Insulet Corporation
Nov 3, 2016
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Insulet Reports Third Quarter 2016 Financial Results

Third Quarter Revenue of $94.9 Million, up 33% Year-Over-Year, Exceeds Expectations

Gross Margin Improves to 58.6%

Company Raises Full Year 2016 Revenue Guidance to a Range of $362 to $365 million, from $345 to $355 million; Approximately 38% Year-Over-Year Growth at Mid-Point

BILLERICA, Mass.--(BUSINESS WIRE)-- Insulet Corporation (NASDAQ: PODD) (Insulet or the Company), the leader in tubeless insulin pump technology with its Omnipod® Insulin Management System (Omnipod System), today announced financial results for the three months ended September 30, 2016.

Third Quarter Highlights and Recent Developments:

"We are extremely pleased with our continuing positive momentum and the results our team is achieving through consistent execution of our winning strategy," said Patrick Sullivan, Chairman and Chief Executive Officer. "We continued to achieve growth across all business lines, generating better-than-anticipated revenue and driving additional gross margin expansion in the third quarter. We are successfully implementing our commercial and operational initiatives, as well as continuing to take steps forward in our product pipeline development efforts, including our artificial pancreas program. Longer-term, we remain focused on delivering sustainable and profitable growth and increasing value for our shareholders."

Third Quarter 2016 Financial Results:

Third quarter 2016 revenue increased 33% to $94.9 million, compared to revenue from continuing operations of $71.4 million in the third quarter of 2015.

Operating income for the third quarter of 2016 was $2.4 million, compared to an operating loss of $14.8 million in the third quarter of 2015.

Net loss from continuing operations for the third quarter of 2016 was $3.0 million, or $0.05 per share, compared with a net loss from continuing operations of $18.0 million, or $0.32 per share, in the third quarter of 2015.

Guidance:

Future results may be affected by changes in ongoing assumptions and judgments, and may also be affected by non-recurring, unusual or unanticipated charges, expenses or gains.

Divestiture of Neighborhood Diabetes:

On February 12, 2016, Insulet sold its wholly-owned Neighborhood Diabetes supplies business to Liberty Medical, LLC for $6.2 million in cash, which included $1.2 million of closing adjustments finalized in June 2016 and paid by Liberty Medical. Beginning in the first quarter of 2016, the results of operations, assets, and liabilities of Neighborhood Diabetes are classified as discontinued operations for all periods presented.

_________________

1 The Company's guidance discussion above compares 2016 expected revenue to the 2015 revenue from continuing operations which excludes Neighborhood Diabetes as if the divestiture occurred on January 1, 2015. The revenue from continuing operations for the year ended December 2015 and the fourth quarter of 2015 (unaudited) are included as an appendix to this press release.

Conference Call:

Insulet will host a conference call at 4:30 p.m. (Eastern Time) on November 3, 2016 to discuss the financial results and outlook. The link to the live call will be available on the Investor Relations section of the Company's website at http://investors.insulet.com, "Events and Presentations", and will be archived for future reference. The call may also be accessed by dialing (844) 831-3022 for domestic callers or (315) 625-6887 for international callers, passcode 84511802. A replay will be available two hours after the completion of the call by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international), passcode 84511802.

About Insulet Corporation:

Insulet Corporation (NASDAQ: PODD) is an innovative medical device company dedicated to making the lives of people with diabetes easier. Through its Omnipod Insulin Management System, Insulet seeks to expand the use of insulin pump therapy among people with insulin-dependent diabetes. The Omnipod is a revolutionary and easy-to-use tubeless insulin pump that features just two parts and a fully-automated cannula insertion. Insulet's Delivery Systems business also partners with global pharmaceutical and biotechnology companies to tailor the Omnipod technology platform for the delivery of subcutaneous drugs across multiple therapeutic areas. Founded in 2000, Insulet Corporation is based in Billerica, Massachusetts. For more information, please visit: http://www.myomnipod.com.

Forward-Looking Statement:

The 2016 financial results contained in this news release are subject to finalization in connection with the preparation of the Company's Form 10-Q for the quarter ended September 30, 2016. This press release contains forward-looking statements concerning Insulet's expectations, anticipations, intentions, beliefs or strategies regarding the future. These forward-looking statements are based on its 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 its 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. These risks and uncertainties include, but are not limited to: risks associated with the Company's dependence on its principal product, the Omnipod System; Insulet's ability to reduce production costs and increase customer orders and manufacturing volumes; adverse changes in general economic conditions; impact of healthcare reform laws; Insulet's ability to raise additional funds in the future on acceptable terms or at all; potential supply problems or price fluctuations with sole source or third-party suppliers on which Insulet is dependent; the potential establishment of a competitive bid program for conventional insulin pumps; failure by Insulet to retain supplier pricing discounts and achieve satisfactory gross margins; failure by Insulet to retain key supplier and payor partners; international business risks; Insulet's inability to secure and retain adequate coverage or reimbursement from third-party payors for the Omnipod System and potential adverse changes in reimbursement rates or policies relating to the Omnipod System; failure to retain key payor partners and their members; potential adverse effects resulting from competition; technological change and product innovation adversely affecting the Company's business; potential termination of Insulet's license to incorporate a blood glucose meter into the Omnipod System or its inability to enter into new license agreements; challenges to the future development of our non-insulin drug delivery business; Insulet's ability to protect its intellectual property and other proprietary rights; conflicts with the intellectual property of third parties, including claims that Insulet's current or future products infringe or misappropriate the proprietary rights of others; adverse regulatory or legal actions relating to the Omnipod System; failure of Insulet's contract manufacturers or component suppliers to comply with FDA's quality system regulations, the potential violation of federal or state laws prohibiting "kickbacks" or protecting the confidentiality of patient health information, or any challenge to or investigation into Insulet's practices under these laws; product liability lawsuits that may be brought against Insulet; reduced retention rates of our customer base; unfavorable results of clinical studies relating to the Omnipod System or the products of Insulet's competitors; potential future publication of articles or announcement of positions by diabetes associations or other organizations that are unfavorable to the Omnipod System; the concentration of substantially all of Insulet's manufacturing operations at a single location in China and substantially all of Insulet's inventory at a single location in Massachusetts; Insulet's ability to attract and retain personnel; Insulet's ability to manage its growth; fluctuations in quarterly results of operations; risks associated with potential future acquisitions or investments in new businesses; Insulet's ability to generate sufficient cash to service all of its indebtedness; the expansion of Insulet's distribution network; Insulet's ability to successfully maintain effective internal control over financial reporting; the volatility of the trading price of Insulet's common stock; risks related to future sales of its common stock or the conversion of any of the Convertible Senior Notes; potential limitations on Insulet's ability to use its net operating loss carryforwards; anti-takeover provisions in its organizational documents; and other risks and uncertainties described in its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 29, 2016 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 its 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.

 

INSULET CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

       

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016     2015 2016     2015
(Unaudited)

(In thousands, except share and per share data)

   
Revenue $ 94,871 $ 71,393 $ 263,414 $ 180,092
Cost of revenue

 

39,230

 

 

39,823

 

 

113,265

 

 

88,814

 
Gross profit

 

55,641

 

31,570

 

150,149

 

91,278

Operating expenses:
Research and development

 

13,734

 

10,035

 

39,676

 

30,311

Sales and marketing

 

22,147

 

21,307

 

69,119

 

55,025

General and administrative

 

17,342

 

 

15,023

 

 

47,923

 

 

42,062

 
Total operating expenses

 

53,223

 

 

46,365

 

 

156,718

 

 

127,398

 
Operating income (loss)

 

2,418

 

(14,795

)

 

(6,569

)

 

(36,120

)
Interest expense

 

3,029

 

3,167

 

9,252

 

9,567

Other income, net

 

211

 

21

 

510

 

76

Loss on extinguishment of long-term debt

 

2,551

 

 

 

 

2,551

 

 

 

Interest expense and other income, net

 

(5,369

)

 

(3,146

)

 

(11,293

)

 

(9,491

)
Loss from continuing operations before income taxes

 

(2,951

)

 

(17,941

)

 

(17,862

)

 

(45,611

)
Income tax expense

 

66

 

 

44

 

 

195

 

 

83

 
Net loss from continuing operations $ (3,017 ) $ (17,985 ) $ (18,057 ) $ (45,694 )
Loss from discontinued operations, net of tax ($0, $18, $408, and $68, respectively)

 

(64

)

 

(942

)

 

(1,703

)

 

(499

)
Net loss $ (3,081 ) $ (18,927 ) $ (19,760 ) $ (46,193 )
Net loss per share basic and diluted:
Net loss from continuing operations per share $ (0.05 ) $ (0.32 ) $ (0.32 ) $ (0.81 )
Net loss from discontinued operations per share $ $ (0.02 ) $ (0.03 ) $ (0.01 )
Weighted-average number of shares outstanding

 

57,341,063

 

 

56,898,281

 

 

57,189,423

 

 

56,735,944

 

 

INSULET CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

 

       


(In thousands, except per share data)

September 30, 2016

December 31, 2015
ASSETS (Unaudited)
Current Assets
Cash, cash equivalents and short-term investments $ 282,695 $ 122,672
Accounts receivable, net 38,548 42,530
Inventories, net 32,663 12,024
Prepaid expenses and other current assets 7,901 4,283
Current assets of discontinued operations   9,252  
Total current assets 361,807 190,761
Property and equipment, net 50,911 41,793
Intangible assets, net 651 933
Goodwill 39,730 39,607
Other assets 98 76
Long-term assets of discontinued operations   1,956  
Total assets $ 453,197   $ 275,126  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 18,212 $ 15,213
Accrued expenses and other current liabilities 33,732 36,744
Deferred revenue 1,247 2,361
Current portion of capital lease obligations 1,061 5,519
Current liabilities of discontinued operations   5,319  
Total current liabilities 54,252 65,156
Capital lease obligations 269
Long-term debt, net 328,962 171,698
Other long-term liabilities 4,888   3,952  
Total liabilities 388,102 241,075
Stockholders' Equity
Preferred stock, $.001 par value
Common stock, $.001 par value 57 57
Additional paid-in capital 736,730 686,193
Accumulated other comprehensive loss (387 ) (654 )
Accumulated deficit (671,305 ) (651,545 )
Total stockholders' equity 65,095   34,051  
Total liabilities and stockholders' equity $ 453,197   $ 275,126  

 

INSULET CORPORATION
REVENUES FROM CONTINUING OPERATIONS
(Reflecting Divestiture of Neighborhood Diabetes)

 

   
Year Ended December 31, 2015
Total     Adjustments(1)    

Continuing
Operations

(In thousands)
Revenue $ 324,225 $ (60,332 ) $ 263,893
 
Quarter Ended December 31, 2015
Total   Adjustments(1)  

Continuing
Operations

(Unaudited)
(In thousands)

Revenue $ 100,119 $ (16,318 ) $ 83,801

(1) Includes adjustments for revenue due to the divestiture of the Neighborhood Diabetes supplies business in February 2016. The adjustments reflect the divestiture as if it occurred on January 1, 2015. The differences between the reported revenue results for Neighborhood Diabetes and the adjustments represent the portion of Omnipod sales transacted through Neighborhood Diabetes which remain with Insulet's continuing operations.

Investor Relations and Media Contact:
Insulet Corporation
Deborah R. Gordon, 978-600-7717
Vice President, Investor Relations and Corporate Communications
dgordon@insulet.com

Source: Insulet Corporation

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