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podd:A1.25ConvertibleNotesMember 2019-01-01 2019-09-30 xbrli:shares iso4217:USD xbrli:shares xbrli:pure iso4217:USD iso4217:USD podd:option podd:security podd:lawsuit
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________
Form 10-Q
 _____________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-33462
_____________________________________________________
INSULET CORPORATION
(Exact name of Registrant as specified in its charter)
________________________________________________________________________________________________________
 
Delaware
 
04-3523891
 
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
 
100 Nagog Park
Acton
Massachusetts
 
01720
 
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (978600-7000
________________________________________________________________________________________________________
Indicate 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 preceding 12 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       No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
 
Accelerated filer

 
 
 
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 Par Value Per Share
PODD
The NASDAQ Stock Market, LLC
As of October 25, 2019, the registrant had 61,821,566 shares of common stock outstanding.




TABLE OF CONTENTS
 
 
 
 
 
 
 


Table of Contents

PART I - FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements (Unaudited)
INSULET CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)
September 30,
2019
 
December 31,
2018
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
419,882

 
$
113,906

Short-term investments
185,622

 
175,040

Accounts receivable trade, less allowance for doubtful accounts of $4,174 and $3,610
65,052

 
63,294

Unbilled receivable
12,485

 
13,378

Inventories
90,207

 
71,414

Prepaid expenses and other current assets
20,653

 
24,254

Total current assets
793,901

 
461,286

Long-term investments
31,006

 
140,784

Property, plant and equipment, net
355,865

 
258,379

Other intangible assets, net
12,834

 
10,383

Goodwill
39,713

 
39,646

Other assets
35,071

 
18,266

Total assets
$
1,268,390

 
$
928,744

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
21,245

 
$
25,500

Accrued expenses and other current liabilities
92,037

 
90,157

Total current liabilities
113,282

 
115,657

Convertible debt, net
985,771

 
591,978

Other liabilities
18,769

 
9,010

Total liabilities
1,117,822

 
716,645

Commitments and contingencies (Note 10)

 

Stockholders’ Equity
 
 
 
Preferred stock, $.001 par value, 5,000,000 authorized; none issued and outstanding

 

Common stock, $.001 par value, 100,000,000 authorized; 61,786,969 and 59,188,758 issued and outstanding
62

 
59

Additional paid-in capital
832,140

 
898,559

Accumulated deficit
(676,982
)
 
(683,614
)
Accumulated other comprehensive loss
(4,652
)
 
(2,905
)
Total stockholders’ equity
150,568

 
212,099

Total liabilities and stockholders’ equity
$
1,268,390

 
$
928,744


The accompanying condensed notes are an integral part of these consolidated financial statements.
3

Table of Contents

INSULET CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except share and per share data)
2019
 
2018
 
2019
 
2018
Revenue
$
192,115

 
$
151,076

 
$
528,806

 
$
398,916

Cost of revenue
69,035

 
49,107

 
182,612

 
139,060

Gross profit
123,080

 
101,969

 
346,194

 
259,856

Operating expenses:
 
 
 
 
 
 
 
Research and development
30,779

 
22,336

 
94,997

 
61,404

Sales and marketing
47,749

 
35,952

 
136,766

 
105,576

General and administrative
27,548

 
36,816

 
82,559

 
81,686

Total operating expenses
106,076

 
95,104

 
314,322

 
248,666

Operating income
17,004

 
6,865

 
31,872

 
11,190

Interest expense, net of portion capitalized
(9,370
)
 
(6,846
)
 
(23,627
)
 
(22,044
)
Loss on extinguishment of debt
(6,451
)
 

 
(6,451
)
 
(10
)
Other (expense) income, net
(53
)
 
1,834

 
5,924

 
5,202

Income (loss) before income taxes
1,130

 
1,853

 
7,718

 
(5,662
)
Income tax expense
(278
)
 
(194
)
 
(1,086
)
 
(939
)
Net income (loss)
$
852

 
$
1,659

 
$
6,632

 
$
(6,601
)
Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.01

 
$
0.03

 
$
0.11

 
$
(0.11
)
Diluted
$
0.01

 
$
0.03

 
$
0.11

 
$
(0.11
)
Weighted-average number of shares used in calculating net income (loss) per share:
 
 
 
 
 
 
 
Basic
60,743,211

 
59,016,863

 
59,986,163

 
58,779,672

Diluted
62,335,679

 
61,146,466

 
61,728,018

 
58,779,672


The accompanying condensed notes are an integral part of these consolidated financial statements.
4

Table of Contents

INSULET CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
2019
 
2018
 
2019
 
2018
Net income (loss)
$
852

 
$
1,659

 
$
6,632

 
$
(6,601
)
Other comprehensive loss, net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustment, net of tax
(1,858
)
 
4

 
(3,032
)
 
(1,055
)
Unrealized gain (loss) on available-for-sale debt securities, net of tax
35

 
(70
)
 
1,285

 
(904
)
Total other comprehensive loss, net of tax
(1,823
)
 
(66
)
 
(1,747
)
 
(1,959
)
Total comprehensive (loss) income
$
(971
)
 
$
1,593

 
$
4,885

 
$
(8,560
)

The accompanying condensed notes are an integral part of these consolidated financial statements.
5

Table of Contents

INSULET CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)


Consolidated Statement of Stockholders' Equity for the three months ended September 30, 2019:
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated Other Comprehensive Loss
 
Total
Stockholders’
Equity
(in thousands, except share data)
Shares
 
Amount
 
 
Balance at June 30, 2019
60,149,926

 
$
60

 
$
930,383

 
$
(677,834
)
 
$
(2,829
)
 
$
249,780

Exercise of options to purchase common stock
471,356

 
1

 
17,256

 

 

 
17,257

Stock-based compensation expense

 

 
6,626

 

 

 
6,626

Restricted stock units vested, net of shares withheld for taxes
8,195

 

 
(291
)
 

 

 
(291
)
Conversion feature of 0.375% Notes, net of issuance costs

 

 
207,768

 

 

 
207,768

Extinguishment of conversion feature on 1.25% Notes, net of issuance costs

 

 
(438,642
)
 

 

 
(438,642
)
Issuance of shares for debt repayment
1,157,492

 
1

 
194,400

 

 

 
194,401

Purchase of capped call options

 

 
(85,360
)
 

 

 
(85,360
)
Net income

 

 

 
852

 

 
852

Other comprehensive loss

 

 

 

 
(1,823
)
 
(1,823
)
Balance at September 30, 2019
61,786,969

 
$
62

 
$
832,140

 
$
(676,982
)
 
$
(4,652
)
 
$
150,568



Consolidated Statement of Stockholders' Equity for the three months ended September 30, 2018:
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated Other Comprehensive Loss
 
Total
Stockholders’
Equity
(in thousands, except share data)
Shares
 
Amount
 
 
Balance at June 30, 2018
58,975,395

 
$
59

 
$
876,641

 
$
(695,166
)
 
$
(2,386
)
 
$
179,148

Exercise of options to purchase common stock
66,785

 

 
2,264

 

 

 
2,264

Stock-based compensation expense

 

 
16,088

 

 

 
16,088

Restricted stock units vested, net of shares withheld for taxes
26,406

 

 
(1,159
)
 

 

 
(1,159
)
Extinguishment of conversion feature on 1.25% Notes, net of issuance costs

 

 
(5
)
 

 

 
(5
)
Net income

 

 

 
1,659

 

 
1,659

Other comprehensive loss

 

 

 

 
(66
)
 
(66
)
Balance at September 30, 2018
59,068,586

 
$
59

 
$
893,829

 
$
(693,507
)
 
$
(2,452
)
 
$
197,929











The accompanying condensed notes are an integral part of these consolidated financial statements.
6


Table of Contents



Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 2019:
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated Other Comprehensive Loss
 
Total
Stockholders’
Equity
(in thousands, except share data)
Shares
 
Amount
 
 
Balance at December 31, 2018
59,188,758

 
$
59

 
$
898,559

 
$
(683,614
)
 
$
(2,905
)
 
$
212,099

Exercise of options to purchase common stock
1,188,043

 
2

 
40,915

 

 

 
40,917

Issuance of shares for employee stock purchase plan
27,613

 

 
2,030

 

 

 
2,030

Stock-based compensation expense

 

 
20,704

 

 

 
20,704

Restricted stock units vested, net of shares withheld for taxes
225,063

 

 
(8,234
)
 

 

 
(8,234
)
Conversion feature of 0.375% Notes, net of issuance costs

 

 
207,768

 

 

 
207,768

Extinguishment of conversion feature on 1.25% Notes, net of issuance costs

 

 
(438,642
)
 

 

 
(438,642
)
Issuance of shares for debt repayment
1,157,492

 
1

 
194,400

 

 

 
194,401

Purchase of capped call options

 

 
(85,360
)
 

 

 
(85,360
)
Net income

 

 

 
6,632

 
 
 
6,632

Other comprehensive loss

 

 

 

 
(1,747
)
 
(1,747
)
Balance at September 30, 2019
61,786,969

 
$
62

 
$
832,140

 
$
(676,982
)
 
$
(4,652
)
 
$
150,568


Consolidated Statement of Stockholders' Equity for the nine months ended September 30, 2018:
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Accumulated Other Comprehensive Loss
 
Total
Stockholders’
Equity
(in thousands, except share data)
Shares
 
Amount
 
 
Balance at December 31, 2017
58,319,348

 
$
58

 
$
866,206

 
$
(707,255
)
 
$
(493
)
 
$
158,516

Exercise of options to purchase common stock
375,154

 

 
12,000

 

 

 
12,000

Issuance of shares for employee stock purchase plan
24,643

 

 
1,481

 

 

 
1,481

Stock-based compensation expense

 

 
31,205

 

 

 
31,205

Restricted stock units vested, net of shares withheld for taxes
349,441

 
1

 
(13,846
)
 

 

 
(13,845
)
Debt retirement

 

 
(3,217
)
 

 

 
(3,217
)
Adoption of ASC 606

 

 

 
20,349

 

 
20,349

Net loss

 

 

 
(6,601
)
 

 
(6,601
)
Other comprehensive loss

 

 

 

 
(1,959
)
 
(1,959
)
Balance at September 30, 2018
59,068,586

 
$
59

 
$
893,829

 
$
(693,507
)
 
$
(2,452
)
 
$
197,929



The accompanying condensed notes are an integral part of these consolidated financial statements.
7


Table of Contents

INSULET CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Nine Months Ended September 30,
(in thousands)
2019
 
2018
Cash flows from operating activities
 
 
 
Net income (loss)
$
6,632

 
$
(6,601
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
18,784

 
11,254

Non-cash interest expense
24,274

 
21,790

Stock-based compensation expense
20,704

 
31,205

Loss on extinguishment of long-term debt
6,451

 
10

Provision for bad debts
2,644

 
2,588

Other
1,850

 
(245
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable and unbilled receivable
(5,957
)
 
(24,581
)
Inventories
(20,046
)
 
(25,279
)
Prepaid expenses and other assets
(4,883
)
 
(5,258
)
Accounts payable, accrued expenses and other current liabilities
(2,550
)
 
2,938

Deferred revenue
847

 
(2,761
)
Other liabilities
2,717

 
400

Net cash provided by operating activities
51,467

 
5,460

Cash flows from investing activities
 
 
 
Capital expenditures
(114,585
)
 
(124,855
)
Acquisition of intangible assets
(6,390
)
 
(2,704
)
Purchases of investments
(63,904
)
 
(145,575
)
Receipts from the maturity or sale of investments
165,275

 
129,415

Net cash used in investing activities
(19,604
)
 
(143,719
)
Cash flows from financing activities
 
 
 
Proceeds from issuance of convertible notes, net of issuance costs
780,202

 

Repayment of convertible debt
(453,608
)
 
(6,699
)
Purchase of capped call options
(85,360
)
 

Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan
42,945

 
13,464

Payments for taxes related to net share settlement of equity awards
(8,234
)
 
(13,846
)
Net cash provided by (used in) financing activities
275,945

 
(7,081
)
Effect of exchange rate changes on cash
(1,832
)
 
(674
)
Net increase (decrease) in cash, cash equivalents and restricted cash
305,976

 
(146,014
)
Cash, cash equivalents and restricted cash at beginning of period
113,906

 
272,577

Cash, cash equivalents and restricted cash at end of period
$
419,882

 
$
126,563

Supplemental cash flow information:
 
 
 
Purchases of property and equipment included in accounts payable and accrued expenses
$
10,616

 
$
10,711

Additions to ROU assets resulting from new operating lease liabilities
$
5,117

 
$




The accompanying condensed notes are an integral part of these consolidated financial statements.
8

Table of Contents

INSULET CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Nature of the Business
Insulet Corporation (“Insulet”) is primarily engaged in the development, manufacturing and sale of its proprietary Omnipod® System, an innovative, discreet and easy-to-use continuous insulin delivery system for people with insulin-dependent diabetes. The Omnipod System consists of two product lines: the Omnipod Insulin Management System (“Omnipod”), which Insulet has been selling since 2005, and its next generation Omnipod DASHTM Insulin Management System (“Omnipod DASH” or “DASH”). Insulet began a full market release of Omnipod DASH in the United States at the end of the first quarter of 2019. Collectively, these products are referred to as the “Omnipod System”.
In addition to using the Omnipod System for insulin delivery, Insulet also partners with global pharmaceutical and biotechnology companies to tailor the Omnipod System technology platform for the delivery of their drugs across other therapeutic areas. The majority of Insulet's drug delivery revenue currently consists of sales to Amgen supplying the Neulasta® Onpro® kit, an innovative delivery system for Amgen’s white blood cell booster to help reduce the risk of infection during intense chemotherapy.

Note 2. Basis of Presentation
Basis of Presentation
The accompanying financial statements reflect the consolidated operations of Insulet and its subsidiaries (the “Company”). The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in the application of certain of its significant accounting policies that may materially affect the reported amounts of assets, liabilities, equity, revenue and expenses. Actual results may differ from those estimates. In management's opinion, the unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the interim results reported. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2019, or for any other subsequent interim period.
The year-end balance sheet data was derived from audited consolidated financial statements. These consolidated financial statements do not include all of the annual disclosures required by U.S. GAAP; accordingly, they should be read in conjunction with the Company’s audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Shipping and Handling Costs
Shipping and handling costs are included in general and administrative expenses and were $2.2 million for both the three months ended September 30, 2019 and 2018 and were $7.1 million and $4.6 million for the nine months ended September 30, 2019 and 2018, respectively.

Reclassification of Prior Period Amounts
Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. Software license costs have been reallocated from general and administrative expenses to research and development and sales and marketing expenses based on license usage. These reclassifications have no effect on previously reported net income.

Recently Adopted Accounting Standards
Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 and its related amendments (collectively referred to as ASC 842), which amends the guidance in former ASC Topic 840, Leases. The new standard requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities on the balance sheet for those leases classified as operating leases. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method, whereby the new guidance is applied prospectively as of the date of adoption and prior periods are not restated. The Company elected the practical expedients that permit the Company to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. The Company also excludes leases with an expected term of less than one year from the application of ASC 842. Upon the adoption, the Company recorded ROU assets of $8.8 million and operating lease liabilities of $10.8 million on its consolidated balance sheet. The difference between the approximate value of the ROU assets and the approximate value of the lease obligations was primarily attributable to a former cease-use liability. See Note 11 for additional information regarding leases.
Effective January 1, 2019, the Company early adopted ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires certain costs to implement a cloud computing arrangement that is a service contract to be capitalized consistent with the rules applicable to internal-use software

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capitalization projects. The Company adopted this new guidance effective January 1, 2019, prospectively. The Company defers eligible costs related to the implementation of cloud computing arrangements within other current and non-current assets and amortizes such costs over the expected term of the hosting arrangement to the same income statement line as the associated cloud operating expenses. Adoption of this standard resulted in the Company capitalizing $0.4 million and $2.4 million of cloud computing implementation costs for the three and nine months ended September 30, 2019, respectively.

Note 3. Revenue and Contract Acquisition Costs
The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2019 and 2018:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
2019
 
2018
 
2019
 
2018
U.S. Omnipod
$
109,464

 
$
81,970

 
$
293,641

 
$
230,289

International Omnipod
67,753

 
50,214

 
187,377

 
117,127

Total Diabetes Revenue
177,217

 
132,184

 
481,018

 
347,416

Drug Delivery
14,898

 
18,892

 
47,788

 
51,500

Total
$
192,115

 
$
151,076

 
$
528,806

 
$
398,916


Revenue for customers comprising more than 10% of total revenue were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,


2019
 
2018
 
2019
 
2018
Amgen, Inc.
*
 
12%
 
*
 
13%
Ypsomed
*
 
*
 
*
 
11%
Cardinal Health Inc. and affiliates
11%
 
12%
 
11%
 
12%
* Represents less than 10% of consolidated revenue.
Deferred revenue related to unsatisfied performance obligations was included in the following consolidated balance sheet accounts in the amounts shown:
 
 
As of
(in thousands)
 
September 30, 2019
 
December 31, 2018
Accrued expenses and other current liabilities
 
$
2,007

 
$
1,184

Other liabilities
 
1,011

 
931

Total deferred revenue
 
$
3,018

 
$
2,115

 
 
 
 
 

Revenue recognized during the three and nine months ended September 30, 2019 included in deferred revenue at the beginning of 2019 was $0.1 million and $1.1 million, respectively. Revenue recognized during the three and nine months ended September 30, 2018 included in deferred revenue at the beginning of 2018 was $0.6 million and $2.5 million, respectively. No revenue was recognized during the three and nine months ended September 30, 2019 and 2018 from performance obligations satisfied or partially satisfied in previous periods.
Contract acquisition costs, representing capitalized commission costs related to new customers, net of amortization, were included in the following consolidated balance sheet accounts in the amounts shown:
 
 
As of
(in thousands)
 
September 30, 2019
 
December 31, 2018
Prepaid expenses and other current assets
 
$
9,006

 
$
7,277

Other assets
 
19,282

 
15,988

Total capitalized contract acquisition costs, net
 
$
28,288

 
$
23,265

 
 
 
 
 


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The Company recognized $2.3 million and $6.4 million of amortization of capitalized contract acquisition costs during the three and nine months ended September 30, 2019, respectively. The Company recognized $1.8 million and $5.0 million of amortization of capitalized contract acquisition costs during the three and nine months ended September 30, 2018, respectively.

Note 4. Investments
Cash and Cash Equivalents
Included in the Company's cash and cash equivalents are restricted cash amounts set aside for collateral on outstanding letters of credit totaling $2.7 million at both September 30, 2019 and December 31, 2018.

Marketable Securities
The Company's short-term and long-term investments in debt securities had maturity dates that range from 4 days to 23 months as of September 30, 2019. The Company’s investment portfolio included approximately 14 available-for-sale debt securities that had insignificant unrealized loss positions as of September 30, 2019 and December 31, 2018. The Company's investments had insignificant realized gains or losses for both the three and nine months ended September 30, 2019 and 2018.
The Company uses the following fair value hierarchy to measure the fair value of assets and liabilities:
Level 1 — quoted prices in active markets for identical assets or liabilities;
Level 2 — observable inputs other than quoted prices in active markets for identical assets or liabilities;
Level 3 — unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. The Company had no Level 3 assets or liabilities as of September 30, 2019 and December 31, 2018.
The following table provides amortized cost, gross unrealized gains and losses, fair value and the level in the fair value hierarchy for the Company's investments as of September 30, 2019 and December 31, 2018:
(in thousands)
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized (Losses)
 
Fair Value
 
Level 1
 
Level 2
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Money market mutual funds
$
83,342

 
$

 
$

 
$
83,342

 
$
83,342

 
$

U.S. government and agency bonds
4,995

 

 

 
4,995

 
4,995

 

Total cash equivalents
$
88,337

 
$

 
$

 
$
88,337

 
$
88,337

 
$

 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency bonds
$
106,135

 
$
204

 
$
(7
)
 
$
106,332

 
$
94,764

 
$
11,568

Corporate bonds
71,329

 
156

 
(1
)
 
71,484

 

 
71,484

Certificates of deposit
7,779

 
27

 

 
7,806

 

 
7,806

Total short-term investments
$
185,243

 
$
387

 
$
(8
)
 
$
185,622

 
$
94,764

 
$
90,858

 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency bonds
$
27,873

 
$
125

 
$
(20
)
 
$
27,978

 
$
9,979

 
$
17,999

Corporate bonds
814

 
44

 
(38
)
 
820

 

 
820

Certificates of deposit
2,190

 
18

 

 
2,208

 

 
2,208

Total long-term investments
$
30,877

 
$
187

 
$
(58
)
 
$
31,006

 
$
9,979

 
$
21,027

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Money market mutual funds
$
47,199

 
$

 
$

 
$
47,199

 
$
47,199

 
$

Total cash equivalents
$
47,199

 
$

 
$

 
$
47,199

 
$
47,199

 
$

 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency bonds
$
112,995

 
$

 
$
(486
)
 
$
112,509

 
$
69,605

 
$
42,904

Corporate bonds
56,235

 

 
(210
)
 
56,025

 

 
56,025

Certificates of deposit
6,506

 

 

 
6,506

 

 
6,506

Total short-term investments
$
175,736

 
$

 
$
(696
)
 
$
175,040

 
$
69,605

 
$
105,435

 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agency bonds
$
90,458

 
$
99

 
$
(155
)
 
$
90,402

 
$
64,086

 
$
26,316

Corporate bonds
46,743

 
43

 
(68
)
 
46,718

 

 
46,718

Certificates of deposit
3,664

 

 

 
3,664

 

 
3,664

Total long-term investments
$
140,865

 
$
142

 
$
(223
)
 
$
140,784

 
$
64,086

 
$
76,698




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Note 5. Convertible Debt, Net
The Company had outstanding convertible debt and related debt issuance costs on its consolidated balance sheet as follows:
 
As of
(in thousands)
September 30, 2019
 
December 31, 2018
1.25% Convertible Senior Notes, due September 2021
$