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8-K - FORM 8-K - INSULET CORP | b87550e8vk.htm |
Exhibit 99.1
INSULET REPORTS SECOND QUARTER 2011 RESULTS
Revenue Increases 40% Year over Year
CE Mark Approval Received on Next Generation OmniPod Insulin Pump
BEDFORD, MA, August 2, 2011 Insulet Corporation (NASDAQ: PODD), the leader in tubeless insulin
pump technology with its OmniPod® Insulin Management System, today announced financial results for
the three and six months ended June 30, 2011.
Second quarter 2011 revenue increased 40% to $32.2 million, compared to $22.9 million in the second
quarter of 2010. Gross profit for the second quarter of 2011 improved by 47% to $14.5 million, or a
45% gross margin, as compared to a gross profit of $9.9 million, or a 43% gross margin, for the
second quarter of 2010.
Operating loss for the second quarter of 2011 was $14.9 million, compared to an operating loss of
$9.9 million in the second quarter of 2010. The $5 million increase in operating loss was primarily
due to one-time transaction expenses related to the acquisition of Neighborhood Diabetes,
non-recurring expenses related to the Companys next generation OmniPod which is currently pending
FDA approval and amortization expenses related to intangible assets acquired. The financial
position and results of operations of Neighborhood Diabetes, which the Company acquired on June 1,
2011, have been included in the Companys results since the acquisition date.
We have made significant advances in our business in the last few months, said Duane DeSisto,
President and Chief Executive Officer of Insulet. In May, we submitted our next generation OmniPod
System for 510(k) clearance by the FDA. In June, we acquired Neighborhood Diabetes, a business
which complements our sales of the OmniPod insulin pump with an expanded product offering and a
higher level of customer service to our nearly 90,000 combined customers. Late last month, we
received CE Mark approval on our next generation OmniPod. Following these achievements, we are now
focused on integrating our acquired infrastructure to help drive the launch of the next generation
OmniPod.
Net loss for the second quarter of 2011 was $19.4 million, or $0.42 per share, compared to a net
loss of $13.7 million, or $0.36 per share, for the second quarter of 2010.
Mr. DeSisto continued, In June we restructured our balance sheet by issuing new convertible debt
with a reduced interest rate, higher convertible strike price and an extended maturity. We used the
majority of the proceeds to repurchase a portion of our
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convertible debt maturing in 2013. With this restructuring complete, we believe we have sufficient
cash to reach profitability.
On June 29, the Company issued $143.75 million of 3.75% Convertible Notes due in June 2016 and used
a portion of the proceeds to repurchase $70 million of the Companys 5.375% Convertible Notes due
in June 2013 for approximately $85 million. The transaction resulted in debt modification
accounting on this portion of the existing notes. In total, the Company recorded additional debt
discount of approximately $41.9 million related to the issuance which will be amortized as non-cash
interest expense over the 5 year term of the 3.75% Notes. The Company expects to record cash
interest expense of $1.6 million and non-cash interest expense of $2.2 million related to the debt
in each of the third and fourth quarters of 2011.
For the six months ended June 30, 2011, revenue increased 38% to $60.5 million from $43.7 million
for the first six months of 2010. Gross profit for the first six months of 2011 was $28.1 million,
or a 46% gross margin, as compared to a gross profit of $18.3 million, or a 42% gross margin, in
the first six months of 2010. Operating loss for the first six months ended June 30, 2011 was $22.2
million as compared to an operating loss of $20.6 million in the first six months ended June 30,
2010. Net loss for the first six months of 2011 was $29.3 million, or $0.64 per share, compared to
$28.2 million, or $0.74 per share, for the first six months of 2010.
As of June 30, 2011, the Company had cash and cash equivalents of $106.7 million compared to $113.3
million at December 31, 2010. The cash balance at June 30, 2011, reflects the payment of
approximately $38 million as the cash consideration for the acquisition of Neighborhood Diabetes
and includes the net proceeds from the sale of approximately $144 million of 3.75% Convertible
Notes due June 2016 and the subsequent repurchase of $70 million of 5.375% Convertible Notes due
June 2013 for $85 million.
Guidance
The Company updated its estimate for full year 2011 revenues to be in the range of $152 to $158
million. For the final six months of 2011, the Company estimates an operating loss in the range of
$13 to $18 million. For the third quarter of 2011, the Company estimates revenue of $44 to $46
million.
Conference Call
Insulet will host a conference call on Tuesday, August 2, 2011 at 5:00PM Eastern time to discuss
the Companys second quarter 2011 results and present information concerning its business,
strategies and outlook. To listen to the conference call, please dial (877) 300-1783 for domestic
callers and (832) 412-1780 for international callers. The conference ID is 85144293. A
replay of the conference call will be available two hours after the start of the call through
August 9, 2011 by dialing (855) 859-2056 or (404) 537-3406, conference ID 85144293. An online
archive of the conference call will also be available by accessing the Investor Information section
of the companys website at http://investors.insulet.com.
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About Insulet Corporation
Insulet Corporation 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
fully-automated cannula insertion. Founded in 2000, Insulet Corporation is based in Bedford, Mass.
For more information, please visit: http://www.myomnipod.com.
Forward-Looking Statement
The 2011 financial results contained in this news release are subject to finalization in connection
with the preparation of the Companys Annual Report on Form 10-Q for the quarter ended June 30,
2011. This press release contains forward-looking statements concerning Insulets expectations,
anticipations, intentions, beliefs or strategies regarding the future, including those related to
its expected revenue and operating losses, the integration and future operations of the
recently-acquired Neighborhood Diabetes business, planned expansion in the U.S. and abroad,
particularly with respect to its agreement with Ypsomed, product demand, the impact of the OmniPod
System on the insulin pump market, regulatory matters and financial performance. These
forward-looking statements are based on its current expectations and beliefs concerning future
developments and their potential effects on it. There can be no assurance that future developments
affecting it 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 Companys dependence on the OmniPod System; Insulets ability to increase
customer orders and manufacturing volumes; adverse changes in general economic conditions; impact
of healthcare reform legislation; Insulets inability to raise additional funds in the future on
acceptable terms or at all; potential supply problems or price fluctuations with sole source or
other third-party suppliers on which Insulet is dependent; international business risks; Insulets
inability to obtain 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;
potential adverse effects resulting from competition with competitors; technological innovations
adversely affecting the Companys business; potential termination of Insulets license to
incorporate a blood glucose meter into the OmniPod System; Insulets ability to protect its
intellectual property and other proprietary rights; conflicts with the intellectual property of
third parties, including claims that Insulets current or future products infringe the proprietary
rights of others; adverse regulatory or legal actions relating to the OmniPod System; failure to
obtain timely regulatory approval for the sale of the next generation OmniPod System; failure of
Insulets contract manufacturers or component suppliers to comply with FDAs quality system
regulations, the potential violation of federal or state laws prohibiting kickbacks or protecting
patient health information, or any challenges to or investigations into Insulets practices under
these laws; product liability lawsuits that may be brought against Insulet; reduced retention
rates; unfavorable results of clinical studies relating to the OmniPod System or the products of
Insulets competitors; potential future publication of articles or announcement of positions by
physician associations or other organizations that are unfavorable to Insulets products; the
expansion, or attempted expansion, into foreign markets; the concentration of substantially all of
Insulets manufacturing capacity at a single location in China and substantially all of Insulets
inventory at a single location in Massachusetts; Insulets ability to attract and retain key
personnel; Insulets ability to manage its growth; failure to integrate successfully the
Neighborhood Diabetes business; intense competition among distributors of diabetes supplies
impairing Neighborhood Diabetes business;
loss by Neighborhood Diabetes of an opportunity to sell
insulin pumps supplied by Insulets competitors; failure by Neighborhood Diabetes to retain key
supplier and payor partners; failure by Neighborhood Diabetes to retain supplier pricing discounts
and achieve satisfactory gross margins; failure by Neighborhood Diabetes to retain and manage
successfully its Medicare and Medicaid business; existence of unanticipated liabilities arising in
connection with the Neighborhood Diabetes business; fluctuations in quarterly results of
operations; risks associated with potential future acquisitions; Insulets ability to generate
sufficient cash to service all of its indebtedness; the expansion of Insulets distribution
network; Insulets ability to successfully maintain effective internal controls; and other risks
and uncertainties described in its Annual Report on Form 10-K, which was filed with the Securities
and Exchange Commission on March 10, 2011 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
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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.
Contact:
Stephanie Marks for Insulet Corporation
ir@insulet.com
877-PODD-IR1 (877-763-3471)
Stephanie Marks for Insulet Corporation
ir@insulet.com
877-PODD-IR1 (877-763-3471)
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Insulet Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(unaudited) | ||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Revenue |
$ | 32,211 | $ | 22,937 | $ | 60,469 | $ | 43,744 | ||||||||
Cost of revenue |
17,673 | 13,051 | 32,398 | 25,473 | ||||||||||||
Gross profit |
14,538 | 9,886 | 28,071 | 18,271 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
6,832 | 4,583 | 11,421 | 8,430 | ||||||||||||
General and administrative |
12,996 | 6,190 | 20,206 | 13,149 | ||||||||||||
Sales and marketing |
9,625 | 9,013 | 18,631 | 17,322 | ||||||||||||
Total operating expenses |
29,453 | 19,786 | 50,258 | 38,901 | ||||||||||||
Operating loss |
(14,915 | ) | (9,900 | ) | (22,187 | ) | (20,630 | ) | ||||||||
Other expense, net |
(4,508 | ) | (3,811 | ) | (7,082 | ) | (7,571 | ) | ||||||||
Net loss |
$ | (19,423 | ) | $ | (13,711 | ) | $ | (29,269 | ) | $ | (28,201 | ) | ||||
Net loss per share basic and diluted |
$ | (0.42 | ) | $ | (0.36 | ) | $ | (0.64 | ) | $ | (0.74 | ) | ||||
Weighted average number of shares
used in calculating basic and
diluted net loss per share |
46,377,843 | 38,285,628 | 45,995,069 | 38,088,041 | ||||||||||||
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Insulet Corporation
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
As of | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
(In thousands, except share data) | ||||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 106,746 | $ | 113,274 | ||||
Accounts receivable, net |
20,361 | 16,841 | ||||||
Inventories |
15,957 | 11,430 | ||||||
Prepaid expenses and other current assets |
4,770 | 912 | ||||||
Total current assets |
147,834 | 142,457 | ||||||
Property and equipment, net |
16,125 | 12,522 | ||||||
Intangible assets, net |
32,401 | | ||||||
Goodwill |
26,727 | | ||||||
Other assets |
3,103 | 1,254 | ||||||
Total assets |
$ | 226,190 | $ | 156,233 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ | 9,369 | $ | 4,895 | ||||
Accrued expenses and other current liabilities |
13,517 | 9,808 | ||||||
Deferred revenue |
3,725 | 4,247 | ||||||
Total current liabilities |
26,611 | 18,950 | ||||||
Long-term debt |
104,177 | 69,433 | ||||||
Other long-term liabilities |
1,303 | 1,619 | ||||||
Total liabilities |
132,091 | 90,002 | ||||||
Stockholders Equity |
||||||||
Preferred stock, $.001 par value: |
||||||||
Authorized: 5,000,000
shares at June 30,
2011 and December 31,
2010. Issued and
outstanding: zero
shares at June 30,
2011 and December 31,
2010, respectively |
| | ||||||
Common stock, $.001 par value: |
||||||||
Authorized: 100,000,000 shares at
June 30, 2011 and
December 31, 2010.
Issued and
outstanding: 47,254,163 and
45,440,839 shares at
June 30, 2011 and
December 31, 2010,
respectively |
47 | 45 | ||||||
Additional paid-in capital |
507,174 | 450,039 | ||||||
Accumulated deficit |
(413,122 | ) | (383,853 | ) | ||||
Total stockholders equity |
94,099 | 66,231 | ||||||
Total liabilities and stockholders equity |
$ | 226,190 | $ | 156,233 | ||||
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