Insulet Announces Pricing of Senior Notes Due 2033

Rhea-AI Summary

Insulet (NASDAQ: PODD) has announced the pricing of $450 million in senior unsecured notes due 2033. The notes will carry a 6.50% annual interest rate with maturity on April 1, 2033. The private placement is expected to close on March 20, 2025.

The company estimates net proceeds of approximately $444.4 million after discounts and before offering expenses. The funds will be used to finance the redemption or repurchase of existing 0.375% Convertible Senior Notes due 2026, cover related fees and expenses, and for general corporate purposes. The notes are being offered exclusively to qualified institutional buyers under Rule 144A and non-U.S. persons outside the United States under Regulation S.

Positive

• Successful pricing of $450 million senior notes offering
• Refinancing of existing convertible notes with lower interest rate (0.375%) debt

Negative

• High interest rate of 6.50% on new notes increases debt service costs
• Net proceeds of $444.4M represent $5.6M in immediate discounts/costs

Insights

Fixed Income Analyst

Insulet's $450 million senior notes offering represents a significant debt restructuring that trades equity dilution risk for higher interest expenses. The company is effectively replacing its 0.375% Convertible Senior Notes due 2026 with 6.50% traditional debt maturing in 2033.

The 17x increase in interest rate (from 0.375% to 6.50%) will substantially raise Insulet's annual interest expense, creating a notable drag on future cash flows. Based on the full amount, this translates to approximately $29.25 million in annual interest payments versus roughly $1.69 million previously—a difference of about $27.56 million annually.

However, this move eliminates the potential equity dilution that would occur if the convertible notes were exchanged for shares. This protection of existing shareholder value is particularly important for a growth-oriented medical device company like Insulet, where share dilution can significantly impact ownership economics.

The timing is notable—Insulet is proactively refinancing debt not due until 2026, suggesting management may be concerned about either future interest rate movements or potential conversion pressure. The 8-year maturity extends their debt runway substantially, improving near-term financial flexibility while accepting higher long-term carrying costs.

This transaction is essentially capital structure management rather than growth financing, balancing higher interest expenses against reduced dilution risk—a reasonable trade-off given Insulet's position as an established leader in tubeless insulin pump technology.

Corporate Finance Strategist

This debt refinancing reveals important strategic considerations in Insulet's capital management approach. By issuing $450 million of senior notes at 6.50% interest to replace convertible debt at 0.375%, the company is making a calculated decision to increase fixed interest costs in exchange for removing the potential equity dilution overhang.

The transaction structure—using a combination of new debt proceeds, cash on hand, and potential partial termination of existing capped call transactions—suggests sophisticated balance sheet engineering. The capped call termination is particularly noteworthy, as these instruments were originally purchased to offset potential dilution from the convertible notes. Early termination could generate cash proceeds while becoming unnecessary as the underlying convertibles are retired.

Insulet's willingness to absorb substantially higher interest costs indicates strong confidence in their business model's cash generation capabilities. With approximately $444.4 million in net proceeds after discounts, this move secures long-term financing through 2033 at fixed rates, protecting against potential future interest rate increases.

The private placement approach to qualified institutional buyers under Rule 144A suggests a targeted financing strategy aimed at sophisticated investors familiar with Insulet's business model and growth trajectory. This approach typically enables faster execution and potentially more favorable terms compared to registered public offerings.

The balance of higher interest expenses against reduced equity dilution risk appears appropriately calibrated given Insulet's established market position and long-term growth outlook in the diabetes management space.

ACTON, Mass.--(BUSINESS WIRE)-- Insulet Corporation (NASDAQ: PODD) (“Insulet” or the “Company”), the global leader in tubeless insulin pump technology with its Omnipod^® brand of products, has priced a private placement of $450 million aggregate principal amount of senior unsecured notes due 2033 (the “Notes”). The Notes will bear interest at an annual rate of 6.50% and will mature on April 1, 2033, unless earlier redeemed or repurchased. The closing of the private placement is expected to occur on March 20, 2025, subject to customary closing conditions.

The Company estimates that the net proceeds from the Notes offering will be approximately $444.4 million, after deducting discounts and before estimated offering expenses payable by the Company.

The Company intends to use the net proceeds from the Notes offering, together with cash on hand and potentially cash from partially terminating the Company’s existing capped call transactions relating to the Company’s existing 0.375% Convertible Senior Notes due 2026 (the “Convertible Senior Notes”), (i) to finance the redemption, repurchase, repayment, satisfaction and discharge or other payment of all or a portion of the Convertible Senior Notes, which may include one or more repurchases pursuant to privately negotiated transactions, and the payment of accrued and unpaid interest thereon, (ii) to pay any fees, costs and expenses relating to the offering of the Notes and the Company’s previously announced credit agreement transactions (if applicable) and/or (iii) for general corporate purposes.

The Notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and only to non-U.S. persons outside the United States pursuant to Regulation S.

The Notes have not been registered under the Securities Act or applicable state securities laws. As a result, the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws.

This press release does not and will not constitute an offer to sell or a solicitation of an offer to buy any securities nor will there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful under the securities laws of such state. Any offer of the Notes will be made only by means of a private offering memorandum. This press release does not and will not constitute an offer to repurchase the Convertible Senior Notes, nor do the statements herein constitute a notice of redemption under the indenture governing the Convertible Senior Notes.

About Insulet Corporation:
Insulet Corporation (NASDAQ: PODD), headquartered in Massachusetts, is an innovative medical device company dedicated to simplifying life for people with diabetes and other conditions through its Omnipod product platform. The Omnipod Insulin Management System provides a unique alternative to traditional insulin delivery methods. With its simple, wearable design, the disposable Pod provides up to three days of non-stop insulin delivery, without the need to see or handle a needle. Insulet’s flagship innovation, the Omnipod^® 5 Automated Insulin Delivery System, integrates with a continuous glucose monitor to manage blood sugar with no multiple daily injections, zero fingersticks, and can be controlled by a compatible personal smartphone or the Omnipod Controller. Insulet also leverages the unique design of its Pod, by tailoring its Omnipod technology platform for the delivery of non-insulin subcutaneous drugs across other therapeutic areas.

Forward-Looking Statements:
This press release contains forward-looking statements concerning Insulet's expectations, anticipations, intentions, beliefs or strategies regarding the future, including the offering of the Notes and the use of proceeds from the offering of the Notes. These forward-looking statements are based on Insulet’s current expectations and beliefs concerning future developments and their potential effects on Insulet. There can be no assurance that future developments affecting Insulet will be those that it has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Insulet’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, and other risks and uncertainties described in Insulet’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 21, 2025 in the section entitled “Risk Factors”, and in its other filings from time to time with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Insulet undertakes no obligation to publicly update or revise any forward-looking statements.

©2025 Insulet Corporation. Omnipod is a registered trademarks of Insulet Corporation in the United States of America and other various jurisdictions. All rights reserved. All other trademarks are the property of their respective owners. The use of third-party trademarks does not constitute an endorsement or imply a relationship or other affiliation.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250318523908/en/

Investor Relations:

June Lazaroff

Senior Director, Investor Relations

(978) 600-7718

jlazaroff@insulet.com

Media:

Angela Geryak Wiczek

Senior Director, Corporate Communications

(978) 932-0611

awiczek@insulet.com

Source: Insulet Corporation

FAQ

What is the interest rate and maturity date for Insulet's (PODD) new senior notes?

The senior notes will bear a 6.50% annual interest rate and mature on April 1, 2033.

How much will Insulet (PODD) raise from the senior notes offering?

Insulet expects to raise approximately $444.4 million in net proceeds after discounts and before offering expenses.

What will Insulet (PODD) use the proceeds from the senior notes for?

The proceeds will be used to redeem or repurchase existing 0.375% Convertible Senior Notes due 2026, pay related fees, and for general corporate purposes.

Who can purchase Insulet's (PODD) new senior notes?

The notes are only available to qualified institutional buyers under Rule 144A and non-U.S. persons outside the United States under Regulation S.