.Highlights and Recent Developments:•Strengthened leadership team with appointment of key executives across the Company.•Evidence demonstrating Omnipod's improved glycemic control and quality of life published in the Journal of Diabetes Technology &Therapeutics and the Journal of Diabetes Science and Technology.•Completed private placement of $345.0 million in principal amount of 1.25% Convertible Senior Notes due in 2021 and the repurchase of$134.2 million in principal amount of the existing 2.00% Convertible Senior Notes due in 2019.•Divested Neighborhood Diabetes medical supplies distribution business to focus on growth opportunities in insulin and drug delivery.•Expanded development partnership with Eli Lilly and Company for Omnipod delivery of Humalog 200 concentrated insulin, in addition to theCompany's already-existing partnership for Humalog U500.•Partnered with Joslin Diabetes Center to implement a unique training certification for Insulet's clinical team.2016 Revenue Results:•Total revenue of $367.0 million◦U.S. Omnipod revenue of $229.8 million◦International Omnipod revenue of $71.9 million◦Drug Delivery revenue of $65.3 millionOur long-term financial objective is to achieve and sustain profitable growth. We expect our efforts in 2017 to focus primarily on the expansion ofour customer base in the United States and internationally, increasing our gross profit and product development. Achieving these objectives isexpected to require additional investments in certain personnel and initiatives, as well as enhancements to our supply chain operation capacity,efficiency and effectiveness. We believe that we will continue to incur net losses in the near term in order to achieve these39Table of Contentsobjectives. However, we believe that the accomplishment of our near term objectives will have a positive impact on our financial condition in thefuture.Components of Financial OperationsRevenue. We derive most of our revenue from global sales of the Omnipod System. Our revenue also includes sales of devices based on theOmnipod System technology platform to global pharmaceutical and biotechnology companies for the delivery of subcutaneous drugs across multipletherapeutic areas.Cost of revenue. Cost of revenue consists primarily of raw material, labor, warranty, inventory reserve and overhead costs such as freight-inand depreciation and the cost of products we acquire from third party suppliers.Research and development. Research and development expenses consist primarily of personnel costs and outside services within ourproduct development, regulatory and clinical functions, and product development projects. We generally expense research and development costsas incurred.Sales and marketing. Sales and marketing expenses consist primarily of personnel costs within our sales, marketing, reimbursement support,customer care and training functions, sales commissions paid to our sales representatives, costs associated with promotional activities andparticipation in industry trade shows.General and administrative. General and administrative expenses consist primarily of salaries and other related costs for personnel servingthe executive, finance, legal, information technology and human resource functions, as well as legal fees, accounting fees, insurance costs, baddebt expenses, shipping, handling and facilities-related costs.40Table of ContentsResults of OperationsThis section discusses our consolidated results of operations for 2016 compared to 2015 , as well as 2015 compared to 2014 , and should beread in conjunction with the consolidated financial statements and accompanying notes included under Item 8 of this Form 10-K.TABLE 1: RESULTS OF OPERATIONS Years Ended December 31, Years Ended December 31,(In Thousands)2016 2015 $ Change % Change 2015 2014 $ Change % ChangeRevenue U.S. Omnipod$229,785 $189,604 $40,181 21 % $189,604 $175,950 $13,654 8 %International Omnipod71,889 40,339 31,550 78 % 40,339 50,025 (9,686) (19)%Drug Delivery65,315 33,950 31,365 92 % 33,950 5,346 28,604 535 %Total Revenue366,989 263,893 103,096 39 % 263,893 231,321 32,572 14 %Cost of revenue155,903 130,622 25,281 19 % 130,622 104,195 26,427 25 %Gross profit211,086 133,271 77,815 58 % 133,271 127,126 6,145 5 %Gross margin57.5% 50.5% 7 50.5% 55.0% -4.5Operating expenses: Research and development55,710 43,208 12,502 29 % 43,208 27,900 15,308 55 %Sales and marketing94,483 78,407 16,076 21 % 78,407 50,552 27,855 55 %General and administrative71,597 60,392 11,205 19 % 60,392 57,548 2,844 5 %Total operating expenses221,790 182,007 39,783 22 % 182,007 136,000 46,007 34 %Operating loss(10,704) (48,736) (38,032) (78)% (48,736) (8,874) 39,862 449 %Interest and other income (loss), net(16,114) (12,654) (3,460) (27)% (12,654) (39,006) 26,352 (68)%Loss from continuing operationsbefore income taxes(26,818) (61,390) (34,572) (56)% (61,390) (47,880) 13,510 28 %Income tax expense392 212 180 85 % 212 60 152 253 %Net loss from continuing operations(27,210) (61,602) (34,392) (56)% (61,602) (47,940) 13,662 28 %Loss from discontinued operations,net of tax(1,669) (11,918) (10,249) (86)% (11,918) (3,560) 8,358 235 %Net loss$(28,879) $(73,520) $(44,641) 61 % $(73,520) $(51,500) $(22,020) 43 %Comparison of the Years Ended December 31, 2016 and December 31, 2015RevenueOur total revenue increased to $367.0 million , up $103.1 million , or 39% , in 2016 compared to 2015 , primarily due to strong growth in ourU.S. Omnipod revenue, International Omnipod revenue and our on-body injection device for drug delivery. Our U.S. Omnipod revenue increased to$229.8 million , up $40.2 million , or 21% , primarily due to growth in our installed base of Omnipod users which was greatly driven by the expansionin 2015 and 2016 of our sales force and customer support personnel and strategic initiatives introduced in mid-2015 to expand awareness of theOmnipod System. The results for 2015 were also partially impacted by unfavorable distributor ordering patterns in the first quarter of 2015 whichstabilized thereafter. Our International Omnipod revenue increased to $71.9 million , up $31.6 million , or 78% , primarily due to growth in distributorsales from continued adoption in existing markets and to a lesser extent from entry into new markets. The results for 2015 included lowerInternational Omnipod sales which partially resulted from unfavorable distributor ordering patterns in the first and second quarters of 2015 whichstabilized thereafter. Our drug delivery revenue increased to $65.3 million , up $31.4 million , or 92% , due to strong growth in demand for ourprimary drug delivery device following regulatory approval in December 2014.For 2017 we expect strong revenue growth across all of our product lines as we continue our expansion in the U.S. and internationally. Weexpect strong growth of approximately 20% in our worldwide Omnipod installed base.Cost of Revenue41Table of ContentsCost of revenue increased to $155.9 million , up $25.3 million , or 19% , in 2016 compared to 2015 , primarily due to an increase in salesvolumes, partially offset by $11.5 million of costs incurred during 2015 that were considered non-recurring in nature, along with supply chainoperation efficiency and effectiveness improvements made in 2016.Gross MarginGross margin increased to 57.5% , up approximately 7 points, in 2016 compared to 2015 , primarily due to $11.5 million of costs incurred in2015 that were considered non-recurring in nature, along with supply chain operation efficiency and effectiveness improvements made in 2016.For 2017 , we expect gross margin to increase primarily from improvements to our supply chain operation efficiency and effectiveness asdemonstrated in 2016.Research and DevelopmentResearch and development expenses increased to $55.7 million , up $12.5 million , or 29% , in 2016 compared to 2015 , primarily due to anincrease in expenses related to our development projects, including our mobile application development which involves interaction with continuousglucose monitoring technology, artificial pancreas program, development efforts with Eli Lilly and Company for the use of concentrated insulin forpatients with higher insulin-resistance and other Omnipod product improvement initiatives.For 2017 , we expect overall research and development spending to increase due to the development efforts on our ongoing projectsdescribed above.Sales and MarketingSales and marketing expenses increased to $94.5 million , up $16.1 million , or 21% , for 2016 , compared to 2015 , primarily due to anincrease of $16.0 million in personnel-related expenses, including increased incentive compensation costs resulting from growth in the business, aswell as costs associated with the expansion in 2015 of our sales force and customer support personnel.We expect sales and marketing expenses in 2017 to increase due to the expansion of our sales force and customer support personnel.General and AdministrativeGeneral and administrative expenses increased to $71.6 million , up $11.2 million , or 19% , for 2016 , compared to 2015 . This increaseincludes a charge of $6.1 million related to in-process internally developed software recorded in the fourth quarter of 2016 due to a change in ourlonger-term enterprise resource planning (“ERP”) system requirements. In addition, the increase was also due to a $4.6 million increase that wasprimarily attributable to personnel-related costs on higher incentive compensation associated with growth in our business, as well as additional staffto support our growth expectations and fees paid for external consultants.For 2017 , we expect overall general and administrative expenses to increase as compared to 2016 as we continue to grow the businessand make investments in our operating structure to support this continued growth.Interest and Other Income (Loss), NetInterest and other income (loss), net increased to $16.1 million , up $3.5 million , or 27% , for 2016 , compared to 2015 , primarily due to$3.0 million of net additional interest expense associated with the issuance of the 1.25% Notes and a $2.6 million charge recorded for theextinguishment of debt related to the repurchase of $134.2 million in principal of the 2% Notes. This was partially offset from a slight decrease incapital lease interest expense.Income Tax ExpenseIn 2016 and 2015, income tax expense was $0.4 million and $0.2 million , respectively. The increase in tax expense is due to foreign taxesdue to our acquisition in mid-2015 of the Canadian distribution business. Additional information regarding income tax expense is provided in note 18to the consolidated financial statementsLoss from Discontinued Operations, Net of TaxThe loss from discontinued operations decreased by approximately $10.2 million in 2016, compared to the year ended December 31, 2015.This decrease was primarily the result of a $9.1 million impairment charge recorded in the fourth quarter of 2015 for the long-lived assets ofNeighborhood Diabetes which we sold in February 2016. As the Neighborhood Diabetes business was sold in February 2016, 2016 includes lessthan two months of full operations compared to a full year for 2015.Comparison of the Years Ended December 31, 2015 and December 31, 201442Table of ContentsRevenueOur total revenue increased to $263.9 million , up $32.6 million , or 14% , in 2015 , compared to 2014 , led by growth in our U.S. Omnipodrevenue and our on-body injection device for drug delivery, offset by lower international Omnipod revenue. Our U.S. Omnipod revenue increased to$189.6 million , up $13.7 million , or 8% , due to growth in our installed base of Omnipod users offset in part by unfavorable distributor orderingpatterns and a reduction in royalty revenues of $3.2 million. Our drug delivery revenue increased to $34.0 million , up $28.6 million due to stronggrowth in demand for our on-body injection device following regulatory approval in December 2014. Our International Omnipod revenue decreasedto $40.3 million , down $9.7 million , or 19% , primarily reflecting lower distributor sales due to changes in distributor ordering patterns despitecontinued growth in our installed base of Omnipod users. This decrease internationally was partially offset by growth in Canada (we acquired ourCanadian distributor in July 2015).Cost of RevenueCost of revenue increased to $130.6 million , up $26.4 million , or 25% , in 2015 compared to 2014 , due to an increase in sales volumes, aswell as $11.5 million of costs directly and indirectly attributable to a voluntary Field Safety Notification that we initiated in November 2015 afteridentifying certain lots of Omnipod product which had a slight increase in the reported cases in which the needle mechanism failed to deploy or therewas a delay in the deployment of the needle mechanism. The product manufactured in this condition was contained prior to distribution and wasultimately scrapped.Gross MarginGross margin decreased to 50.5% , down approximately 4.5 points in 2015 compared to 2014 , primarily due to approximately $11.5 millionof costs directly and indirectly attributable to the voluntary field safety notification. The decrease in gross margin also reflects an increasedinvestment in product quality and related policies and procedures to stand behind our products, which contributed to a $3.3 million increase inwarranty expense year over year, of which $0.4 million related to the voluntary field safety notification.Research and DevelopmentResearch and development expenses increased to $43.2 million , up $15.3 million , or 55% , in 2015 compared to 2014 , due to expensesrelated to our development projects, including a new PDM, the use of concentrated insulin for patients with higher insulin-resistance and investmentin our artificial pancreas program, as well as expenses related to software development costs of $10.5 million.Sales and MarketingSales and marketing expenses increased to $78.4 million , up $27.9 million , or 55% , for 2015 compared to 2014 , primarily due to a $19.5million increase in employee related expenses associated with the expansion of our sales force and customer support personnel. Additionally, therewas a $6.9 million increase in costs associated with marketing campaigns, new market opportunities and other strategic initiatives.General and AdministrativeGeneral and administrative expenses increased to $60.4 million , up $2.8 million , or 5% , for 2015 compared to 2014 , mainly the result ofan increase of $1.7 million in audit, professional services and consulting fees and an increase of $1.6 million in technology license fees andconsulting services. Additionally, there was an increase in shipping costs of $1.4 million, an increase in employee related expenses of $0.9 million, a$0.9 million increase in expenses associated with claims and settlements and a $0.9 million increase in occupancy and depreciation expense. Thisincrease was partially offset by a decrease in legal fees of approximately $6.2 million, mainly related to the Becton, Dickinson and Companylitigation settlement in 2014.Interest and Other Income (Loss), NetInterest and other income (loss), net decreased to $12.7 million , down $26.4 million , or 68% for 2015 compared to 2014 , due to the loss fromextinguishment of long-term debt of $23.2 million in 2014 as well as the change in interest rate on our long-term debt to 2% in mid-2014 from 3.75%.Income Tax ExpenseIn 2015 and 2014, income tax expense was $0.2 million and $0.1 million, respectively. Income tax expense is comprised of a current portionfor 2015 and 2014 and deferred portion for 2015. The current portion primarily related to state and foreign taxes and the deferred portion primarilyrelated to federal and state tax amounts. The increase in tax expense was due to foreign taxes due to our acquisition in 2015 of the Canadiandistribution assets. Additional information regarding income tax expenses is provided in note 18 to the consolidated financial statements.43Table of ContentsLoss from Discontinued Operations, Net of TaxThe loss from discontinued operations increased by approximately $8.4 million in 2015 compared to 2014. This increase was primarily theresult of a $9.1 million impairment charge recorded in the fourth quarter of 2015 for the long-lived assets of Neighborhood Diabetes.Liquidity and Capital ResourcesAs of December 31, 2016 , we had $137.2 million in cash and cash equivalents and $161.4 million in short-term investments. We believe thatour current liquidity, together with the cash expected to be generated from sales, will be sufficient to meet our projected operating and debt servicerequirements for at least the next twelve months.To lower our manufacturing costs, increase supply redundancy, add capacity closer to our largest customer base and support growth, weintend to construct a highly-automated manufacturing facility in the U.S., with planned production out of the facility beginning in 2019. We expectcapital expenditures to increase above historic levels to fund the construction of the manufacturing facility and related equipment purchases. Webelieve that our current liquidity will be sufficient to meet our projected expenditures associated with this project.Convertible DebtIn September 2016, we issued and sold $345.0 million in principal amount of 1.25% Convertible Senior Notes due September 2021 ("1.25%Notes"). The interest rate on the notes is 1.25% per annum, payable semi-annually in arrears in cash on March 15 and September 15 of each year.Interest began accruing on September 13, 2016; the first interest payment is due on March 15, 2017. The 1.25% Notes are convertible into ourcommon stock at an initial conversion rate of 17.1332 shares of common stock per $1,000 principal amount of the 1.25% Notes, which is equivalentto a conversion price of approximately $58.37 per share, subject to adjustment under certain circumstances. The 1.25% Notes will be convertibleprior to the close of business on the business day immediately preceding June 15, 2021 only under certain circumstances and during certainperiods, and will be convertible on or after June 15, 2021 until the close of business on the second scheduled trading day immediately precedingSeptember 15, 2021, regardless of those circumstances.Cash interest expense related to the 1.25% Notes in the year ended December 31, 2016 was $1.3 million . Non-cash interest expense relatedto the 1.25% Notes was comprised of the amortization of the debt discount and debt issuance costs and in the year ended December 31, 2016 was$3.8 million .In June 2014 we issued and sold $201.3 million in principal amount of 2% Convertible Senior Notes due June 15, 2019 (the "2% Notes"). Theinterest rate on the notes is 2% per annum, payable semi-annually in arrears in cash on June 15 and December 15 of each year. The 2% Notes areconvertible into our common stock at an initial conversion rate of 21.5019 shares of common stock per $1,000 principal amount of the 2% Notes,which is equivalent to a conversion price of approximately $46.51 per share , subject to adjustment under certain circumstances.In September 2016, in connection with the issuance of $345.0 million in principal amount of 1.25% Notes discussed above, we repurchasedapproximately $134.2 million in principal amount of the 2% Notes for $153.6 million. The $154.3 million paid to extinguish the debt was allocated todebt and equity based on their respective fair values immediately prior to the transaction. We allocated $121.4 million of the payment to the debt and$32.9 million to equity.Cash interest expense related to the 2% Notes in the years ended December 31, 2016 , 2015 and 2014 was $3.2 million , $4.0 million and $2.3million , respectively. Non-cash interest expense related to the 2% Notes was comprised of the amortization of the debt discount and debt issuancecosts and in the years ended December 31, 2016 , 2015 and 2014 was $6.3 million , $7.7 million and $4.0 million , respectively.Additional information regarding our debt issuances is provided in note 7 to the consolidated financial statements included under Item 8 of thisForm 10-K.Capital LeasesAs of December 31, 2016 and December 31, 2015 , we had approximately $13.7 million of manufacturing equipment acquired under capitalleases. As of December 31, 2016 , one capital lease remained outstanding and is being repaid in equal monthly installments over a 24 month term,ending in the first quarter of 2017, and includes principal and interest payments with an effective interest rate of 13% .Additional information regarding our capital leases is provided in note 8 to the consolidated financial statements included under Item 8 of thisForm 10-K.44Table of ContentsSummary of Cash Flows Years Ended December 31,(In thousands) 2016 2015 2014Cash provided by (used in): Operating activities $15,911 $(12,552) $8,920Investing activities (178,010) (15,323) (11,486)Financing activities 176,567 (371) 4,032Effect of exchange rate changes on cash 34 (275) —Net increase (decrease) in cash and cash equivalents $14,502 $(28,521) $1,466Included in our summary of cash flows are the results of our discontinued operations. Refer to note 3 in the consolidated financial statementsfor further information.Operating ActivitiesOur net cash provided by operating activities for the year ended December 31, 2016 was $15.9 million compared to net cash used in operatingactivities of $12.6 million in the same period of 2015 . The increase was primarily due to a lower net loss recorded for the year and improvedcustomer collections, partially offset by timing of cash disbursements and additional inventory purchases in order to support customer demand andto allow for alternative shipping methods which in turn is expected to lower our distribution costs.Our net cash used in operating activities was $12.6 million for the year ended December 31, 2015 compared to net cash provided by operatingactivities of $8.9 million in the same period of 2014 . The decrease was primarily due to the increased investment in business operations in 2015 tosupport the growth of the business.Investing ActivitiesOur net cash used in investing activities in the year ended December 31, 2016 was $178.0 million compared to $15.3 million in the sameperiod of 2015 . In the year ended December 31, 2016 , we invested $161.6 million into short-term investments (net of proceeds from redemptionsand sales), driven by the net proceeds from the issuance of the 1.25% Notes. There were no such investments in 2015. In addition, the increase ininvesting activities relates to higher capital purchases of $22.1 million in 2016 compared to $10.6 million in 2015, primarily associated withinvestments in supply chain operations including $10.7 million for equipment in process of construction to support our U.S. manufacturing initiatives.Net cash used in investing activities in the year ended December 31, 2015 was $15.3 million compared to $11.5 million in the same period of2014 . The $3.8 million increase primarily related to the acquisition of our Canadian distributor in July 2015 of $4.7 million, partially offset by lowercapital purchases.Financing ActivitiesOur net cash provided by financing activities for the year ended December 31, 2016 was $176.6 million compared to $0.4 million in net cashused in financing activities in the same period of 2015 . The increase was primarily attributable to net proceeds of $333.7 million in September 2016from the issuance of the 1.25% Notes, offset by repayments of $153.6 million to extinguish $134.2 million or approximately 67% of our outstanding2% Notes.Net cash used in financing activities in the year ended December 31, 2015 was $0.4 million compared to $4.0 million in net cash provided byfinancing activities in the same period of 2014 . The $4.4 million decrease was primarily attributable to the increase in capital lease property andequipment in 2015 as well as a $5.0 million net decrease in proceeds related to the 2014 issuance of the 2% Notes.Commitments and ContingenciesWe lease our facilities in Massachusetts, California, Tennessee, Canada and China. Our leases are accounted for as operating leases. Theleases generally provide for a base rent plus real estate taxes and certain operating expenses related to the leases.Certain of our operating lease agreements contain scheduled rent increases. Rent expense is recorded using the straight-line method anddeferred rent is included in other liabilities in the accompanying consolidated balance sheets.45Table of ContentsThe following table summarizes our principal obligations as of December 31, 2016 :(In thousands) Contractual Obligations Total 2017 2018 2019 2020 2021 LaterOperating lease obligations $14,380 $2,560 $2,468 $2,455 $2,383 $2,383 $2,131Debt obligations (1) 435,687 5,654 5,654 72,011 4,313 348,055 —Capital lease obligations (2) 269 269 — — — — —Purchase obligations (3) 78,102 67,928 10,174 — — — —Total contractual obligations $528,438 $76,411 $18,296 $74,466 $6,696 $350,438 $2,131 (1) Debt obligations include principal and interest. Our senior convertible notes incur interest of 2% and 1.25% per annum.(2) The effective interest rate on our capital lease obligation is 13%.(3) Our purchase obligations include commitments with certain of our suppliers, primarily for the purchase of Omnipod System components and manufacturing equipmentalong with other commitments to purchase goods or services in the normal course of business. We make such commitments through a combination of purchase orders,supplier contracts, and open orders based on projected demand information. These amounts include an $8.8 million commitment for the purchase of property located inActon, Massachusetts that will be used for our manufacturing facility in the U.S. and was subsequently paid in February 2017. Total purchase price for the property was$9.3 million. These amounts also include outstanding purchase commitments with various suppliers for the construction and retrofit of the manufacturing facility and theestablishment of highly-automated manufacturing operations, including $22.8 million with ATS Automation Tooling Systems Inc for equipment purchases.Legal ProceedingsThe significant estimates and judgments related with establishing litigation reserves are discussed under "Legal Proceedings" in note 15 of theconsolidated financial statements included under Item 8 of this Form 10-K.Off-Balance Sheet ArrangementsAs of December 31, 2016 , we did not have any off-balance sheet financing arrangements.Critical Accounting Policies and EstimatesOur financial statements are based on the selection and application of generally accepted accounting principles, which require us to makeestimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes. Futureevents and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actualresults could differ from those estimates, and any such differences may be material to our financial statements.Based on the sensitivity of reported financial statement amounts to the underlying estimates and assumptions, the relatively more significantaccounting policies applied by us have been identified by management as those associated with the following:• Revenue recognition• Stock-based compensation and equity instruments• Business Combinations• Goodwill• Intangibles and other long-lived assets• Accounts receivable and allowance for doubtful accounts• Warranty• Contingencies• Income Taxes• Convertible DebtAdditional information on our critical accounting estimates and significant accounting policies, including references to applicable footnotes, isprovided in note 2 to the consolidated financial statements included under Item 8 of this Form 10-K.Recent Accounting PronouncementsInformation with respect to recent accounting developments is provided in note 2 to the consolidated financial statements included under Item 8of this Form 10-K.46Table of ContentsItem 7A. Quantitative and Qualitative Disclosures about Market RiskWe do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instrumentsconsist of cash, cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses, debt and long-termobligations. We consider investments that, when purchased, have a remaining maturity of 90 days or less to be cash equivalents. The primaryobjectives of our investment strategy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. To minimizeour exposure to an adverse shift in interest rates, we invest mainly in short-term investments and cash equivalents. 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.As of December 31, 2016 , we had outstanding debt recorded on our consolidated balance sheet of $332.8 million , net of our deferredfinancing costs and unamortized debt discount totaling $79.3 million , related to our 2% and 1.25% Notes. As the interest rates are fixed, changes ininterest rates do not affect the value of our debt.Foreign Currency Exchange Risk. Our business is subject to risks, including, but not limited to: unique economic conditions, changes in politicalclimate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. We are primarily exposed to currencyexchange rate fluctuations related to our subsidiary operation in Canada. The majority of our sales outside of the U.S. are transacted in U.S. dollarsand are not subject to material foreign currency fluctuations.Fluctuations in foreign currency rates could affect our sales, cost of goods and operating margins and could result in exchange losses. Inaddition, currency devaluations can result in a loss if we hold deposits of that currency. A hypothetical 10% increase or decrease in foreigncurrencies that we transact in would not have a material adverse impact on our business, financial condition or results of operations.Item 8. Financial Statements and Supplementary DataOur financial statements as of December 31, 2016 and 2015 and for each of the three years in the period ended December 31, 2016 , andthe Reports of the Registered Independent Public Accounting Firms are included in this report as listed in the index.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm s48 Consolidated Balance Sheets as of December 31, 2016 and 201550 Consolidated Statements of Operations for the Years ended December 31, 2016, 2015 and 201451 Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2016, 2015 and 201452 Consolidated Statements of Stockholders' Equity for the Years ended December 31, 2016, 2015 and 201453 Consolidated Statements of Cash Flows for the Years ended December 31, 2016, 2015 and 201454 Notes to Consolidated Financial Statements5547Table of ContentsReport of Independent Registered Public Accounting FirmBoard of Directors and StockholdersInsulet CorporationWe have audited the accompanying consolidated balance sheet of Insulet Corporation (a Delaware corporation) and subsidiaries (the“Company”) as of December 31, 2016 , and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cashflows for the year ended December 31, 2016 . Our audit of the basic consolidated financial statements included the financial statement schedulelisted in the index appearing under Item 15(a). These financial statements and financial statement schedule are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of InsuletCorporation and subsidiaries as of December 31, 2016 , and the results of their operations and their cash flows for the year ended December 31,2016 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statementschedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, theinformation set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’sinternal control over financial reporting as of December 31, 2016 , based on criteria established in the 2013 Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 27, 2017 expressed anunqualified opinion./s/ GRANT THORNTON LLPBoston, MassachusettsFebruary 27, 201748Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders ofInsulet CorporationWe have audited the accompanying consolidated balance sheet of Insulet Corporation as of December 31, 2015, and the related consolidatedstatements of operations, comprehensive loss, stockholders' equity and cash flows for each of the two years in the period ended December 31,2015. Our audits also include the financial statement schedule listed in the Index at Item 15(a) for the years ended December 31, 2015 and 2014.These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on thesefinancial statements and schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of InsuletCorporation at December 31, 2015, and the consolidated results of its operations and its cash flows for each of the two years in the period endedDecember 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedulefor the years ended December 31, 2015 and 2014, when considered in relation to the basic financial statements taken as a whole, presents fairly inall material respects the information set forth therein./s/ Ernst & Young LLPBoston, MassachusettsFebruary 29, 2016(except for the effects of discontinued operations as discussed in Notes 2 and 3 asto which the date is September 6, 2016)49Table of ContentsINSULET CORPORATIONCONSOLIDATED BALANCE SHEETS December 31, 2016 December 31, 2015(In thousands, except share and per share data) ASSETS Current Assets Cash and cash equivalents$137,174 $122,672Short-term investments161,396 —Accounts receivable, net28,803 42,530Inventories, net35,514 12,024Prepaid expenses and other current assets7,073 4,283Current assets from discontinued operations— 9,252Total current assets369,960 190,761Property and equipment, net46,266 41,793Other intangible assets, net528 933Goodwill39,677 39,607Other assets216 76Long-term assets from discontinued operations— 1,956Total assets$456,647 $275,126LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable$13,160 $15,213Accrued expenses and other current liabilities40,959 36,744Deferred revenue1,309 2,361Current portion of capital lease obligations269 5,519Current liabilities from discontinued operations— 5,319Total current liabilities55,697 65,156Capital lease obligations— 269Long-term debt, net of discount332,768 171,698Other long-term liabilities5,032 3,952Total liabilities393,497 241,075Commitments and contingencies (Note 15) Stockholders’ Equity Preferred stock, $.001 par value: Authorized: 5,000,000 shares at December 31, 2016 and 2015.Issued and outstanding: zero shares at December 31, 2016 and 2015— —Common stock, $.001 par value: Authorized: 100,000,000 shares at December 31, 2016 and 2015. Issued and outstanding: 57,457,967 and 56,954,830 shares at December 31, 2016 and 2015, respectively57 57Additional paid-in capital744,243 686,193Accumulated other comprehensive loss(726) (654)Accumulated deficit(680,424) (651,545)Total stockholders’ equity63,150 34,051Total liabilities and stockholders’ equity$456,647 $275,126The accompanying notes are an integral part of these consolidated financial statements.50Table of ContentsINSULET CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31,(In thousands, except share and per share data)2016 2015 2014Revenue$366,989 $263,893 $231,321Cost of revenue155,903 130,622 104,195Gross profit211,086 133,271 127,126Operating expenses: Research and development55,710 43,208 27,900Sales and marketing94,483 78,407 50,552General and administrative71,597 60,392 57,548Total operating expenses221,790 182,007 136,000Operating loss(10,704) (48,736) (8,874)Interest expense14,388 12,712 14,578Other income (expense), net825 58 (1,225)Loss on extinguishment of long-term debt2,551 — 23,203Interest and other income (loss), net(16,114) (12,654) (39,006)Loss from continuing operations before income taxes(26,818) (61,390) (47,880)Income tax expense392 212 60Net loss from continuing operations(27,210) (61,602) (47,940)Loss from discontinued operations, net of tax ($408, $79 and $82 for the years ended December31, 2016, 2015 and 2014, respectively)(1,669) (11,918) (3,560)Net loss$(28,879) $(73,520) $(51,500) Net loss from continuing operations per share basic and diluted$(0.48) $(1.08) $(0.86)Net loss from discontinued operations per share basic and diluted$(0.03) $(0.21) $(0.06)Weighted-average number of shares used in calculating net loss per share57,251,377 56,785,646 55,628,542The accompanying notes are an integral part of these consolidated financial statements.51Table of ContentsINSULET CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Years Ended December 31,(In thousands)2016 2015 2014Net loss$(28,879) $(73,520) $(51,500)Other comprehensive loss, net of tax Foreign currency translation adjustment, net of tax135 (641) 6Unrealized loss on available-for-sale securities, net of tax(207) Total other comprehensive (loss) income, net of tax(72) (641) 6Total comprehensive loss$(28,951) $(74,161) $(51,494)The accompanying notes are an integral part of these consolidated financial statements.52Table of ContentsINSULET CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock AdditionalPaid-inCapital AccumulatedDeficit Accumulated OtherComprehensive Loss TotalStockholders’Equity(In thousands, except share data)Shares Amount Balance, December 31, 201354,870,424 $55 $651,086 $(526,525) $(19) $124,597Exercise of options to purchase common stock754,522 1 11,084 — 11,085Issuance for employee stock purchase plan13,620 — 583 — 583Stock-based compensation expense— — 22,432 — 22,432Restricted stock units vested, net of shareswithheld for taxes311,921 — (8,665) — (8,665)Net impact of conversion of 3.75% Notes— — (61,728) — (61,728)Allocation to equity for conversion feature on2% Notes, net of issuance costs— — 34,455 — 34,455Issuance of common stock pursuant toconversion of debt348,535 — 12,564 — 12,564Net loss— — — (51,500) (51,500)Other comprehensive income 6 6Balance, December 31, 201456,299,022 56 661,811 (578,025) (13) 83,829Exercise of options to purchase common stock449,149 1 7,198 — 7,199Issuance for employee stock purchase plan22,039 — 652 — 652Stock-based compensation expense— — 19,178 — 19,178Restricted stock units vested, net of shareswithheld for taxes184,620 — (2,646) — (2,646)Net loss— — — (73,520) (73,520)Other comprehensive loss (641) (641)Balance, December 31, 201556,954,830 57 686,193 (651,545) (654) 34,051Exercise of options to purchase common stock242,962 — 4,832 — — 4,832Issuance for employee stock purchase plan30,949 — 802 — — 802Stock-based compensation expense— — 23,638 — — 23,638Restricted stock units vested, net of shareswithheld for taxes229,226 — (2,866) — — (2,866)Allocation to equity for conversion feature on1.25% Notes, net of issuance costs— — 64,509 — — 64,509Extinguishment of conversion feature on 2%Notes, net of issuance costs— — (32,865) — — (32,865)Net loss (28,879) (28,879)Other comprehensive loss (72) (72)Balance, December 31, 201657,457,967 $57 $744,243 $(680,424) $(726) $63,150The accompanying notes are an integral part of these consolidated financial statements.53Table of ContentsINSULET CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31,(In thousands)2016 2015 2014Cash flows from operating activities Net loss$(28,879) $(73,520) $(51,500)Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization13,833 15,838 12,223Non-cash interest and other expense10,068 7,678 10,253Stock-based compensation expense23,617 19,178 22,519Loss on extinguishment of long-term debt2,551 — 23,203Provision for bad debts2,070 1,184 3,254Impairment and other charges6,234 9,086 —Changes in operating assets and liabilities: Accounts receivable12,551 (9,793) (10,069)Inventories(24,103) (722) (3,635)Deferred revenue(849) 809 654Prepaid expenses and other assets(2,621) (1,460) 662Accounts payable, accrued expenses and other current liabilities639 17,986 525Other long-term liabilities800 1,184 831Net cash provided by (used in) operating activities (1)15,911 (12,552) 8,920Cash flows from investing activities Purchases of property and equipment(22,115) (10,608) (11,486)Purchases of short-term investments(177,654) — —Receipts from the maturity or sale of short-term investments16,045 — —Proceeds from divestiture of business, net5,714 — —Acquisition of Canadian distribution business— (4,715) —Net cash used in investing activities(178,010) (15,323) (11,486)Cash flows from financing activities Principal payments of capital lease obligations(5,518) (5,576) (3,858)Proceeds from issuance of convertible notes, net of issuance costs333,725 — 194,490Repayment of convertible notes(153,628) — (189,521)Proceeds from issuance of common stock, net of offering costs4,854 7,851 11,586Payment of withholding taxes in connection with vesting of restricted stock units(2,866) (2,646) (8,665)Net cash provided by (used in) financing activities176,567 (371) 4,032Effect of exchange rate changes on cash34 (275) —Net increase (decrease) in cash and cash equivalents14,502 (28,521) 1,466Cash and cash equivalents, beginning of period122,672 151,193 149,727Cash and cash equivalents, end of period$137,174 $122,672 $151,193Supplemental disclosure of cash flow information Cash paid for interest$3,687 $4,025 $4,657Cash paid for taxes$932 $109 $124Non-cash investing and financing activities Allocation to equity for conversion feature for issuance of 2% convertible notes$— $— $35,638Allocation to equity for conversion feature for issuance of 1.25% convertible notes$66,689 $— $—Allocation to equity for conversion feature for the repurchase of 2% convertible notes$(32,865) $— $—Common stock issued in exchange for 3.75% convertible notes$— $— $12,564Purchases of property and equipment under capital lease$— $5,721 $1,474(1) Includes activity related to discontinued operations. See note 3 to the consolidated financial statements for discussion of discontinued operations.The accompanying notes are an integral part of these consolidated financial statements.54INSULET CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1. Nature of the BusinessInsulet Corporation, the "Company," is primarily engaged in the development, manufacturing and sale of its proprietary Omnipod InsulinManagement System (the “Omnipod System”), an innovative, discreet and easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod System features a small, lightweight, self-adhesive disposable tubeless Omnipod device which is worn on thebody for approximately three days at a time and its wireless companion, the handheld Personal Diabetes Manager (“PDM”). Conventional insulinpumps require people with insulin-dependent diabetes to learn to use, manage and wear a number of cumbersome components, including up to 42 inches of tubing. In contrast, the Omnipod System features only two discreet, easy-to-use devices that eliminate the need for a bulky pump, tubingand separate blood glucose meter, provides for virtually pain-free automated cannula insertion, communicates wirelessly and integrates a bloodglucose meter. The Company believes that the Omnipod System’s unique proprietary design and features allow people with insulin-dependentdiabetes to manage their diabetes with unprecedented freedom, comfort, convenience, and ease.Commercial sales of the Omnipod System began in the United States in 2005. The Company sells the Omnipod System in the United Statesthrough direct sales to customers or through its distribution partners. The Omnipod System is currently available in multiple countries in Europe,Canada and Israel.In addition to using the Omnipod for insulin delivery, the Company also partners with global pharmaceutical and biotechnology companies totailor the Omnipod System technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas.The Company acquired Neighborhood Holdings, Inc. and its wholly-owned subsidiaries (collectively, “Neighborhood Diabetes”) in June 2011 .Through Neighborhood Diabetes, the Company provided customers with blood glucose testing supplies, traditional insulin pumps, pump suppliesand pharmaceuticals and had the ability to process claims as either durable medical equipment or through pharmacy benefits. In February 2016, theCompany sold Neighborhood Diabetes to Liberty Medical LLC ("Liberty Medical"). Additional information regarding the disposition and treatment ofthe Neighborhood Diabetes business as discontinued operations is provided in note 3 to these consolidated financial statements.Note 2 . Summary of Significant Accounting PoliciesUse of Estimates in Preparation of Financial StatementsThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in the applicationof certain of its significant accounting policies that may materially affect the reported amounts of assets, liabilities, equity, revenue and expenses.The most significant estimates used in these financial statements include the valuation of stock-based compensation expense, acquired businesses,accounts receivable, inventories, goodwill, deferred revenue, equity instruments, convertible debt, the lives of property and equipment and intangibleassets, as well as warranty and doubtful accounts allowance reserve calculations. Actual results may differ from those estimates.Foreign Currency TranslationFor foreign operations, asset and liability accounts are translated at exchange rates as of the balance sheet date; income and expenses aretranslated using weighted average exchange rates for the reporting period. Resulting translation adjustments are reported in accumulated othercomprehensive loss, a separate component of stockholders' equity. Gains and losses arising from transactions and translation of period-endbalances denominated in currencies other than the functional currency, primarily the Canadian dollar, are included in other income (expense), net,and were not material for fiscal years 2016 , 2015 and 2014 .Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompanybalances and transactions have been eliminated in consolidation.Cash and Cash EquivalentsFor the purpose of the financial statement classification, the Company considers all highly-liquid investment instruments with original maturitiesof 90 days or less, when purchased, to be cash equivalents. Cash equivalents55include money market mutual funds, corporate bonds, and certificates of deposit which are carried at cost which approximates their fair value.Included in the Company's cash and cash equivalents are amounts set aside for collateral on outstanding letters of credit, related to securitydeposits for lease obligations, totaling $1.2 million as of December 31, 2016 and December 31, 2015 .Short-term InvestmentsShort-term investment securities consist of available-for-sale marketable securities and are carried at fair value with unrealized gains or lossesincluded as a component of other comprehensive loss in stockholders' equity. Investments, exclusive of cash equivalents, with a stated maturitydate of one year or less from the balance sheet date or that are expected to be used in current operations, are classified as short-term investments.Short-term investments include U.S. government and agency bonds, corporate bonds, and certificates of deposit.The Company reviews investments for other-than-temporary impairment when the fair value of an investment is less than its amortized cost. Ifan available-for-sale security is other than temporarily impaired, the loss is charged to earnings.Property and EquipmentProperty and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the respective assets.Leasehold improvements are amortized over their useful life or the life of the lease, whichever is shorter. Assets acquired under capital leases areamortized in accordance with the respective class of owned assets and the amortization is included with depreciation expense. Maintenance andrepair costs are expensed as incurred.Business CombinationsThe Company recognizes the assets and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition.The Company assesses the fair value of assets, including intangible assets, using a variety of methods and each asset is measured at fair valuefrom the perspective of a market participant. The method used to estimate the fair values of intangible assets incorporates significant assumptionsregarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and theappropriate discount rates for a market participant. Assets recorded from the perspective of a market participant that are determined to not haveeconomic use for the Company are expensed immediately. Any excess purchase price over the fair value of the net tangible and intangible assetsacquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred.Segment ReportingOperating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on aregular basis by the chief operating decision-maker ("CODM") in deciding how to allocate resources to an individual segment and in assessingperformance of the segment. The Company has concluded that their Chief Executive Officer is the CODM as he is the ultimate decision maker forkey operating decisions, determining the allocation of resources and assessing the financial performance of the Company. These decisions,allocations and assessments are performed by the CODM using consolidated financial information. Consolidated financial information is utilized bythe CODM as the Company’s current product offering primarily consists of drug delivery and the Omnipod System. The Company’s products arerelatively consistent and manufacturing is centralized and consistent across product offerings. Based on these factors, key operating decisions andresource allocations are made by the CODM using consolidated financial data and as such the Company has concluded that they operate as onesegment.GoodwillGoodwill represents the excess of the cost of acquired businesses over the fair value of identifiable net assets acquired. The Company followsthe provisions of Financial Accounting Standards Board ("FASB") ASC 350-20, Intangibles - Goodwill and Other (“ASC 350-20”). The Companyperforms an assessment of its goodwill for impairment on at least an annual basis or whenever events or changes in circumstances indicate theremight be impairment. The Company's annual impairment test date is October 1st.The majority of the Company's goodwill resulted from the acquisition of Neighborhood Diabetes in June 2011. This goodwill largely reflectsoperational synergies and expansion of product offerings across markets complementary to the existing core Omnipod offerings.As the Company operates in one segment, the Company has considered whether that segment contains multiple reporting units. The Companyhas concluded that there is a single reporting unit as the Company does not56have segment managers and discrete financial information below consolidated results is not reviewed on a regular basis. Based on this conclusion,goodwill was tested for impairment at the enterprise level. The Company performs an annual goodwill impairment test unless interim indicators ofimpairment exist. The Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair valueof its sole reporting unit is less than its carrying amount. This qualitative analysis is used as a basis for determining whether it is necessary toperform the two-step goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carryingamount, then the two-step goodwill impairment test will be performed. The first step compares the carrying value of the reporting unit to its fair valueusing a discounted cash flow analysis. If the reporting unit’s carrying value exceeds its fair value, the Company would record an impairment loss tothe extent that the carrying value of goodwill exceeds its implied fair value. There was no impairment of goodwill during the years ended December31, 2016 , 2015 or 2014 . As a result of the sale of Neighborhood Diabetes, goodwill totaling $0.1 million was allocated to the discontinued businesson the disposition date using the relative fair value approach and was included in long-term assets from discontinued operations as of December 31,2015.The following table presents the change in carrying amount of goodwill from continuing operations during the period indicated: Years Ended December 31,(In thousands)2016 2015Goodwill: Beginning balance$39,607 $37,396Goodwill as a result of acquisition— 2,403Foreign currency adjustment70 (192)Ending balance$39,677 $39,607Revenue RecognitionThe Company generates the majority of its revenue from sales of its Omnipod System to customers and third-party distributors who resell theproducts to patients with diabetes.Revenue recognition requires that persuasive evidence of a sales arrangement exists, delivery of goods occurs through transfer of title and riskand rewards of ownership, the selling price is fixed or determinable and collectability is reasonably assured. With respect to these criteria:•The evidence of an arrangement generally consists of a physician order form, a patient information form and, if applicable, third-partyinsurance approval for sales directly to patients or a purchase order for sales to a third-party distributor.•Transfer of title and risk and rewards of ownership are passed to the patient or third-party distributor upon shipment of the products.•The selling prices for all sales are fixed and agreed with the patient or third-party distributor and, if applicable, the patient’s third-partyinsurance provider(s) prior to shipment and are based on established list prices or, in the case of certain third-party insurers,contractually agreed upon prices. Provisions for discounts, rebates and other adjustments to customers are established as a reduction torevenue in the same period the related sales are recorded.The Company offers a 45 -day right of return for sales of its Omnipod System in the United States, and a 90 -day right of return for sales of itsOmnipod System in Canada to new patients and defers revenue to reflect estimated sales returns in the same period that the related product salesare recorded. Returns are estimated through a comparison of the Company’s historical return data to its related sales. Historical rates of return areadjusted for known or expected changes in the marketplace when appropriate. When doubt exists about reasonable assuredness of collectabilityfrom specific customers, the Company defers revenue from sales of products to those customers until payment is received.In June 2011 , the Company entered into a development agreement with a U.S. based pharmaceutical company (the "DevelopmentAgreement”). Under the Development Agreement, the Company was required to perform design, development, regulatory, and other services tosupport the pharmaceutical company as it worked to obtain regulatory approval to use the Company’s drug delivery technology as a delivery methodfor its pharmaceutical. Over the term of the Development Agreement, the Company has invoiced amounts based upon meeting certain deliverablemilestones. Revenue on the Development Agreement was recognized using a57proportional performance methodology based on efforts incurred and total payments under the agreement. The impact of changes in the expectedtotal effort or contract payments was recognized as a change in estimate using the cumulative catch-up method. The pharmaceutical companyreceived regulatory approval and now purchases product from the Company for use with its pharmaceutical under a supply agreement. Productrevenue under this arrangement is recognized at the time that all of the revenue recognition criteria are met, typically upon shipment.The Company had deferred revenue of $1.9 million and $2.5 million as of December 31, 2016 and 2015 , respectively. Deferred revenueincluded $0.6 million and $0.2 million classified in other long-term liabilities as of December 31, 2016 and 2015 , respectively. Deferred revenueprimarily relates to undelivered elements within certain of the Company's developmental arrangements and other instances where the Company hasnot yet met the revenue recognition criteria.Collaborative ArrangementsThe Company enters into collaborative arrangements for ongoing initiatives to develop products. Although the Company does not consider anyindividual alliance to be material, certain of the more notable alliances are described below.Eli Lilly and Concentrated insulins : In May 2013, the Company entered into an agreement with Eli Lilly and Company (Eli Lilly) to develop anew version of the Omnipod insulin pump specifically designed to deliver Humulin R U-500 insulin, a concentrated form of insulin used by peoplewith highly insulin resistant Type 2 diabetes. In January 2016, the Company entered into a development agreement with Eli Lilly to develop a newversion of Insulet's Omnipod tubeless insulin delivery system, specifically designed to deliver Lilly's Humalog 200 units/mL insulin, a concentratedform of insulin used by higher insulin-requiring patients with diabetes that provides the same dose of insulin in half the volume of Lilly's HumalogU100 insulin. Under the terms of these arrangements, the parties share the responsibility of the permissible costs that are incurred. Any amountsincurred in excess of the permissible shared costs that are the responsibility of one party becomes due and payable by the other party.Consideration received and payments made by the Company under the terms of the arrangements are recorded within research and developmentexpense.Shipping and Handling CostsThe Company does not typically charge its customers for shipping and handling costs associated with shipping its product to its customersunless non-standard shipping and handling services are requested. These shipping and handling costs are included in general and administrativeexpenses and were $4.1 million , $3.7 million and $2.3 million in the years ended December 31, 2016 , 2015 and 2014 , respectively.Concentration of Credit RiskFinancial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, short-term investments andaccounts receivable. The Company maintains the majority of its cash and short-term investments with one financial institution. Accounts are partiallyinsured up to various amounts mandated by the Federal Deposit Insurance Corporation or by the foreign country where the account is held.The Company purchases Omnipod Systems from Flex Ltd., its single source supplier. As of December 31, 2016 and December 31, 2015 ,liabilities to this vendor represented approximately 16% and 28% of the combined balance of accounts payable, accrued expenses and other currentliabilities, respectively.Revenue for customers comprising more than 10% of total revenue were as follows: Twelve Months Ended December 31, 2016 2015 2014Amgen, Inc. 17% 10% *Ypsomed Distribution AG 16% 12% 19%RGH Enterprises, Inc. 10% 13% 14%* Customer represents less than 10% of revenue for the period.Reclassification of Prior Period Balances58Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation includingadjusting footnotes to reflect the presentation of discontinued operations as further discussed in note 3 . These reclassifications have no effect onthe previously reported net loss.Subsequent EventsEvents occurring subsequent to December 31, 2016 have been evaluated for potential recognition or disclosure in the consolidated financialstatements.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue fromContracts with Customers ("ASU 2014-09"). ASU 2014-09 requires that a company recognize revenue when it transfers promised goods or servicesto customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.Under this guidance, a company makes additional estimates regarding performance conditions and the allocation of variable consideration and mustevaluate whether revenue derived from a contract should be recognized at a point in time or over time. The guidance is effective in fiscal yearsbeginning January 1, 2018, with early adoption permitted. The Company plans to adopt the standard as of the required effective date. The Companyis currently evaluating the impact of ASU 2014-09. As part of the Company's assessment work to-date, the Company has formed an implementationwork team, completed training on the new ASU’s revenue recognition model and is continuing its contract review and documentation, for which todate the Company has made significant progress. Over the course of 2017, the Company plans to finalize its evaluation and implement any requiredpolicy, process, and internal control changes required as a result of that evaluation. The new standard permits two methods of adoption:retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applyingthe guidance recognized at the date of initial application (the modified retrospective method). The Company has not yet selected a transition methodnor has it determined the full effect of the standard on its consolidated financial position and results of operations.In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Paymentswhen the terms of an award provide that a performance target could be achieved after the requisite service period ("ASU 2014-12"). ASU 2014-12clarifies the period over which compensation cost would be recognized in awards with a performance target that affects vesting and that could beachieved after the requisite service period. Compensation cost would be recognized over the required service period, if it is probable that theperformance condition will be achieved. The guidance is effective in fiscal years beginning after January 1, 2016, with early adoption permitted. TheCompany adopted ASU 2014-12 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements- Going Concern ("ASU 2014-15"). ASU No. 2014-15requires management to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern within one year afterthe date that the financial statements are issued. The new standard is effective for fiscal years ending after December 15, 2016 and interim periodswithin annual periods beginning after December 15, 2016. Early adoption is permitted. The Company has adopted the standard as of December 31,2016 and has concluded that substantial doubt about the Company’s ability to continue as a going concern does not exist.In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 amends existingguidance and requires entities to measure most inventory at the lower of cost and net realizable value. The guidance is effective prospectively forannual reporting periods beginning after December 15, 2016. Early adoption is permitted. Upon adoption, entities must disclose the nature of andreason for the accounting change. The Company is currently evaluating the impact of ASU 2015-11 but does not expect it to be material to theconsolidated financial statements.In September 2015, the FASB issued ASU No. 2015-16, Business Combinations, Simplifying the Accounting for Measurement PeriodAdjustments ("ASU 2015-16"). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement-periodadjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines theamount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had beencompleted at the acquisition date. The guidance is effective in 2016 for calendar year-end public entities. Early adoption is permitted. The Companyhas adopted ASU 2015-16 on January 1, 2016 and its adoption did not have an impact on the consolidated financial statements.59In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments-Overall: Recognition andMeasurement of Financial Assets and Financial Liabilities . ASU 2016-01 changes the current GAAP model for the accounting of equity investments,financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. All equity investments inunconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value throughearnings. There will no longer be an available-for-sale classification (changes in fair value reported in other comprehensive income (loss)) for equitysecurities with readily determinable fair values. In addition, the FASB clarified guidance related to the valuation allowance assessment whenrecognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The classification and measurement guidancewill be effective in fiscal years beginning after December 15, 2017, and interim periods within those years. The Company is currently evaluating theimpact of ASU 2016-01.In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize the assets andliabilities on their balance sheet for the rights and obligations created by most leases and continue to recognize expenses on their incomestatements over the lease term. It will also require disclosures designed to give financial statement users information on the amount, timing, anduncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods beginning after December 15, 2018, and interimperiods within those years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02.In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-BasedPayment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactionsfor both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well asclassification in the statement of cash flows. The guidance is effective for annual reporting periods beginning after December 15, 2016, and interimperiods within those years. Early adoption is permitted for all entities. Had the standard been adopted as of December 31, 2016, the Company'sdeferred tax assets (tax effected) would have increased by approximately $23.8 million, which would have been offset by a full valuation allowance.Overall, the Company does not expect adoption of the standard to have a material impact on its consolidated financial statements.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and CashPayments (a consensus of the Emerging Issues Task Force) ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cashreceipts and cash payments on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied whencash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for annual reporting periodsbeginning after December 15, 2017, and interim periods within those years. Early adoption is permitted for all entities. The Company is currentlyevaluating the impact of ASU 2016-15 but does not expect it to be material to the consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash (a consensus of the EmergingIssues Task Force) ("ASU 2016-18"). ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash andrestricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalentsand restricted cash and restricted cash equivalents in the statement of cash flows. The guidance is effective for annual reporting periods beginningafter December 15, 2017, and interim periods within those years. Early adoption is permitted for all entities. The Company is currently evaluating theimpact of ASU 2016-18 but does not expect it to be material to the consolidated financial statements.In December 2016, the FASB issued ASU 2016-19, T echnical Corrections and Improvements ("ASU 2016-19") . ASU 2016-19 includesnumerous technical corrections and clarifications to GAAP that are designed to remove inconsistencies in the board’s accounting guidance. Severalprovisions in this accounting guidance are effective immediately which did not have an impact on the Company’s consolidated financialstatements. Additional provisions in this accounting guidance are effective for the Company in annual financial reporting periods beginning afterDecember 15, 2016. The Company is currently evaluating the impact that the adoption of the additional provisions in this accounting guidance mayhave on its consolidated financial statements.Other Significant Policies:The following table identifies the Company's other significant accounting policies and the note and page where a detailed description of eachpolicy can be found.60Fair Value MeasurementsNote5Page64 Convertible DebtNote7Page66 Accounts Receivable and Allowance for Doubtful AccountsNote10Page71 InventoriesNote11Page71 Other Intangible AssetsNote13Page73 Accrued Expenses and Other Current Liabilities- Product Warranty CostsNote14Page74 Commitments and ContingenciesNote15Page75 Equity - Stock-Based CompensationNote16Page76 Income TaxesNote18Page8061Note 3 . Discontinued OperationsIn February 2016, the Company sold Neighborhood Diabetes to Liberty Medical for approximately $6.2 million in cash, which included $1.2million of closing adjustments finalized in June 2016 and paid by Liberty Medical. The results of operations, assets, and liabilities of NeighborhoodDiabetes, are classified as discontinued operations for all periods presented, except for certain corporate overhead costs which remain in continuingoperations.In connection with the 2016 disposition, the Company entered into a transition services agreement pursuant to which Insulet is providingvarious services to Liberty Medical on an interim transitional basis. The services generally commenced on the closing date and terminated sixmonths following the closing. Services provided by Insulet included certain information technology and back office support. The charges for suchservices were generally intended to allow the service provider to recover all out-of-pocket costs. Billings by Insulet under the transition servicesagreement were recorded as a reduction of the costs to provide the respective service in the applicable expense category in the consolidatedstatements of operations. This transitional support is to provide Liberty Medical the time required to establish its stand-alone processes for suchactivities that were previously provided by Insulet as described above and does not constitute significant continuing support of Liberty Medical'soperations. Total expenses incurred for such transition services, which are reimbursed in full, were $0.9 million for the year ended December 31,2016.Following the disposition, the Company entered into a distribution agreement with the Neighborhood Diabetes subsidiary of Liberty Medical tocontinue to act as a distributor for the Company's products. Omnipod sales transacted through Neighborhood Diabetes prior to the divestiture thatwere previously eliminated in consolidation were $0.3 million , $2.8 million and $2.3 million for the years ended December 31, 2016 , 2015 and 2014, respectively. These amounts were historically reported in the Neighborhood Diabetes revenue results and are being presented based on currentmarket terms of products sold to the Neighborhood Diabetes subsidiary of Liberty Medical.Post divestiture, Omnipod System sales to the Neighborhood Diabetes subsidiary of Liberty Medical were $0.4 million for the year endedDecember 31, 2016.The following is a summary of the operating results of Neighborhood Diabetes included in discontinued operations for the year endedDecember 31, 2016 , 2015 and 2014 : Years Ended December 31,(In thousands)2016 2015 2014Discontinued operations: Revenue (1)$7,730 $60,332 $57,399Cost of revenue5,468 45,449 41,237Gross profit2,262 14,883 16,162Operating expenses: Sales and marketing1,542 9,945 10,292 General and administrative (2)1,853 16,967 9,293 Total operating expenses3,395 26,912 19,585Operating Loss(1,133) (12,029) (3,423)Interest and other income (expense), net(128) 190 (55)Loss from discontinued operations before taxes(1,261) (11,839) (3,478)Income tax expense408 79 82Net loss from discontinued operations$(1,669) $(11,918) $(3,560)(1) Revenue for the year ended December 31, 2016 includes revenue from operations of Neighborhood Diabetes through the date of sale in February 2016.(2) Included in general and administration expenses for the year ended December 31, 2015 was a charge of $9.1 million related to the impairment ofNeighborhood Diabetes asset group.62Depreciation and amortization expense included in discontinued operations was $0.1 million , $3.3 million and $4.5 million for the years endedDecember 31, 2016 , 2015 and 2014 , respectively.The following is a summary of the Neighborhood Diabetes assets and liabilities presented as discontinued operations:(in thousands)December 31, 2015ASSETS Accounts receivable, net$5,857Inventories, net2,019Prepaid expenses and other current assets1,376Total current assets of discontinued operations9,252Intangible assets, net1,788Goodwill140Other non-current assets28Total long-term assets of discontinued operations1,956Total assets of discontinued operations$11,208LIABILITIES Accounts payable$3,436Accrued expenses and other current liabilities1,883Current liabilities of discontinued operations5,319Total liabilities of discontinued operations$5,319Net operating cash flows used in discontinued operations in the years ended December 31, 2016 and 2015 were $2.0 million and $3.2 million ,respectively. Net operating cash flows provided by discontinued operations in the year ended December 31, 2014 was $0.2 million .4. Business CombinationOn July 7, 2015, the Company executed an asset purchase agreement with GlaxoSmithKline (GSK) whereby the Company acquired GSK'sassets associated with the Canadian distribution of the Company's products. With the acquisition, the Company assumed all distribution, sales,marketing, training and support activities for the Omnipod System in Canada through its wholly-owned subsidiary, Insulet Canada Corporation.The acquisition allows the Company to establish a local presence in Canada that enables it to engage directly with healthcare providers andOmnipod users. The aggregate purchase price of approximately $4.7 million consisted of cash paid at closing, subject to certain adjustments.The Company has accounted for the acquisition as a business combination. Under business combination accounting, the assets and liabilitieswere recorded as of the acquisition date, at their respective fair values, and consolidated with the Company. The excess of the purchase price overthe fair value of net assets acquired was recorded as goodwill and largely reflects operational synergies complimentary to the existing business. Theoperating results of GSK Canada have been included in the consolidated financial statements since July 7, 2015, the date the acquisition wascompleted. These results are not material to the Company's revenues or operating results.Prior to the acquisition the Company had a pre-existing relationship with GSK. As a result of the acquisition, the pre-existing relationship wassettled by Insulet, with Insulet repurchasing the $0.5 million of inventory held by GSK at the date of the asset purchase. The inventory repurchasedhad been sold to GSK during the second quarter of 2015, however no revenue was recognized by Insulet on these sales given the expectation torepurchase. As the inventory was repurchased at cost, there were no gains or losses associated with this transaction. This transaction wasaccounted for separately from the business combination.63Table of ContentsThe table below details the consideration transferred to acquire GSK.(in thousands) Cash$5,000Employment liability transfer fee(285)Total consideration$4,715The assets acquired and liabilities assumed were recorded at fair value at date of acquisition as follows:(in thousands) Goodwill$2,403Contractual relationships2,100Inventory step-up230Assumed liabilities(18) $4,715During the year ended December 31, 2015, the Company incurred transaction costs of $0.1 million , consisting primarily of legal fees, whichhave been recorded as general and administrative expenses. The Company determined that there was no value to the reacquisition of the Canadaexclusivity contract due to the contribution charges of the contractual relationships.Note 5 . Fair Value MeasurementsThe Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair ValueMeasurements and Disclosures (“ASC 820”) related to the fair value measurement of certain of its assets and liabilities. ASC 820 defines fair valueas the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the assetor liability in an orderly transaction between market participants on the measurement date. A single estimate of fair value results from a complexseries of judgments about future events and uncertainties and relies heavily on estimates and assumptions. When estimating fair value, dependingon the nature and complexity of the asset or liability, the Company may use one or all of the following approaches:•Market approach, which is based on market prices and other information from market transactions involving identical or comparableassets or liabilities.•Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economicobsolescence.•Income approach, which is based on the present value of the future stream of net cash flows.To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, as described in ASC 820, of whichthe first two are considered observable and the last unobservable:Level 1 — quoted prices in active markets for identical assets or liabilitiesLevel 2 — observable inputs other than quoted prices in active markets for identical assets or liabilitiesLevel 3 — unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its ownassumptionsCertain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accruedexpenses and other liabilities are carried at cost, which approximates their fair value because of the short-term maturity of these financialinstruments.64The following table provides a summary of assets that are measured at fair value as of December 31, 2016 and 2015 , aggregated by the levelin the fair value hierarchy within which those measurements fall: Fair Value Measurements(in thousands)Total Level 1 Level 2 Level 3December 31, 2016 Recurring fair value measurements: Cash equivalents: Money market mutual funds$93,467 $93,467 $— $—Corporate bonds$4,203 $— $4,203 $—Certificates of deposit$735 $— $735 $—Total cash equivalents$98,405 $93,467 $4,938 $—Short-term investments: U.S. government and agency bonds$79,093 $49,963 $29,130 $—Corporate bonds$56,653 $— $56,653 $—Certificates of deposit$25,650 $— $25,650 $—Total short-term investments$161,396 $49,963 $111,433 $— December 31, 2015 Recurring fair value measurements: Cash equivalents: Money market mutual funds$98,223 $98,223 $— $—Non-recurring fair value measurements: Long-term assets of discontinued operations (1)$1,800 $— $— $1,800 (1)Long-lived assets held and used relate to the asset group of the Neighborhood Diabetes business which consists of definite lived intangible assets and property andequipment. During the fourth quarter of 2015, the Company recognized an impairment charge on this asset group totaling $9.1 million , which represented the differencebetween the fair value of the asset group and the carrying value. As a result of the impairment, the asset group was recorded at fair value as of December 31, 2015. Thefair value for the asset group was determined using the direct cash flows expected to be received from the disposition of the asset group, which was completed inFebruary 2016 (level 3 input). DebtThe estimated fair value of debt is based on the Level 2 quoted market prices for the same or similar issues and included the impact of theconversion features.The carrying amounts, net of unamortized discounts and issuance costs, and the estimated fair values of the Company's convertible debt as ofDecember 31, 2016 and 2015 are as follows: December 31, 2016 December 31, 2015(in thousands)CarryingValue Estimated FairValue Carrying Value Estimated Fair Value2% Convertible Senior Notes$59,737 $71,909 $171,698 $207,882 1.25% Convertible Senior Notes$273,031 $320,969 $— $—Note 6 . Short-term InvestmentsThe Company's short-term investments are classified as available-for-sale and have maturity dates that range from zero months to 19 monthsas of December 31, 2016 . The investments are all classified as short-term as they are available for current operations. Amortized costs, grossunrealized holding gains and losses, and fair values at December 31, 2016 are as follows:65Table of Contents(in thousands)Amortized cost Gross UnrealizedGains GrossUnrealizedLosses Fair ValueDecember 31, 2016 U.S. government and agency bonds$79,211 $— $(118) $79,093Corporate bonds56,742 — (89) 56,653Certificates of deposit25,650 — — 25,650Total short-term investments$161,603 $— $(207) $161,396The Company had no realized gains or losses in 2016. The Company had no short-term investments at December 31, 2015.Note 7 . Convertible DebtThe Company had outstanding convertible debt and related deferred financing costs on its consolidated balance sheet as follows: As of(in thousands)December 31, 2016 December 31, 2015Principal amount of the 2% Convertible Senior Notes$67,084 $201,250Principal amount of the 1.25% Convertible Senior Notes345,000 —Unamortized debt discount(69,684) (25,704)Deferred financing costs(9,632) (3,848)Long-term debt, net of discount$332,768 $171,698Interest expense related to the convertible notes is as follows: Years Ended December 31,(in thousands)2016 2015 2014Contractual coupon interest4,467 4,025 4,657Accretion of debt discount8,800 6,552 8,007Amortization of debt issuance costs1,270 1,126 895Loss on extinguishment of long-term debt2,551 — 23,203Total interest and loss on extinguishment$17,088 $11,703 $36,7621.25% Convertible Senior NotesIn September 2016, the Company issued and sold $345.0 million in principal amount of 1.25% Convertible Senior Notes, due September 15,2021 (the " 1.25% Notes"). The interest rate on the notes is 1.25% per annum, payable semi-annually in arrears in cash on March 15 andSeptember 15 of each year. Interest began accruing on September 13, 2016; the first interest payment is due on March 15, 2017. The 1.25% Notesare convertible into the Company’s common stock at an initial conversion rate of 17.1332 shares of common stock per $1,000 principal amount ofthe 1.25% Notes, which is equivalent to a conversion price of approximately $58.37 per share, subject to adjustment under certain circumstances.The 1.25% Notes will be convertible prior to the close of business on the business day immediately preceding June 15, 2021 only under certaincircumstances and during certain periods, and will be convertible on or after June 15, 2021 until the close of business on the second scheduledtrading day immediately preceding September 15, 2021, regardless of those circumstances.The Company recorded a debt discount of $66.7 million related to the 1.25% Notes which results from allocating a portion of the proceeds tothe fair value of the conversion feature. The fair value of the debt discount was estimated using a trinomial lattice model based on the followinginputs: Company's stock price, expected volatility, term to maturity, risk-free interest rate, and dividend yield. The debt discount was recorded asadditional paid-in capital and the remaining liability reflects the value of the Company’s nonconvertible debt borrowing rate of 5.8% per annum. Thisdebt discount is being amortized as non-cash interest expense over the five year term of the 1.25% Notes. The Company incurred debt issuancecosts and other expenses related to this offering of approximately $11.3 million , of which $2.2 million has been reclassified as a reduction to thevalue of the amount66allocated to equity. The remainder is presented as a reduction of debt in the consolidated balance sheet, is being amortized using the effectiveinterest method, and is recorded as non-cash interest expense over the five year term of the 1.25% Notes.The 1.25% Notes contain provisions that allow for additional interest to holders of the notes upon failure to timely file documents or reports thatthe Company is required to file with the SEC. The additional interest is at a rate of 0.50% per annum of the principal amounts of the notesoutstanding for a period of 360 days.If the Company merges or consolidates with a foreign entity, then additional taxes may be required to be paid by the Company under the termsof the 1.25% Notes.The Company determined that the higher interest payments required and tax payments required in certain circumstances are consideredembedded derivatives and should be bifurcated and accounted for at fair value. The Company assesses the value of the embedded derivatives ateach balance sheet date. The derivatives had de minimis value at the balance sheet date.Cash interest expense related to the 1.25% Notes in the year ended December 31, 2016 was $1.3 million . Non-cash interest expense relatedto the 1.25% Notes was comprised of the amortization of the debt discount and debt issuance costs and in the year ended December 31, 2016 was$3.8 million .As of December 31, 2016, the Company included $273.0 million on its balance sheet in long-term debt related to the 1.25% Notes.2% Convertible Senior NotesIn June 2014, the Company issued and sold $201.3 million in principal amount of 2% Convertible Senior Notes due June 15, 2019 (the “ 2%Notes”). The interest rate on the notes is 2% per annum, payable semi-annually in arrears in cash on June 15 and December 15 of each year. The2% Notes are convertible into the Company’s common stock at an initial conversion rate of 21.5019 shares of common stock per $1,000 principalamount of the 2% Notes, which is equivalent to a conversion price of approximately $46.51 per share, subject to adjustment under certaincircumstances.The Company recorded a debt discount of $35.6 million related to the 2% Notes. The debt discount was recorded as additional paid-in capitalto reflect the value of the Company’s nonconvertible debt borrowing rate of 6.2% per annum. This debt discount is being amortized as non-cashinterest expense over the five year term of the 2% Notes. The Company incurred deferred financing costs related to this offering of approximately$6.7 million , of which $1.2 million has been reclassified as an offset to the value of the amount allocated to equity. The remainder is recorded as areduction to debt in the consolidated balance sheet and is being amortized as non-cash interest expense over the five year term of the 2% Notes.In September 2016, in connection with the issuance of $345 million in principal amount of the 1.25% Notes, the Company repurchasedapproximately $134.2 million in principal amount of the 2% Notes for $153.6 million . The extinguishment of the 2% Notes was accounted forseparately from the issuance of the 1.25% Notes as both transactions were viewed as arm's-length in nature and were not contingent upon oneanother. The $ 153.6 million paid to extinguish the debt was allocated to debt and equity based on their respective fair values immediately prior tothe transaction. The fair value of the debt was estimated using a trinomial lattice model based on the following inputs: Company's stock price,expected volatility, term to maturity, risk-free interest rate, and dividend yield. The Company allocated $121.4 million of the payment to the debt and$32.9 million to equity.The Company recorded a loss on extinguishment of debt of $2.6 million in connection with the repurchase and redemption of the 2% Notesduring the year ended December 31, 2016, representing the excess of the $121.4 million allocated to the debt over its carrying value, net ofunamortized debt discount, deferred financing costs and accrued interest.The 2% Notes contain provisions that allow for additional interest to the holders of the notes upon the failure to timely file documents or reportsthat the Company is required to file with the SEC. The additional interest is at a rate of 0.25% per annum of the principal amount of the notesoutstanding for the first 180 days and 0.50% per annum of the principal amount of the notes outstanding for a period up to 360 days.If the Company is purchased by a company outside of the US, then additional taxes may be required to be paid by the Company under theterms of the 2% Notes.The Company determined that the higher interest and tax payments required in certain circumstances are considered embedded derivativesand should be bifurcated and accounted for at fair value. The Company assesses the value of the embedded derivatives at each balance sheetdate. The derivatives had de minimis value at the balance sheet date.67Cash interest expense related to the 2% Notes in the years ended December 31, 2016 , 2015 and 2014 was $3.2 million , $4.0 million and $2.3million , respectively.Non-cash interest expense related to the 2% Notes was comprised of the amortization of the debt discount and debt issuance costs and in theyears ended December 31, 2016 , 2015 and 2014 was $6.3 million , $7.7 million and $4.0 million , respectively.As of December 31, 2016 , the Company included $59.7 million on its balance sheet in long-term debt related to the 2% Notes.3.75% Convertible Senior NotesIn June 2011 , the Company issued and sold $143.8 million in principal amount of 3.75% Convertible Senior Notes due June 15, 2016 (the "3.75% Notes"). The interest rate on the notes was 3.75% per annum, payable semi-annually in arrears in cash on December 15 and June 15 ofeach year. The 3.75% Notes were convertible into the Company’s common stock at an initial conversion rate of 38.1749 shares of common stockper $1,000 principal amount of the 3.75% Notes, which was equivalent to a conversion price of approximately $26.20 per share.In connection with the issuance of the 3.75% Notes, the Company repurchased $70 million in principal amount of its 5.375% ConvertibleSenior Notes due June 15, 2013 (the " 5.375% Notes") for $85.1 million , a 21.5% premium on the principal amount. The investors that held the $70million in principal amount of repurchased 5.375% Notes purchased $59.5 million in principal amount of the 3.75% Notes and retained approximately$13.5 million in principal amount of the remaining 5.375% Notes. These investors’ combined $73.0 million in principal amount of convertible debt ($13.5 million of 5.375% Notes and $59.5 million of 3.75% Notes) was considered to be a modification of a portion of the 5.375% Notes and wasaccounted for separately from the issuance of the remainder of the 3.75% Notes.The Company recorded a total debt discount of $25.8 million related to the modified debt. This discount consisted of $10.5 million related to theremaining debt discount on the $70 million in principal amount of 5.375% Notes repurchased, $15.1 million related to the premium payment inconnection with the repurchase and $0.2 million related to the increase in the value of the conversion feature. The total debt discount was beingamortized as non-cash interest expense at the effective rate of 16.5% over the five year term of the modified debt. Additionally, the Company paidtransaction fees of approximately $2.0 million related to the modification, which were recorded as interest and other expense at the time of themodification.Of the $143.8 million in principal amount of 3.75% Notes issued in June 2011, $84.3 million in principal amount was considered to be anissuance of new debt. The Company recorded a debt discount of $26.6 million related to the $84.3 million in principal amount of 3.75% Notes. Thedebt discount was recorded as additional paid-in capital to reflect the value of its nonconvertible debt borrowing rate of 12.4% per annum and wasbeing amortized as non-cash interest expense over the five year term of the 3.75% Notes. The Company incurred deferred financing costs related tothis offering of approximately $2.8 million , of which $0.9 million has been reclassified as an offset to the value of the amount allocated to equity. Theremainder was recorded as other assets in the consolidated balance sheet and was being amortized as non-cash interest expense over the fiveyear term of the 3.75% Notes.In June 2014, in connection with the issuance of $201.3 million in principal amount of the 2% Notes, the Company repurchasedapproximately $114.9 million in principal amount of the 3.75% Notes for $160.7 million , a premium of $45.8 million over the principal amount.Investors that held approximately $80.0 million of 3.75% Notes purchased approximately $98.2 million in principal amount of the 2% Notes. Therepurchase of the 3.75% Notes was treated as an extinguishment of debt since the fair value of the conversion feature changed by more than 10%.The extinguishment of the 3.75% Notes was accounted for separately from the issuance of the 2% Notes. The $160.7 million paid to extinguish thedebt was allocated to debt and equity based on their respective fair values immediately prior to the transaction. The Company allocated $112.4million of the payment to the debt and $48.3 million to equity.The 3.75% Notes were convertible at the option of the holder during the quarter ended June 30, 2014 since the last reported sales price pershare of the Company's common stock was equal to or greater than 130% of the conversion price for at least 20 of the 30 trading days ended onMarch 31, 2014. The 3.75% Notes and any unpaid interest were convertible at the Company’s option for cash, shares of the Company’s commonstock or a combination of cash and shares of the Company’s common stock.Beginning on June 20, 2014 , the Company had the right to redeem the 3.75% Notes, at its option, in whole or in part, if the last reported saleprice per share of the Company’s common stock was at least 130% of the conversion price then in effect for at least 20 trading days during aperiod of 30 consecutive trading days. In June 2014, the Company met the redemption requirements and notified holders of its intent to redeem theoutstanding68$28.8 million in principal amount of 3.75% Notes in July 2014. Prior to the redemption date, holders of $28.5 million in principal amount of 3.75%Notes exercised their right to convert their outstanding 3.75% Notes. The Company settled this conversion of the 3.75% Notes in July 2014 byproviding cash of $28.5 million for the principal amount of the outstanding 3.75% Notes converted and issuing 348,535 shares of common stock forthe conversion premium totaling $12.6 million , for a total consideration paid of $41.1 million . The Company settled the redemption of the remaining $0.3 million in principal amount in exchange for a cash payment of $0.3 million representing principal and accrued and unpaid interest. TheCompany allocated $27.9 million of the total consideration paid to the debt and $13.5 million to equity.The Company recorded a loss on extinguishment of debt of $23.2 million in connection with the repurchase and redemption of the 3.75% Notesduring the year ended December 31, 2014, representing the excess of the $140.3 million allocated to the debt over its carrying value, net of deferredfinancing costs.Certain features related to a portion of the 3.75% Notes, including the holders’ ability to require the Company to repurchase their notes and thehigher interest payments required in an event of default, were considered embedded derivatives and were required to be bifurcated and accountedfor at fair value. The Company assessed the value of these embedded derivatives at each balance sheet date.No cash interest expense was recorded related to the 3.75% Notes in the years ended December 31, 2016 and 2015 . Cash interest expenserelated to the 3.75% Notes in the year ended December 31, 2014 was $2.4 million .No non-cash interest expense was recorded in the years ended December 31, 2016 and 2015 related to the 3.75% Notes. Non-cash interestexpense related to the 3.75% Notes in the year ended December 31, 2014 was $4.9 million .As of December 31, 2014 , no amounts remain outstanding related to the 3.75% Notes.69Note 8 . Capital Lease ObligationsAs of December 31, 2016 and 2015 , the Company had approximately $13.7 million of manufacturing equipment acquired under capital leases,included in property and equipment. As of December 31, 2016 , one capital lease remained outstanding and is being repaid in equal monthlyinstallments over a 24 month term, ending in the first quarter of 2017, and includes principal and interest payments with an effective interest rate of13% .The assets acquired under capital leases are being amortized on a straight-line basis over 5 years in accordance with the Company's policy fordepreciation of manufacturing equipment. Amortization expense on assets acquired under capital leases is included with depreciation expense.Amortization expense related to these capital leased assets was $2.7 million , $2.5 million and $1.3 million in the years ended December 31, 2016 ,2015 and 2014 , respectively.Assets acquired under capital leases consist of the following: As of(in thousands)December 31, 2016 December 31, 2015Manufacturing equipment$13,705 $13,705Less: Accumulated amortization(7,086) (4,346) Total$6,619 $9,359The aggregate future minimum lease payments related to these capital leases as of December 31, 2016 are as follows:(in thousands) Years Ending December 31,Minimum LeasePayments2017$269Total future minimum lease payments$269Interest expense—Total capital lease obligations$269The Company recorded $0.4 million , $1.2 million and $1.2 million of interest expense on capital leases in the years ended December 31, 2016, 2015 , and 2014 , respectively.Note 9. Net Loss Per ShareBasic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period,excluding unvested restricted common shares. Diluted net loss per share is computed using the weighted average number of common sharesoutstanding and, when dilutive, potential common share equivalents from options, restricted stock units and warrants (using the treasury-stockmethod), and potential common shares from convertible securities (using the if-converted method). Because the Company reported a net loss forthe years ended December 31, 2016 , 2015 and 2014 , all potential dilutive common shares have been excluded from the computation of the dilutednet loss per share for all periods presented, as the effect would have been anti-dilutive.Potential dilutive common share equivalents consist of the following: Years Ended December 31, 2016 2015 20142.00% Convertible Senior Notes1,442,433 4,327,257 4,327,2571.25% Convertible Senior Notes5,910,954 — —Unvested restricted stock units962,219 811,965 746,612Outstanding stock options3,441,303 2,999,199 1,847,669Total dilutive common shares11,756,909 8,138,421 6,921,53870Table of ContentsNote 10 . Accounts Receivable, NetAccounts receivable consist of amounts due from third-party payors, patients, third-party distributors and government agencies. The Companyrecords an allowance for doubtful accounts at the time potential collection risk is identified. The Company estimates its allowance based on historicalexperience, assessment of specific risk, discussions with individual customers or various assumptions and estimates that are believed to bereasonable under the circumstances. The Company believes the reserve is adequate to mitigate current collection risk.Customers that represented greater than 10% of gross accounts receivable as of December 31, 2016 , and 2015 were as follows: As of December 31, 2016 December 31, 2015Amgen, Inc.16% 22%Ypsomed Distribution AG19% 19%The components of accounts receivable from continuing operations are as follows:(in thousands)As ofDecember 31, 2016 December 31, 2015Trade receivables$31,714 $46,668Allowance for doubtful accounts(2,911) (4,138) Total accounts receivable$28,803 $42,530Refer to note 3 for accounts receivable related to discontinued operations.Note 11 . Inventories, NetInventories are held at the lower of cost or market, determined under the first-in, first-out method, and include the costs of material, labor andoverhead. Inventory has been recorded at cost, or net realizable value as appropriate, as of December 31, 2016 and 2015 . The Company reviewsinventories for net realizable value based on quantities on hand and expectations of future use. Work in process is calculated based upon a buildupin the stage of completion using estimated labor inputs for each stage in production.The components of inventories from continuing operations are as follows:(in thousands)As ofDecember 31, 2016 December 31, 2015Raw materials$1,911 $632Work-in-process15,681 1,960Finished goods, net17,922 9,432 Total inventories$35,514 $12,024Refer to note 3 for inventories related to discontinued operations, which were fully comprised of finished goods as of December 31, 2015.In the third quarter of 2015, the Company identified that certain lots of Omnipods had increased complaints relating to the deployment of theneedle mechanism. Omnipods produced with the specific tooling changes of needle mechanism components were subject to replacement, includingcertain Omnipod lots that were held as inventory. As such, the Company determined that it would not recover any amounts related to this inventory.Accordingly, this change in estimate increased the Company's cost of revenue in the year ended December 31, 2015 by approximately $7.3 million .71Note 12 . Property and Equipment, NetProperty and equipment related to continuing operations consist of the following: EstimatedUseful Life(Years) As of(in thousands)December 31, 2016 December 31, 2015Machinery and equipment2-5 $53,246 $49,059Lab equipment2-3 694 1,615Computers3 2,833 2,067Software3 3,786 2,566Office furniture and fixtures3-5 1,960 1,468Leasehold improvement* 1,126 927Construction in process— 24,137 12,275Total property and equipment $87,782 $69,977Less: accumulated depreciation (41,516) (28,184)Total property and equipment, net $46,266 $41,793____________________________________* Lesser of lease term or useful life of asset.Property and equipment from discontinued operations were not significant as of December 31, 2015 .Depreciation expense related to property and equipment from continuing operations was $13.3 million , $11.4 million and $7.7 million for theyears ended December 31, 2016 , 2015 and 2014 , respectively. Depreciation expense from discontinued operations was not significant duringthose same periods. The Company recorded $0.5 million , $0.2 million and $0.2 million of capitalized interest in the years ended December 31, 2016, 2015 and 2014 .Construction in process mainly consists of infrastructure improvements and internal use software. Depreciation on software does not beginuntil the assets are integrated into the current systems.During the year ended December 31, 2015 , the Company wrote-off $5.4 million of fully depreciated assets, as the assets were no longer inuse. No gain or loss was recognized in the year ended December 31, 2015 related to the write-off of these assets. During the year endedDecember 31, 2016 , the Company wrote-off no fully depreciated assets.During 2016, the Company restructured its plan for an internally developed ERP system to leverage current third-party software available andscale conversion based on the Company's evolving ERP needs. As a result, the Company recorded a charge of $6.1 million included in general andadministrative expenses related to in-process internally developed software.The Company capitalizes eligible software development costs, including salaries and payroll-related costs of employees who devote time to thedevelopment. Capitalization begins when a detail program design is completed and technological feasibility has been established. These costs areamortized on a straight-line basis over the estimated useful life. In the second quarter of 2015, based on changes in one of the Company's ongoingprojects, the Company determined that the detailed program designs were no longer sufficiently complete to establish technological feasibility of thisproject. As such, all costs previously capitalized for this project, approximately $1.3 million within property and equipment, net, and all subsequentcosts incurred through December 31, 2015, approximately $9.2 million , have been recorded to research and development expense in the yearended December 31, 2015.72Note 13 . Other Intangible AssetsThe Company’s finite-lived intangible assets are stated at cost less accumulated amortization. The Company assesses its intangible and otherlong-lived assets for impairment whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable.The Company recognizes an impairment loss for intangibles and other finite-lived assets if the carrying amount of a long-lived asset is notrecoverable based on its undiscounted future cash flows. Any such impairment loss is measured as the difference between the carrying amount andthe fair value of the asset. The estimation of useful lives and expected cash flows requires the Company to make significant judgments regardingfuture periods that are subject to some factors outside its control. Changes in these estimates can result in significant revisions to the carrying valueof these assets and may result in material charges to the results of operations.The Company recorded $32.9 million of other intangible assets as a result of the acquisition of Neighborhood Diabetes in 2011. In December2015, the Company completed a long-lived asset impairment test for Neighborhood Diabetes and determined that the carrying value of the long-lived asset group, which included intangible assets, exceeded the undiscounted cash flows expected to be generated from the asset group. TheCompany compared the fair value of the intangible assets and the related asset group, which was estimated based on the subsequent sales price ofthe asset group as of February 2016. As a result, an impairment charge of $9.0 million was recorded within loss from discontinued operations for theyear ended December 31, 2015. The impairment charge was allocated on a pro-rata basis based on the carrying value of the assets within the assetgroup. As a result, impairment charges of approximately $7.4 million and $1.6 million , respectively, were recorded on the customer relationship andtrade name intangible assets which are included within long-term assets from discontinued operations on the balance sheet. During the threemonths ended March 31, 2016, the remaining balance of the other intangible assets associated with the acquisition of Neighborhood Diabetes wasremoved from the balance sheet as part of the divestiture and included in the calculated loss of disposal. No further impairment was recorded uponthe sale. The Company recorded $2.1 million of other intangible assets in the year ended December 31, 2015 as a result of the July 2015 acquisition ofits Canadian distribution business (see note 4 for further description). The Company determined that the estimated useful life of the contractualrelationship asset is 5 years and is amortizing the asset over the estimated lives, based on the expected cash flows of the assets, accordingly.Other intangible assets consist of the following: As ofDecember 31, 2016 December 31, 2015(in thousands)Gross CarryingAmount AccumulatedAmortization Net Book Value Gross CarryingAmount AccumulatedAmortization Net Book ValueCustomer and contractual relationships, net (1) (2)$1,994 $(1,466) $528 $3,399 $(1,000) $2,399Tradename (3)— — — 322 — 322Total intangible assets (4)$1,994 $(1,466) $528 $3,721 $(1,000) $2,721 (1) Includes foreign currency translation loss of approximately $0.1 million .(2) The customer relationships asset includes $1.5 million of both the gross carrying amount and net book value, respectively, that are included in long-term assets fromdiscontinued operations on the balance sheet as of December 31, 2015.(3) The tradename asset is included in long-term assets from discontinued operations on the balance sheet as of December 31, 2015.(4) As a result of the impairment recorded on the Neighborhood Diabetes asset group, the Company recorded an impairment charge of approximately $9.0 million on therelated Neighborhood Diabetes intangible assets, which was recorded through discontinued operations. This resulted in the gross carrying value and accumulatedamortization of the Neighborhood Diabetes intangibles being reduced by $31.1 million and $22.1 million , respectively, at December 31, 2015.Amortization expense from continuing operations was approximately $0.4 million and $1.0 million for the years ended December 31, 2016 and2015 , respectively. There was no amortization expense from continuing operations in the year ended December 31, 2014. Amortization expensefrom discontinued operations was approximately $0.1 million , $3.3 million and $4.0 million for the years ending December 31, 2016 , 2015 and 2014respectively. Amortization expense is recorded in general and administration expenses in the consolidated statements of operations.73Amortization expense expected for the next five years and thereafter from continuing operations is as follows:(in thousands) Years Ending December 31,Customer and ContractualRelationships2017$18120181542019129202064 Total$528As of December 31, 2016 , the weighted average amortization period of the Company’s intangible assets is approximately 4 years.Note 14 . Accrued Expenses and Other Current LiabilitiesAccrued expenses and other current liabilities related to continuing operations consist of the following: Years Ended December 31,(in thousands)2016 2015Employee compensation and related costs$21,999 $16,856Professional and consulting services6,753 5,654Sales and use tax299 1,163Supplier charges2,886 4,981Warranty1,642 1,592Other7,380 6,498Total accrued expenses and other current liabilities$40,959 $36,744Product Warranty CostsThe Company provides a four -year warranty on its PDMs sold in the United States and a five -year warranty on its PDMs sold in Canada andmay replace any Omnipods that do not function in accordance with product specifications. The Company estimates its warranty at the time theproduct is shipped based on historical experience and the estimated cost to service the claims. Warranty expense is recorded in cost of goods soldon the statement of operations. Cost to service the claims reflects the current product cost which has been decreasing over time. As these estimatesare based on historical experience, and the Company continues to introduce new products and versions, the Company also considers theanticipated performance of the product over its warranty period in estimating warranty reserves.74A reconciliation of the changes in the Company’s product warranty liability is as follows: Years Ended December 31,(in thousands)2016 2015Balance at the beginning of the period$4,152 $2,614Warranty expense4,602 4,964Warranty claims settled(4,366) (3,426)Balance at the end of the period$4,388 $4,152 As of(in thousands)December 31, 2016 December 31, 2015Composition of balance: Short-term$1,642 $1,592Long-term2,746 2,560 $4,388 $4,152Note 15 . Commitments and ContingenciesThe Company records a liability in the consolidated financial statements for loss contingencies when a loss is known or considered probableand the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range isa better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and canbe reasonably estimated, the estimated loss or range of loss is disclosed. As of December 31, 2016, the Company had a commitment of $8.8 million for the purchase of property that will be used for the Company'smanufacturing facility in the United States and was subsequently paid in February 2017. Total purchase price for the property was $9.3 million .Operating LeasesThe Company leases its facilities in Massachusetts, California, Tennessee, Canada and China. The Company’s leases are accounted for asoperating leases. The leases generally provide for a base rent plus real estate taxes and certain operating expenses related to the leases.The Company leases approximately 100,000 square feet of laboratory and office space for its corporate headquarters in Billerica,Massachusetts. The leases expire in November 2022 and contain escalating payments over the life of the lease. Additionally, the Company leasesapproximately 29,000 square feet of warehousing space in Billerica, Massachusetts under a lease expiring in September 2019. The Companyleases other facilities in Canada, China, California and Tennessee containing a total of approximately 4,000 square feet under leases expiring fromMay 2017 to May 2018.Certain of the Company’s operating lease agreements contain scheduled rent increases. Rent expense is recorded using the straight-linemethod and deferred rent is included in other liabilities in the accompanying balance sheets. The Company has considered FASB ASC 840-20,Leases in accounting for these lease provisions. Rental expense from continuing operations under operating leases was $2.5 million , $1.9 millionand $1.4 million in the years ended December 31, 2016 , 2015 and 2014 , respectively.The aggregate future minimum lease payments related to these leases from continuing operations as of December 31, 2016 are as follows:75(in thousands) Years Ending December 31,Minimum LeasePayments20172,56020182,46820192,45520202,38320212,383Thereafter2,131Total$14,380Legal ProceedingsThe Company is in the process of responding to a revised audit report received in December 2015 on behalf of the Centers for Medicare andMedicaid Services and the State of New York alleging overpayment of certain Medicaid claims to Neighborhood Diabetes. As of December 31,2015, the Company had determined that it was probable that a loss had been incurred and recorded an aggregate liability of $0.4 million recordedwithin loss from discontinued operations, which was reduced to $0.3 million during 2016 (which remains the Company’s current estimate of suchliability). The change in the liability was recorded in discontinued operations.In May 2016, the Company reached a settlement agreement for $0.5 million with the Connecticut Department of Social Services Office ofQuality Assurance relating to an audit alleging overpayment of certain Medicaid claims to Neighborhood Diabetes. The settlement amount for thisaudit was consistent with the amount previously accrued.In April 2016, the Company reached a settlement agreement for $0.5 million with the Massachusetts Department of Revenue for sales and usetax audits related to Insulet Corporation, which resulted in a $0.2 million reduction of the previously recorded liability and a credit to general andadministrative expenses during 2016.Between May 5, 2015 and June 16, 2015, three class action lawsuits were filed by shareholders in the U.S. District Court, Massachusetts,against the Company and certain individual current and former executives of the Company. Two suits subsequently were voluntarily dismissed.Arkansas Teacher Retirement System v. Insulet, et al. , 1:15-cv-12345, which remains outstanding, alleges that the Company (and certainexecutives) committed violations of Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by making allegedly false andmisleading statements about the Company’s business, operations, and prospects. The lawsuit seeks, among other things, compensatory damagesin connection with the Company’s allegedly inflated stock price between May 7, 2013 and April 30, 2015, as well as attorneys' fees and costs. Due inpart to the preliminary nature of this matter, the Company currently cannot reasonably estimate a possible loss, or range of loss, in connection withthis matter.The Company is, from time to time, involved in the normal course of business in various legal proceedings, including intellectual property,contract, employment and product liability suits. Although the Company is unable to quantify the exact financial impact of any of these matters, theCompany believes that none of these currently pending matters will have an outcome material to its financial condition or business.Note 16 . EquityThe Company accounts for stock-based compensation under the provisions of FASB ASC 718-10, Compensation — Stock Compensation(“ASC 718-10”), which requires all share-based payments to employees and directors, including grants of stock options and restricted stock units, tobe recognized in the income statement based on their fair values. Share-based payments that contain performance conditions are recognized whensuch conditions are probable of being achieved.In July 2014, in connection with the extinguishment of $28.5 million in principal amount of the 3.75% Notes, the Company issued 348,535shares of its common stock to the holders representing the conversion premium.The Company grants share-based awards to employees in the form of options to purchase the Company’s common stock, the ability topurchase stock at a discounted price under the employee stock purchase plan and restricted stock units. The Company uses the Black-Scholesoption pricing model to determine the weighted-average fair value of options granted and determines the intrinsic value of restricted stock unitsbased on the closing price of its common stock on the date of grant. The Company recognizes the compensation expense of76share-based awards on a straight-line basis for awards with only service conditions and on an accelerated basis for awards with performanceconditions. Compensation expense is recognized over the vesting period of the awards.Stock-based compensation expense from continuing operations related to share-based awards recognized in the years ended December 31,2016 , 2015 and 2014 was $23.8 million , $18.7 million and $22.0 million , respectively, and was calculated on awards ultimately expected to vest.Stock-based compensation expense from discontinued operations related to share-based awards was not significant for the year ended December31, 2016. Stock-based compensation expense from discontinued operations related to share-based awards for the years ended December 31, 2015and 2014 was $0.5 million and $0.5 million , respectively. At December 31, 2016 , the Company had $41.5 million of total unrecognizedcompensation expense related to unvested stock options and restricted stock units.Stock OptionsIn May 2007, in conjunction with the Company's initial public offering, the Company adopted its 2007 Stock Option and Incentive Plan (the"2007 Plan"). The 2007 Plan was amended and restated in November 2008, May 2012 and May 2015 to provide for the issuance of additionalshares and to amend certain other provisions. Under the 2007 Plan, awards may be granted to persons who are, at the time of grant, employees,officers, non-employee directors or key persons (including consultants and prospective employees) of the Company. The 2007 Plan provides for thegranting of stock options, restricted stock units, stock appreciation rights, deferred stock awards, restricted stock, unrestricted stock, cash-basedawards, performance share awards or dividend equivalent rights. Options granted under the 2007 Plan generally vest over a period of four yearsand expire ten years from the date of grant. As of December 31, 2016 , 4,487,991 shares remain available for future issuance under the 2007 Plan.In the year ended December 31, 2015 the Company awarded 194,500 shares of performance-based incentive stock options. In the year endedDecember 31, 2016 the Company awarded 65,000 shares of performance-based incentive stock options. The stock options were granted under the2007 Plan and vest over a four year period from the grant date with the potential of an accelerated vesting period pursuant to the achievement ofcertain performance conditions.The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the stock price and thefollowing assumptions, including expected volatility, expected life of the awards, the risk-free interest rate, and the dividend yield.•Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period and is computedover expected terms based upon the historical volatility of the Company's stock.•The expected life of the awards is estimated based on the midpoint scenario, which combines historical exercise data with hypotheticalexercise data for outstanding options, as the Company believes this data currently represents the best estimate of the expected life ofa new employee option. The Company stratifies its employee population into two groups based upon organizational hierarchy.•The risk-free interest rate assumption is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected termon the options.•The dividend yield assumption is based on Company history and expectation of paying no dividends. The Company has neverdeclared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used anexpected dividend yield of zero in the valuation.Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.Stock-based compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest. If theCompany’s actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different fromwhat the Company has recorded in the current period.The Company evaluates the assumptions used to value the awards on a quarterly basis and if factors change and different assumptions areutilized, stock-based compensation expense may differ significantly from what has been recorded in the past. If there are any modifications orcancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.77The estimated grant date fair values of the employee stock options were calculated using the Black-Scholes option pricing model, based on thefollowing assumptions: Years Ended December 31, 2016 2015 2014Risk-free interest rate0.99% - 1.91% 1.16% - 1.75% 0.12% - 1.98%Expected term (in years)5.07 - 5.38 4.86 - 5.25 1.0 - 6.25Dividend yield— — —Expected volatility38% - 40% 37% - 38% 37% - 63%The weighted average grant date fair value of options granted for the years ended December 31, 2016 , 2015 and 2014 was $11.60 , $11.09and $15.88 , respectively.The following summarizes the activity under the Company’s stock option plans: Number ofOptions (#) Weighted AverageExercise Price ($) AggregateIntrinsicValue ($) (In thousands)Balance, December 31, 20152,999,199 $31.37 —Granted1,049,862 31.85 —Exercised (1)(242,962) 19.89 $4,646Canceled(364,796) 31.92 —Balance, December 31, 20163,441,303 $32.27 $20,196Vested, December 31, 2016 (2)1,503,811 $31.89 $9,325Vested and expected to vest, December 31, 2016 (2)(3)3,167,755 $18,648 (1) The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of the date ofexercise and the exercise price of the underlying options. The aggregate intrinsic value of options exercised in the years ended December 31, 2016 , 2015 and2014 was $4.6 million , $8.6 million and $20.4 million , respectively,(2) The aggregate intrinsic value was calculated based on the positive difference between the estimated fair value of the Company’s common stock as of December 31,2016 , and the exercise price of the underlying options.(3) Represents the number of vested options as of December 31, 2016 , plus the number of unvested options expected to vest as of December 31, 2016 , based on theunvested options outstanding at December 31, 2016 adjusted for the estimated forfeiture.At December 31, 2016 there were 3,441,303 options outstanding (vested and unvested) with a weighted average exercise price of $32.27 anda weighted average remaining contractual life of 7.9 years. Of this amount, at December 31, 2016 , there were 1,503,811 vested options exercisablewith a weighted average exercise price of $31.89 and a weighted average remaining contractual life of 6.6 years and 1,663,944 options expected tovest with a weighted average exercise price of $32.57 and a weighted average remaining contractual life of 8.8 years.Employee stock-based compensation expense from continuing operations related to stock options in the years ended December 31, 2016 ,2015 and 2014 was $9.9 million , $9.1 million and $7.6 million , respectively, and was based on awards ultimately expected to vest. Employee stock-based compensation expense from discontinued operations related to stock options was not significant for the year ended December 31, 2016.Employee stock-based compensation expense from discontinued operations related to stock options for the years ended December 31, 2015 and2014 was $0.1 million and $0.1 million . At December 31, 2016 , the Company had $19.0 million of total unrecognized compensation expenserelated to stock options that will be recognized over a weighted average vesting period of 2.5 years.Restricted Stock UnitsIn the year ended December 31, 2016 , the Company awarded 592,783 restricted stock units to certain employees and non-employeemembers of the Board of Directors, which included 154,991 restricted stock units subject to the achievement of performance conditions(performance-based restricted stock units). For performance-based restricted stock units for which the performance criteria has not yet beenachieved, the Company recognized stock compensation expense of $2.4 million in 2016 as it expects a portion of the performance-based restricted78stock units granted will be earned based on its evaluation of the performance criteria at December 31, 2016 . An additional $1.0 million of stockcompensation expense was recognized in 2016 for performance-based restricted stock units for which the performance criteria has been achievedas of December 31, 2016. The restricted stock units were granted under the 2007 Plan and generally vest annually over a one or three year periodfrom the grant date, except for the performance-based restricted stock units, which follow different vesting patterns.The restricted stock units granted have a weighted average fair value of $29.85 per share based on the closing price of the Company’scommon stock on the date of grant. The restricted stock units granted during the year ended December 31, 2016 were valued at approximately$17.7 million on their grant date, and the Company is recognizing the compensation expense over the vesting period. Approximately $10.2 million ,$8.1 million and $14.3 million of stock-based compensation expense from continuing operations related to the vesting of non-performance basedrestricted stock units was recognized in the years ended December 31, 2016 , 2015 and 2014 , respectively. Employee stock-based compensationexpense recognized from discontinued operations related to the vesting of non-performance based restricted stock units was not significant for theyear ended December 31, 2016. Employee stock-based compensation expense from discontinued operations related to the vesting of non-performance based restricted stock for the years ended December 31, 2015 and 2014 was $0.4 million and $0.4 million , respectively.Approximately $22.4 million of the fair value of the restricted stock units remained unrecognized as of December 31, 2016 and will be recognizedover a weighted average period of 1.8 years. Under the terms of the awards, the Company will issue shares of common stock on each of the vestingdates.The following table summarizes the status of the Company’s restricted stock units: Number ofShares (#) WeightedAverageFair Value ($)Balance, December 31, 2015811,965 $30.58Granted592,783 29.85Vested(317,470) 31.01Forfeited(125,059) 33.02Balance, December 31, 2016962,219 $31.14Employee Stock Purchase PlanThe Employee Stock Purchase Plan (“ESPP”) authorizes the issuance of up to a total of 380,000 shares of common stock to participatingemployees. The Company will make one or more offerings each year to eligible employees to purchase stock under the ESPP. Between January 1,2008 and June 30, 2016, offering periods began on the first business day occurring on or after each January 1 and July 1 and ended on the lastbusiness day occurring on or before the following June 30 and December 31, respectively. Beginning as of July 1, 2016, offering periods begin onthe first business day occurring on or after each December 1 and June 1 and will end on the last business day occurring on or before the followingMay 31 and November 30, respectively. In order to permit a transition to the new offering cycle, a one-time offering period began on July 1, 2016and ended on November 30, 2016.Each employee who is a participant in the Company’s ESPP may purchase up to a maximum of 800 shares per offering period or $25,000worth of common stock, valued at the start of the purchase period, per year by authorizing payroll deductions of up to 10% of his or her base salary.Unless the participating employee withdraws from the offering period, his or her accumulated payroll deductions will be used to purchase commonstock.For all offering periods ending on or before June 30, 2016, the purchase price for each share purchased was 85% of the fair market value ofthe common stock on the last day of the offering period. For all offering periods beginning on or after July 1, 2016, the purchase price for each sharepurchased will be 85% of the lower of (i) the fair market value of the common stock on the first day of the offering period or (ii) the fair market valueof the common stock on the last day of the offering period.The accumulated payroll deductions of any employee who is not a participant on the last day of an offering period will be refunded. Anemployee’s rights under the ESPP terminate upon voluntary withdrawal from the plan or when the employee ceases employment with the Companyfor any reason.The ESPP may be terminated or amended by the Board of Directors at any time. An amendment to increase the number of shares of commonstock that is authorized under the ESPP, and certain other amendments, require the approval of stockholders.79The Company issued 30,949 shares of common stock in 2016 , 22,039 shares of common stock in 2015 and 13,620 shares of common stockin 2014 to employees participating in the ESPP. The Company recorded approximately $0.2 million , $0.1 million and $0.1 million of stock-basedcompensation expense related to the ESPP in each of the years ended December 31, 2016 , 2015 and 2014 .Shareholder Rights PlanIn November 2008, the Board of Directors of the Company adopted a shareholder rights plan (the "Shareholder Rights Plan”), as set forth inthe Shareholder Rights Agreement between the Company and the rights agent, the purpose of which is, among other things, to enhance the abilityof the Board of Directors to protect shareholder interests and to ensure that shareholders receive fair treatment in the event any coercive takeoverattempt of the Company is made in the future. The Shareholder Rights Plan could make it more difficult for a third party to acquire, or coulddiscourage a third party from acquiring, the Company or a large block of the Company’s common stock.In connection with the adoption of the Shareholder Rights Plan, the Board of Directors of the Company declared a dividend distribution of onepreferred stock purchase right (a “Right”) for each outstanding share of common stock to stockholders of record as of the close of business onNovember 15, 2008. In addition, one Right will automatically attach to each share of common stock issued between November 15, 2008 and thedistribution date. The Rights currently are not exercisable and are attached to and trade with the outstanding shares of common stock. Under theShareholder Rights Plan, the Rights become exercisable if a person or group becomes an “acquiring person” by acquiring 15% or more of theoutstanding shares of common stock or if a person or group commences a tender offer that would result in that person or group owning 15% ormore of the common stock. The Board of Directors, from time to time, can and has taken action to allow certain shareholders to acquire more than15% of the outstanding shares of common stock under certain conditions. If a person or group becomes an “acquiring person,” each holder of aRight (other than the acquiring person) would be entitled to purchase, at the then-current exercise price, such number of shares of the Company’spreferred stock which are equivalent to shares of common stock having a value of twice the exercise price of the Right. If the Company is acquiredin a merger or other business combination transaction after any such event, each holder of a Right would then be entitled to purchase, at the then-current exercise price, shares of the acquiring company’s common stock having a value of twice the exercise price of the Right.Note 17. Defined Contribution PlanThe Insulet 401(k) Retirement Plan (the “401(k) Plan”) is a defined contribution plan in the form of a qualified 401(k) plan, in which substantiallyall employees are eligible to participate upon hire. Eligible employees may elect to contribute 100% of their eligible compensation up to the IRSmaximum. The Company has the option of making both matching contributions and discretionary profit-sharing contributions to the 401(k) Plan.Since 2011, the Company has offered a discretionary match of 50% for the first 6% of an employee’s salary that was contributed to the 401(k) Plan.The Company match vests after the employee attains one year of service. The total amount contributed by the Company under the 401(k) Plan incontinuing operations was $1.6 million , $1.6 million and $1.1 million for the years ended December 31, 2016 , 2015 and 2014 , respectively.Contributions in discontinued operations were not significant during those same periods.Note 18 . Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets andliabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilitiesare determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted taxrates that will be in effect in the years in which the differences are expected to reverse. The Company reviews its deferred tax assets forrecoverability considering historical profitability, projected future taxable income, and the expected timing of the reversals of existing temporarydifferences and tax planning strategies. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the periodthat includes the enactment date.The Company follows the provisions of FASB ASC 740-10, Income Taxes (“ASC 740-10”) on accounting for uncertainty in income taxesrecognized in its financial statements. ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statementrecognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, ASC 740-10 provides guidance onderecognition, classification,80interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes estimated interest and penalties foruncertain tax positions in income tax expense.The Company files federal, state and foreign tax returns. These returns are generally open to examination by the relevant tax authorities fromthree to four years from the date they are filed. The tax filings relating to the Company's federal and state tax returns are currently open toexamination for tax years 2013 through 2015 and 2012 through 2015, respectively. In addition, the Company has generated tax losses since itsinception in 2000. These years may be subject to examination if the losses are carried forward and utilized in future years.At December 31, 2016 and December 31, 2015 , the Company provided a full valuation allowance against its domestic net deferred tax assetbecause it is not more likely than not that the future tax benefit will be realized. In addition, the Company has a net deferred tax asset in foreignjurisdictions where no valuation allowance is recorded, because it is more likely than not that the future tax benefit will be realized.Income tax expense from continuing operations consists of the following: Years Ended December 31,(in thousands)2016 2015 2014Current: Federal$— $— $—State52 72 57Non-U.S.539 321 3Total current expense591 393 60Deferred: Federal— — —State— — —Non-U.S.(199) (181) —Total deferred expense(199) (181) —Total income tax expense$392 $212 60Income tax expense from discontinued operations was $0.4 million for the year ended 2016 and was primarily generated from federal deferredtaxes. Income tax expense from discontinued operations was not significant for the years ended December 31, 2015 and 2014 .The following table reconciles the federal statutory income rate to the Company's effective income tax rate: Year Ended December 31, 2016 2015 2014Tax at U.S. statutory rate34.00 % 34.00 % 34.00 %Changes from statutory rate: State taxes, net of federal benefit(10.86) 3.06 1.56Tax credits0.03 1.51 1.36Permanent items(11.03) (2.09) (1.32)Change in valuation allowance(13.45) (37.11) (32.13)Other(0.15) 0.28 (3.60)Effective income tax rate(1.46)% (0.35)% (0.13)%Pre-tax income attributable to the Company's operations located outside the U.S. was approximately $0.8 million , $0.3 million and $0.1 millionfor 2016 , 2015 and 2014 , respectively. In general, it is the Company's practice and intention to reinvest the earnings of its non-U.S. subsidiaries inthose operations. As of December 31, 2016 , the Company has chosen to indefinitely reinvest approximately $0.8 million of earnings of certain of itsnon-U.S. subsidiaries. Generally, such amounts become subject to U.S taxation upon the remittance of dividends and under certain othercircumstances. No provision has been recorded for U.S. income taxes that could be incurred upon repatriation. It is not practicable to estimate theamount of the deferred tax liability related to such earnings.81Significant components of the Company’s deferred tax assets (liabilities) consists of the following: Year Ended December 31,(in thousands)2016 2015Deferred tax assets: Net operating loss carryforwards$169,203 $172,815Start up expenditures929 1,168Tax credits8,007 8,173Provision for bad debts1,330 1,724Depreciation and amortization6,368 2,472Capital loss carryforward18,961 —Other15,060 13,022Total deferred tax assets$219,858 $199,374Deferred tax liabilities: Prepaids$(1,173) $(1,249)Amortization of acquired intangibles(33) —Amortization of debt discount(25,977) (9,503)Goodwill(855) (383)Other(313) —Total deferred tax liabilities$(28,351) $(11,135)Valuation allowance$(191,922) $(188,442)Net deferred tax liabilities$(415) $(203)The Company has recorded a deferred tax liability related to the tax basis in an acquired intangible asset that is not amortized for financialreporting purposes. The deferred tax liability will only reverse at the time of ultimate sale or further impairment of the underlying intangible assets.Due to the uncertain timing of this reversal, the temporary difference cannot be considered as a source of future taxable income for purposes ofdetermining a valuation allowance; therefore, the tax liability cannot be used to offset the deferred tax asset related to the net operating losscarryforward for tax purposes that will be generated by the same amortization.A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than notthat some portion or all of the deferred tax assets will not be realized. After consideration of the available evidence, both positive and negative, theCompany has determined that a $191.9 million valuation allowance at December 31, 2016 is necessary to reduce the deferred tax assets to theamount that will more likely than not be realized. The Company provided a valuation allowance for the full amount of its domestic net deferred taxasset for the years ended December 31, 2016 and 2015 because it is not more likely than not that the future tax benefit will be realized. In the yearended December 31, 2016 , the Company’s valuation allowance increased to $191.9 million from the balance at December 31, 2015 of $188.4million . The change in the valuation allowance is primarily attributable to the capital loss carryforward generated in the current year that resultedfrom the sale of the Neighborhood Diabetes business, partially offset additional deferred tax liabilities recognized for the amortization of debtdiscount in the current year.At December 31, 2016 , the Company had approximately $535.7 million , $216.2 million and $8.0 million of federal net operating losscarryforwards, state net operating loss carryforwards and research and development and other tax credits, respectively. If not utilized, these federalcarryforwards will begin to expire in 2020 and will continue to expire through 2036, and the state carryforwards will continue to expire through 2036.At December 31, 2015 , the Company had approximately $532.0 million , $285.6 million and $8.2 million of federal net operating loss carryforwards,state net operating loss carryforwards and research and development and other tax credits, respectively from continuing operations. The utilizationof such net operating loss carryforwards and the realization of tax benefits in future years depends predominantly upon having taxable income.Under the provisions of the Internal Revenue Code, certain substantial changes in the Company's ownership may result in a limitation on theamount of net operating loss carryforwards which may be used in future years. There will be a yearly limitation placed on the amount of netoperating loss available for use in future years. Additionally, it is probable that a portion of the research and development tax credit carryforwardmay not be available to offset future income.82As a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities does not include certain deferred taxassets as of December 31, 2016 and December 31, 2015 that arose directly from tax deductions related to equity compensation greater thancompensation recognized for financial reporting. Equity will be increased by $23.8 million if and when such deferred tax assets are ultimatelyrealized. The Company utilizes ASC 740 ordering when excess tax benefits have been realized. Upon adoption of ASU 2016-09 in 2017, thesedeferred tax assets are expected to be added to the Company’s table of deferred tax assets and liabilities, with an offsetting amount recorded to thevaluation allowance.The Company had no unrecognized tax benefits at December 31, 2016 .19 . Segment ReportingOperating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on aregular basis by the chief operating decision-maker ("CODM") in deciding how to allocate resources to an individual segment and in assessingperformance of the segment. The Company has concluded that their Chief Executive Officer is the CODM as he is the ultimate decision maker forkey operating decisions, determining the allocation of resources and assessing the financial performance of the Company. These decisions,allocations and assessments are performed by the CODM using consolidated financial information. Consolidated financial information is utilized bythe CODM as the Company’s current product offerings and primarily consists of the Omnipod System and drug delivery. The Company’s productsare relatively consistent and manufacturing is centralized and consistent across product offerings. Based on these factors, key operating decisionsand resource allocations are made by the CODM using consolidated financial data and as such the Company has concluded that it operates as onesegment.Worldwide revenue for the Company's products is categorized as follows: Years Ended December 31,(in thousands)2016 2015 2014U.S. Omnipod$229,785 $189,604 $175,950International Omnipod71,889 40,339 50,025Drug Delivery65,315 33,950 5,346Total$366,989 $263,893 $231,321Geographic information about revenue, based on the region of the customer's shipping location, is as follows: Years Ended December 31,(in thousands)2016 2015 2014United States$295,100 $223,554 $181,296All other71,889 40,339 50,025Total$366,989 $263,893 $231,321Geographic information about long-lived assets, net, excluding goodwill and other intangible assets is as follows:(in thousands)December 31, 2016 December 31, 2015United States$20,854 $13,018China25,431 28,638Other197 213Total$46,482 $41,8698320. Quarterly Data (Unaudited) 2016 Quarters Ended December 31 (1) September 30 June 30 March 31(In thousands, except per share data) Revenue$103,575 $94,871 $87,330 $81,213Gross profit60,937 55,641 50,457 44,051Operating income (loss)(4,135) 2,418 (1,288) (7,699)Net loss from continuing operations, net of taxes(9,153) (3,017) (4,351) (10,689)Income (loss) from discontinued operations, net of taxes34 (64) 153 (1,792)Net loss$(9,119) $(3,081) $(4,198) $(12,481)Net loss per share from continuing operations$(0.16) $(0.05) $(0.08) $(0.19)Net loss per share from discontinued operations$— $— $— $(0.03)(1) Included in net loss from continuing operations for the fourth quarter of 2016 was a charge of $6.1 million related to in-process internally developed software. 2015 Quarters Ended December 31 (2) September 30 June 30 March 31(In thousands, except per share data) Revenue$83,801 $71,393 $60,551 $48,148Gross profit41,993 31,570 30,515 29,193Operating loss(12,617) (14,794) (14,059) (7,266)Net loss from continuing operations, net of taxes(15,909) (17,984) (17,267) (10,442)Income (loss) from discontinued operations, net of taxes(11,418) (943) 1,835 (1,392)Net loss$(27,327) $(18,927) $(15,432) $(11,834)Net loss per share from continuing operations$(0.28) $(0.31) $(0.30) $(0.18)Net loss per share from discontinued operations$(0.20) $(0.02) $0.03 $(0.03) (2) Included in loss from discontinued operations for the fourth quarter of 2015 was a charge of $9.1 million related to the impairment of the Neighborhood Diabetes assetgroup.84Table of ContentsSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTSThe following table sets forth activities in the Company's accounts receivable reserve and deferred tax valuation allowance accounts:DescriptionBalance atBeginning ofPeriod Additions Charged to Costs andExpenses Deductions Balance atEndof Period(In thousands) Year Ended December 31, 2016 Allowance for doubtful accounts (1)$4,454 $2,069 $3,612 $2,911Deferred tax valuation allowance (1)193,405 7,599 9,082 191,922Year Ended December 31, 2015 Allowance for doubtful accounts (1)$5,837 $1,184 $2,567 $4,454Deferred tax valuation allowance (1)165,020 28,418 33 193,405Year Ended December 31, 2014 Allowance for doubtful accounts (1)$7,133 $3,254 $4,550 $5,837Deferred tax valuation allowance (1)158,323 21,070 14,373 165,020(1) Includes the amount classified as discontinued operations on the balance sheet and related activity.85Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURENone.Item 9A. Controls and ProceduresDisclosure Controls and ProceduresOur management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosurecontrols and procedures as of December 31, 2016 . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designedto ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded,processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosurecontrols and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by acompany in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, includingits principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizesthat any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectivesand management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on theevaluation of our disclosure controls and procedures as of December 31, 2016 , 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.Changes in Internal Control Over Financial ReportingThere were no changes in our internal control over financial reporting during the three months ended December 31, 2016 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting.Management's Annual Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined inExchange Act Rule 13a — 15(f). Our internal control system was designed to provide reasonable assurance to our management and the Board ofDirectors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designedhave inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financialstatement preparation and presentation. Our management assessed the effectiveness of our internal control over financial reporting as of December31, 2016 . In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the TreadwayCommission 2013 (“COSO”) in Internal Control — Integrated Framework (the COSO criteria).Based on our assessment we believe that, as of December 31, 2016 , our internal control over financial reporting is effective based on thosecriteria. The effectiveness of our internal control over financial reporting as of December 31, 2016 has been audited by Grant Thornton LLP, anindependent registered public accounting firm, as stated in their report which appears below.86Table of ContentsReport of Independent Registered Public Accounting FirmBoard of Directors and StockholdersInsulet CorporationWe have audited the internal control over financial reporting of Insulet Corporation (a Delaware corporation) and subsidiaries (the “Company”)as of December 31, 2016 , based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement’s Annual Reporting on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internalcontrol over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reportingwas maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the riskthat a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, andperforming such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for ouropinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance thattransactions 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 thecompany; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’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 anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016,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), the consolidatedfinancial statements of the Company as of and for the year ended December 31, 2016, and our report dated February 27, 2017 expressed anunqualified opinion on those financial statements./s/ GRANT THORNTON LLPBoston, MassachusettsFebruary 27, 201787Table of ContentsITEM 9B. OTHER INFORMATIONNone.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceCertain information required by this Item 10 relating to our directors, executive officers and corporate governance is incorporated by referenceherein from our proxy statement in connection with our 2017 annual meeting of stockholders, which proxy statement will be filed with the Securitiesand Exchange Commission (the “SEC”) not later than 120 days after the close of our year ended December 31, 2016 .Item 11. Executive CompensationCertain information required by this Item 11 relating to remuneration of directors and executive officers and other transactions involvingmanagement is incorporated by reference herein from our proxy statement in connection with our 2017 annual meeting of stockholders, which proxystatement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our year ended December 31, 2016 .Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersCertain information required by this Item 12 relating to security ownership of certain beneficial owners and management is incorporated byreference herein from our proxy statement in connection with our 2017 annual meeting of stockholders, which proxy statement will be filed with theSecurities and Exchange Commission not later than 120 days after the close of our fiscal year ended December 31, 2016 . For information onsecurities authorized for issuance under equity compensation plans, see the section entitled “Market for Registrant’s Common Equity, RelatedStockholders Matters, and Issuer Purchases of Equity Securities “ in Part II, Item 5, in this Annual Report on Form 10-K.Item 13. Certain Relationships and Related Transactions, and Director IndependenceCertain information required by this Item 13 relating to certain relationships and related transactions, and director independence is incorporatedby reference herein from our proxy statement in connection with our 2017 annual meeting of stockholders, which proxy statement will be filed withthe Securities and Exchange Commission not later than 120 days after the close of our year ended December 31, 2016 .Item 14. Principal Accounting Fees and ServicesCertain information required by this Item 14 regarding principal accounting fees and services is set forth under “Principal Accounting Fees andServices” in our proxy statement in connection with our 2017 annual meeting of stockholders, which proxy statement will be filed with the Securitiesand Exchange Commission not later than 120 days after the close of our year ended December 31, 2016 .88Table of ContentsItem 15. Exhibits, Financial Statement Schedules(A)(1) FINANCIAL STATEMENTS The following consolidated financial statements of Insulet Corporation are included in Item 8 hereof: Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets - Years ended December 31, 2016 and 2015Consolidated Statements of Operations - Years ended December 31, 2016, 2015 and 2014Consolidated Statements of Comprehensive Loss - Years ended December 31, 2016, 2015 and 2014Consolidated Statements of Stockholders' Equity - Years ended December 31, 2016, 2015 and 2014Consolidated Statements of Cash Flows - Years ended December 31, 2016, 2015 and 2014Notes to Consolidated Financial Statements (A)(2) FINANCIAL STATEMENT SCHEDULES 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 relatedinstructions, 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 SECfilings.Item 16. Form 10-K SummaryNone.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signedon its behalf by the undersigned thereunto duly authorized. INSULET CORPORATION (Registrant) February 27, 2017/s/ Patrick J. Sullivan Patrick J. Sullivan Chief Executive Officer(Principal Executive Officer) February 27, 2017/s/ Michael L. Levitz Michael L. Levitz Chief Financial Officer(Principal Financial and Accounting Officer)89Table of ContentsPOWER OF ATTORNEY AND SIGNATURESWe, the undersigned officers and directors of Insulet Corporation, hereby severally constitute and appoint Patrick J. Sullivan and Michael L.Levitz, 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 thecapacities indicated below, on all amendments to this Report, and generally to do all things in our names and on our behalf in such capacities toenable Insulet Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securitiesand 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 ofthe Registrant and in the capacities on February 27, 2017 . Signature Title/s/ Patrick J. Sullivan Chief Executive OfficerPatrick J. Sullivan (Principal Executive Officer) /s/ Michael L. Levitz Chief Financial OfficerMichael L. Levitz (Principal Financial and Accounting Officer) /s/ Sally Crawford Sally Crawford Director /s/ John Fallon, M.D. John Fallon, M.D. Director /s/ Dr. Jessica Hopfield Dr. Jessica Hopfield Director /s/ David A. Lemoine David Lemoine Director /s/ Timothy J. Scannell Timothy J. Scannell Director /s/ Regina Sommer Regina Sommer Director /s/ Joseph Zakrzewski Joseph Zakrzewski Director90Table of ContentsEXHIBIT INDEXListed and indexed below are all Exhibits filed as part of this report.NumberDescription 3.1Eighth Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to our Registration Statement onForm S-8 (No. 333-144636) filed July 17, 2007) 3.2Amended and Restated By-laws of the Registrant (Incorporated by reference to our Current Report on Form 8-K, filed February 26, 2016) 4.1Specimen Stock Certificate (Incorporated by reference to our Registration Statement on Form S-8 (No. 333-144636) filed July 17, 2007) 4.2Certificate of Designations, Preferences and Rights of a Series of Preferred Stock of Insulet Corporation classifying and designating theSeries A Junior Participating Cumulative Preferred Stock (Incorporated by reference to our Form 8-A, filed November 20, 2008) 4.3Shareholder Rights Agreement, dated as of November 14, 2008, between Insulet Corporation and Registrar and Transfer Company, asRights Agent (Incorporated by reference to our Form 8-A, filed November 20, 2008) 4.4Amendment, dated September 25, 2009, to Shareholder Rights Agreement, dated as of November 14, 2008, between Insulet Corporationand Computershare Trust Company, As Rights Agent (Incorporated by reference to our Current Report on Form 8-A/A, filed September 28,2009) 4.5Amendment No. 2, dated August 30, 2016, to Shareholder Rights Agreement, dated as of November 18, 2008, between Insulet Corporationand Computershare Trust Company, As Rights Agent (Incorporated by reference to our Current Report on Form 8-K, filed August 31, 2016) 4.6Indenture, dated as of June 9, 2014, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee (Incorporated byreference to our Current Report on Form 8-K, filed June 12, 2014) 4.7Form of 2.00% Convertible Senior Notes due 2019 (included in Exhibit 33.3) (Incorporated by reference to our Current Report on Form 8-K,filed June 12, 2014) 4.8Indenture, dated as of September 13, 2016, between Insulet Corporation and Wells Fargo Bank, National Association, as Trustee(Incorporated by reference to Exhibit 4.1 in our Current Report on Form 8-K, filed September 13, 2016) 4.9Form of 1.25% Convertible Senior Notes due 2021 (included in Exhibit 4.8) (Incorporated by reference to Exhibit 4.1 in our Current Report onForm 8-K, filed September 13, 2016) 10.1+Development and License Agreement between TheraSense, Inc. and Insulet Corporation, dated January 23, 2002 (Incorporated byreference to Amendment No. 3 to our Registration Statement on Form S-1 (File No. 333-140694) filed May 8, 2007) 10.2+Amendment No. 1 to Development and License Agreement, dated as of March 3, 2008, by and between Abbott Diabetes Care, Inc. (ADC),formerly known as TheraSense, Inc., and Insulet Corporation. (Incorporated by reference to our Current Report on Form 8-K, filed March 5,2008) 10.3+Amendment No. 2 to Development and License Agreement, dated as of June 30, 2010, by and between ADC formerly known asTheraSense, Inc., and Insulet Corporation (Incorporated by reference to our Quarterly Report on Form 10-Q/A, filed November 19, 2010) 10.4Amendment No. 3 to Development and License Agreement, dated as of April 5, 2011 by and between ADC and Insulet Corporation(Incorporated by reference to our Quarterly Report on Form 10-Q, filed May 9, 2012) 10.5Amendment No. 4 to Development and License Agreement, dated as of March 29, 2012 by and between ADC and Insulet Corporation(Incorporated by reference to our Quarterly Report on Form 10-Q, filed May 9, 2012) 10.6Amendment No. 5 to Development and License Agreement, dated as of June 21, 2012 by and between ADC and Insulet Corporation(Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 8, 2012) 10.7+Master Supply Agreement between Insulet Corporation and Flextronic Marketing (L) Ltd., dated January 3, 2007 (Incorporated by referenceto our Registration Statement on Form S-1 (File No. 333-146810) filed October 19, 2007) 10.8+Addendum to Master Supply Agreement between Insulet Corporation and Flextronic Marketing (L) Ltd., dated October 4, 2007 (Incorporatedby reference to our Registration Statement on Form S-1 (File No. 333-146810) filed October 19, 2007) 10.9+Distribution Agreement dated January 4, 2010 by and between Insulet Corporation and Ypsomed Distribution AG (Incorporated by referenceto our Quarterly Report on Form 10-Q/A, filed November 19, 2010) 91Table of ContentsNumberDescription 10.10Amendment No. 1 to Distribution Agreement dated April 10, 2012 by and between Insulet Corporation and Ypsomed Distribution AG(Incorporated by reference to our Quarterly Report on Form 10-Q, filed May 9, 2012) 10.11+Settlement and Cross-License Agreement, dated September 18, 2013, by and among the Company and Medtronic Inc., Medtronic MiniMedInc., and Medtronic Puerto Rico Operations Co. (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 7, 2013) 10.12+Master Equipment and Services Agreement between Insulet Corporation and ATS Automated Tooling Systems Inc., dated August 31, 2016(Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 4, 2016) 10.13+Materials Supplier Agreement between Insulet Corporation and Flextronics Medical Sales and Marketing, Ltd, dated September 1, 2016(Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 4, 2016) 10.14Third Addendum to Manufacturing Services Agreement between Insulet Corporation and Flextronics Marketing (L) Ltd., dated May 29, 2014(Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 7, 2014) 10.15Fourth Addendum to Manufacturing Services Agreement between Insulet Corporation and Flextronics Marketing (L) Ltd., dated July 15, 2014(Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 7, 2014) 10.16Fifth Addendum to Manufacturing Services Agreement between Insulet Corporation and Flextronics Marketing (L) Ltd., dated July 15, 2014(Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 7, 2014) 10.17Purchase and Sale Agreement by and between 100 Nagog Park Limited Partnership and Insulet Corporation, dated December 16, 2016(Incorporated by reference to our Current Report on Form 8-K, filed December 20, 2016) 10.18#Supply Agreement, dated November 21, 2013, between Amgen and Insulet Corporation, as amended by Amendment No. 1 throughAmendment No. 14 10.19Form of Employee Non-Competition and Non-Solicitation Agreement by and between Insulet Corporation and each of its executive officers(Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-140694) filed February 14, 2007) 10.20Offer Letter by and between Insulet Corporation and Paul Lucidi, dated May 11, 2010 (Incorporated by reference to our Annual Report onForm 10-K, filed March 10, 2011) 10.21Offer Letter by and between Insulet Corporation and Charles Liamos (Incorporated by reference to our Current Report on Form 8-K, filedJanuary 10, 2011) 10.22Employment Agreement by and between Insulet Corporation and Patrick J. Sullivan dated September 16, 2014 (Incorporated by reference toour Current Report on Form 8-K, filed September 16, 2014) 10.23Amended and Restated Executive Severance Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5,2014) 10.24Rules and Conditions for the Directors' Compensation Program (Incorporated by reference to our Annual Report on Form 10-K, filedFebruary 26, 2015) 10.25Agreement by and between Insulet Corporation and Michael Levitz dated March 23, 2015 (Incorporated by reference to our Current Reporton Form 8-K, filed April 1, 2015) 10.26Amended and Restated Executive Severance Plan (Incorporated by reference to our Current Report on Form 8-K, filed December 20, 2016) 10.27Insulet Corporation 2000 Stock Option and Incentive Plan (Incorporated by reference to Amendment No. 2 to our Registration Statement onForm S-1 (File No. 333-140694) filed April 25, 2007) 10.28Insulet Corporation Second Amended and Restated 2007 Employee Stock Purchase Plan (Incorporated by reference to our Annual Reporton Form 10-K, filed February 28, 2014) 10.29Form of Non-Qualified Stock Option Agreement for Company Employees under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.30Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Second Amended and Restated 2007 Stock Optionand Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014)92Table of ContentsNumberDescription 10.31Form of Time Vesting Restricted Stock Unit Agreement for Employees under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.32Form of Incentive Stock Option Agreement under the Second Amended and Restated 2007 Stock Option and Incentive Plan (Incorporatedby reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.33Form of Time Vesting Restricted Stock Unit Agreement for Singapore Employees under the Second Amended and Restated 2007 StockOption and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.34Form of Time Vesting Restricted Stock Unit Agreement for Non-Employee Directors under the Second Amended and Restated 2007 StockOption and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.35Form of Incentive Stock Option Agreement for Section 16 Officers under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.36Form of Non-Qualified Stock Option Agreement for Section 16 Officers under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.37Form of Time Vesting Restricted Stock Unit Agreement for Employees at the Vice President Level and Above under the Second Amendedand Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5,2014) 10.38Form of Time Vesting Restricted Stock Unit Agreement for Section 16 Officers under the Second Amended and Restated 2007 Stock Optionand Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.39Form of Non-Qualified Stock Option Agreement for Patrick J. Sullivan under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.40Form of Incentive Stock Option Agreement under the Second Amended and Restated 2007 Stock Option and Incentive Plan - October 2014New Hires (Incorporated by reference to our Quarterly Report on Form 10-Q, filed November 5, 2014) 10.41Form of UK Time Vesting Restricted Stock Unit Agreement for Employees at the Vice President Level and Above under the SecondAmended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February26, 2015) 10.42Form of Incentive Stock Option Agreement under the Second Amended and Restated 2007 Stock Option and Incentive Plan - 2015 SalesPlan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015) 10.43Form of Non-Qualified Stock Option Agreement for Brad Thomas under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015) 10.44Form of Non-Qualified Stock Option Agreement for Shacey Petrovic under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015) 10.45Form of Time Vesting Restricted Stock Unit Agreement for Brad Thomas under the Second Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015) 10.46Form of Time Vesting Restricted Stock Unit Agreement for Shacey Petrovic under the Second Amended and Restated 2007 Stock Optionand Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015) 10.47Form of UK Non-Qualified Stock Option Agreement for Employees at the Vice President Level and Above under the Second Amended andRestated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 26, 2015) 10.48Third Amended and Restated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Definitive Proxy Statement on FormDEF14A, filed April 2, 2015) 10.49Form of Canada Non-Qualified Stock Option Agreement for Company Employees under the Insulet Corporation Second Amended andRestated 2007 Stock Option and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015) 93Table of ContentsNumberDescription 10.50Form of Canada Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Second Amended and Restated 2007 StockOption and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015) 10.51Form of Performance Vesting Restricted Stock Unit Agreement under the Insulet Corporation Second Amended and Restated 2007 StockOption and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015) 10.52Form of Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Option and IncentivePlan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 12, 2015) 10.53Form of Non-Qualified Stock Option Agreement for Michael Levitz, David Colleran and Michael Spears (Incorporated by reference to ourRegistration Statement on Form S-8 (No. 333-208387) filed December 8, 2015) 10.54Form of Time Vesting Restricted Stock Unit Agreement for Michael Levitz, David Colleran and Michael Spears (Incorporated by reference toour Registration Statement on Form S-8 (No. 333-208387) filed December 8, 2015) 10.55Form of Non-Executive Employee Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated2007 Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016) 10.56Form of Non-Executive Employee Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 StockOption and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016) 10.57Form of Section 16 Officer Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016) 10.58Form of Section 16 Officer Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Optionand Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016) 10.59Form of Vice President Time Vesting Restricted Stock Unit Agreement under the Insulet Corporation Third Amended and Restated 2007Stock Option and Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016) 10.60Form of Vice President Incentive Stock Option Agreement under the Insulet Corporation Third Amended and Restated 2007 Stock Optionand Incentive Plan (Incorporated by reference to our Annual Report on Form 10-K, filed February 29, 2016) 10.61Form of International Non-Qualified Stock Option Agreement under the Third Amended and Restated 2007 Stock Option and Incentive Plan(Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016) 10.62Form of Time Vesting Restricted Stock Unit Agreement for Non-Employee Directors under the Third Amended and Restated 2007 StockOption and Incentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016) 10.63Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the Third Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016) 10.64Form of Vice President Incentive Stock Option Agreement (Three Year Vest) under the Third Amended and Restated 2007 Stock Option andIncentive Plan (Incorporated by reference to our Quarterly Report on Form 10-Q, filed August 4, 2016) 10.65Insulet Corporation Fourth Amended and Restated 2007 Employee Stock Purchase Plan (Incorporated by reference to our Quarterly Reporton Form 10-Q, filed August 4, 2016) 12.1Insulet Corporation Statement Regarding Computation of Ratios of Earnings to Fixed Charges (Incorporated by reference to our RegistrationStatement on Form S-3, filed June 22, 2011) 21.1Subsidiaries of the Registrant 23.1Consent of Independent Registered Public Accounting Firm (Grant Thornton LLP) 23.2Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP) 24.1Power of Attorney (included on signature page) 94Table of ContentsNumberDescription 31.1Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer. 31.2Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer. 32.1*Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief ExecutiveOfficer and Chief Financial Officer. 101The following materials from Insulet Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016 formatted in XBRL(eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) theConsolidated Statements of Comprehensive Loss; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statementsof Cash Flows_________________________*This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to theliability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or theSecurities Exchange Act of 1934. +Confidential treatment granted as to certain portions of this exhibit. #Confidential treatment requested as to certain portions of this exhibit.95EXHIBIT 10.18Supply Agreement, dated November 21, 2013, between Amgen and Insulet Corporation, as amended by Amendment No. 1 throughAmendment No. 14Supply AgreementBy and BetweenAmgen Inc.andInsulet Corporation* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18TABLE OF CONTENTS1. Definitions.......................................................................................................................................... 11.1 “Agreement” ...................................................................................................................................11.2 “Business Day”...................................................................................................................................11.3 “Commercialization” or “Commercialize”.........................................................................................11.4 “Commercial Year”.............................................................................................................................11.5 “Confidential Information”.................................................................................................................21.6 “Conforming Lot”...............................................................................................................................21.7 “Customized Insulet Device”............................................................................................................. 21.8 “Device”............................................................................................................................................. 21.9 “Disposition”...................................................................................................................................... 31.10 “Executive Officers”...........................................................................................................................31.11 “Facility”............................................................................................................................................ 31.12 “First Commercial Year”.................................................................................................................... 31.13 “Governmental Authority”................................................................................................................. 31.14 “Lot Release Procedures”...................................................................................................................31.15 “Manufacturing Services”.................................................................................................................. 31.16 “Minimum Lot Quantity”...................................................................................................................31.17 “Non-Conforming Lot”...................................................................................................................... 31.18 “Partial Commercial Year”................................................................................................................. 31.19 “Party” ................................................................................................................................................31.20 “Purchase Order”................................................................................................................................31.21 “Quality System Regulation”............................................................................................................. 41.22 “Ship” ................................................................................................................................................41.23 “Specifications”..................................................................................................................................41.24 “Supply Territory”.............................................................................................................................. 41.25 “Supply Territory Expansion Reimbursable Expenses”.....................................................................41.26 “Unit Price”........................................................................................................................................4* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.182. Manufacture; Supply.......................................................................................................................... 62.1 Subcontractors ..................................................................................................................................62.2 Quality Agreement..............................................................................................................................62.3 [*]....................................................................................................................................................... 62.4 Specification Changes........................................................................................................................72.5 Audits..................................................................................................................................................72.6 Forecasts............................................................................................................................................72.7 Purchase Orders; Precedence...........................................................................................................82.8 Delivery Date Confirmations, Shipping Schedule............................................................................. 82.9 Adjustments in Purchase Order Quantities........................................................................................ 82.10 Carryover of Forecast..........................................................................................................................92.11 Shipment.............................................................................................................................................92.12 Lot Release Procedure.........................................................................................................................93. Compensation.......................................................................................................................................93.1 Unit Price Amounts..............................................................................................................................103.2 Inclusive...............................................................................................................................................103.3 [*]..........................................................................................................................................................103.4 [*] Capital Expense...............................................................................................................................113.5 Supply Territory Expansion Reimbursable Expenses ...................................................................113.6 Taxes....................................................................................................................................................113.7 Invoices................................................................................................................................................113.8 Timing of Payments.............................................................................................................................124. [*].........................................................................................................................................................125. Confidentiality......................................................................................................................................145.1 Confidential Information......................................................................................................................145.2 Survival...............................................................................................................................................155.3 Disclosure of Terms of Agreement......................................................................................................155.4 Publications........................................................................................................................................156. Representations and Warranties........................................................................................................166.1 Representations of Authority..............................................................................................................16* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.186.2 Consents.............................................................................................................................................166.3 No Conflict...........................................................................................................................................166.4 Applicable Laws..................................................................................................................................166.5 Enforceability.......................................................................................................................................166.6 Employee Obligations.........................................................................................................................166.7 Intellectual Property........................................................................................................................... 166.8 Debarment.................................................................................................................................... 176.9 Representations and Warranties of Insulet........................................................................................ 176.10 Exclusive Warranties......................................................................................................................... 187. Risk Allocation................................................................................................................................... 187.1 Insurance.................................................................................................................................... 188. Indemnification and Limitation of Liability.......................................................................................... 188.1 Indemnification by Amgen................................................................................................................. 198.2 Indemnification by Insulet.................................................................................................................. 198.3 Indemnification Procedure................................................................................................................ 198.4 Limitation of Liability................................................................................................................ 209. Term and Termination................................................................................................................ 209.1 Term........................................................................................................................................ 209.2 Termination Without Cause................................................................................................................ 219.3 Termination For Cause................................................................................................................ 219.4 Effect of Expiration or Termination.................................................................................................... 219.5 Remaining Stock...................................................................................................................... 2110. Disputes................................................................................................................................... 2110.1 Resolution of Disputes................................................................................................................ 2110.2 Performance During Dispute......................................................................................................... 2211. INTELLECTUAL PROPERTY OWNERSHIP, PATENTS, LICENSES, AND [*]......................... 2211.1 Intellectual Property Ownership, Patents and Licenses......................................................... 2211.2 Retained Rights........................................................................................................................... 2311.3 Trademarks..................................................................................................................................... 2312. Miscellaneous.............................................................................................................................. 25* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.1812.1 Regulatory Support and Submissions............................................................................................... 2512.2 Changes..................................................................................................................................... 2612.3 Governing Law and [*].................................................................................................................. 2712.4 Assignment..................................................................................................................................... 2712.5 Entire Agreement; Amendments............................................................................................... 2712.6 Notices...................................................................................................................................... 2812.7 Independent Contractors.................................................................................................................. 2812.8 No Strict Construction.................................................................................................................. 2912.9 Headings..................................................................................................................................... 2912.10 No Implied Waivers; Rights Cumulative............................................................................ 2912.11 Severability.................................................................................................................. 2912.12 Execution in Counterparts; Facsimile Signatures......................................................... 2912.13 Force Majeure.................................................................................................................. 2912.14 Interpretation; Precedence............................................................................................... 2912.15 [*]..................................................................................................................................... 3012.16 Construction.................................................................................................................. 3012.17 [*]..................................................................................................................................... 30* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18SUPPLY AGREEMENTThis Supply Agreement (as defined further below, this “ Agreement ”) is entered into as of November 21, 2013 (the “ Effective Date ”), by andbetween Amgen Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal office at One AmgenCenter Drive, Thousand Oaks, CA 91320-1799 (“ Amgen ”), and Insulet Corporation, a corporation organized and existing under the laws of theState of Delaware and having its principal office at 9 Oak Park Drive, Bedford, MA 01730 (“ Insulet ”).INTRODUCTIONA. WHEREAS, Amgen is engaged in the business of discovering, developing, manufacturing and marketing human therapeutics;B. WHEREAS, Insulet is engaged in the business of developing, manufacturing and marketing infusion devices and systems;C. WHEREAS, Amgen and Insulet are parties to that certain Development Agreement effective as of [*], pursuant to which, among other things,Insulet is to perform certain drug delivery system development activities in return for certain compensation all as set forth therein (as may beamended from time to time, the “ Development Agreement ”); andD. WHEREAS, Amgen desires to purchase from Insulet, and Insulet desires to sell to Amgen, drug delivery systems on the terms and conditionsset forth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained in or referenced by this Agreement,the Parties hereto have reviewed and accepted all referenced material and any appendices, exhibits or other attachments and agree to be bound bythe terms and conditions set forth in this Agreement as follows:1.Definitions.For purposes of this Agreement, the terms defined in this article shall have the respective meanings set forth below. Capitalized terms used in thisAgreement but not defined herein shall have the meanings ascribed to such terms in the Development Agreement:1.1“ Agreement ” means this Supply Agreement together with all Appendices referenced herein and attached hereto as each may be amendedfrom time to time pursuant to Section 12.5.1.2“ Business Day ” means any day other than a Saturday or Sunday on which banking institutions in New York, NY, are open for business.1.3“ Commercialization ” or “ Commercialize ” will mean any activities directed to marketing, promoting, distributing, importing, offering to sell,and/or selling the System.1.4“ Commercial Year ” means (i) the First Commercial Year, and (ii) the twelve month period beginning on the first anniversary of the FirstCommercial Year, and each subsequent twelve month period thereafter during the Term.1.5“ Confidential Information ” of a Party means (i) all Technology [Controlled] by such Party, and (ii) all ideas, information and data of any kind,whether in written, oral, graphical, machine-readable or other form, whether or not marked as confidential or proprietary, which aretransferred, disclosed or made available by or on behalf of such Party (“ Disclosing Party ”) to the other Party or its representatives (“Receiving Party ”), including any of the foregoing of Third Parties disclosed by or on behalf of such Party. Confidential Information of Partyincludes information regarding such Party’s products, financial information, business information or objectives and reports and audits, andall biological materials of a Party. Notwithstanding the foregoing, Confidential Information will not include Technology or other informationthat:(a)was known or used by the Receiving Party or its Affiliates prior to its date of disclosure to the Receiving Party as demonstrated bycontemporaneous written records; or* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18(b)either before or after the date of the disclosure to the Receiving Party is lawfully disclosed to the Receiving Party or its Affiliates bysources other than the Disclosing Party rightfully in possession of such Technology or other information and not bound byconfidentiality obligations to the Disclosing Party; or(c)either before or after the date of the disclosure to the Receiving Party or its Affiliates is or becomes published or otherwise is orbecomes part of the public domain through no breach hereof on the part of the Receiving Party or its Affiliates; or(d)is independently developed by or for the Receiving Party or its Affiliates without reference to or reliance upon the ConfidentialInformation of the Disclosing Party as demonstrated by contemporaneous written records.Notwithstanding the foregoing, (1) any Confidential Information will not be deemed to be within the foregoing exceptions merely because suchinformation is embraced by more general information in the public domain or in the possession of the Receiving Party or any of its Affiliates, and(2) any combination of features will not be deemed to be within the foregoing exceptions merely because individual features are in the public domainor in the possession of the Receiving Party or any of its Affiliates, but only if the combination itself and its principle of operation are in the publicdomain or in the possession of the Receiving Party or any of its Affiliates.1.6“ Conforming Lot ” has the meaning ascribed to it in the Quality Agreement.1.7“ Customized Insulet Device ” shall have the meaning set forth in the Insulet Product Definition Document INSPR020-PDD, Amgen DeliveryDevice ADD) attached hereto as Exhibit 1.7 as updated from time to time by mutual agreement of the Parties (“ Product DefinitionDocument ”).1.8“ Device ” means any [*].1.9“ Disposition ” means to either reject or pass a batch, or part thereof, of Customized Insulet Devices by the quality unit of a Party pursuant tosuch Party’s quality systems and, with respect to Insulet, in compliance with the Quality Agreement.1.10“ Executive Officers ” means Insulet’s President and Chief Operating Officer (who, as of the Effective Date, is Charles Liamos) (oran officer or employee of Insulet then serving in a substantially equivalent capacity) and Amgen’s Executive Vice President,Operations (who, as of the Effective Date, is Madhu Balachandran) (or the officer or employee of Amgen then serving in asubstantially equivalent capacity).1.11“ Facility ” means Insulet’s or its Affiliate’s or sub-contractor’s facility at which the Custom Insulet Device is Manufactured.1.12“ First Commercial Year ” means the first full calendar year beginning after the granting of Regulatory Approval by the FDA for theSystem.1.13“ Governmental Authority ” means a country, federal, state, provincial, commonwealth, supranational, cantonal or local regulatoryagency, department, bureau or other governmental entity with authority over the testing, Manufacture, use, storage, import,promotion, marketing or sale of a Customized Insulet Device.1.14“ Lot Release Procedures ” means the testing procedures for the Customized Insulet Device set forth in the Quality Agreement, asmay be amended by the mutual agreement of the Parties, in writing, from time to time, that are the basis for determining whether alot of Customized Insulet Devices is appropriate for release by Insulet.1.15“ Manufacturing Services ” shall mean, with respect to each Customized Insulet Device to be supplied hereunder, the preparation,assembly, and production of each such item. “Manufacture,” “Manufacturing,” “Manufactured,” and other variants of manufacturingservices shall have comparable meanings.1.16“ Minimum Lot Quantity ” means [*] ([*]) units of Customized Insulet Devices.1.17“ Non-Conforming Lot ” means, except if due to [*], a lot of Customized Insulet Device Manufactured by Insulet that, based theperformance of and results from the Lot Release Procedures and comparison to release criteria set forth in the Lot ReleaseProcedures, is inappropriate for release by Insulet.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.181.18“ Partial Commercial Year ” means the remainder of the calendar year commencing on the first day of the month following thegranting of Regulatory Approval by the FDA for the System.1.19“ Party ” means Insulet or Amgen and, when used in the plural, “Parties” shall mean Insulet and Amgen.1.20“ Purchase Order ” shall mean each written order for the purchase of Customized Insulet Device issued by Amgen or its Affiliates inaccordance with Section 2.7.1.21“ Quality System Regulation ” shall mean the applicable quality system requirements, as amended from time to time, for themethods used in, and the facilities and controls used for, the design, manufacture, packaging, labeling, storage, installation, andservicing of all finished devices intended for human use according to CFR Part 820, and any applicable guidance document orstandard published or recognized by the FDA.1.22“ Ship ” shall mean the delivery, pursuant to Section 2.11, by Insulet of Customized Insulet Devices meeting the Release Criteria toAmgen or its designee. “Shipping,” “Shipped,” “Shipment”, and other variants shall have comparable meanings.1.23“ Specifications ” means the specifications and requirements of a Customized Insulet Device, including but not limited toperformance requirements, materials, equipment, systems, standards and workmanship as set forth in the Product DefinitionDocument.1.24“ Supply Territory ” means [*] and additional countries and regions as provided for pursuant to Section 12.2(b).1.25“ Supply Territory Expansion Reimbursable Expenses ” means, with respect to each Supply Territory Expansion Request, those [*]in support of [*].1.26“ Unit Price ” means the price set forth in Section 3.1 payable, pursuant to the terms of this Agreement, by Amgen for CustomizedInsulet Devices.Terms defined elsewhere in this Agreement are set forth below:TermSection NumberAdditional Supply Territory12.2(b)Agreement1 st ParagraphAmgen1 st ParagraphAmgen Indemnified Party8.2Announcement5.1(a)Applicable Securities Rules5.1(a)Applications11.3(b)Binding Portion2.6(a)[*]4[*]4Change12.2(a)Change Order12.2(a)Development Agreement4 th ParagraphDisclosing Party1.5Effective Date1 st Paragraph[*]4[*]2.3Forecast2.6(a)Forecast-Based [*]3.1Indemnified Party8.3(a)Indemnifying Party8.3(a)* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Infringement Claim8.2Initial Period9.1Insulet1 st ParagraphInsulet Enforcement Actions11.3(e)Insulet Indemnified Party8.1Licensed Marks11.3(b)Loss8.1Mandatory Disclosure5.1(a)[*]4Notice of Permitted Assignment12.4Order-Based [*]3.1Permitted User5.1(b)[*]2.3POD Marks11.3(c)Product Definition Document1.7Product Warranty6.9(c)PTO11.3(b)Publication5.4Purchase Order2.7(a)Quality Agreement2.2Receiving Party1.5Renewal Period9.1Severed Clause12.11[*]12.17Supply Territory Expansion Request12.2(b)Taxes3.6Term9.1Trademarks11.3(c)2.Manufacture; Supply.2.1 Subcontractors. Subject to the terms of the Quality Agreement, Insulet has the right to use Affiliates and subcontractors for theperformance of Insulet’s obligations hereunder, provided that at all times that Insulet shall remain fully liable for any and all acts oromissions of such Affiliates and subcontractors.2.2 Quality Agreement. Concurrent with the execution of this Agreement, the Parties are entering into the document attachedhereto as Exhibit 2.2 specifying the quality and regulatory procedures and responsibilities of the Parties hereunder with respect to theManufacture of Custom Insulet Devices (the “ Quality Agreement ”).2.3 [*]. Amgen shall [*], and Insulet shall [*] those responsibilities set forth in the [*] subject to the applicable terms [*]. Insulet shall[*].2.4 Specification Changes . The Specifications or the specifications for the Insulet Device (as defined in the DevelopmentAgreement) may be amended or supplemented by the Parties in accordance with the terms and conditions of the Quality Agreement.2.5 Audits . Amgen shall have the right, pursuant to the terms and conditions of the Quality Agreement, to cause an inspection andaudit of any Facilities being used by Insulet, its Affiliates or any subcontractor for the Manufacture of Customized Insulet Devices.2.6 Forecasts.a.As soon as practicable after the Effective Date and at least [*] days prior to the [*] of each calendar month thereafter,Amgen will provide Insulet with eighteen (18) month rolling* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18forecasts of Amgen’s anticipated monthly requirements for Custom Insulet Devices (each, a “ Forecast ”), which Forecastsshall commence on the month immediately following delivery of such forecast. The [*] of each such Forecast shall bebinding on Amgen (the “ Binding Portion ”) and Amgen shall issue Purchase Orders for all amounts included in the BindingPortion of such Forecasts.b.Except as mutually agreed in writing by the Parties, for each Forecast following the initial Forecast provided by Amgen, thequantity of Customized Insulet Device forecast (i) for the [*] months of such Forecast shall not vary from the amountsforecasted for such months in the most recent previously delivered Forecast, (ii) the amounts forecasted for the [*] of suchForecast shall not exceed [*] percent ([*]%) of the amounts forecasted for such month in the most recent previouslydelivered Forecast and (iii) the amounts forecasted for the [*] months of such Forecast shall not exceed [*] percent ([*]%) ofthe amounts forecasted for such months in the most recent previously delivered Forecast. Accompanying each Forecast,Amgen shall place a binding Purchase Order in accordance with Section 2.7 for Custom Insulet Devices for the first monthcontained in such Forecast.c.Each Party acknowledges and agrees that, except with respect to the Binding Portion of each Forecast, as may beadjusted pursuant to Section 2.6(b), (a) the Forecasts are for planning purposes only, (b) Amgen will prepare suchForecasts in good-faith, but does not guarantee the accuracy of any portions of such Forecasts, and (c) with the exceptionof the Binding Portion of the Forecasts, Insulet does not guarantee its ability to meet the requirements of such Forecasts.2.7 Purchase Orders; Precedence .a.Amgen may use its standard purchase order form for any notice provided for hereunder; provided that all purchase ordersmust reference this Agreement and include and specify the proposed delivery date, quantities and destination (each, a “Purchase Order ”). The Parties agree that the terms and conditions contained in this Agreement shall govern and prevailover any terms and conditions of any such Purchase Order, acknowledgment form or other instrument.b.Unless otherwise accepted pursuant to Section 2.8, Insulet shall not be obligated to supply quantities of Customized InsuletDevices set forth in Purchase Orders to the extent such quantities are in excess of the Binding Portion of a Forecast for theapplicable month.c.Unless otherwise accepted by Insulet pursuant to Section 2.8, Insulet shall not be obligated to Ship Customized InsuletDevices [*] after the date each Purchase Order is received by Insulet.d.Each Purchase Order shall be for no less than the Minimum Lot Quantity.e.In addition to the quantities set forth in the Binding Portion of the Forecast and any Purchase Orders issued and acceptedpursuant hereto, within [*] days after receipt of a Notice of Permitted Assignment (as defined in Section 12.4), Amgen mayplace one or more Purchase Orders for a quantity [*] of Customized Insulet Devices [*] of Customized Insulet Devices setforth in the Forecast current as of the date of receipt of such Notice of Permitted Assignment, for delivery no sooner than [*]after the date of such Purchase Order. Quantities of Customized Insulet Devices set forth in Purchase Orders pursuant tothis Section 2.7(e) shall be deemed included in and part of the Binding Portion of the Forecast and the rights andobligations of each Party with respect to the Binding Portion of the Forecast shall apply thereto.2.8 Delivery Date Confirmations, Shipping Schedule . Within [*] Business Days after Amgen submits to Insulet a Purchase Order,Insulet shall issue a notice to Amgen acknowledging or rejecting the delivery dates specified in the Purchase Order. Insulet may only rejectquantities of Customized Insulet Devices set forth in Purchase Orders to the extent of the following: (a) any portion of a Purchase Order thatdoes not conform to the requirements of Section 2.7(b), Section 2.7(c) or Section 2.7(d) or (b) if the fees set forth in the Purchase Order areinconsistent with the Unit Price Amounts applicable as set forth in Section 3. Failure by Insulet to issue such notice within such [*] BusinessDay period shall be deemed an acceptance of the applicable Purchase Order.2.9 Adjustments in Purchase Order Quantities . Purchase Orders are not subject to cancellation by Insulet or Amgen once acceptedby Insulet. Reduction in the quantity of Customized Insulet Devices ordered, suspension of deliveries and all other changes to a previously-accepted Purchase Order are permitted only pursuant to written agreement of the Parties (such agreement not to be unreasonably withheld,conditioned* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18or delayed). Subject to Section 2.7(b) and the remainder of this Section 2.9 and subject to Manufacturing and other capacity constraints ofInsulet, Insulet shall use commercially reasonable efforts to accommodate Amgen’s requests for Customized Insulet Devices in excess ofthe quantities set forth in the Forecasts. If Amgen requests and Insulet agrees in writing to any change to the quantities set forth in aPurchase Order, then the Purchase Order shall be deemed to be revised according to Insulet’s written agreement.2.10 Carryover of Forecast . To the extent Amgen fails to provide any Forecast required under Section 2.6, the last applicableForecast previously provided by Amgen shall be deemed to be the latest Forecast provided by Amgen as required by Section 2.6 and suchfailure will not be considered to be a breach of this Agreement by Amgen.2.11 Shipment .a.With respect to each Purchase Order, Insulet will promptly notify Amgen in writing of any anticipated delay in ShippingCustomized Insulet Devices by the delivery date(s) specified in each such Purchase Order.b.Insulet shall ship Customized Insulet Devices under suitable controls and pursuant to all reasonable instructions providedby Amgen. Amgen shall have the right to designate the freight forwarder to be used by Insulet by notifying Insulet of suchno later than [*] days prior to the applicable delivery date; provided, in the absence of such instructions, Insulet shall use afreight forwarder previously designated by Amgen. [*]. [*]. In the event of conflict, the terms of this Agreement takeprecedence over the Incoterms.c.Insulet shall package all Customized Insulet Devices in accordance with standard commercial practices that meet orexceed Applicable Laws and meet the ship testing requirements defined in the Product Definition Document. Unlessinstructed otherwise by Amgen, Insulet shall (i) Ship Purchase Orders complete; (ii) ensure that all packages anddocuments conspicuously bear the applicable Purchase Order number; (iii) enclose a packing slip with each Shipment and,when more than one package is Shipped, identify the package containing the packing slip; (iv) ensure that all CustomizedInsulet Devices included in a Shipment have an expiration date no less than the approved shelf life [*]; and (v) shipCustomized Insulet Devices on plastic pallets.2.12 Lot Release Procedure . With respect to each lot of Customized Insulet Devices, Insulet shall perform the Lot ReleaseProcedure in accordance with the requirements set forth in the Quality Agreement and determine whether each such lot is a Conforming Lotand Insulet shall only Ship to Amgen and its designees Conforming Lots.3.Compensation.3.1. Unit Price Amounts . Amgen shall pay Insulet the Unit Price for each Customized Insulet Device ordered by Amgen and Manufacturedby Insulet in a given Commercial Year as follows:[*]Aggregate Number ofCustomized Insulet DevicesOrdered by AmgenWith respect to each [*], UnitPrice for each CustomizedInsulet Device Shipped toAmgen[*][*]For the avoidance of doubt, [*].For the Partial Commercial Year and each Commercial Year, the Unit Price [*] (set forth in the table above) applicable thereto that Amgen will pay,and Insulet will invoice, during such period (the “ Forecast-Based [*] ”) shall be determined based on the lesser of the following quantities ofCustomized Insulet Devices set forth in the Forecast submitted immediately prior to the commencement of the Partial Commercial Year orCommercial Year, as the case may be: (i) [*]% of the quantity of Customized Insulet Devices in the Binding Portion of such Forecast and (ii) theaggregate of the quantities of Customized Insulet Devices set forth in the [*]months of such Forecast. Promptly after the end of the PartialCommercial Year and each Commercial Year, but in no event later than [*], Insulet will notify Amgen of the aggregate quantity of Customized InsuletDevices actually ordered by Amgen for delivery during such period and whether the Unit Amount [*] applicable thereto (the “ Order-Based [*] ”) is thesame as the Forecast-Based [*] and, in the event that the Order-Based [*] is not the same as the Forecast-Based [*], then within [*] days afterreceipt of such* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18notice either (a) if the Order-Based [*] is [*], then Amgen shall pay to Insulet the difference between the [*] and [*] Unit Prices applicable to eachCustomized Insulet Device or (b) if the Order-Based [*] is [*], then Insulet shall pay to Amgen the difference between the [*] and [*] Unit Pricesapplicable to each Customized Insulet Device.3.2.Inclusive . Insulet acknowledges and agrees that the Unit Price is all inclusive including inclusive of technical support services, complaintinvestigation services, root cause analysis, corrective actions activities, equipment maintenance, and purchase and maintenance oftoolsets.3.3.[*] . As full and complete compensation for [*] will pay [*]. For the avoidance of doubt, Amgen will [*].3.4.[*] Capital Expense . In return for Insulet making capital investments in support of Manufacturing a Customized Insulet Device that includesa [*], Amgen will reimburse, up to an amount not to exceed $[*], Insulet the actual, reasonable costs incurred by Insulet and payable to ThirdParties with respect to such capital investments. Promptly after incurring such costs, Insulet will invoice Amgen for such and include witheach such invoice reasonably detailed documentation of the costs incurred.3.5.Supply Territory Expansion Reimbursable Expenses . With respect to each Supply Territory Expansion Request, Amgen will compensateInsulet as full and complete compensation the Supply Territory Expansion Reimbursable Expenses. Promptly after incurring such SupplyTerritory Expansion Reimbursable Expenses, Insulet will invoice Amgen for such and include with each such invoice reasonably detaileddocumentation of such expenses.3.6.Taxes . The pricing, fees and amounts payable by Amgen to Insulet hereunder do not include any taxes imposed by law on Amgen as thepurchaser of Customized Insulet Devices for any national, state or local property, sales, service, use, excise, value added, gross receipts orother such taxes (“ Taxes ”). In addition to any amounts otherwise payable by Amgen pursuant to this Agreement, Amgen agrees to pay orreimburse Insulet for all Taxes which Insulet is required to pay or collect or which are required to be withheld in respect of the transactionscontemplated by this Agreement except income and payroll taxes.3.7.Invoices.a.Insulet shall submit invoices to Amgen on a [*] basis for amounts payable by Amgen hereunder (i) pursuant to Section 3.1,Section 3.3, Section 3.4, and Section 3.5 for [*] and (ii) testing as provided in Section 12.1. Insulet will endeavor to submit suchinvoices promptly following the [*]. Invoices will be submitted in electronic format to the following electronic address (whichaddresses may be changed, from time-to-time, by Amgen upon prior notice to Insulet): email address:AccountsPayableMailroom@Amgen.com .b.Each invoice shall contain:i.Purchase Order number;ii.number of Customized Insulet Devices Shipped to Amgen in [*];iii.applicable Unit Price for each such Customized Insulet Device, and Unit Price Amounts;iv.if any, amounts due on account of Section 3.3, Section 3.4, Section 3.5 and, with respect to Section 3.4,Section 3.5 and Section 12.1, reasonable documentation thereof; andv.the total amount payable by Amgen.c.Amounts listed in each invoice shall be specified in United States dollars. To the extent Amgen reasonably requires additionalinformation for any amounts stated on an invoice, Amgen shall promptly notify Insulet of same and Insulet shall respond promptly tosuch request.d.Amgen may request that Insulet submit at times other than those specified herein an invoice for portions of the Compensation thathave not yet been invoiced but represent amounts payable for actual performance of Insulet’s obligations hereunder. When Amgenmakes such a request, Insulet shall deliver to Amgen a complete invoice reflecting such portions of the Compensation, if any,believed by Insulet to be payable. Insulet shall endeavour to deliver such invoice by the deadline identified in Amgen’s requesttherefore and, if no deadline is specified in Amgen’s request, [*] days following Insulet’s receipt of Amgen’s request.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18e.If Amgen disputes in good faith an amount stated in an invoice, Amgen will pay the undisputed amounts and notify Insulet in writingof the dispute concerning the remaining amounts within [*] days after Amgen’s receipt of such invoice and provide a reasonablydetailed basis therefore. Upon resolution of disputed amounts, Insulet shall submit an invoice pursuant to this Section 3.7 for theamounts that the Parties mutually agree are no longer in dispute. Payment by Amgen does not constitute acceptance of theInsulet’s performance hereunder or an admission of liability.3.8. Timing of Payments . Subject to Section 3.7(e), Amgen will pay each invoice in full within [*] days after receipt. With respect to eachinvoice, payment terms shall be [*] days after Amgen’s receipt of each invoice. All amounts payable hereunder shall be paid in U.S. currency.Amgen will pay [*].4.[*].[*] Insulet will [*]. Notwithstanding the foregoing, for the purposes of this Section 4, if [*]. [*] shall extend to [*] provided that Amgen [*] or, in thealternative, Amgen [*]. [*] Insulet will notify Amgen [*]. In the event of a [*]. In the event Amgen [*] set forth in this Section 4 [*][*]5.Confidentiality.5.1 Confidential Information . With respect to any Confidential Information of a Party disclosed by or on behalf of it or its Affiliates to theother Party or its representatives during the Term, the Receiving Party agrees: (i) not to use any Confidential Information of the Disclosing Party inconnection with activities other than those contemplated by this Agreement, (ii) except as provided in Section 5.1(b) and Section 5.4, not to discloseConfidential Information of the Disclosing Party to Third Parties without the prior written consent of the Disclosing Party, (iii) except as provided inSection 5.1(a) and Section 5.1(b), that the Confidential Information of the Disclosing Party will be maintained in confidence.a.Neither Party shall make any public announcement about the Agreement, or any part thereof, or its business relationship with theother Party or one or more of its Affiliates (collectively, “ Announcement ”) unless prior written consent is obtained from such otherParty, which consent may be withheld in such other Party’s sole discretion. Notwithstanding the foregoing provisions of thisSection 5.1, a Party may disclose Confidential Information of the Disclosing Party, the terms of this Agreement, or make anAnnouncement if such Party determines, based on advice from its outside counsel, that it is required to make such disclosure tocomply with Applicable Law or the rules of a securities exchange on which such Party is listed (“ Applicable Securities Rules ”; andeach such disclosure a “ Mandatory Disclosure ”). With respect to each Mandatory Disclosure, as much in advance of each suchMandatory Disclosure as practicable, such Party shall (i) notify the other Party of the proposed content of the Mandatory Disclosure,(ii) give the other Party reasonable opportunity to review and comment on the proposed content of the Mandatory Disclosure, and(iii) in good faith, consider and revise the content of the Mandatory Disclosure based on comments received from the other Partyand submit the revised Mandatory Disclosure to the other Party for review and consent, such consent not to be unreasonablywithheld, delayed or conditioned. A Party shall include in each Mandatory Disclosure only the information required to be disclosedby Applicable Law or Applicable Securities Rules, and, to the extent possible, shall seek confidential treatment of each MandatoryDisclosure.b.Disclosures to Employees and Subcontractors . A Receiving Party is permitted to disclose Confidential Information of the DisclosingParty to its employees and Subcontractors and to Receiving Party’s Affiliates and employees of Affiliates who have a need to knowsuch Confidential Information to assist the Receiving Party in fulfilling its obligations under this Agreement (each a “ Permitted User”), provided that each Permitted User is bound by obligations at least as stringent as those set forth in Section 5and that theReceiving Party is responsible for and liable to the Disclosing Party for each and every failure by a Permitted User to comply withthe terms of this Section 5.5.2 Survival . The terms of this Section 5 shall survive termination or expiration of this Agreement until the tenth anniversary of suchexpiration or termination of this Agreement.5.3 Disclosure of Terms of Agreement . The Parties agree that the contents of this Agreement shall be considered Confidential Informationof the Parties. Notwithstanding the foregoing and Section 5.2, each Party shall have the right to disclose in confidence the material terms of thisAgreement to Third Parties retained by such Party to perform legal, accounting or similar advisory services who have a need to know such terms inorder to provide such advisory services provided that such Third Parties are subject to written obligations of confidentiality at least as stringent asthose* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18contained in Section 5 and that such Party is responsible for and liable to the other Party for each and every failure by such Third Parties to complywith the terms of this Section 5. Additionally, notwithstanding the foregoing and Section 5.2, each Party shall have the right to disclose in confidencethe material terms of this Agreement to Third Parties that are (i) potential acquirers or assignees of substantially all of Insulet’s assets or business asset forth in a term sheet that includes the material terms of an acquisition or assignment or (ii) investment bankers, investors, or lenders, provided ineach case that such Third Parties are subject to written obligations of confidentiality at least as stringent as those contained in Section 5 (other thaninvestment bankers, investors and lenders, who must be bound prior to disclosure by commercially reasonable obligations of confidentiality) and thatsuch Party is responsible for and liable to the other Party for each and every failure by such Third Parties to comply with the terms of this Section 5.5.4 Publications . Except to the extent provided otherwise in this Section 5, whether to be presented orally or in written form, noAnnouncement, news release, public statement, publication, or presentation relating to the existence of this Agreement, the subject matter herein, ora Party’s performance hereunder (collectively, a “ Publication ”) shall be made without the other Party’s prior written approval. Each Party agrees tosubmit, at least [*] days prior to submission for publication, such Publication it proposes to make to the other Party for purposes of such other Party’sreview and comment. Each Party agrees to respond as promptly as reasonably practicable to a proposed Publication in accordance with timelinesagreed upon by the Parties, and likewise agrees that it shall not unreasonably withhold, condition, or delay approval of such Publication. In addition,if at any time during such [*] day period, the other Party informs such Party that its proposed publication discloses inventions made by either Party incarrying out the Development Program that have not yet been protected through the filing of a patent application, or the public disclosure of suchproposed publication could be expected to have a material adverse effect on any Patent Rights or Technology of such other Party, then such Partywill either (a) delay such proposed publication, for up to [*] days from the date the other Party informed such Party of its objection to the proposedpublication, to permit the timely preparation and first filing of patent application(s) on the information involved or (b) remove the identified disclosuresprior to publication. Insulet shall not make use of Amgen or any of its Affiliates’ name in any advertising or promotional material, or otherwise,without the prior written consent of Amgen.6.Representations and Warranties.6.1 Representations of Authority . Each Party represents and warrants to the other Party that it has full corporate right, power and authorityto enter into this Agreement and to perform its respective obligations under this Agreement.6.2 Consents . Each Party represents and warrants to the other Party that (i) as of the Effective Date, all necessary consents, approvals andauthorizations of all government authorities and other Persons required to be obtained by it as of the Effective Date in connection with the execution,delivery and performance of this Agreement have been obtained by it as of the Effective Date and (ii) its performance hereunder shall be in materialcompliance with Applicable Laws.6.3 No Conflict . Each Party represents and warrants to the other Party that, notwithstanding anything to the contrary in this Agreement, theexecution and delivery of this Agreement, the performance of such Party’s obligations hereunder and the licenses and sublicenses to be grantedpursuant to this Agreement (i) do not and will not conflict with or violate any requirement of Applicable Laws and (ii) do not and will not conflict with,violate, breach or constitute a default under any written agreement to which it is a party.6.4 Applicable Laws . Each Party represents and warrants to the other Party that it will perform its obligations under this Agreement and willcause those of its Affiliates and Subcontractors and their respective employees, directors, officers, and agents contributing to or in connection withperformance hereunder to perform, in compliance with Applicable Laws.6.5 Enforceability . Each Party represents and warrants to the other Party that this Agreement is a legal and valid obligation binding upon itand is enforceable in accordance with its terms.6.6 Employee Obligations . Each Party represents and warrants to the other Party that all of its employees, officers, and subcontractors whohave been, are or will be involved in the Manufacturing or Shipping have executed or will have executed agreements or have existing obligationsunder law requiring assignment to such Party of all intellectual property made during the course of and as the result of their association with suchParty, and obligating the individual to maintain as confidential such Party’s Confidential Information, to the extent required to support such Party’sobligations under this Agreement.6.7 Intellectual Property . Each Party represents and warrants to the other Party as follows:* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18a.To such Party’s knowledge, the performance of its obligations under the Agreement will not result in the infringement of anyintellectual property rights or the use of misappropriated trade secrets of any Third Party.b.Such Party has the right to grant the rights and licenses granted to the other Party under this Agreement.c.To such Party’s knowledge, no Third Party with which such Party has entered into any written agreement under which IntellectualProperty Rights material to this Agreement are licensed from such Third Party intends to cancel or terminate such writtenagreement and no Third Party has the right to cancel or terminate such written agreement.6.8 Debarment . Each Party, and its Affiliates and their respective employees, directors, officers, consultants, and contractors contributing toor in connection with performance hereunder is not presently nor has ever been: (i) the subject of a debarment action or is debarred pursuant toSection 306 of the U.S. Federal Food, Drug, and Cosmetic Act of 1938, as amended, or other applicable local law; (ii) the subject of adisqualification proceeding or is disqualified as a clinical investigator pursuant to 21 C.F.R. § 312.70; or (iii) the subject of an exclusion proceeding orexcluded from participation in any federal health care program under 42 C.F.R. Part 1001 et seq. Furthermore, each Party agrees and representsand warrants to the other Party that it will not employ or otherwise engage any individual or entity in connection with its performance hereunder whohas been debarred, disqualified, or excluded, as described above, and shall immediately notify the other Party upon it becoming aware of anyinquiry concerning, or the commencement of any proceeding or disqualification that is the subject of this Section that involves it or any suchrepresentative(s). Notice of or failure to provide such notice shall constitute a material breach hereunder.6.9 Representations and Warranties of Insulet . Insulet represents and warrants to Amgen (and not to Third Parties) the following:a.Subject to Section 6.9(c), with respect to Customized Insulet Devices Manufactured at times other than during the [*], suchCustomized Insulet Devices Shipped hereunder will (i) meet the Specifications and Product Definition Document requirements; (ii)have been Manufactured and Shipped in compliance with, in all material respects, Applicable Laws and the Quality Agreement; and(iii) to the extent required hereunder, meet and be manufactured in compliance with current Good Manufacturing Practices pursuantto 21 C.F.R. Part 820, any other Quality System Regulations, and ISO 13485 standards.b.Subject to Section 6.9(c), with respect to Customized Insulet Devices Manufactured during the [*], such Customized Insulet DevicesShipped hereunder will (i) meet the requirements set forth in the Specifications, Product Definition Document and QualityAgreement with respect to sterilization; (ii) have been Manufactured and Shipped in compliance with, in all material respects,Applicable Laws and the Quality Agreement; and (iii) to the extent required hereunder, meet and be manufactured in compliancewith current Good Manufacturing Practices pursuant to 21 C.F.R. Part 820, any other Quality System Regulations, and ISO 13485standards.c.The warranties set forth in Sections 6.9(a) and 6.9(b) (the “ Product Warranty ”) shall be in effect with respect to any CustomizedInsulet Device for the period beginning on the [*]. Amgen’s [*], and Insulet’s [*], for any breach of the Product Warranty shall be forInsulet to: (i) replace non-conforming Customized Insulet Devices returned to Insulet, and such remedy shall be available only fordefects reported during the applicable warranty period; and (ii) in the event that such a breach necessitates a recall of the System,Insulet shall reimburse Amgen’s reasonable, necessary, direct, external costs associated with such recall, provided that such costsdo not exceed [*] during the Term. The Product Warranty does not apply with respect to Customized Insulet Devices that are,following Shipment by Insulet, subject to abuse, alteration, misuse, or improper operation.d.The Manufacture of each Customized Insulet Device and, generically in combination with a human therapeutic, with respect to theTerritory, the use of each Customized Insulet Device does not, to the knowledge of Insulet, infringe any patent, copyright, tradesecret or other proprietary right of any Third Party, provided that Amgen’s sole and exclusive remedy for the breach of thisrepresentation shall be indemnification, defense and hold harmless pursuant to Section 8.2(iii) and the rights and remedies set forthin Section 8.3(b).e.That Insulet and its Affiliates and subcontractors and their respective employees, directors, officers and agents contributing to or inconnection with performance hereunder, (i) have not and will not offer or give to Amgen or any of Amgen’s representatives gifts,entertainment, payments, loans or other gratuities in order to or that may influence the award of a contract or obtain favorabletreatment under any agreement with Amgen or its representatives and (ii) have not and will not use federal funds to influence orattempt to influence any employee of the United States Federal government or a member of congress in connection with thisAgreement.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.186.10 Exclusive Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANYWARRANTIES TO THE OTHER PARTY, OR TO ANY OTHER PERSON OR ENTITY, WITH RESPECT TO PERFORMANCE HEREUNDER ORANY DELIVERABLE, AND EACH PARTY HEREBY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDINGTHOSE OF NONINFRINGEMENT, TITLE, MERCHANTABILITY, COURSE OF DEALING, USAGE OF TRADE, AND FITNESS FOR APARTICULAR PURPOSE.7.Risk Allocation.7.1. Insurance . Each Party shall maintain levels and types of insurance coverage as are reasonable and consistent with sound businesspractice or as required by Applicable Laws, to include at a minimum Workers’ Compensation or any similar statutory equivalent, employers’ liability,and commercial general liability. Any combination of self-insurance, primary and/or excess liability insurance policies shall be deemed compliant withthis requirement. At a Party’s request, the other Party shall submit a certificate of insurance evidencing any applicable Workers’ Compensation,Employers’ Liability and Commercial General Liability policies that may be in effect as of the Effective Date and, thereafter, not more frequently thanannually thereafter.8.Indemnification and Limitation of Liability.8.1 Indemnification by Amgen . Amgen will indemnify, defend and hold harmless Insulet and its Affiliates, and their respective officers,directors, employees, agents, successors and assigns (“ Insulet Indemnified Party ”) against all Third Party actions, losses, claims, demands,damages, costs and liabilities (including reasonable attorneys’ and professionals’ fees) (collectively, “ Loss ”) to the extent arising from Amgen’s orits Affiliates’ or subcontractors’, or their respective employees’, contractors’ or agents’ (i) [*], (ii) [*], (iii) [*] except to the extent of Insulet’s obligationsto indemnify, defend and hold harmless under Section 8.2, (iv) [*], except to the extent of Insulet’s obligations to indemnify, defend and holdharmless under Section 8.2. Additionally, except to the extent of Insulet’s obligations to indemnify, defend and hold harmless under Section 8.2,Amgen will indemnify, defend and hold harmless Insulet Indemnified Party against all Third Party claims (a) to the extent arising from [*] and (b) anyand all Third Party [*].8.2 Indemnification by Insulet . Insulet will indemnify, defend and hold harmless Amgen and its Affiliates, and their respective officers,directors, employees, agents, successors and assigns (“ Amgen Indemnified Party ”) against any and all Loss to the extent arising from Insulet’s orits Affiliates’ or subcontractors’, or their respective employees’, contractors’ or agents’ (i) [*] in performance or lack of performance of Insulet’sobligations hereunder, (ii) breach of any of [*], (iii) infringement of the intellectual property of a Third Party, including patent claim, to the extentrelating [*] (“ Infringement Claim ”).8.3 Indemnification Procedure .a.In the event of a Loss for which a Party (the “ Indemnified Party ”) seeks from the other Party (the “ Indemnifying Party ”)indemnification and defense pursuant to Section 8.1 or Section 8.2, the Indemnified Party will promptly notify the Indemnifying Partyof each such Loss, and the Indemnifying Party will assume the defense thereof with, counsel reasonably satisfactory to theIndemnified Party; provided that the Indemnified Party will have the right to retain its own counsel at its own cost except ifrepresentation of the Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual orpotential conflicting interests between the Parties in which case the cost shall be borne by the Indemnifying Party. Theindemnifications provided for by Section 8.1 and Section 8.2 will not apply to amounts paid in settlement of any Loss if suchsettlement is effected without the consent of the Indemnifying Party, which consent will not be unreasonably withheld. The failure topromptly deliver notice of a Loss to the Indemnifying Party after service of the complaint, if materially prejudicial to the IndemnifyingParty’s ability to defend such complaint, will relieve the Indemnifying Party of any liability to the Indemnified Party under this Section8.3 only to the extent so prejudiced. The Indemnified Party will reasonably cooperate with the Indemnifying Party in the investigationand defense of each Loss.b.With respect to each Infringement Claim, without limiting Amgen’s other rights or remedies under this Agreement, Insulet shall usecommercially reasonable efforts to obtain the intellectual property rights that are the subject of the claim or design around thealleged/actual infringement such that there is no infringement (while still being able to satisfy the Specifications for the CustomizedInsulet Device in accordance with this Agreement).8.4 Limitation of Liability .a.EXCEPT WITH REGARD TO [*], ANY LIABILITY THAT ARISES FROM A PARTY’S [*], IN NO EVENT SHALL EITHER PARTY BELIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL,* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OF THIS AGREEMENT OR THE SALE OFPRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THEPOSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THEPOSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE LIMITED REMEDIES IN THIS AGREEMENT FAILOF THEIR ESSENTIAL PURPOSE. ANY “LOSS” FOR WHICH A PARTY IS OBLIGATED TO DEFEND, INDEMNIFY, HOLDHARMLESS THE OTHER PARTY SHALL BE CONSIDERED DIRECT DAMAGES OF SUCH OTHER PARTY.b.EXCEPT WITH RESPECT TO ANY LIABILITY OR LOSS THAT ARISES FROM (A) [*], IN NO EVENT SHALL INSULET’SAGGREGATE LIABILITY FOR DIRECT DAMAGES TO AMGEN UNDER THIS AGREEMENT AND THE DEVELOPMENTAGREEMENT, IN THE AGGREGATE, EXCEED [*].9.Term and Termination.9.1 Term . This Agreement shall become effective on the date first written above and unless terminated earlier in accordance with the termsof this Agreement, shall remain in full force and effect until the expiration of the fifth Commercial Year (the “ Initial Period ”). Prior to the expiration ofthe [*] and each Commercial Year thereafter, the Parties shall negotiate in good faith an extension of the term for an additional twelve (12) monthperiod (each a “ Renewal Period ”, and together with the Initial Period, the “ Term ”); provided that either Party may elect not to renew thisAgreement by providing the other Party with notice of same at least twenty four (24) months prior to the Initial Period or expiration of the thencurrent-Renewal Period, as applicable.9.2 Termination Without Cause . Following the [*], Amgen may notify Insulet in writing of its intent to terminate this Agreement withoutcause, such termination to become effective twelve (12) months following the date of such notice.9.3 Termination For Cause . Except as otherwise provided in Section 12.13 regarding Force Majeure, either Party may terminate theAgreement if (a) except with respect to obligations regarding Confidential Information set forth in Section 5, the other Party materially breaches anymaterial provision of this Agreement and has not cured such breach within [*] days (or for such reasonable amount of time thereafter, but in no eventlonger than [*] days, if the default is not susceptible of cure within [*] days) after written notice thereof (specifying in reasonable detail the nature ofthe material breach) by the non-breaching Party; or (b) the other Party voluntarily commences any action or seeks any relief regarding its liquidation,reorganisation other than for corporate reorganisation, dissolution or similar act or under any bankruptcy, insolvency or similar law; or (c) if aproceeding is commenced or an order, judgement or decree is entered seeking the liquidation, reorganization, dissolution or similar act or any otherrelief under any bankruptcy, insolvency or similar law against the other Party, without its consent, which continues undismissed or unstayed for aperiod of [*] days.9.4 Effect of Expiration or Termination . Expiration or termination of the Agreement shall not relieve the Parties of any obligation accruingprior to such expiration or termination, and the provisions of Sections 1, 3.6, 5, 6.9, 6.10, 7 (but only with respect to insurance applicable toindemnification obligations), 8, 9.4, 9.5, 10, 11, and 12 shall survive the expiration or termination of the Agreement.9.5 Remaining Stock . In the event of termination other than as a result of breach by Amgen, Amgen shall have the right but not theobligation to purchase all usable stock of the Custom Insulet Devices which was Manufactured for Amgen.10.Disputes.10.1 Resolution of Disputes . The Parties recognize that a bona fide dispute as to certain matters related to a Party’s rights or remediesunder this Agreement may arise from time to time. In the event of the occurrence of such a dispute, the Parties shall undertake good faith efforts toresolve any such dispute in good faith. In the event the Parties shall be unable to resolve any such dispute, by written notice to the other Party, aParty may, but shall not be obligated to, have such dispute referred to the Executive Officers for attempted resolution by good faith negotiationswithin [*] days, or such other period as may be agreed to by the Parties, after such written notice is received.10.2 Performance During Dispute . Each Party shall continue to diligently perform its obligations under this Agreement pending resolution ofany dispute hereunder; provided, however, during the pendency of a dispute regarding payments to Insulet, Amgen shall not be obligated to payamounts to Insulet that are the subject of a good faith dispute.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.1811.INTELLECTUAL PROPERTY OWNERSHIP, PATENTS, LICENSES, AND [*].11.1 Intellectual Property Ownership, Patents and Licenses . The Parties’ intention is that if and to the extent that Development occursduring the Term of this Agreement, grants of rights, intellectual property ownership, protection, and related matters shall be consistent with theParties’ agreement with respect to such as set forth in Article 5 and Article 6 of the Development Agreement. Accordingly, the [*]. Theaforementioned [*] as follows:[*]11.2Retained Rights . Nothing contained in this Agreement confers or will be construed to confer any rights by implication, estoppel orotherwise, under any Intellectual Property Rights, other than the rights expressly granted in this Agreement and the DevelopmentAgreement. All rights not expressly granted by a Party under this Agreement or the Development Agreement are hereby reserved.11.3Trademarks .a.Limitations on Use . Except as set forth in this Section 11.3, Amgen shall not use, register, or seek to register any trademark for usewith wearable infusion device for delivery of human therapeutics that is confusingly similar to, or contains the words, “POD”,“OMNI”, “OMNIPOD” or “INSULET”.b.Licensed Marks Assignment . Amgen has pending applications Serial No. [*], and [*] for the marks [*] and [*], respectively(collectively, “ Applications ”) filed in the United States Patent and Trademark Office (“ PTO ”) on the basis of Amgen’s intent to usesuch trademarks (the “ Licensed Marks ”). Amgen agrees that Insulet shall become the owner of the [*] and [*] trademarks pursuantto this Section 11.3. With respect to each of the Licensed Marks, upon a statement of use or amendment to allege use is filed in thePTO and accepted by the PTO, Amgen will promptly assign the Application relevant to the Licensed Mark to Insulet. Amgen herebyagrees to use the Licensed Marks only in connection with the Customized Insulet Device and the System meeting reasonablestandards of quality that equal or exceed the quality of similar products heretofore marketed or provided by Amgen, the quality ofwhich is known and acceptable to Insulet.c.Trademark License . Insulet hereby grants to Amgen an exclusive, worldwide, fully paid up, royalty-free, and sub-licensable (onterms and conditions substantially consistent herewith) right and license to use the Licensed Marks and related registrations(collectively, the “ Trademarks ”) upon or in connection with the Customized Insulet Device and System. The license to theTrademarks granted to Amgen is exclusive, even as to Insulet, and Insulet will not use the Trademarks on any Device, products orother materials except those made for Amgen. Other than the Licensed Marks, this Section 11.3(c) does not preclude Insulet fromusing any marks that contain the word “POD” (“ POD Marks ”), on Devices, products or other materials not supplied to Amgen, andAmgen understands and agrees that Insulet may use or license such POD Marks [*]. All use of the Trademarks under thisAgreement in connection with the Customized Insulet Device shall inure to the benefit of Insulet. Upon termination of thisAgreement by Amgen pursuant to Section 9.3 (Termination for Cause), Insulet shall immediately do all that is necessary or requiredto assign the Trademarks to Amgen and Amgen shall have the unrestricted right to use and license the Trademarks.d.New Trademark Filings and Maintenance . Insulet will have the obligation, at its own expense, to use best efforts to file andprosecute trademark applications and maintain registrations for the Trademarks covering the Customized Insulet Device andSystem in the Supply Territory. This Section 11.3 is a material provision of this Agreement and Insulet’s failure to comply with thisSection 11.3 shall be considered a material breach of this Agreement. Insulet shall promptly notify Amgen of the status of alltrademark applications and registrations regarding the Trademarks. If Insulet does not timely take action before any deadline withrespect to Trademarks, then Insulet hereby grants to Amgen a power of attorney to act on its behalf to take the necessary actionduring the grace period or otherwise, all at Amgen’s expense, and without waiver of any other rights of Amgen under thisAgreement.e.Enforcement . If either Party shall become aware of any infringement by third parties of the Licensed Marks or any other use of theLicensed Marks or any term or trademark application confusingly similar to the Licensed Marks, such Party shall promptly notify theother Party of that infringement, use or application. Insulet agrees, at Insulet’s expense, to defend and protect the Trademarksagainst infringement by third parties in the Supply Territory, including, without limitation, instituting suit to seek injunctions andmonetary damages and filing opposition proceedings and cancellation actions against conflicting trademarks of third parties(collectively “ Insulet Enforcement Actions ”). Insulet shall consult with Amgen but will have control over the selection of counsel, theconduct of the matter, and the settlement of Insulet Enforcement Actions. Amgen shall have the right to participate in all suchInsulet Enforcement Actions at Amgen’s expense. Insulet shall be entitled to [*] of any recovery of monetary damages from InsuletEnforcement Actions. If Insulet fails to prosecute actions against any third party* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18that Amgen reasonably believes is infringing or likely to cause confusion with the Trademarks, Amgen shall have the right, but notthe obligation, to prosecute such action independently and, if it exercises such right, it shall fund [*] of the costs and expensesthereof and be entitled to [*] of any recovery of monetary damages. Amgen shall consult with Insulet but will have complete controlover the selection of counsel, the conduct of the matter, and the settlement of all enforcement actions that are brought by Amgen.To the extent that Insulet fails to fulfill its obligations to defend and protect the Trademarks, and/or as necessary for Amgen toprosecute actions against infringers as permitted in this paragraph, Insulet irrevocably constitutes and appoints Amgen as its trueand lawful representative and attorney-in-fact, with full power and authority in its name, place and stead, to fulfill such Insuletobligations and prosecute such actions. The foregoing grant of authority is a special power of attorney coupled with an interest,shall be irrevocable and shall continue in full force and effect notwithstanding the subsequent merger, dissolution or othertermination of the existence of Insulet. The Parties shall cooperate and promptly do such acts and execute, acknowledge, anddeliver such documentation as is necessary for the parties to fulfill their respective obligations pursuant to this Section 11.3.12.Miscellaneous.12.1 Regulatory Support and Submissions .a.Insulet will perform [*] of the Customized Insulet Device required or necessary to support submissions to or meetings withRegulatory Authorities, and Amgen will reimburse Insulet [*].b.Confidential Information of Insulet regarding the Customized Insulet Device that is required to be submitted to a RegulatoryAuthority will be managed through a Master File, where applicable, or an equivalent regionally appropriate mechanism for filing(referred to in this Agreement as a Master File). Information that is not Confidential Information of Insulet regarding the CustomizedInsulet Device may also be managed through a Master File, at the request of Amgen.c.With the exception of the Confidential Information of Insulet in a Master File, which Insulet shall file with the Regulatory Authoritiesupon Amgen’s request as set forth in this Section 12.1, Amgen shall have the right, but not the obligation, to compile and file anyand all submissions with the Regulatory Authorities required for the approval of Customized Insulet Devices and/or Systems forcommercial or clinical use (such submissions include without limitation briefing documents in support of meetings, clinical trialapplications, marketing applications, and responses to questions or requests for additional information from Regulatory Authorities).Insulet shall submit to Amgen, in electronic form compatible with Amgen’s system requirements with Confidential Information ofInsulet redacted, all documents necessary to be submitted to a Regulatory Authority. With the exception of Confidential Informationof Insulet contained in a Master File: (i) Amgen shall own all right, title and interest in and to filings and submissions to RegulatoryAuthorities and Regulatory Approvals related to the Customized Insulet Devices and Systems; and (ii) with respect to theCustomized Insulet Device, Insulet shall only submit to Regulatory Authorities those documents approved in writing and in advanceby Amgen. With respect to Confidential Information of Insulet contained in a Master File, Amgen shall approve the index of contentin writing prior to submission. Insulet will provide Amgen with a Letter of Authorization for the Master File that allows FDA toincorporate by reference the information into Amgen’s submission.d.Unless otherwise agreed by the Parties or required by Regulatory Authorities, for each document necessary to be submitted to aRegulatory Authority that does not contain Confidential Information of Insulet, Insulet shall submit to Amgen for its review andcomment a draft of each such document no later than sixty (60) days prior to the anticipated date for submittal to the RegulatoryAuthority. Insulet will consider in good faith any comments and suggestions that Amgen may have based on its review of thedocumentation, address such comments and suggestions, and make reasonable changes to the documentation given suchcomments and suggestions.e.Except for Confidential Information of Insulet’s contained in a Master File, Insulet shall provide a copy of the Master File contents toAmgen at the time of submission and provide updated contents to Amgen when changes are made. With respect to ConfidentialInformation of Insulet contained in a Master File, at the time of submission and when changes are made, Insulet shall submit toAmgen an index of the contents of the Master File and a brief description of contents. After submission to a Regulatory Authority,Insulet shall maintain a Master File throughout the life of the Customized Insulet Device and notify Amgen within [*] business daysof each change to the content of a Master File. Insulet shall immediately notify Amgen of any communication from a RegulatoryAuthority regarding the Customized Insulet Device, to include but not limited to, information contained within a Master File. Amgenwill reimburse Insulet its actual and reasonable costs incurred for compilation, submission, communication with a RegulatoryAuthority, and maintenance of a Master File to the extent the Master File is only* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18required or necessary for the Customized Insulet Device and not required, necessary or conducted with respect to the InsuletDevice.f.Insulet and Amgen will document medical device reporting roles and responsibilities in an amendment to this Agreement. Insuletwill, in good faith, with the engagement of staff adequate in number and expertise, and prior to the filing date as specified by Amgenand Insulet, negotiate the foregoing amendment.12.2 Changes .a.Each Party recognizes and acknowledges that changes to this Agreement arising from requirements of Regulatory Authoritiesapplicable to Customized Insulet Devices (each a “ Change ”) may be necessary from time to time. In the event that either Partydetermines that a Change is desirable or necessary, such Party will notify the other Party of such Change in writing. Within [*] daysafter notice by either Party of a request for a Change, the Parties will negotiate in good faith with respect to such Change, in eachcase. Upon the mutual agreement of the Parties to approve a requested Change, the Parties will execute a written change ordersetting forth the agreed upon Change (each a “ Change Order ”). The Parties will perform their obligations under this Agreement asmodified by each Change Order. If the Parties are unable to agree on any Change within the above-referenced [*] day period, theParties will continue to perform their respective obligations hereunder as agreed to by the Parties.b.Notwithstanding anything to the contrary set forth in Section 12.1(a), upon Amgen’s request, from time-to-time, that InsuletManufacture and supply the Customized Insulet Device for Commercialization in countries or regions specified by Amgen that areoutside of the then-current Supply Territory pursuant to the Amgen-approved schedule (each such request a “ Supply TerritoryExpansion Request ”), Insulet will (a) submit to Amgen a proposed schedule and estimate of Supply Territory ExpansionReimbursable Expenses with respect to the Supply Territory Expansion Request, (b) subject to the Change process set forth inSection 12.1(a), do all that is necessary or required for it to Manufacture and supply the Customized Insulet Device forCommercialization in the countries or regions specified in the Supply Territory Expansion Request; and (c) be compensated byAmgen pursuant to Section 3.5. With respect to each Supply Territory Expansion Request, upon Regulatory Approval with respectto the territory(ies) that is(are) the subject of such request (each, an “ Additional Supply Territory ”), the definition of Supply Territoryshall be automatically amended to include in each Additional Supply Territory. At Amgen’s request, Insulet shall file submissions,notifications, applications, documentation and related materials as Amgen may request in relation to obtaining approval ofRegulatory Authorities for the Customized Insulet Devices and/or Systems anywhere in the world and any Change due to suchrequests shall be addressed pursuant to Section 12.1 and Section 12.1(a).c.In the event of a conflict between or among Change Orders, a Change Order dated later in time will control over a Change Orderdated earlier in time. If a Change is mandated by a change in Applicable Laws, and failure to comply would render either Party’sperformance under this Agreement or the use of the Customized Insulet Device illegal, each Party’s performance shall betemporarily suspended only to the extent such performance is illegal until such time as the Parties confer and the Parties shallmutually agree to a course of action and delegate responsibility for implementing such Change in order to comply with suchamended Applicable Laws.12.3 Governing Law and [*] . This Agreement will be construed and the respective rights of the Parties determined according to thesubstantive laws of the Commonwealth of Massachusetts notwithstanding the provisions governing conflict of laws under such Massachusetts law tothe contrary. The Parties [*].12.4 Assignment . Neither Amgen nor Insulet may assign this Agreement in whole or in part without the consent of the other Party, except ifsuch assignment occurs in connection with the sale or transfer of all or substantially all of the business or assets of the assigning Party, in whichcase, the assigning Party shall provide the other Party notice of such assignment within [*] days thereof (“ Notice of Permitted Assignment ”).12.5 Entire Agreement; Amendments . This Agreement (including all attachments hereto and documents or portions of documentsincorporated herein by reference) constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes allother previous arrangements with respect to the subject matter hereof, whether written or oral. For the avoidance of doubt, this Agreement does notmodify or supersede the Development Agreement. Any amendment or modification to this Agreement will be made in writing signed by both Parties.12.6 Notices.a.Notices to Amgen will be addressed to:* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Amgen Inc.One Amgen Center DriveThousand Oaks, CA 91320Attention: Vice President Global Strategic SourcingMailstop: 10-2-DWith a copy to:Amgen Inc.One Amgen Center DriveThousand Oaks, CA 91320Attention: Law Department, Contracting and Operations Group; Mailstop: 35-2-Ab.Notices to Insulet will be addressed to:Insulet Corporation9 Oak Park DriveBedford, MA 01730Attention: General Counselc.Each Party may change its notice recipients under this Section 12.6 by giving notice to the other Party in the manner hereinprovided. Any notice required or provided for by the terms of this Agreement will be in writing and will be (a) sent by registered orcertified mail, return receipt requested, postage prepaid, (b) sent via a reputable overnight courier service, or (c) sent by facsimiletransmission with an original to be followed the same day via a reputable overnight courier service, in each case properlyaddressed in accordance with this Section 12.6. The effective date of each notice will be the actual date of receipt by the Partyreceiving the same.12.7 Independent Contractors . It is understood and agreed that the relationship between the Parties hereunder is that of independentcontractors and that nothing in this Agreement will be construed as authorization for either Amgen or Insulet to act as agent for the other. For anyperformance required under this Agreement (i) between two business entities based in the United States of America and (ii) being performed in theUnited States of America and/or its territories, Insulet agrees that this Agreement shall be performed in full compliance with, if and to extentapplicable to Insulet, the Equal Opportunity Clauses set forth in 41 C.F.R. §§ 60-1.4(a), 60-250.5(a) and 60-741.5(a) and the employee notice andrelated obligations found at 29 C.F.R. Part 471, Appendix A to Subpart A, Title VII of the Civil Rights Act of 1964; Sections (1) and (3) of ExecutiveOrder No. 11625 relating to the promotion of Minority Business Enterprises; Americans with Disabilities Act; Age Discrimination in Employment Act;Fair Labor Standards Act; Family Medical Leave Act; and all corresponding implementing rules and regulations, all of which, including the contractclauses required and regulations promulgated thereunder, are incorporated herein by reference.12.8 No Strict Construction . This Agreement has been prepared jointly and will not be strictly construed against any Party.12.9 Headings . The captions or headings of the sections or other subdivisions hereof are inserted only as a matter of convenience or forreference and will have no effect on the meaning of the provisions hereof.12.10 No Implied Waivers; Rights Cumulative . No failure on the part of Amgen or Insulet to exercise, and no delay in exercising, any right,power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, will impair, prejudice or constitute awaiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, norwill any single or partial exercise of* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy orprivilege.12.11 Severability . If, under applicable law or regulation, any provision of this Agreement is invalid or unenforceable, or otherwise directly orindirectly affects the validity of any other material provision(s) of this Agreement (such invalid or unenforceable provision, a “ Severed Clause ”), theParties will consult one another and use reasonable efforts to agree upon a valid and enforceable provision that is a reasonable substitute for theSevered Clause in view of the intent of this Agreement. In the event such a valid and enforceable provision cannot be agreed upon, the invalidity ofone or more Severed Clauses will not affect the validity of this Agreement as a whole, unless the Severed Clauses are of such essential importanceto this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the Severed Clauses.12.12 Execution in Counterparts; Facsimile Signatures . This Agreement may be executed in counterparts, each of which counterparts,when so executed and delivered, will be deemed to be an original, and all of which counterparts, taken together, will constitute one and the sameinstrument even if both Parties have not executed the same counterpart. Signatures provided by facsimile transmission will be deemed to be originalsignatures.12.13 Force Majeure . A Party shall not be deemed to have breached this Agreement to the extent its failure to perform directly results froma Force Majeure Event and such Party uses its good faith efforts to resume, and does resume, performance as soon as reasonably practicable afterthe occurrence of the Force Majeure Event.12.14 Interpretation; Precedence . Whenever the context may require, any pronoun will include the corresponding masculine, feminine andneuter forms. The words “include”, “includes” and “including” will be deemed to be followed by the phrase “without limitation.” Unless the contextrequires otherwise, (A) any definition of or reference to any agreement, instrument or other document herein will be construed as referring to suchagreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on suchamendments, supplements or modifications set forth herein or therein), (B) any reference to any laws herein will be construed as referring to suchlaws as from time to time enacted, repealed or amended, (C) any reference herein to any Person will be construed to include the Person’ssuccessors and assigns, (D) the words “herein”, “hereof’ and “hereunder”, and words of similar import, will be construed to refer to this Agreement inits entirety and not to any particular provision hereof, (E) any reference herein to the words “mutually agree” or “mutual written agreement” will notimpose any obligation on either Party to agree to any terms relating thereto or to engage in discussions relating to such terms except as such Partymay determine in such Party’s sole discretion; (F) all references herein to Articles, Sections, Appendices, Exhibits or Schedules will be construed torefer to Articles, Sections, Appendices, Exhibits and Schedules of this Agreement; and (G) all references to the “knowledge” of a Party will refer tothe actual knowledge of any of such Party’s officer or director level employees or members of its Board of Directors, or the knowledge which anysuch person would reasonably be expected to have assuming reasonable inquiry in light of such person’s position with such Party. In the event ofany conflict between this Agreement and any Appendix attached hereto, the terms of this Agreement shall control.12.15 [*] . Nothing contained herein shall [*].12.16 Construction . The Parties acknowledge that each Party is of equal bargaining strength and has actively participated in thepreparation and negotiation of this Agreement. Each Party is entering into this Agreement on its own free will and is not acting under duress orcoercion of any kind or nature whatsoever. Each Party has had the right and opportunity to consult with legal counsel of its choice in connection withthis Agreement; and each Party has either done so, or has voluntarily declined to do so free from duress or coercion. Any rule of construction to theeffect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement, any portion hereof, or anyModifications hereto.12.17 [*] . Prior to the [*], each Party agrees that it will [*].* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS WHEREOF, the Parties have caused this Supply Agreement to be executed by their respective duly authorized officerseffective as of the Effective Date.INSULET CORPORATIONAMGEN INC.By: /s/ Charles T LiamosBy: /s/ William ReisName: Charles T LiamosName: William ReisTitle: COOTitle: Vice President, Global Strategic Sourcing By: /s/ William Rich Name: William Rich Title: Vice President, Supply Chain** Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 1.7[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2Quality Agreement[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18 AMENDMENT NUMBER 001TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 001 (“ Amendment” ), entered into effective as of April 15, 2014 (“ Amendment 1 Effective Date ”), by and between AmgenInc. (“ Amgen ”) and Insulet Corporation (“ Insulet ”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (“Agreement ”).B. Amgen and Insulet desire, and are willing, to amend the Agreement to provide for the purchase by Insulet of certain components for use in theManufacture of Customized Insulet Devices with the intent to reduce Manufacturing lead times.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the parties havereviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the terms andconditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Agreement Article 3 . Article 3 of the Agreement is hereby amended by adding the following text as a new Section 3.9:“3.9 Amgen-Specific Componentsa.If, prior to Amgen’s first submittal of the Forecast, Amgen requests in writing that Insulet purchase some or all of the Amgen-Specific Components (defined below) and Amgen submits to Insulet a purchase order for such, Insulet shall promptly purchase andmaintain in its inventory the Amgen-Specific Components specified in, such request (the “ Requested Amgen-Specific Components”); provided, however, that Amgen shall only have the right to request, and Insulet shall only be obligated to purchase and maintainin its inventory, up to [*] of each Amgen-Specific Component. Insulet shall take delivery of each Requested Amgen-SpecificComponent no later than the lead time (set forth in Section 3.9(b), below) applicable to each such Requested Amgen-Specificcomponent. Insulet shall only use the Requested Amgen-Specific Components for the Manufacture of Customized Insulet Devices.The Manufacture of one Customized Insulet Device requires one of each of the Amgen-Specific Components (referred to as the “Customized Insulet Device Amgen-Specific Components Set ”). Until the number of Customized Insulet Devices equal to thenumber of Customized Insulet Device Amgen-Specific Component Sets represented by the Requested Amgen-SpecificComponents (the “ Expedited Delivery Customized Insulet Devices ”) has been ordered by Amgen by Purchase Order, Insulet shalldeliver Customized Insulet Devices within three months after Amgen’s submission of the Purchase Order (regardless of the timingof Amgen’s submission of Forecasts or the quantities of Customized Insulet Devices set forth in the Binding Portion of a Forecast).For illustrative purposes, if before submitting its first Forecast Amgen orders [*] of each Amgen-Specific Component and thereaftersubmits Purchase Orders on [*] and [*] for [*] and [*] Customized Insulet Devices, respectively, then Insulet will deliver [*]Customized Insulet Devices on or before [*] and [*] Customized Insulet Devices on or before [*].* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18b.The Amgen-Specific Components are the following:ItemDescription of Amgen-Specific ComponentLeadTimes(weeks)[*][*] [*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*] or[*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*][*]c.Amgen will pay Insulet [*] (US$[*]) for each Customized Insulet Device Amgen-Specific Components Set that Amgen requests andInsulet purchases and maintains in its inventory pursuant to this Agreement. Insulet will credit to Amgen [*] (US$[*]) for eachExpedited Delivery Customized Insulet Device ordered by and delivered to Amgen.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effectiveas of the Amendment 1 Effective Date.Insulet CorporationAmgen Inc.By: /s/ W. P. RyanBy: /s/ Ed VrableName: W. P. RyanName: Ed VrableTitle: COOTitle: Director Strategic Sourcing * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18 AMENDMENT NUMBER 002TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 002 (“ Amendment” ), entered into effective as of June 25, 2014 (“ Amendment 2 Effective Date ”), by and betweenAmgen Inc. (“ Amgen ”) and Insulet Corporation (“ Insulet ”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “ Agreement ”).B. As of the Amendment 2 Effective Date, Amgen requires [*] for the Customized Insulet Device [*]. with the intent to [*] Amgen and Insulet desire,and are willing, to amend the Agreement to provide for the payment by Amgen of certain amounts for Customized Insulet Devices that [*], all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the parties havereviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the terms andconditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Invoices, Section 3.7 . Section 3.7(a) of the Agreement is amended by deleting it in its entirety and replacing it with thefollowing:“(a)Insulet shall submit invoices to Amgen on a [*] basis for amounts payable by Amgen hereunder (i) pursuant to Section 3.1,Section 3.3, Section 3.4, and Section 3.5 for [*], (ii) pursuant to Section 3.10, and (ii) testing as provided in Section 12.1. Insulet willendeavor to submit such invoices promptly following the [*]. Invoices will be submitted in electronic format to the following electronicaddress (which addresses may be changed, from time-to-time, by Amgen upon prior notice to Insulet): email address:AccountsPayableMailroom@Amgen.com .”2.2 Agreement Article 3 . Article 3 of the Agreement is hereby amended by adding the following text as a new Section 3.10:“3.10 PQ Validation [*] .“ Insulet Acceptance Criteria ” shall mean the lot acceptance criteria for the Insulet Eros lots as defined in Insulet’s “SOP-051 QA FinalAcceptance of Product Rev R” in effect as of June 17, 2014.“ PQ Validation [*] ” means each [*] that, [*]. For the avoidance of doubt, a PQ Validation [*].In the event of changes to the [*] or in the event of changes to the [*], whether it be due to [*] changes or [*], that require a [*] and, pursuantto [*], Amgen has approved a [*], Amgen will pay Insulet [*] (US$[*]) for [*]. Except for the payment of the [*] obligated to make anypayments, or reimburse any amounts, to [*].”3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effectiveas of the Amendment 2 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Brian K. RobertsBy: /s/ Sev SislianName: Brian K. RobertsName: Sev SislianTitle: CFOTitle: Category Manager * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 003TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 003 (“ Amendment” ), entered into effective as of June 26 , 2014 (“ Amendment 3 Effective Date ”), by and betweenAmgen Inc. (“ Amgen ”) and Insulet Corporation (“ Insulet ”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “ Agreement ”).B. Amgen and Insulet desire, and are willing, to amend the Agreement to set forth medical device reporting roles and responsibilities, all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 New Section 2.13. The Agreement is hereby amended by adding to it a new Section 2.13 that reads as follows:“2.13 Safety Agreement . Medical device reporting roles and responsibilities are set forth in the Safety Agreement, attached hereto asExhibit 2.13, which is incorporated herein by reference and applies hereto.”2.2 Agreement Section 12.2(f) . The Agreement is hereby amended by deleting Section 12.2(f) in its entirety.2.3 Exhibit 2.13 (Safety Agreement) . The Agreement is hereby amended by adding to the Agreement a new Exhibit 2.13 withcontent as set forth in Exhibit 2.13 attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effectiveas of the Amendment 3 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Brian K. RobertsBy: /s/ Sev SislianName: BRIAN K. ROBERTSName: SEV SISLIANTitle: CFOTitle: CATEGORY MANAGER Amgen Inc. By: N.A. Name: N.A. Title: N.A.Exhibit 2.13Safety Agreement(Attached) * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18 Exhibit 2.13SAFETY AGREEMENTTHIS SAFETY AGREEMENT (“ Safety Agreement ”) is entered into as of June 27, 2014 (the “ Safety Agreement Effective Date ”) by andbetween Amgen Inc., a Delaware corporation (“ Amgen ”), and Insulet Corporation, a Delaware corporation (“ Insulet ”).AGREEMENT1.SUPPLY AGREEMENT. This Safety Agreement is incorporated by reference in and governed by that certain Supply Agreement by andbetween the Parties, dated as of November 21, 2013 (as might be amended from time to time, the “ Agreement ”).2.DEFINITIONS. All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In the event of a conflictbetween the capitalized terms defined and set forth in this Safety Agreement and the defined terms of the Agreement, the definitions setforth in this Safety Agreement shall control with respect to this Safety Agreement. The following definitions are used herein:2.1Drug Adverse Event . Drug Adverse Event (or “Drug AE”) shall mean any untoward medical occurrence in a patient who has beenadministered an Amgen Product and which does not necessarily have a causal relationship with the treatment.) Drug AEs includewithout limitation any unfavorable and unintended sign, symptom or disease temporally associated with the use of an Amgen Product,whether or not considered related to Amgen Product, including any clinically significant worsening of a pre-existing condition. Forpurposes of this Safety Agreement, any doubt as to whether information constitutes a Drug AE shall be resolved by treating it as a DrugAE. The following events also shall be deemed Drug Adverse Events for purposes of this Agreement, even if the patient has notsuffered an adverse outcome:•Incidents of pregnancy when either the mother or father is a patient or clinical trial subject to whom .Amgen Product hasbeen administered;•Incidents when a lactating woman is actively taking an Amgen Product while breastfeeding;•Lack of therapeutic effect;•Suspected transmission of an infectious agent via an Amgen Product;•Incidents of overdose, abuse, or misuse of an Amgen Product, including off-label use or attempted suicide;•Medication errors involving an Amgen Product; and•Incidents of occupational exposure . to an Amgen Product.2.2Device Adverse Event . Device Adverse Event (or “Device AE”) shall mean an event that reasonable suggests that the CustomizedInsulet Device or a similar device marketed by Insulet:•May have caused or contributed to death or serious injury.•Has malfunctioned and that the Customized Insulet Device or a similar device marketed by Insulet would be likely to causeor contribute to a death or serious injury if the malfunction were to recur, or•Resulted in an event that necessitates remedial action to prevent an unreasonable risk of substantial harm to the publichealth.2.3Privacy Laws and Regulations . Privacy Laws and Regulations shall mean, as are in effect from time to time, applicable data privacylaws, including without limitation the national and sub-national laws based on the European Union Data Protection Directive to theextent applicable to data processors, and U.S. state data breach notification and information security laws and regulations specific tothe handling of Personal Information to the extent applicable to a Party or its representatives or third-party service* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18providers, including, but not limited to the requirements set forth at 45 Massachusetts M.G.L. c. 93H and 201 CMR §§ 17.00-17.05.2.4Personal Information . Personal Information shall mean any information from which an individual may be identified, including withoutlimitation an individual’s name, address, telephone number, social security number, account numbers, account balances, accounthistories, and “personal information,” “nonpublic personal information,” “protected health information” (and other similar information,however described) as defined in applicable Privacy Laws and Regulations and that is obtained as a result of, or in connection with, thedevelopment, marketing, or commercialization of an Amgen Product.3.DRUG ADVERSE EVENT AND DEVICE ADVERSE EVENT HANDLING AND EXCHANGE.3.1Collection of Events Generally .(i)Each Party will record in writing all available information of which it becomes aware regarding each Drug AE or Device AE that it isrequired to exchange under this Safety Agreement and shall use reasonable efforts to obtain the following information from the personproviding the Drug AE or Device Adverse Event information (the “reporter”):(a)confirmation that the patient was exposed to an Amgen Product and/or used the Customized Insulet Device;(b)the details of the Drug AE or Device AE;(c)the details that identify the affected Amgen Product and/or Customized Insulet Device (Product name. Part number, Lotnumber. Serial number, Use by date. etc.);(d)the contact information for the patient’s healthcare provider; and(e)a description of the source of the report (for example, consumer, healthcare provider, etc.).(ii)If the reporter is the patient’s healthcare provider, the notifying Party shall obtain the reporter’s contact information.(iii)Each Party will provide the other Party with such assistance as may be reasonably requested in investigating and obtaining follow-upinformation with respect to Drug AEs or Device AEs.3.2Insulet’s Obligations Regarding Reporting, Investigation, and Follow Up of Drug AEs and Device AEs(i)Within [*] of Insulet’s awareness of information relating to a Drug AE or Device AE, Insulet will transmit to the designated Amgen phonenumber on Attachment A all available information of which it is then aware regarding such event.(ii)If Insulet receives any other information or documents relating to a Drug AE or Device AE, within [*] after receipt of such, Insulet shallprovide such information and/or the originals of such documents to Amgen’s designated contact.(iii)No later than the [*] of each calendar month during the Term of the Agreement, Insulet shall submit to Amgen a written report includingthe following: (1) a line listing of Drug AEs and Device Adverse Events of which Insulet is aware that occurred or of which it becameaware during the previous calendar month or (2) a statement certifying that Insulet is not aware of the occurrence of any Drug AEs orDevice Adverse Events during the previous calendar month. If a line listing is provided, Amgen will inform Insulet if Amgen. did notreceive an AE or Device Adverse Event reflected on the line listing and within [*] after receipt of such notice, Insulet shall transmit suchmissing reports to Amgen.3.3Amgen’s Obligations Regarding Device Adverse EventsNo later than the [*] of each calendar month during the Term of the Agreement, Amgen shall submit to Insulet a written report including thefollowing: (1) a line listing of Device Adverse Events of which Amgen is aware that occurred or of which it became aware during the previouscalendar month or (2) a statement certifying that Amgen is not aware of the occurrence of any Device Adverse Events during the previouscalendar month. If a line listing is provided, Insulet will inform Amgen if Insulet did not receive a Device Adverse Event reflected on the linelisting and within [*] after receipt of such notice, Amgen shall transmit such missing reports to Insulet (unless such event was originallyreceived from Insulet under Section 3.2 above).4.PHARMACOVIGILANCE* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18As between the Parties, Amgen is responsible for pharmacovigilance matters and maintaining the global safety database for the AmgenProducts. All Drug Adverse Events, Device Adverse Events, recalls or pharmacovigilance events will be communicated according to this SafetyAgreement and Section 6.9(c) of the Agreement.5.SAFETY AND REGULATORY COMMUNICATIONS(i)Amgen shall control all regulatory matters relating to the Amgen Products or Customized Insulet Device, including without limitationregulatory communications and filings, regulatory/safety reporting to Governmental Authorities, packaging and labeling, recalls,reimbursements and returns, and any other corrective actions related to an Amgen Product or Customized Insulet Device.(ii)Notwithstanding the above, if Insulet, acting in good faith, determines that a Device AE or malfunction of the Customized Insulet Deviceis applicable to or is reasonably likely to occur with its other drug delivery systems as designed, manufactured and marketed, then tothe extent Insulet is obligated under the Medical Device Reporting (MDR) regulations, Insulet is permitted to meet its separate reportingresponsibilities regarding for its other drug delivery systems, as the case may be. However, under these circumstances, the other drugdelivery system would be the product listed in the MDR Report, not the Customized Insulet Device.(iii)Insulet shall notify Amgen within one (1) business day after Insulet’s receipt of any safety or regulatory communication regarding DrugAEs or Device Adverse Events from a Governmental Authority concerning an Amgen Product, Customized Insulet Device, or similardevice marketed by Insulet.(iv)If Insulet receives notification of an impending regulatory inspection related to an Amgen Product or Customized Insulet Device. Insuletshall notify Amgen within one (1) business day after such notification.Insulet shall not disclose any Confidential Information of, or make any commitments regarding Drug Adverse Events or Device Adverse Eventson behalf of. Amgen or its Affiliates to a Governmental Authority except to the extent Amgen has given prior written authorization to Insulet to doso.6.RISK MANAGEMENT ACTIVITIESInsulet shall cooperate with Amgen in implementing any and all Amgen Product-related risk management activities relating to the CustomizedInsulet Device and Section 12.2(a) of the Agreement, to the extent Amgen reasonably requests Insulet to do so.7.TRAININGInsulet represents and warrants that its Quality Management System training includes training relating to the identification and reporting ofcomplaints, including Drug Adverse Events.8.QUALITY MANAGEMENT SYSTEMInsulet shall implement, maintain, and adhere to a set of policies. plans, practices, and supporting infrastructure as defined in the QualityAgreement.9.MISCELLANEOUS9.1AuditsAmgen’s audit rights under Article 3 of the Quality Agreement shall be deemed to include the right to audit Insulet’s compliance with thisSafety Agreement.9.2Personal InformationEach Party hereby represents and warrants that while this Safety Agreement is effective, and continuing as long as a Party controls,possesses, stores, transmits or processes Personal Information (including after expiration or termination of this Safety Agreement): (a) it willadhere to and comply with the requirements of all applicable Privacy Laws and Regulations; and (b) except as expressly permitted in thisSafety Agreement, it will, and will cause those acting on its behalf to, protect against the loss, destruction, processing, transmission,disclosure, and use of Personal Information. Except as expressly set forth in this Safety Agreement or otherwise authorized in advance andin writing by the other Party, each Party shall not provide anything to the other Party that contains any of the following information about anindividual (each, a “ Restricted Data Element ”): social security or taxpayer identification number; driver’s license or other* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18state-issued identification number; credit card or other financial account number; health insurance information, including identificationnumber; medical information (other than that expressly required to be provided under the terms of this Safety Agreement), includingirrelevant medical information, passport number or other identification number issued by a Governmental Authority; alien registrationnumber; mother’s maiden name, when labeled as such; employee identification number; DNA or other biometric data, such as fingerprintsand retinal scans. Unless, and then only to the extent, this Safety Agreement expressly requires or the Parties otherwise agree in advanceand in writing to exchange Personal Information, the Party providing such Personal Information to the other Party will, and will cause thoseacting on its behalf to, redact all Restricted Data Elements from any documents or other materials that are provided to the receiving Party.To the extent this Safety Agreement expressly requires or the Parties otherwise agree in advance and in writing to exchange PersonalInformation, this exchange will be conducted with appropriate attention to privacy concerns.9.3LanguageEnglish will be used as the common language for all information exchanged between the Parties pursuant to this Safety Agreement.IN WITNESS WHEREOF, the Parties have executed this Safety Agreement through their duly authorized representatives.Amgen Inc.By: /s/ Deborah J. Arrindell, MD JD MPH Name: Deborah J. Arrindell, MD JD MPH Title: Executive Director, Safety Insulet CorporationBy: /s/ Tracey Haas Wielinski Name: Tracey Haas Wielinski Title: VP, Global Regulatory, Clinical Affairsand QA * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18ATTACHMENT AReporting AddressesFrom Insulet to AmgenTelephone: 1-800-77-AMGENSafety-related regulatory queries:[*][*][*][*][*][*][*]Parties are responsible for confirming successful transmission of the information (such as a facsimile transmission report, return receipt,express mail tracking documentation or electronic confirmation).* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 004TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 004 (“Amendment”), entered into effective as of August 6, 2014 (“Amendment 4 Effective Date”), by and between AmgenInc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Amgen and Insulet desire, and are willing, to amend the Agreement to set forth additional or changed roles and responsibilities with respect toquality, all as set forth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms. All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Exhibit 2.2 (Quality Agreement). Exhibit 2.2 (Quality Agreement) to the Agreement is hereby amended by adding to Exhibit 2.2new Sections 24, 25, and 26 with content as set forth in Exhibit 1 to this Amendment.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 4 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Kevin SchmidBy: /s/ Sev SislianDate: August 6, 2014Name: Kevin SchmidDate: August 6, 2014Name: Sev SislianTitle: Vice President, Business DevelopmentTitle: GSS, Category ManagerInsulet CorporationBy: /s/ Tracey WielinskiDate: 6 August 2014Name: Tracey WielinskiTitle:Vice President of Global Regulatory/Clinical Affairs andQuality AssuranceAmgen Inc.By: /s/ Anthony Mire-SluisDate: August 6, 2014Name: Anthony Mire-SluisTitle:Vice President Quality* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 1[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 005TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 005 (“ Amendment” ), entered into effective as of August 11, 2014 (“ Amendment 5 Effective Date ”), by and betweenAmgen Inc. (“ Amgen ”) and Insulet Corporation (“ Insulet ”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (“Agreement ”).B. Amgen provided to Insulet a Forecast (and associated Purchase Orders numbered [*] for a total of [*] Customized Insulet Devices to bedelivered between [*] and [*] (“ [*] Forecasted Customized Insulet Devices ”). In order to adjust Insulet’s manufacturing capacity availability, Insulethas requested that Amgen accept delivery of the [*] Forecasted Customized Insulet Devices during the month of [*]. Section 2.9 of the Agreementprovides that, among other things, changes to previously-accepted Purchase Orders are permitted pursuant to a written agreement of the Parties.C. Amgen and Insulet desire, and are willing, to enter into this written agreement, pursuant to Section 2.9 of the Agreement, to change theaforementioned Purchase Orders to provide that Insulet will deliver the [*] Forecasted Customized Insulet Devices during [*], on the terms set forthin the Agreement as modified below.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the parties havereviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the terms andconditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Agreement Article 3 . Article 3 of the Agreement is hereby amended by adding the following text as a new Section 3.11:“3.11 [*] Forecasted Customized Insulet Devices . Amgen provided to Insulet a Forecast (and associated Purchase Orders numbered [*] (the “[*]Purchase Orders ”)) for a total of [*] Customized Insulet Devices to be delivered between [*] and [*] (“ [*] Forecasted Customized InsuletDevices ”). Amgen and Insulet hereby agree that, notwithstanding anything to the contrary set forth in this Agreement, the Forecast that includesthe [*] Forecasted Customized Insulet Devices, or the [*] Purchase Orders, Insulet will deliver to Amgen the [*] Forecasted Customized InsuletDevices during the month of [*]. In return for Amgen agreeing to [*] Forecasted Customized Insulet Devices, the following sections of theAgreement will not apply to the [*] Forecasted Customized Insulet Devices delivered in the month of [*]: [*]. For the avoidance of doubt, Amgenwill [*]. Additionally, in the event [*].”Amendment 5 Table 1[*][*][*][*][*][*][*][*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18[Remainder of this page left blank intentionally]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.183.CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.IN WITNESS THEREOF, the authorized representatives of the parties have executed this Amendment to the Agreement effectiveas of the Amendment 5 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Brian RobertsBy: /s/ Sev SislianName: Brian RobertsName: Sev SislianTitle: Chief Financial OfficerTitle: GSS Category Manager Amgen Inc. By: /s/ Bill Rich Name: Bill Rich Title: Vice President External Supply* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 006TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 006 (“Amendment”), entered into effective as of August 14, 2014 (“Amendment 6 Effective Date”), by and between AmgenInc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Amgen and Insulet desire, and are willing, to amend the Agreement to set forth an amended and restated Quality Agreement, all as set forthherein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms. All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Exhibit 2.2 (Quality Agreement). Exhibit 2.2 (Quality Agreement) to the Agreement is hereby replaced in its entirety with theExhibit 2.2 (Quality Agreement) attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 6 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Kevin SchmidBy: /s/ Sev SislianDate: August 18, 2014Name: Kevin SchmidDate: August 18, 2014Name: Sev SislianTitle: Vice President, Business DevelopmentTitle: GSS, Category ManagerInsulet CorporationBy: /s/ Tracey WielinskiDate: 18 August 2014Name: Tracey WielinskiTitle: Vice President of RA/QAAmgen Inc.By: /s/ Anthony Mire-SluisDate: August 18, 2014Name: Anthony Mire-SluisTitle: Vice President Quality* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on August 14, 2014)[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 007TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 007 (“Amendment”), entered into effective as of February 10, 2015 (“Amendment 7 Effective Date”), by and betweenAmgen Inc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Concurrently with entering into the Agreement, the Parties entered into the Quality Agreement (set forth as Exhibit 2.2) and, effective as ofAugust 14, 2014, amended and restated the Quality Agreement as set forth in Amendment 6 to the Agreement.C. Amgen and Insulet desire, and are willing, to amend the Quality Agreement to set forth an amended and restated Quality Agreement, all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms. All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Exhibit 2.2 (Quality Agreement). Effective as of the Amendment 7 Effective Date, Exhibit 2.2 (Quality Agreement) to theAgreement is hereby replaced in its entirety with the Exhibit 2.2 (Quality Agreement) attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 7 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Kevin SchmidBy: /s/ Sev SislianDate: February 11, 2015 Name: Kevin SchmidDate: February 12, 2015Name: Sev SislianTitle: Vice President, Business DevelopmentTitle: GSS, Sr. Category ManagerInsulet CorporationBy: /s/ Tracey WielinskiDate: 10 February 2015Name: Tracey WielinskiTitle: Vice President Regulatory,Clinical Affairs, and Quality AssuranceAmgen Inc.By: /s/ Troy WrightDate: 12 February 2015Name: Troy WrightTitle: Director, Quality Assurance, Contract Manufacturing Quality* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on February 10, 2015)[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 008TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 008 (“Amendment”), entered into effective as of June 22, 2015 (“Amendment 8 Effective Date”), by and between AmgenInc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Concurrently with entering into the Agreement, the Parties entered into the Quality Agreement (set forth as Exhibit 2.2) and, thereafter, haveamended and restated the Quality Agreement.C. Amgen and Insulet desire, and are willing, to amend the Quality Agreement to set forth an amended and restated Quality Agreement, all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Exhibit 2.2 (Quality Agreement) . Effective as of the Amendment 8 Effective Date, Exhibit 2.2 (Quality Agreement) to theAgreement is hereby replaced in its entirety with the Exhibit 2.2 (Quality Agreement) attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 8 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Daniel LevangieBy: /s/ Sev SislianDate: June 23, 2015Name: Daniel LevangieDate: June 24, 2015Name: Sev SislianTitle: President, Drug DeliveryTitle: GSS, Sr. Category ManagerInsulet CorporationBy: /s/ Brian KeoghDate: 23 June 2015Name: Brian KeoghTitle: Director, Quality AssuranceAmgen Inc.By: /s/ Troy WrightDate: 23 June 2015Name: Troy WrightTitle: Director, Quality Assurance* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on June 22, 2015)[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 009TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 009 (“Amendment”), entered into effective as of June 26, 2015 (“Amendment 9 Effective Date”), by and between AmgenInc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Amgen and Insulet desire, and are willing, to amend the Agreement to (i) eliminate Amgen’s obligation to compensate Insulet for Insulet’s [*]during each [*], (ii) eliminate Amgen’s obligation to pay [*], (iii) permit Insulet to, at no cost to Amgen, hold a certain quantity of Customized InsuletDevices in inventory at [*], and (iv) provide that Amgen is permitted to have [*] persons perform PIP duties and any additional employees present forthe purpose of training, all as set forth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Section 1.6 (Conforming Lot) . Section 1.6 of the Agreement is hereby amended by deleting it in its entirety and replacing it withthe following:“1.6 “ Conforming Lot ” has the meaning ascribed to it in the Quality Agreement and, in addition, with respect to Insulet Held CustomizedInsulet Devices, is a lot (or a portion thereof) that has been stored and managed in compliance with the requirements set forth inSection 2.11(b) .”2.2 Section 1.17 (Non-Conforming Lot) . Section 1.17 of the Agreement is hereby amended by deleting it in its entirety andreplacing it with the following:“1.17 “ Non-Conforming Lot ” means (i) a lot of Customized Insulet Device Manufactured by Insulet that, based the performance of andresults from the Lot Release Procedures and comparison to release criteria set forth in the Lot Release Procedures, is inappropriate forrelease by Insulet or (ii) Insulet Held Customized Insulet Devices for which Insulet has failed to meet one or more of the requirements setforth in Section 2.11(b) .”2.3 Section 2.3 ([*]) . Section 2.3 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following:“2.3 [*] . Amgen shall [*]. Insulet shall [*]. Additionally, Amgen shall [*].2.4 Section 2.11 (Shipment) . Section 2.11(b) of the Agreement is hereby amended by adding to the end of Section 2.11(b) thefollowing:* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18“At no cost or expense to Amgen and as an accommodation to support Insulet’s management of its manufacturing network, Insulet ispermitted to store at [*], Customized Insulet Devices in a quantity up to that equal to the [*] of the then-current Forecast (“ Insulet HeldCustomized Insulet Devices ”). With respect to Insulet Held Customized Insulet Devices, (i) Insulet will maintain (and provide to Amgenupon Amgen’s reasonable request made from time-to-time) an up-to-date list identifying with specificity the inventory of the Insulet HeldCustomized Insulet Devices, (ii) Insulet will store and manage such consistent and in compliance with the terms of this Agreement (includingthe Quality Agreement), (iii) Insulet will bear the risk of loss with respect to Insulet Held Customized Insulet Devices prior to receipt of thesame by Amgen, and (iv) without modifying or limiting the requirements set forth in Section 2.11(c)(iv), they must be Shipped to Amgen, ifever, no later than [*] after the date of Manufacture with a remaining shelf life of no less than [*].”2.5 Section 3.1 (Unit Price Amount) . Section 3.1 of the Agreement is hereby amended by deleting it in its entirety and replacing itwith the following:“3.1 Unit Price Amounts . Amgen shall pay Insulet the Unit Price for each Customized Insulet Device ordered by Amgen andManufactured by Insulet in a given Commercial Year as follows:[*]Aggregate Number of CustomizedInsulet Devices Ordered by AmgenWith respect to each [*], Unit Pricefor each Customized InsuletDevice Shipped to Amgen[*]For the Partial Commercial Year and each Commercial Year, the Unit Price [*] (set forth in the table above) applicable thereto that Amgenwill pay, and Insulet will invoice, during such period (the “Forecast-Based [*]”) shall be determined based on the lesser of the followingquantities of Customized Insulet Devices set forth in the Forecast submitted immediately prior to the commencement of the PartialCommercial Year or Commercial Year, as the case may be: (i) [*] of the quantity of Customized Insulet Devices in the Binding Portion ofsuch Forecast and (ii) the aggregate of the quantities of Customized Insulet Devices set forth in the [*] of such Forecast. Promptly after theend of the Partial Commercial Year and each Commercial Year, but in no event later than [*], Insulet will notify Amgen of the aggregatequantity of Customized Insulet Devices actually ordered by Amgen for delivery during such period and whether the Unit Amount [*]applicable thereto (the “Order-Based [*]”) is the same as the Forecast-Based [*] and, in the event that the Order-Based [*] is not the sameas the Forecast-Based [*], then within [*] days after receipt of such notice either (a) if the Order-Based [*] is [*], then Amgen shall pay toInsulet the difference between the [*] and [*] Unit Prices applicable to each Customized Insulet Device or (b) if the Order-Based [*] is [*],then Insulet shall pay to Amgen the difference between the [*] and [*] Unit Prices applicable to each Customized Insulet Device.”2.6 Section 3.3 ([*] Production Run Compensation) . Section 3.3 of the Agreement is hereby amended by deleting it in its entiretyand replacing it with the following:“3.3 [*] . Amgen shall [*].”2.7 Section 3.7 (Invoices) . Section 3.7(a) of the Agreement is hereby amended by deleting it in its entirety and replacing it with thefollowing:“(a)Insulet shall submit invoices to Amgen on a [*] basis for amounts payable by Amgen hereunder (i) pursuant to Section 3.1, Section3.4, and Section 3.5 for [*] and (ii) testing as provided in Section 12.1. Insulet will endeavor to submit such invoices promptlyfollowing the [*]. Invoices will be submitted in electronic format to the following electronic address (which addresses may bechanged, from time-to-time, by Amgen upon prior notice to Insulet): email address: AccountsPayableMailroom@Amgen.com .”2.8 Section 3.10 ([*]) . Section 3.10 of the Agreement is hereby amended by deleting it in its entirety.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.183.CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 9 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Dan LevangieBy: /s/ Sev SislianDate: June 29, 2015Name: Dan LevangieDate: July 6, 2015Name: Sev SislianTitle: President, Drug DeliveryTitle: GSS, Sr. Category ManagerInsulet CorporationBy: /s/ Brian KeoghDate: 29 June 2015Name: Brian KeoghTitle: Director, Quality AssuranceAmgen Inc.By: /s/ Chris KozlikDate: July 6, 2015Name: Chris KozlikTitle: Director, External Supply Chain* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on May [xx], 2015)[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 010TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 010 (" Amendment "), entered into effective as of September 29, 2015 (" Amendment 10 Effective Date "), by andbetween Amgen Inc. (" Amgen ") and Insulet Corporation (" Insulet ") amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled "Supply Agreement" effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the " Agreement ").B. Amgen and Insulet desire, and are willing, to amend the Agreement to (i) update the shipping terms to replace [*], with [*], (ii) provide for [*],(iii) provide that Insulet will [*] and provide that Amgen will [*], and (iv) if the [*], then provide for certain [*].NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Section 2.11(b) (Shipment) . Section 2.11(b) of the Agreement is hereby amended by deleting it in its entirety and replacing itwith the following:"(b) Insulet shall ship Customized Insulet Devices under suitable controls and pursuant to all reasonable instructions provided by Amgen.Amgen shall have the right to designate the freight forwarder to be used by Insulet by notifying Insulet of such no later than [*] days prior tothe applicable delivery date; provided, in the absence of such instructions, Insulet shall use a freight forwarder previously designated byAmgen. All Customized Insulet Devices shall be delivered [*]. In the event of conflict, the terms of this Agreement take precedence over theIncoterms.At no cost or expense to Amgen and as an accommodation to support Insulet's management of its manufacturing network, Insulet ispermitted to store at Insulet's Facility located in Billerica, Massachusetts, Customized Insulet Devices in a quantity up to that equal to the [*]of the then-current Forecast (" Insulet Held Customized Insulet Devices "). With respect to Insulet Held Customized Insulet Devices,(i) Insulet will maintain (and provide to Amgen upon Amgen's reasonable request made from time-to-time) an up-to-date list identifying withspecificity the inventory of the Insulet Held Customized Insulet Devices, (ii) Insulet will store and manage such consistent and in compliancewith the terms of this Agreement (including the Quality Agreement), (iii) Insulet will bear the risk of loss with respect to Insulet HeldCustomized Insulet Devices prior to receipt of the same by Amgen, and (iv) without modifying or limiting the requirements set forth inSection 2.11(c)(iv), they must be Shipped to Amgen, if ever, no later than [*] after the date of Manufacture with a remaining shelf life of noless than [*]."2.2 Section 2 (Manufacture; Supply) . Section 2 of the Agreement is hereby amended by adding at the end of Section 2 newSections 2.14 and 2.15 that read as follows:"2.14 [ *] . Insulet will [*].”"* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.182.3 Section 3.1 (Unit Price Amounts) . Section 3.1 of the Agreement is hereby amended by adding at the end of Section 3.1 thefollowing:[*]Amgen will [*]. With respect to [*]."3. CONCLUSIONThis Amendment may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute oneand the same document, binding on the Parties notwithstanding that each of the Parties may have signed different counterparts. A facsimiletransmission or PDF of this Amendment bearing a signature on behalf of a Party shall be legal and binding on such Party. Except as amended andsupplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effect and apply hereto. Except asamended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effect and applyhereto.IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 10 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Dan LevangieBy: /s/ Sev SislianDate: 10/1/15Name: Dan LevangieDate: 10/1/15Name: Sev SislianTitle: President, Drug DeliveryTitle: GSS, Sr. Category Manager Amgen Inc.By: /s/ Patricia TurneyDate: 10/1/15Name: Patricia TurneyTitle: Executive Director, Supply ChainAmgen Inc.By: /s/ Bill RichDate: 1 October 2015Name: Bill RichTitle: VP, Device Technologies * Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 011TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 011 (“Amendment”), entered into effective as of May 03, 2016 (“Amendment 11 Effective Date”), by and between AmgenInc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Concurrently with entering into the Agreement, the Parties entered into the Quality Agreement (set forth as Exhibit 2.2) and, thereafter, haveamended and restated the Quality Agreement.C. Amgen and Insulet desire, and are willing, to amend the Quality Agreement to set forth an amended and restated Quality Agreement, all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Exhibit 2.2 (Quality Agreement) . Effective as of the Amendment 11 Effective Date, Exhibit 2.2 (Quality Agreement) to theAgreement is hereby replaced in its entirety with the Exhibit 2.2 (Quality Agreement) attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 11 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Daniel LevangieBy: /s/ Sev SislianDate: May 3, 2016Name: Daniel LevangieDate: May 3, 2016Name: Sev SislianTitle: President, Drug DeliveryTitle: GSS, Sr. Manager - DevicesInsulet CorporationBy: /s/ Michael SpearsDate: May 3, 2016Name: Michael SpearsTitle: Vice President, Quality, Regulatoryand Clinical affairsAmgen Inc.By: /s/ Troy WrightDate: 3 May 2016Name: Troy WrightTitle: Site Head, Contract Manufacturing Quality* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on May 03, 2016)[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 012TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 012 (“Amendment”), entered into effective as of August 24, 2016 (“Amendment 12 Effective Date”), by and betweenAmgen Inc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Concurrently with entering into the Agreement, the Parties entered into the Quality Agreement (set forth as Exhibit 2.2) and, thereafter, haveamended and restated the Quality Agreement.C. Amgen and Insulet desire, and are willing, to amend the Quality Agreement to set forth an amended and restated Quality Agreement, all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1 Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1 Exhibit 2.2 (Quality Agreement) . Effective as of the Amendment 12 Effective Date, Exhibit 2.2 (Quality Agreement) to theAgreement is hereby replaced in its entirety with the Exhibit 2.2 (Quality Agreement) attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to theAgreement effective as of the Amendment 12 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Michael GraffeoBy:Date: 9/1/16Michael Graffeo Vice President Business Development DrugDeliveryforDaniel LevangieDate:Name: Sev SislianTitle: GSS, Sr. Manager - DevicesTitle: President, Drug Delivery Insulet CorporationBy: /s/ Michael SpearsDate: 9/1/16Name: Michael SpearsTitle: Vice President, Quality, Regulatory and ClinicalAffairsAmgen Inc.By:Date:Name: David BlakeTitle: Sr. Manager, Contract Manufacturing Quality* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on August 24, 2016)[Superseded by Amendment Number 014 to the Supply Agreementby and between Amgen Inc. and Insulet Corporation]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 13TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 13 (“ Amendment ”), entered into effective as of December 20, 2016 (“ Amendment 13 Effective Date ”), by and betweenAmgen Inc. (“ Amgen ”) and Insulet Corporation (“ Insulet ”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “ Agreement ”).B. Amgen and Insulet desire, and are willing, to amend the Agreement to include additional terms, rights, and remedies intended to strengthen andenhance business continuity and manufacturing resiliency related to the manufacture and supply of the Customized Insulet Device, all as set forthherein.NOW, THEREFORE, in consideration of the Parties respective promises, covenants, conditions and provisions contained or referenced herein, theParties have reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by theterms and conditions set forth in the Agreement as modified herein as follows:1. DEFINITIONS1.1. Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1. Section 2.1 . Section 2.1 of the Agreement is hereby amended by adding a new Section 2.1.1 that reads as follows:“2.1.1 Key Subcontractor and Other Suppliers and Subcontractors .(i) As of December 20, 2016, Flextronics Medical Sales and Marketing Ltd. is instrumental to the Manufacturing of Customized InsuletDevices (“ Key Subcontractor ”). Insulet represents and warrants that the Key Subcontractor has the right (and such right is not and shall notbe limited or interfered with in anyway by Insulet during the Term) to manufacture the Customized Insulet Device and purchase from othersubcontractors (including without limitation [*]) goods and services that are necessary or required for the manufacture and supply of theCustomized Insulet Device.(ii) Insulet shall, on or before [*], enter into a written agreement (“ Key Subcontractor/Insulet/Amgen Agreement ”) by and among Insulet,Amgen and the Key Subcontractor providing for each of the following:(a) upon the occurrence of any Supply Trigger Event, Quality Trigger Event or Contract Non-Assumption Trigger Event (as evidencedby Trigger Notification delivered in accordance with the terms of this Section 2.1.1) and, if subject to cure, until such time as suchTrigger Event has been cured pursuant to Section 2.18.1, the following apply:(I) Amgen has with respect to the Customized Insulet Device the right, at its option, to direct and purchase directly from, or makepayments directly to, on behalf of Insulet, Key Subcontractor to support the continued commercialization of the Customized InsuletDevice;(II) the Key Subcontractor has, and Insulet shall cooperate and not interfere with, the right and obligation [*];(III) the Key Subcontractor will cooperate with (including without limitation providing transparency regarding and collaboration onresolution of supply issues, production planning and staffing,* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18components and toolset inventory and use, production planning, staff scheduling) and take direction from (including withoutlimitation Amgen’s technical decisions) Amgen with respect to manufacture and supply of Customized Insulet Devices;(IV) the Key Subcontractor has the permission and right to purchase from others (including without limitation [*]) goods andservices that are necessary or required for the manufacture and supply of the Customized Insulet Device and use or have used byits suppliers or subcontractors any equipment owned or controlled by Insulet that is located at facilities owned, controlled oroperated by such Key Subcontractor or its suppliers or subcontractors to support supply to Amgen of the Customized InsuletDevice; and(V) the Key Subcontractor agrees to manufacture and supply Amgen the Customized Insulet Device (A) in quantities that Insuletwould have been obligated to supply to Amgen and (B) meeting the terms and conditions that the Key Subcontractor would havebeen obligated to meet in supplying to Insulet, in each case pursuant to, at Amgen’s election, (X) a separate agreement by andbetween Amgen and Key Subcontractor which such agreement shall be on substantially the same terms as set forth in that certainMaterials Supplier Agreement by and between Insulet and Key Subcontractor dated as September 1, 2016 (“ Insulet/Flex MaterialsSupplier Agreement ”) (that separate agreement is attached to the Key Subcontractor/Insulet/Amgen Agreement noting that certainproprietary commercial and financial terms have been redacted), (Y) the Insulet/Flex Materials Supplier Agreement, or (Z) areplacement agreement mutually agreed by Amgen and Key Subcontractor which is appropriate for the manufacture and supply ofCustomized Insulet Devices for Amgen.(b) A license grant providing that: [*](c) In addition to the license grant, Insulet will promptly [*].Amgen agrees to cooperate in good faith with Insulet and Key Subcontractor in the negotiation of the Key Subcontractor/Insulet/AmgenAgreement.(iii) Insulet shall do all that is reasonably necessary or required to facilitate, and not interfere with or impede, Amgen’s ability to direct andpurchase directly from, or make payments directly to on behalf of Insulet, Key Subcontractor as provided in this Section 2.1.1.(iv) If Insulet proposes, or Amgen and Insulet mutually agree in writing, to substitute or replace Key Subcontractor with one or more thirdparties (each a “ Subsequently Identified Key Subcontractor ”), prior to any substitution or replacement, Insulet shall have secured anagreement with each Subsequently Identified Key Subcontractor, substantially similar to the Key Subcontractor/Insulet/Amgen Agreementby and among Insulet, Amgen and the Subsequently Identified Key Subcontractor that includes the terms, permissions, and rights specifiedin this Section 2.1.1.(v) Insulet represents and warrants to Amgen that, with the exception of the activities undertaken as of December 20, 2016 by the KeySubcontractor, no Intellectual Property Rights owned or controlled by Insulet or its Affiliates are necessary or required to undertake activitiessupporting manufacturing, supply and commercialization of the Customized Insulet Device (including without limitation sterilization andtesting). Additionally, Insulet represents and warrants to Amgen that Insulet has submitted to Amgen any and all documents, information,data, processes and procedures of or used by Insulet that are necessary or required for third parties that undertake activities supportingmanufacturing and supply of the Customized Insulet Device (including without limitation sterilization and testing) other than those activesdone by the Key Subcontractor or the Key Subcontractor’s subcontractors and suppliers (such third parties, the “ Other Subcontractors ”) toundertake activities supporting manufacturing and supply of the Customized Insulet Device. With respect to any such documents,information, data, processes and procedures created or revised after December 20, 2016, Insulet will promptly submit the same to Amgen.Insulet shall, on or before [*], send written notices (the content of which has been approved by Amgen (such approval not to beunreasonably withheld)) to Other Subcontractors providing that, although Amgen is free at any time to enter into agreements with OtherSubcontractors that include additional, different or better terms than those with Insulet, upon the occurrence of any [*] and, if subject to cure,until such time as such Trigger Event has been cured pursuant to Section 2.18.1, the Other Subcontractor has, and Insulet shall cooperateand not interfere with, the right to prioritize the use of materials, equipment and resources for the manufacturing and supplying of theCustomized Insulet Device over use with respect to other devices of Insulet.(vi) Amgen hereby agrees and covenants not to notify the Key Subcontractor(s) of the occurrence of a [*] (defined below).* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18(vii) Within [*] after Amgen notifies Insulet of its good faith assertion that there has been a [*] including the basis (in reasonable detail) forsuch assertion (the “ Insulet Response Period ”), Insulet shall notify Amgen of its agreement with or good faith objection to Amgen’sassertion that a [*] or [*] has occurred and, if an objection, include the basis (in reasonable detail) for such objection. If within the [*], Insuletnotifies Amgen of its objection to Amgen’s assertion that there has been a [*] or [*] (each a “ Trigger Event Assertion Dispute ”), then theParties shall follow the dispute resolution process set forth in Exhibit 2.1.1(vii).(viii) For purpose of this Agreement, “Trigger Notification” shall mean (i) notice mutually agreed to by Amgen and Insulet that there hasbeen a [*] or [*]; (ii) notice from Amgen accompanied by an affidavit or certification by an officer of Amgen that Insulet has not respondedwithin [*] of Amgen’s notice to Insulet of a [*] or [*]; (iii) notice from an arbitrator appointed in accordance with the terms of this Agreementthat there has been either a [*] or [*]; or (iv) notice from outside counsel for Amgen that there has been a [*].2.2. Section 2.4 . Section 2.4 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following:“2.4 Specification and Design Changes . The Specifications or the specifications for the Insulet Device (as defined in the DevelopmentAgreement) may be amended or supplemented by mutual agreement of the Parties in accordance with the terms and conditions of theQuality Agreement. In each event that Amgen submits to Insulet a proposal to change, or Insulet proposes to Amgen changes to, theSpecifications, Insulet will promptly submit to Amgen an assessment of the impact on the quality, regulatory, and design changes to theSpecifications, and Unit Price and, thereafter, (i) the Parties will negotiate in good faith any changes to the quality, regulatory, and designchanges to the Specifications and Unit Price and (ii) the proposed changes will not be implemented unless and until the Parties mutuallyagree to such changes, if any, to the quality, regulatory, and design changes to the Specifications and/or Unit Price.”2.3. Section 2.7 . Section 2.7 of the Agreement is hereby amended by adding a new Section 2.7(f) that reads as follows:“(f) Notwithstanding anything to the contrary contained herein, the Parties agree that, as of December 20, 2016 Insulet has, and shall haveavailable throughout the Term, capacity for Manufacturing the Customized Insulet Device up to (i) [*] units annually (“ Annual Capacity ”)and (ii) [*] units monthly for shipments delivered March through April and [*] units monthly for shipments delivered May through February(respectively, the “ Monthly Capacity ”). Furthermore, the Parties agree that notwithstanding Section 2.6(b) of the Agreement, the Forecastshall not exceed either the Annual Capacity or the Monthly Capacity. Unless agreed otherwise, Insulet shall not be obligated to supplyquantities of Customized Insulet Device set forth in Purchase Orders to the extent such quantities are in excess of the either the AnnualCapacity or Monthly Capacity.”2.4. Section 2.11(b) . Section 2.11(b) of the Agreement is hereby amended by deleting it in its entirety and replacing it with thefollowing:“(b) Insulet shall Ship Customized Insulet Devices under suitable controls and pursuant to all reasonable instructions provided by Amgen.Amgen shall have the right to designate the freight forwarder to be used by Insulet by notifying Insulet of such no later than [*] prior to theapplicable delivery date; provided, in the absence of such instructions, Insulet shall use a freight forwarder previously designated by Amgen.[*] In the event of conflict, the terms of this Agreement take precedence over the Incoterms.At no cost or expense to Amgen and as an accommodation to support Insulet’s management of its manufacturing network and enhancesupply assurance, Insulet is permitted to store at [*], Customized Insulet Devices in a quantity up to that equal to the [*] of the then-currentForecast (“ Insulet Held Customized Insulet Devices ”). With respect to Insulet Held Customized Insulet Devices, (i) Insulet will maintain(and provide to Amgen upon Amgen’s reasonable request made from time-to-time) an up-to-date list identifying with specificity the inventoryof the Insulet Held Customized Insulet Devices, (ii) Insulet will store and manage such inventory consistent with, and in compliance with, theterms of this Agreement (including the Quality Agreement), (iii) Insulet will bear the risk of loss with respect to Insulet Held CustomizedInsulet Devices prior to receipt of the same by Amgen, and (iv) without modifying or limiting the requirements set forth in Section 2.11(c)(iv),they must be Shipped to Amgen, if ever, with a remaining shelf life of no less than [*].”2.5. Article 2 . Article 2 of the Agreement is hereby amended by adding new Section 2.16, Section 2.17, and Section 2.18 that readas follows:“2.16 Redundancy .* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.182.16.1 Specified Supply Chain Redundancy . Insulet shall use commercially reasonable efforts to achieve the specified redundancy listedin Exhibit 2.16 and Exhibit 2.17a, by the dates indicated therein.2.16.2 [*] . [*], Insulet shall submit to Amgen [*].2.16.3 Maintaining Specified and Other Supply Chain Redundancy . Insulet shall, and as applicable shall cause its suppliers andsubcontractors to, store and maintain tools in compliance with applicable laws, applicable standard operating procedures, practices orpolicies of Insulet and, as applicable, any third party that will store tools, and manufacturers’ recommended storage conditions.2.16.4 Component Safety Stock . Insulet shall, by the dates indicated in Exhibit 2.16, maintain in inventory, or, as applicable, cause itssuppliers or subcontractors to maintain in inventory, so that they are promptly available and in condition useful for use in the Manufacturingor shipment of Customized Insulet Devices, the component inventories set forth in Exhibit 2.16.2.17 Manufacturing Redundancy and Resiliency . Upon Amgen’s request made from time-to-time during the Term, but not more oftenthan [*], Insulet will submit to Amgen information in a reasonable level of detail regarding the facilities and subcontractors necessary orrequired to Manufacture the Customized Insulet Device to enable Amgen to perform a risk assessment of the Manufacturing supply chainand identify to and discuss with Insulet specific mitigation activities that Amgen may be interested in pursuing with Insulet and the fundingfor and other terms related thereto.Representatives from each Party with expertise in supply chain and device engineering and manufacturing will meet (either telephonically orin person) quarterly at each Quarterly Business Review and the purpose of the meeting will be to review the resiliency and redundancy ofmanufacturing the Customized Insulet Device. During each review, Insulet shall provide an update on the status of its progress against thecommitments made in Sections 2.16.1, 2.16.2, and 2.16.4.To the extent that Insulet fails to maintain any previously achieved commitment set forth in Exhibit 2.16, Exhibit 2.17a, or Exhibit 2.17b,Insulet shall either cure this by the next Quarterly Business Review or shall promptly submit to Amgen a written plan setting forth the actionsto be taken to cure the same using at least commercially reasonable efforts. Insulet shall include in each such plan an explanation of theroot cause of the failure, [*]. If upon review Amgen concludes, acting reasonably, that such commitment is no longer met as a result of acircumstance [*], Amgen will notify Insulet that the Unit Price will be reduced as set forth in Section 3.1.2.2.18 Trigger Event . The following definitions are used in this Agreement:“ Contract Non-Assumption Trigger Event ” means:(i) Insulet becomes the subject of a [*] bankruptcy proceeding under [*] of the United States Bankruptcy Code (the “Bankruptcy Code”)and any of the following events occur: [*]; or.(ii) Insulet becomes the subject of a [*] bankruptcy proceeding under [*].“ [*] ” means [*].“ Perform Key Supply Activities ” means, with respect to Key Subcontractor, to [*].“ Performance of Other Activities ” means, other than the activities to Perform Key Supply Activities, those activities (including withoutlimitation sterilization and testing) necessary or required to manufacture and supply the Customized Insulet Device including withoutlimitation sterilization, testing and use of any and all documents, processes, and procedures of Insulet and equipment owned or controlledby Insulet that are located at facilities owned, controlled or operated by those performing such activities.“ Quality Trigger Event ” means any [*].“ Supply Trigger Event ” means a [*].2.18.1 [*] . Without limiting Amgen’s rights and remedies with respect to, or prior to [*].2.18.2 [*] . Until the Occurrence of Cure with respect to each [*] or [*], as the case may be, or upon the occurrence of a [*], to enablemanufacturing, supply and commercialization of Customized Insulet Devices,(i) Amgen shall have the right, at its election, to (A) direct Key Subcontractor, and Key Subcontractor is permitted to, Perform KeySupply Activities and (B) undertake, or have third parties (including Other Subcontractors) undertake, Performance of OtherActivities; and* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18(ii) Insulet shall permit and cooperate and not interfere with, the prioritization of the use of [*], components, toolsets, and otherequipment and resources for the manufacturing and supplying of the Customized Insulet Device (including without limitationprioritization over manufacturing other devices for Insulet).Upon each [*] or [*], until the Occurrence of Cure and Amgen’s election, if ever, to direct Key Subcontractor to Perform Key Supply Activitiesand undertake, or have third parties undertake, Performance of Other Activities, Insulet shall (y) permit Amgen to participate, engage andcollaborate with Insulet and its suppliers and subcontractors to gain information regarding and identify remedial actions with respect to theorigin and mitigation of the [*] or [*] (including without limitation providing transparency regarding and collaboration on resolution of supplyissues, production planning and staffing, components and toolset inventory and use, production planning, and staff scheduling) and(z) cooperate with and do all that is necessary or required to conduct and prioritize lot qualification testing.Insulet shall cooperate with Amgen and promptly take such further actions and execute and deliver to Amgen all information, instrumentsand documents as may be reasonably necessary to carry out this Section 2.18.2 in order to provide and secure to Amgen the full andcomplete enjoyment of its rights and privileges hereunder.2.18.3 [*] . On or before [*], Insulet will [*]. Amgen agrees to [*].2.6. Section 3.1 . Section 3.1 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following:“3.1 Unit Price Amounts . On and after [*], Amgen shall pay Insulet the Unit Price for each Customized Insulet Device ordered by Amgenand Manufactured by Insulet in a given Commercial Year as follows: With respect to each Conforming Lot, Unit Price for each CustomizedInsulet Device Shipped to Amgen, [*] subject to adjustments as specified in Section 3.1.2, below. 3.1.1 Intentionally Omitted .3.1.2 Additional Compensation; Unit Price Adjustments .(i) In consideration for certain agreed to modifications made to the Customized Insulet Device and as full and final compensation for lotsnumbered [*] through [*], inclusive, Insulet shall be entitled to invoice Amgen for an additional [*] for each Customized Insulet Device thatInsulet Manufactured and Shipped to Amgen for lots numbered [*] through [*], inclusive.(ii) On and after [*], the [*]:(a) [*] (b) [*](c) [*](iii) After the occurrence of a [*], Amgen shall pay Insulet, its successors and assigns, and Insulet shall be entitled to only, an amountequal to [*] of the Unit Price as of the day of the [*] occurrence, for each Customized Insulet Device manufactured by the Key Subcontractor,pursuant to those certain rights set forth in Section 2.18.2, that is ordered, received and not rejected by Amgen.”2.7. Section 9.1 . Section 9.1 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following:“9.1 Term . This Agreement shall become effective on the date first written above and unless terminated earlier in accordance with theterms of this Agreement, shall remain in full force and effect until December 31, 2023 (the “ Initial Period ”). Prior to January 1, 2022 andeach Commercial Year thereafter, the Parties shall negotiate in good faith an extension of the term for an additional two year period (each a“ Renewal Period ”, and together with the Initial Period, the “ Term ”); provided that either Party may elect not to extend the Initial Period orTerm, as the case may be, by providing the other Party with notice of same at least twenty four (24) months prior to the end of the InitialPeriod or expiration of the then current-Renewal Period, as applicable.”2.8. Exhibits . The Exhibits to the Agreement are amended by appending to the Agreement new Exhibit 2.1.1(vii), Exhibit 2.16,Exhibit 2.17a, and Exhibit 2.17b with content as set forth in the Exhibit 2.1.1(vii), Exhibit 2.16, Exhibit 2.17a and Exhibit 2.17b attachedhereto.3. CONCLUSIONThis Amendment may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute oneand the same document, binding on the Parties notwithstanding that each of the Parties* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18may have signed different counterparts. A facsimile transmission or PDF of this Amendment bearing a signature on behalf of a Party shall be legaland binding on such Party. Except as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain andcontinue in full force and effect and apply hereto. Except as amended and supplemented hereby, all of the terms and conditions of the Agreementshall remain and continue in full force and effect and apply hereto.IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreementeffective as of the Amendment 13 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Shacey PetrovicBy: /s/ Venkata P. YepuriDate: 12/21/16Name: Shacey PetrovicDate: 12/20/16Name: Venkata P. YepuriTitle: President and Chief OperatingOfficerTitle: Executive Director/Head of Global Strategic Sourcing Amgen Inc.By: /s/ Patricia TurneyDate: 12/20/16Name: Patricia TurneyTitle: Vice President, External Supply* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.1.1(vii)Dispute Resolution ProcessWith respect to each Trigger Event Assertion Dispute, during the [*] after notice to Insulet from Amgen that Amgen desires to attempt to resolvethrough negotiation the Trigger Event Assertion Dispute (such period (which may be extended by mutual agreement of the Parties), the “ ExecutiveNegotiations Period ”; and such negotiations, the “ Executive Negotiations ”), the Parties shall promptly meet (either telephonically or in person) andattempt in good faith to resolve the Trigger Event Assertion Dispute by negotiation between executives (vice president level or higher) who haveauthority to settle the controversy. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlementnegotiations for purposes of applicable rules of evidence.Any Trigger Event Assertion Dispute which is not resolved by the Executive Negotiations during the Executive Negotiations Period shall be finallyresolved by the independent arbitration panel (the “ Arbitrator Panel ”) in accordance with the 2013 Administered Arbitration Rules of theInternational Institute for Conflict Prevention & Resolution Rules, as the same may be amended from time to time. The arbitration shall be governedby the Federal Arbitration Act, 9 U.S.C. §§1 et seq., and judgment upon the award rendered by the arbitrator may be entered by any court havingjurisdiction thereof. The place of arbitration shall be Boston, Massachusetts.With respect to any Trigger Event Assertion Dispute which is not resolved by Executive Negotiations, within [*] after the end of the ExecutiveNegotiations Period, the Parties shall meet (either in person or telephonically) and attempt to agree on the appointment of an independent arbitratorpanel (the “Arbitrator Panel”). For purposes of an arbitrator or the Arbitrator Panel, “independent” shall mean having no past or present family,business or other relationship with either of the Parties or any of their respective Affiliates, directors, or officers, unless following full disclosure of allsuch relationships, the Parties agree in writing to waive such requirement with respect to an individual. If within [*] after the Executive NegotiationsPeriod, the Parties are unable to agree on a single independent arbitrator for the Arbitrator Panel, then, within [*] thereafter, each Party willdesignate an independent arbitrator, and the two independent arbitrators together will select a third independent arbitrator within [*] after havingbeen designated themselves by the Parties (in which case, the Arbitrator Panel will consist of three independent arbitrators). Within [*] after thedesignation of the Arbitrator Panel, each Party shall submit a written statement of its positions on the [*] or [*], as the case may be, to the ArbitratorPanel and the other Party. Each Party shall have [*] to submit a written response thereto including supporting information. The Arbitrator Panel shallhave the right to meet with the Parties, either alone or together. There will be no discovery allowed. For the sake of clarity, the term “discovery” asused herein includes without limitation document requests and production, depositions, interrogatories, and requests for admission. No later than [*]after the designation of the Arbitrator Panel or such later date as agreed to in writing by the Parties, the Arbitrator Panel shall make a writtendecision (including the reasons for such) on whether a [*] or [*], as the case may be, has occurred. The decision of the Arbitrator Panel shall be final,binding and enforceable and shall be appealable only (a) following denial by the Arbitration Panel of a request for reconsideration submitted to theArbitration Panel by a Party no later than [*] after the Arbitration Panel issued its written decision, and, thereafter, (b) pursuant to Section 10 of theFederal Arbitration Act.The Party against whom a final decision is rendered shall pay the fees and costs of the Arbitrator Panel and the CPR Institute for DisputeResolution. Otherwise, each Party shall bear all of its other costs and expenses of the dispute resolution process set forth in this Section.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.16[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.17a[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.17b[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18AMENDMENT NUMBER 014TO THE SUPPLY AGREEMENTBY AND BETWEEN AMGEN INC. AND INSULET CORPORATIONThis Amendment Number 014 (“Amendment”), entered into effective as of January 23, 2017 (“Amendment 14 Effective Date”), by and betweenAmgen Inc. (“Amgen”) and Insulet Corporation (“Insulet”) amends the Agreement (defined below).RECITALSA. Amgen and Insulet entered into that certain agreement titled “Supply Agreement” effective as of November 21, 2013 and identified by contractnumber CW2146852 pursuant to which Insulet is to, among other things, Manufacture and sell to Amgen the Customized Insulet Devices (asamended, the “Agreement”).B. Concurrently with entering into the Agreement, the Parties entered into the Quality Agreement (set forth as Exhibit 2.2) and, thereafter, haveamended and restated the Quality Agreement.C. Amgen and Insulet desire, and are willing, to amend the Quality Agreement to set forth an amended and restated Quality Agreement, all as setforth herein.NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions and provisions contained or referenced herein, the Partieshave reviewed and accepted all referenced material and any appendices, exhibits or other attachments hereto and agree to be bound by the termsand conditions set forth in the Agreement as modified herein as follows:1.DEFINITIONS1.1. Capitalized Terms . All capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement. In theevent of a conflict between the capitalized terms defined and set forth in this Amendment and the defined terms of the Agreement, the definitions setforth in this Amendment shall control.2. AMENDMENTS TO THE AGREEMENT2.1. Exhibit 2.2 (Quality Agreement) . Effective as of the Amendment 14 Effective Date, Exhibit 2.2 (Quality Agreement) to theAgreement is hereby replaced in its entirety with the Exhibit 2.2 (Quality Agreement) attached hereto.3. CONCLUSIONExcept as amended and supplemented hereby, all of the terms and conditions of the Agreement shall remain and continue in full force and effectand apply hereto.[Signature Page Follows]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18IN WITNESS THEREOF, the authorized representatives of the Parties have executed this Amendment to the Agreementeffective as of the Amendment 14 Effective Date.Insulet CorporationAmgen Inc.By: /s/ Michael GraffeoBy: /s/ Sev SislianDate: 3 February 2017Name: Michael GraffeoDate: 1/30/17Name: Sev SislianTitle: VP Business DevelopmentTitle: GSS, Sr. Manager - Devices* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 (Quality Agreement) (amended and restated on January 23, 2017)(Attached)* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Exhibit 2.2 Quality Agreement (Insulet/Amgen) Amended & Restated January 20, 2016 QUALITY AGREEMENTThis Quality Agreement (including its attachments which are incorporated herein by reference) sets forth roles and responsibilities of each Party,outlines minimum quality system requirements for Customized Insulet Devices ordered by Amgen and Manufactured and supplied by Insulet toAmgen, and specifies preventative or proactive measures that will provide for continuous supply of materials. This Quality Agreement is entered byand between Insulet Corporation (“Insulet”) and Amgen Inc. (“Amgen”).Approval SignaturesThis Quality Agreement, developed jointly by Insulet and Amgen, is hereby approved by the Parties as an acceptable description of the activities insupport of the quality of the Manufacturing and supplying of Customized Insulet Devices.Signatures below indicate understanding of, and agreement with the content. Any changes to this document must be approved in writing by Insuletand Amgen. Changes can only be approved by the same functional roles and levels as the original approvers. This Quality Agreement isimmediately effective upon the last date of signature set forth below.Insulet CorporationAmgen Inc.By: /s/ Michael SupczakBy: /s/ David BlakeDate: 1/20/17Date: 1/23/17Name: Michael SupczakName: David BlakeTitle: Sr. Director, Quality AssuranceTitle: Sr. Manager Quality Systems, Contract Manufacturing Quality* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.181.PURPOSEPursuant to that certain Supply Agreement entered into November 14, 2013, by and between Amgen and Insulet (as amended from time to time, the“Supply Agreement”), Insulet will Manufacture and supply to Amgen, and Amgen will order and purchase from Insulet, the Customized InsuletDevice. Capitalized terms used but not defined herein shall have the meanings ascribed to the same as set forth in the Supply Agreement.This Quality Agreement outlines the responsibilities for the major elements of the quality assurance program applicable to the Customized InsuletDevice Manufacture by Insulet. This Quality Agreement does not limit or supersede any other contractual agreement between the Parties and isapplicable to all Customized Insulet Devices Manufactured by Insulet as required by the Supply Agreement.2.SCOPE AND DELIVERABLES2.1.This Quality Agreement defines the high level Quality System requirements and related deliverables applicable to the Manufacture ofCustomized Insulet Devices ordered by Amgen pursuant to the Supply Agreement.2.2.On or before [*] after the effective date of this Quality Agreement, Insulet will submit to Amgen for Amgen’s review (and Insulet will considerin good faith and revise the draft plan based on Amgen’s review) and approval (such approval not to be unreasonably withheld) a QualityPlan that will be a controlled document defining the Quality System Requirements set-forth in this Quality Agreement and the details of howInsulet will fulfill these requirements. This will be done in the form of references to the procedures, documents and other controls in place toensure the requirements are consistently met. Insulet will comply with the Quality Plan approved of by Amgen.3.REGULATORY3.1.Compliance: Insulet will Manufacture for Amgen Customized Insulet Devices under requirements of, and in compliance with, the followingapplicable to the Manufacture and supply of Customized Insulet Device (collectively, “Quality System”):3.1.1.FDA, Quality System Regulation, Title 21 Code of Federal Regulations Part 820 (21 CFR §820),3.1.2.ISO 13485: 2003, Medical Devices - Quality Management System, and3.1.3.ISO 14971: 2012, Medical Devices - Application of risk management to medical devices.3.2.Compliance Audits : Insulet shall allow Amgen's Regulatory Authorities and/or Notified Body to perform an announced/unannouncedQuality Systems audit periodically (annually or as necessary). A Regulatory Authority or Notified Body shall be permitted to audit Insulet'ssuppliers on behalf of Amgen (accompanied by Insulet), and Insulet shall endeavor to secure such right from Insulet's suppliers, as relatedto the Customized Insulet Device, and Amgen's Regulatory Authority and Notified Body will follow the requirements set forth in this sectionwith respect to the conduct of audits. With respect to an announced audit, Amgen's Regulatory Authority and Notified Body shall notifyInsulet a minimum of [*] calendar days prior written notice of routine audits. In addition, Amgen may, after notifying Insulet, perform auditsof Insulet’s compliance with the Quality System Requirements, and to assess the effectiveness of its quality system. Insulet will have aninternal audit program to monitor compliance with the Quality System.3.3.Amgen observation right during Insulet’s audit of its suppliers:3.3.1.Amgen has the right to be present as an observer during Insulet’s audits of the [*] and Insulet’s sterilization supplier and testingLaboratory as outlined in section 11.1.3.3.2.Insulet has sole audit authorship rights of the [*] and Insulet’s sterilization suppliers and testing laboratory (section 11.1).3.3.3.Insulet will submit Audit Summary Report to Amgen within [*] after the last day of each audit.3.3.4.Insulet determines audit frequency as defined in the quality agreement between Insulet and their suppliers (section 11.1)3.4.Audit Notices : Any compliance audit by Amgen of Insulet will be conducted during normal business hours after reasonable notice (typically[*] for planned audits) to Insulet and no more frequently than [*].* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.183.5.Event (For-Cause) Audit . In addition to other audits set forth in this Quality Agreement or the Supply Agreement, during the Supply Term,Insulet shall permit Amgen to conduct audits of Insulet upon the occurrence of an Event Audit Circumstance (as defined below) uponreasonable (given the nature of the Event Audit Circumstance) prior notice to Insulet and during the Insulet’s normal business hours. Eachof the following is an Event Audit Circumstance that may trigger a For-Cause audit:3.5.1.Receipt of a Warning Letter or any other regulatory agency action from the FDA or other Governmental Authority;3.5.2.Recall or market withdrawal of Customized Insulet Device;3.5.3.Receipt of an unmitigated, unacceptable trending of complaints (i.e. Severity A and B) as reviewed in the Quarterly Business Reviewmeeting;3.5.4.Existence of unmitigated, unacceptable data trends with respect to the manufacturing lot qualification testing, packaging, labeling,sterilization, or rejection of finished goods of Customized Insulet Device.3.6.For-Cause Audit Notices: Any For-Cause audit by Amgen of Insulet will be conducted during normal business hours after [*].3.7.Audit Follow-up : Any out of compliance observations noted during compliance and for-cause audits will be addressed per Insulet’sCorrective and Preventive Action system. Insulet will provide Amgen with a corrective action plan that addresses the complianceobservation and a schedule for implementation of the corrective action(s) (which schedule shall reflect implementation of corrective actionswithin [*] time period, but in no event longer than required by applicable law).3.8.Facility Registration: Insulet is responsible to maintain the U.S. FDA Establishment Registration for its facility(ies) such that it is up to dateand readily available for FDA inspection. Additionally, Insulet will maintain ISO 13485:2003 certification.3.9.Agency Inspections: Insulet will notify Amgen of inspection notifications and inspection results that may involve or impact CustomizedInsulet Devices. Insulet will provide Amgen copies of inspection reports that it receives from any regulatory agency or any notice of anyclaim or action by any agency relating to non-compliance with any applicable laws, rules or regulations that may affect Customized InsuletDevices or the Manufacture thereof. Except to the extent as it may be required by law, Insulet will not communicate directly with anyregulatory agency (including FDA) regarding the Customized Insulet Device, except through or with the explicit review and approval ofAmgen. To the extent relevant to the Manufacture or supply of Customized Insulet Devices, Insulet may require Amgen representatives tobe present during any Third Party audit of Insulet products or processes. Amgen has the right to have representatives' present during aninspection by Regulatory Authorities or a Notified Body that relates to the Customized Insulet Device.3.10.Support during audits by Regulatory Authorities or a Notified Body at Amgen: In the event that Amgen is involved in suchinspection, e.g. a Pre-Approval Inspection (PAI), Insulet shall make reasonable effort to support Amgen questioning by providing ateam to respond to questions pertaining to Customized Insulet Device or common platform technology, services or QMS. Amgenshall request the information electronically or by phone. Insulet will make documents, including those considered ConfidentialInformation of Insulet and information from its suppliers, available to review to representatives of Regulatory Authorities or aNotified Body within twenty four (24) hours after request, or as expeditiously as possible, during inspection/registration audits ofAmgen.4.QUALITY SYSTEM4.1.Insulet will establish and maintain a documented quality system in compliance with 21 CFR §820 and ISO 13485:2003. Insulet will havewritten procedures for the control of changes to the materials, packaging* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18components, suppliers, equipment, processing steps, Customized Insulet Device requirements, sampling, test methods, and releasingrequirements.4.2.Change Notification and Approval4.2.1.Insulet to:i.Notify Amgen of all changes related to the Manufacture, testing, packaging, labeling and shipping of Customized Insulet Devicesincluding without limitation changes to components, suppliers, specifications, risk management documents, procedures, and CoC(collectively, “Controlled Change”) prior to implementation of each such change4.2.2.Amgen to:i.Review and approve, such approval not to be unreasonably withheld, each Controlled Change with respect to the Manufacture ofthe Customized Insulet Device.ii.Prior to each Customized Insulet Device production run, ensure all Controlled Changes have been approved in Amgen system.4.3.Insulet shall ensure the execution of the [*] sterilization validation of the device in accordance with applicable international regulatoryrequirements and internal procedures. In addition, Insulet shall perform an annual requalification, reassessment and verification of thesame.4.4.Lot Release Procedures are attached hereto as Appendix B.4.5.Insulet will notify Amgen within [*] when a non-conformance or deviation beyond the established Quality Control Plan has been identifiedthat may affect Manufacturing or supply of Customized Insulet Devices.4.6.Insulet will be responsible for supplying Amgen with quality reports. The content and frequency will be defined in the Quality Plan applicableto the Customized Insulet Device.4.6Insulet will have procedures in place to ensure data with respect to Customized Insulet Devices is complete and accurate; that it can betraced to its source and that it is readily available during regulatory inspections. 4.7Insulet will notify Amgen of any incompleteness or inaccuracies related to data with respect to Customized Insulet Devices which mayimpact the quality or the safety of any of the Amgen product, as soon as possible, but not to exceed [*] after becoming aware suchinformation. 5.MANAGEMENT RESPONSIBILITY5.1.Executive Management at Insulet is responsible for quality planning and assures that resources are dedicated to achieve quality objectives,and manufacture and provide Customized Insulet Devices that meet Specifications approved by Amgen.5.2.Insulet and Amgen will conduct Quality and Compliance Reviews regarding the Manufacture of Customized Insulet Devices. The reviewswill include: CAPA, product complaints, critical manufacturing data and yield trending, nonconformance reports (NCRs) and deviations, EOtest trends, external audit reports as they pertain to Manufacture of Customized Insulet Devices, and status of previous open actions andother quality and compliance related topics. Unless otherwise agreed by Amgen, the Parties will complete one review per calendar quarterduring the Term after the commencement of 1 st commercial build of Customized Insulet Device.6.QUALITY AUDIT6.1.Insulet will establish and maintain procedures for internal quality audits and audit of their CMOs and conduct such audits to assure that thequality system is in compliance with the established quality system requirements and to determine the effectiveness of the Quality System.7.DESIGN CONTROLS7.1.Design Controls are the responsibility of Insulet and will follow and be consistent with established Insulet procedures. Insulet has theresponsibility for the control, approval and issuance including but not limited to the following:7.1.1.Material Specifications7.1.2.Process Requirements7.1.3.Parts Specifications7.1.4.Finished Goods Specifications7.1.5.Packaging Component Specifications7.1.6.Label Specifications* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.187.2.Amgen is responsible for design control for the combination product (that is, the System) including combination product design verification,design validation, human factors and drug-device interaction testing.7.3.Insulet shall ensure that all design control requirements have been met prior to the first shipment of Customized Insulet Device for humanuse. The interface between the groups and roles and responsibilities of each Party with respect to each phase of design controls is set forthin Appendix C.7.4.Control of changes to the Customized Insulet Device and components thereof will follow requirements set forth in Section 4.2.8.DOCUMENT CONTROL8.1.Insulet shall maintain document control procedures as defined in the Supply Agreement and in compliance with 21 CFR 820.40 and ISO13485. Insulet shall make this documentation available for review by Amgen during quality systems audits and upon request. Insulet shallmake the Design History File (DHF), Device Master Record (DMR), Device History Record (DHR) and Insulet's other related qualitysystems records that are relevant to the Customized Insulet Device accessible to Amgen upon reasonable request and in support of allRegulatory Authority inspections. Insulet will work with Amgen to make these documents available through agreed upon measures, such aselectronic systems or through review. The provisions of the Supply Agreement regarding Confidential Information apply to this QualityAgreement and interactions between the Parties with respect hereto.8.2.Insulet will maintain documents in compliance with 21 CFR 820.180 and MDD 93/42/EEC for the time equivalent to design and expectedlife of the Customized Insulet Device but no less than five (5) years from the date of release for commercial distribution by Insulet. Insuletwill notify Amgen prior to the end of the document retention period and the scheduled destruction of any contents of the DHF, DMR orDHR.9.RISK MANAGEMENT9.1.With respect to the Services, Insulet shall develop and comply with a risk management system that is compliant with ISO 14971 and allother product applicable standards to risk management. Insulet and Amgen shall fulfill the deliverables listed in the Risk ManagementDeliverables Table below.9.2.Insulet shall have provisions for Amgen to audit Insulet's risk management procedures and documents. Insulet shall have risk deliverableslisted in the table below reviewed and approved by Amgen.Risk Management Deliverables TableDELIVERABLEPRIMARY RESPONSIBILITYCOMMENTS OR RATIONALERiskManagementFileAmgenAmgen will establish and maintain a Risk Management File per itsinternal procedures and ISO 14971.Insulet shall provide required information for Amgen risk managementfile (e.g. risk document titles and identifiers).RiskManagementPlanInsulet and AmgenAmgen will create and maintain Risk Management Plan per internalprocedures and ISO 14971.Insulet will create a risk management plan to describe risk activities, andhow overall risk will be evaluated.Risk AssessmentsInsulet and AmgenInsulet will perform risk assessments per internal procedures. Amgen willconduct use and system risk assessments per internal SOP and ISO14971.Risk ManagementReportInsulet and AmgenThe results of Insulet assessments will be documented in a RiskManagement Report per internal procedures and ISO 14971.Amgen will generate and maintain a Risk Management Report perinternal procedures and ISO 14971 which includes a summary of risksidentified by Insulet and Amgen.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18An Amgen/Insulet Risk Management flowchart is in Exhibit 1.10.INSPECTION, MEASURING, TESTING10.1.Insulet shall assure that that measuring and test equipment is appropriate for its intended use and periodically serviced and/orcalibrated in compliance with written procedures for such. Insulet shall be responsible for test method and equipment validation(s)as required by Insulet's approved procedures.11.PURCHASING CONTROL11.1.Insulet is responsible for the qualification of materials and the approval of new or alternate sub-tier suppliers for the Manufacture ofCustomized Insulet Device. The following suppliers will not be changed without prior written approval from Amgen:Subcontractor NameLocationProduct/Service[*]Insulet shall establish, maintain the requirements, including quality requirements, for the selection of suppliers, subcontractors andconsultants. Evaluation of the suppliers, subcontractors and consultants shall be performed in compliance with Insulet’s procedures. Theseprocedures as well as the schedule for performing the evaluations shall be documented and made available for review by Amgen duringroutine Quality Systems audits.11.2.All fluid path components coming into contact with the Amgen Product will be manufactured [*]. Assembly of the fluid path components,sub-assemblies, and the entire Customized Insulet Device, including all packaging, will be performed [*]. Fluid path components aredefined in the following table:PartNumberPart DescriptionApproved SupplierMfg.CountryMaterial Description[*]12.IDENTIFICATION AND TRACEABILITY12.1.Insulet will maintain a system to assure proper identification and acceptance status of material, components and CustomizedInsulet Devices throughout the manufacturing cycle and records to allow for traceability of materials and components used in eachlot of Customized Insult Devices.13.PRODUCTION AND PROCESS CONTROLS13.1.Insulet will maintain written procedures for production and process control of the Customized Insulet Device. Insulet will sterilize theCustomized Insulet Device in accordance with the Insulet Product Definition Document INSPR020-PDD, Amgen Delivery DeviceADD specifications. Sterilization results will be provided on the Certificate of Conformance.13.2.Amgen will notify Insulet of any requested changes to the Specifications or Manufacturing of the Customized Insulet Deviceincluding without limitation changes required by Applicable Law or Government Authority and changes to the following:•Item #1 - Design Requirement Document;•Item #2 - Subsystem components (e.g., hardware, electrical, mechanical and software);•Item #3 - Manufacturing improvement (e.g., procedures, in line testing and equipment);•Item #4 - Lot qualification procedures;•Item #5 - Risk documents;•Item #6 - Shipping process and condition; and•Item #7 - Materials (e.g., packaging component and label artwork).* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Within [*] calendar days for Items [*] and [*] calendar days for Items [*] after each such notification from Amgen, Insulet will submit toAmgen an assessment of cost and schedule for implementation of the changes. Insulet will implement the changes as agreed upon by theParties, such agreement not to be unreasonably withheld, including those required by Governmental Authorities or Applicable Law. [*]14.ACCEPTANCE ACTIVITIES14.1.For each lot of Customized Insulet Devices, Insulet shall require [*] to conduct identification, sampling and testing in accordancewith the Lot Release Procedures in Appendix B. A lot of Customized Insulet Devices Manufactured by [*] that, based on theperformance of and results from the Lot Release Procedures and comparison to release criteria set forth in the Lot ReleaseProcedures in Appendix B, is appropriate for release by [*] (each an “In-Process Conforming Lot”). In-Process Conforming Lots willproceed to sterilization in accordance with the Sterilization/[*] Procedures. For each In-Process Conforming Lot that completes theSterilization/[*] Procedures, and is shipped to Insulet, Insulet will perform lot qualification testing per Lot release procedure inAppendix B. The lot passes acceptance criteria and Insulet release requirement will become Conforming Lot, and prior to ship toAmgen, Insulet will provide to Amgen electronic versions of the DHRs (Device History Record) and a Certificate of Conformancethat will contain the following information:14.1.1 [*];14.1.2. [*];14.1.3 [*];14.1.4 [*];14.1.5 [*];14.1.6 [*].14.1.7 [*];14.1.8 [*];14.1.9 [*];14.1.10[*]; and14.1.11 [*].14.2.Amgen maintains final acceptance responsibility for all Customized Insulet Devices Shipped to Amgen. Amgen may reject any lot ofCustomized Insulet Devices (a) that is not associated with a valid Certificate of Conformance, (b) that, upon examination, is not in acondition consistent with the Certificate of Conformance, provided that any such deviation from the Certificate of Conformance doesnot arise after Shipping, or (c) that does not meet the warranties set forth in the Supply Agreement. Amgen shall notify Insulet bygiving written notice of rejection to Insulet within [*] after the receipt of final documentation from Insulet as outlined in section 13.2. IfAmgen determines in good faith that it is reasonably likely that Amgen will reject Customized Insulet Devices, Amgen will provideverbal notification of such to Insulet within [*] after each such determination. Any disputes concerning Amgen’s rejection of a lot ofCustomized Insulet Devices will be resolved in accordance with Section 10 of the Supply Agreement.15.SHIPPING REQUIREMENTS15.1.Shipping environmental condition from [*] facility to Insulet shall be:[*]16.NON-CONFORMING CUSTOMIZED INSULET DEVICES16.1.During the [*] Production Run Period, Amgen quality will disposition lots that are not Conforming Lots, or portions thereof, bydirecting Insulet in writing that such lots, or portions thereof, be disposed of or that such Lots, or portions thereof, be delivered toAmgen without further processing.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.1817.CORRECTIVE AND PREVENTIVE ACTION17.1.Insulet will establish and maintain a corrective and preventive action (CAPA) program in accordance and compliance withapplicable requirements of Regulatory Authorities.17.2.Trending and analysis of all non-conformances will be performed by Insulet to verify the effectiveness of corrective and/orpreventive actions and such trending and analyses will be reviewed with Amgen during the quarterly Quality and ComplianceReview.17.3.After each Non-Conforming Lot and after completing the obligations set forth in Section 16.1 and 16.2 of the Quality Agreement,Insulet and Amgen (through its [*]) shall mutually agree on corrective action to resolve the cause of Non-Conformance, prior toconducting another production run.18.[*]18.1.[*]18.2.[*]18.3.[*]18.4.[*]19.QUALITY SYSTEM RECORD19.1.Insulet will prepare and maintain Quality System Records. Quality System Records include or refer to the location of non-Customized Insulet Devices specific quality system procedures.20.RETAIN SAMPLE20.1.Insulet shall receive and store certain amount of Customized Insulet device as “Retention Sample” per Insulet procedure. Insuletand Amgen shall agree on the required number of retains to support the Customized Insulet Device. If additional samples arerequired, above and beyond what has been agreed upon, Amgen should be notified and have the opportunity to authorize. Anyadditional samples taken as retains, above and beyond, should be destroyed at the time the batch is released by Amgen. 21.RECALL/WITHDRAWALS/FIELD SAFETY CORRECTIVE ACTION21.1.Insulet shall notify Amgen within one (1) business day after there is an actual recall or correction/removal or Field Safety CorrectiveAction (FSCA) related to the Insulet Device that could affect the Customized Insulet Device. Insulet will follow its establishedprocedures for determining the scope of the potential problem and actions necessary.21.2.Insulet will notify Amgen within one (1) business day after it determines that an issue with the Customized Insulet Device couldrequire a recall or correction/removal or Field Safety Corrective Action (FSCA) from the market. Amgen will then determine whetherthe Customized Insulet Device should be the subject of a recall, correction or removal from the market.21.3.In the event Amgen determines that any problem identified as reasonably likely to require a recall or correction/removal or FieldSafety Corrective Action (FSCA) from the market related to the released Customized Insulet Devices, Amgen will notify Insulet ofsuch within one (1) business day after such determination and follow its established procedures for determining the scope of thepotential problem and any actions necessary.21.4.When potential recall/withdrawal/Field Safety Corrective Action (FSCA) issue is identified by Amgen and communicated to Insuletby Amgen, Insulet shall immediately perform investigations regarding and related to the issue. Insulet shall submit to Amgeninvestigation reports regarding the defect, issue or cause for such regulatory reporting within an appropriate timeframe dependenton regulatory reporting requirements. Amgen shall have the final decision for a voluntary product recall or correction/removal as itrelates to the Customized Insulet Device.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.1822.ANNUAL PRODUCT QUALITY REVIEWIn support of an Annual Product Review, Insulet will provide one each calendar quarter to Amgen a quarterly status written report on scrap,yield, NCMR’s, CAPA’s and other quality related data on related components and products that may impact the Customized InsuletDevice. Insulet will review information pertaining to the Customized Insulet device that will appear in Amgen Annual Product Review, priorto FDA submission.23.CONFIDENTIALITYWithout limiting Article 5 of the Supply Agreement, information contained in Specifications, batch records, procedures, and test methodsrelating exclusively to the Customized Insulet Device will be treated as confidential pursuant to the Supply Agreement.24.JOINT QUALITY COMMITTEEa)Formation . The Joint Quality Committee (“JQC”) shall be comprised of two (2) members from each Party, which members shall initially bethe persons set forth in the following. Amgen and Insulet shall designate one of its members to act as chairperson of the JQC. As of theEffective Date, the members of the JQC are the following or the designee:Amgen:[*]Insulet: [*]Each Party may change its members on the JQC by giving prior notice to the other Party in the manner provided in the Supply Agreement.b)Responsibilities . The JQC shall have overall responsibility for managing, directing and overseeing the Quality Agreement and compliancewith such including, but not limited to, the following: (1) establishing specific requirements for, and implementing the general concepts of,the Quality Agreement; and (2) monitoring and coordinating communication regarding the Parties’ efforts under the Quality Agreement.The JQC shall not have any power to amend, modify or waive compliance with the terms of the Quality Agreement or Supply Agreement.c)Meetings . During the Term, the JQC will meet (telephonically or in person) at times as reasonably requested by a Party.25.DECISION MAKING . The Parties recognize that a bona fide dispute as to certain matters related to a Party’s rights or remedies under thisQuality Agreement may arise from time to time. In the event of the occurrence of such a dispute, the JQC shall undertake good faith efforts toresolve any such dispute in good faith. In the event the JQC shall be unable to resolve any such dispute, by written notice to the other Party, aParty may, but shall not be obligated to, escalate such dispute pursuant to Section 10 of the Supply Agreement.26. PRODUCT COMPLAINTS26.1 DEFINITIONSAmgen Product . For purposes of this Section 26, the defined term “Amgen Product” shall include suspected counterfeit product.“ Privacy Laws and Regulations ” shall have the meaning ascribed to it in the Safety Agreement.“ Product Complaint ” shall mean any written, electronic, or oral communication that alleges deficiencies related to the identity, quality,durability, reliability, safety, effectiveness, or performance of a drug or device after it is released for distribution to market or clinic by eitherAmgen or by distributors or other third parties for whom* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Amgen (or its designee) manufactures the drug or device; provided, however, with respect to Amgen, Product Complaint shall not includedeficiencies solely related to or arising from an Amgen Product.“Product Complaint Sample” shall mean, with respect to each Product Complaint, the actual unit of the Customized Insulet Device associatedwith such Product Complaint. When required by the mutually agreed-upon Product Complaint investigation process, and if available, Amgen willsend to Insulet for investigation, the Product Complaint Sample.26.2 PRODUCT COMPLAINT EVENT HANDLING 26.2.1 Collection of Product Complaints (the Customized Insulet device)a)Amgen shall notify Insulet of each Product Complaint of which Amgen becomes Aware, even if the information known to Amgen isincomplete. With respect to a Product Complaint, “Aware” means if: (1) any employee of Amgen has acquired information thatreasonably suggests a Product Complaint has occurred; or (2) any of Amgen’s employees (A) who have management or supervisoryresponsibilities over persons with regulatory, scientific, or technical responsibilities or (B) whose responsibilities include the collectionand reporting of Product Complaints, becomes aware from any information that a Product Complaint may have occurred.b)Amgen shall provide to Insulet all information relating to Product Complaints received by Amgen from any source, including patients andhealthcare providers.c)Amgen will, within [*], report to Insulet all information available to Amgen regarding each Product Complaint and shall use reasonableefforts to obtain the following information from the person providing the Product Complaint information (the “reporter”):◦confirmation that the patient was exposed to an Amgen Product and/or used the Customized Insulet Device;◦the details of the Product Complaint; and◦the contact information for the reporter.d)On or before the [*] day of each calendar month, Insulet shall notify Amgen whether there were Product Complaints related to commonplatform technology (Insulet Device) that could impact, or are applicable to, the Customized Insulet Device. With respect to suchProduct Complaints, Insulet shall provide tracking and trending data, the content of which shall be mutually agreed upon between theParties.26.2.2 Reporting, Investigation, and Follow Up of Product Complaintsa)Within One (1) Business Day after Amgen becoming Aware of a Product Complaint and information relating thereto, Amgen willtransmit all available information of which it is then aware regarding such Product Complaint to Insulet via established communicationprocess. Receipt of information will be confirmed by Insulet within two (2) Business Days . Insulet will conduct investigations perInsulet standard process timelines. The Complaint Handling Process Flow is attached as Exhibit 2 and applies hereto.b)If a Party receives additional information or documents relating to a previously reported Product Complaint, such Party shall providesuch information and/or the originals of such documents to the other Party’s designated contact within two (2) business days afterreceipt. Examples of such additional information include without limitation the following:◦Confirmed device failure; and◦Identification of potential product security issues.c)Within two (2) Business Days of receipt of a Product Complaint from Amgen; Insulet will notify Amgen to conduct a regulatoryreportability assessment for the following symptom code:[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18d)Insulet is responsible for conducting thorough investigations of Product Complaints, in alignment with agreed upon processes includingthose related to the authenticity, operation, functionality and performance of the Customized Insulet Device. The investigation shall beperformed and documented in a written report which identifies the underlying cause if possible based on available information, andCorrective Actions, if required, necessary to correct the identified cause, including justification for such conclusions. The report shallinclude a visual inspection of the Product Complaint Sample, if there is a Product Complaint Sample or where applicable, to confirm theauthenticity of the device that is the subject of the Product Complaint as a Customized Insulet Device.e)Upon Amgen’s request, an investigational report shall be provided by Insulet to Amgen with respect to a Product Complaint. f)All Product Complaint samples will be returned to Insulet for investigation or destruction as outlined in the Insulet complaint handlingprocedure as applicable to Customized Insulet Devicea.Amgen will provide Return Material kits to complainants for return of the Product Complaint Sample directly to Insulet.b.Amgen will initiate return sample follow up activities if receipt of the return sample exceeds seven (7) Business Days.g)Each Party will provide the other Party with such assistance as may be reasonably requested in investigating and obtaining follow-upinformation with respect to Product Complaints.h)No later than the fifteenth (15 th ) day of each calendar month during the term of the Agreement, Amgen shall submit to Insulet a writtenreport including the following: (1) a line listing of Product Complaints of which Amgen is Aware that occurred or of which it becameAware during the previous calendar month or (2) a statement certifying that Amgen is not Aware of the occurrence of any ProductComplaints during the previous calendar month. If a line listing of Product Complaints is provided, Insulet will inform Amgen to theextent that Insulet did not receive any Product Complaint reflected on the line listing and within two (2) Business Days after receipt ofsuch notice, Amgen shall transmit such missing reports to Insulet.i)No later than the fifteenth (15 th ) day of each calendar month during the Term of the Supply Agreement, Insulet shall submit to Amgenthe following for the previous calendar month:◦Rolling 24 months complaint rate per symptom code◦All trend investigations (Including similar devices)◦All device failures, including applicable failures with similar devices◦Open CAPAs and CAPA effectiveness verification for identified complaint codes◦Adherence to cycle time (on-time closure)j)Contact information may be updated by each Party as necessary by prior written notice to the other Party all without the need to formallyamend this Quality Agreement.26.3. TRAININGInsulet represents and warrants that its Quality Management System training includes training relating to the identification, communication,investigation and reporting of Product Complaints.26.4 QUALITY MANAGEMENT SYSTEMInsulet shall implement, maintain, and adhere to a set of policies, plans, practices, and supporting infrastructure as defined in the QualityAgreement to include a designated unit to receive, review, and investigate Product Complaints.* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Appendix A[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Appendix B[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 10.18Appendix C[*]* Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [*]. Acomplete version of this exhibit has been filed separately with the Securities and Exchange Commission.EXHIBIT 21.1SUBSIDIARIES OF THE REGISTRANT Name of Entity State/Country of OrganizationSub-Q Solutions, Inc. DelawareInsulet MA Securities Corporation MassachusettsInsulet Singapore Private Limited SingaporeInsulet Canada Corporation CanadaInsulet Consulting (Shenzhen) Co., Ltd. ChinaEXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe have issued our reports dated February 27, 2017 , with respect to the consolidated financial statements, schedule, and internal control overfinancial reporting included in the Annual Report of Insulet Corporation on Form 10-K for the year ended December 31, 2016 . We consent to theincorporation by reference of said reports in the Registration Statements of Insulet Corporation on Forms S-3 (No. 333-158354, 333-174746, 333-172782, and 333-196486) and on Forms S-8 (No. 333-144636, 333-153176, 333-183166, 333-202689, 333-208193 and 333-208387)./s/ GRANT THORNTON LLPBoston, MassachusettsFebruary 27, 2017EXHIBIT 23.2Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-158354, 333-174746, 333-172782, and 333-196486,Forms S-8 No. 333-144636, 333-153176, 333-183166, 333-202689, 333-208193 and 333-208387) of Insulet Corporation and in the relatedProspectus of our report dated February 29, 2016 (except for effects of discontinued operations, as discussed in Notes 2 and 3, as to which the dateis September 6, 2016), with respect to the consolidated financial statements and schedules of Insulet Corporation, included in this Annual Report onForm 10-K for the year ended December 31, 2016./s/ Ernst & Young LLPBoston, MassachusettsFebruary 27, 2017EXHIBIT 31.1CERTIFICATIONI, Patrick J. Sullivan, certify that: 1.I have reviewed this Annual Report on Form 10-K of Insulet Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. /s/ Patrick J. Sullivan Patrick J. Sullivan Chief Executive Officer Date:February 27, 2017EXHIBIT 31.2CERTIFICATIONI, Michael L. Levitz, certify that:1.I have reviewed this Annual Report on Form 10-K of Insulet Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting. /s/ Michael L. Levitz Michael L. Levitz Chief Financial Officer Date:February 27, 2017EXHIBIT 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of InsuletCorporation, a Delaware corporation (the “Company”), does hereby certify with respect to the Annual Report of the Company on Form 10-K for thefiscal year ended December 31, 2016 , as filed with the Securities and Exchange Commission (the “Report”) that, to their knowledge:(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Patrick J. Sullivan Patrick J. Sullivan Chief Executive Officer Date:February 27, 2017 /s/ Michael L. Levitz Michael L. Levitz Chief Financial Officer Date:February 27, 2017

Continue reading text version or see original annual report in PDF format above