QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Item 1. | Consolidated Financial Statements (Unaudited) |
(in thousands, except share and per share data) | June 30, 2019 | December 31, 2018 | |||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | $ | |||||
Short-term investments | |||||||
Accounts receivable trade, less allowance for doubtful accounts of $4,098 and $3,610 | |||||||
Unbilled receivable | |||||||
Inventories | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Long-term investments | |||||||
Property and equipment, net | |||||||
Other intangible assets, net | |||||||
Goodwill | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses and other current liabilities | |||||||
Total current liabilities | |||||||
Convertible debt, net | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Stockholders’ Equity | |||||||
Preferred stock, $.001 par value, 5,000,000 authorized; none issued and outstanding | |||||||
Common stock, $.001 par value, 100,000,000 authorized; 60,149,926 and 59,188,758 issued and outstanding | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Accumulated deficit | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands, except share and per share data) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Cost of revenue | |||||||||||||||
Gross profit | |||||||||||||||
Operating expenses: | |||||||||||||||
Research and development | |||||||||||||||
Sales and marketing | |||||||||||||||
General and administrative | |||||||||||||||
Total operating expenses | |||||||||||||||
Operating income | |||||||||||||||
Interest expense, net of portion capitalized | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other income, net | |||||||||||||||
Income (loss) before income taxes | ( | ) | ( | ) | |||||||||||
Income tax expense | |||||||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Diluted | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Weighted-average number of shares used in calculating net income (loss) per share: | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Foreign currency translation adjustment, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Unrealized gain (loss) on available-for-sale debt securities, net of tax | ( | ) | ( | ) | |||||||||||
Total other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||
Total comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||
(in thousands, except share data) | Shares | Amount | ||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Exercise of options to purchase common stock | — | |||||||||||||||||||||
Issuance for employee stock purchase plan | — | |||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||
Restricted stock units vested, net of shares withheld for taxes | — | ( | ) | ( | ) | |||||||||||||||||
Net income | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||
Balance at June 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 March 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Exercise of options to purchase common stock | — | |||||||||||||||||||||
Issuance for employee stock purchase plan | — | |||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||
Restricted stock units vested, net of shares withheld for taxes | — | ( | ) | ( | ) | |||||||||||||||||
Debt retirement | ( | ) | ( | ) | ||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||
Balance at June 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, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Exercise of options to purchase common stock | ||||||||||||||||||||||
Issuance for employee stock purchase plan | — | |||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||
Restricted stock units vested, net of shares withheld for taxes | — | ( | ) | ( | ) | |||||||||||||||||
Net income | ||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||
Balance at June 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, 2017 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Exercise of options to purchase common stock | — | |||||||||||||||||||||
Issuance for employee stock purchase plan | — | |||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||
Restricted stock units vested, net of shares withheld for taxes | ( | ) | ( | ) | ||||||||||||||||||
Debt retirement | ( | ) | ( | ) | ||||||||||||||||||
Adoption of ASC 606 | ||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||
Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Six Months Ended June 30, | |||||||
(in thousands) | 2019 | 2018 | |||||
Cash flows from operating activities | |||||||
Net income (loss) | $ | $ | ( | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||||||
Depreciation and amortization | |||||||
Non-cash interest expense | |||||||
Stock-based compensation expense | |||||||
Provision for bad debts | |||||||
Other | ( | ) | ( | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable and unbilled receivable | ( | ) | ( | ) | |||
Inventories | ( | ) | ( | ) | |||
Prepaid expenses and other assets | ( | ) | ( | ) | |||
Accounts payable, accrued expenses and other current liabilities | ( | ) | ( | ) | |||
Deferred revenue | ( | ) | |||||
Other liabilities | ( | ) | |||||
Net cash provided by (used in) operating activities | ( | ) | |||||
Cash flows from investing activities | |||||||
Purchases of property, equipment | ( | ) | ( | ) | |||
Acquisition of intangible assets | ( | ) | ( | ) | |||
Purchases of investments | ( | ) | ( | ) | |||
Receipts from the maturity or sale of investments | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities | |||||||
Repayment of convertible debt | ( | ) | |||||
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan | |||||||
Payments for taxes related to net share settlement of equity awards | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Effect of exchange rate changes on cash | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||
Non-cash investing and financing activities: | |||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
U.S. Omnipod | $ | $ | $ | $ | |||||||||||
International Omnipod | |||||||||||||||
Total Diabetes Revenue | |||||||||||||||
Drug Delivery | |||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Amgen, Inc. | * | ||||||
Ypsomed | * | * | * | ||||
Cardinal Health Inc. and affiliates |
As of | ||||||||
(in thousands) | June 30, 2019 | December 31, 2018 | ||||||
Accrued expenses and other current liabilities | $ | $ | ||||||
Other liabilities | ||||||||
Total deferred revenue | $ | $ | ||||||
As of | ||||||||
(in thousands) | June 30, 2019 | December 31, 2018 | ||||||
Prepaid expenses and other current assets | $ | $ | ||||||
Other assets | ||||||||
Total capitalized contract acquisition costs, net | $ | $ | ||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Fair Value | Level 1 | Level 2 | |||||||||||||||||
June 30, 2019 | |||||||||||||||||||||||
Money market mutual funds | $ | $ | — | $ | — | $ | $ | $ | |||||||||||||||
Total cash equivalents | $ | $ | — | $ | — | $ | $ | $ | |||||||||||||||
U.S. government and agency bonds | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
Corporate bonds | ( | ) | |||||||||||||||||||||
Certificates of deposit | ( | ) | |||||||||||||||||||||
Total short-term investments | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
U.S. government and agency bonds | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
Corporate bonds | ( | ) | |||||||||||||||||||||
Certificates of deposit | |||||||||||||||||||||||
Total long-term investments | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
December 31, 2018 | |||||||||||||||||||||||
Money market mutual funds | $ | $ | — | $ | — | $ | $ | $ | |||||||||||||||
Total cash equivalents | $ | $ | — | $ | — | $ | $ | $ | |||||||||||||||
U.S. government and agency bonds | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
Corporate bonds | ( | ) | |||||||||||||||||||||
Certificates of deposit | |||||||||||||||||||||||
Total short-term investments | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
U.S. government and agency bonds | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||
Corporate bonds | ( | ) | |||||||||||||||||||||
Certificates of deposit | |||||||||||||||||||||||
Total long-term investments | $ | $ | $ | ( | ) | $ | $ | $ |
As of | |||||||
(in thousands) | June 30, 2019 | December 31, 2018 | |||||
1.25% Convertible Senior Notes, due September 2021 | $ | $ | |||||
1.375% Convertible Senior Notes, due November 2024 | |||||||
Unamortized debt discount | ( | ) | ( | ) | |||
Debt issuance costs | ( | ) | ( | ) | |||
Total convertible debt, net | $ | $ |
As of | |||||||||||||||
June 30, 2019 | December 31, 2018 | ||||||||||||||
(in thousands) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||
1.25% Convertible Senior Notes, due September 2021 | $ | $ | $ | $ | |||||||||||
1.375% Convertible Senior Notes, due November 2024 | |||||||||||||||
Total | $ | $ | $ | $ |
June 30, 2019 | |||||||
(in thousands, except share and per share data) | Three Months Ended | Six Months Ended | |||||
Numerator: | |||||||
Net income | $ | $ | |||||
Denominator: | |||||||
Basic weighted average common shares outstanding | |||||||
Effect of dilutive securities | |||||||
Stock options | |||||||
Restricted stock units | |||||||
Convertible debt | |||||||
Diluted shares | |||||||
Net income per share: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ |
June 30, 2019 | June 30, 2018 | |||||||
Three Months Ended | Six Months Ended | Three and Six Months Ended | ||||||
1.25% Convertible Senior Notes | ||||||||
1.375% Convertible Senior Notes | ||||||||
Unvested restricted stock units | ||||||||
Stock options | ||||||||
Total |
As of | |||||||
(in thousands) | June 30, 2019 | December 31, 2018 | |||||
Raw materials | $ | $ | |||||
Work-in-process | |||||||
Finished goods | |||||||
Total inventories | $ | $ |
(in thousands) | |||
Goodwill at December 31, 2018 | $ | ||
Foreign currency translation | |||
Goodwill at June 30, 2019 | $ |
As of | |||||||||||||||||||||||
June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||||||||||
Customer and contractual relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Internal-use software | ( | ) | ( | ) | |||||||||||||||||||
Intellectual property | |||||||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Years Ending December 31, | (in thousands) | ||
2019 (remaining) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total | $ |
As of | |||||||
(in thousands) | June 30, 2019 | December 31, 2018 | |||||
Employee compensation and related costs | $ | $ | |||||
Professional and consulting services | |||||||
Supplier purchases | |||||||
Value added taxes payable | |||||||
Other | |||||||
Accrued expenses and other current liabilities | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Product warranty liability at beginning of period | $ | $ | $ | $ | |||||||||||
Warranty expense | |||||||||||||||
Warranty claims settled | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Product warranty liability at end of period | $ | $ | $ | $ |
As of | |||||||
(in thousands) | June 30, 2019 | December 31, 2018 | |||||
Accrued expenses and other current liabilities | $ | $ | |||||
Other liabilities | |||||||
Total | $ | $ |
Years Ending December 31, | (in thousands) | ||||
2019 (remaining) | $ | ||||
2020 | |||||
2021 | |||||
2022 | |||||
2023 | |||||
Thereafter | |||||
Total future minimum lease payments | |||||
Less: imputed interest | ( | ) | |||
Present value of future minimum lease payments | $ | ||||
As of June 30, 2019 | (in thousands) | ||||
ROU asset: | |||||
Other assets | $ | ||||
Operating lease liabilities: | |||||
Accrued expenses and other current liabilities | $ | ||||
Other liabilities | |||||
Total | $ |
Three Months Ended June 30, | Six Months Ended June 30, | Unamortized Expense | Weighted Average Remaining Expense Period (Years) | ||||||||||||||||||
($ in thousands) | 2019 | 2018 | 2019 | 2018 | At June 30, 2019 | ||||||||||||||||
Stock options | $ | $ | $ | $ | $ | ||||||||||||||||
Restricted stock units | |||||||||||||||||||||
Employee stock purchase plan | |||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Number of Options | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | Weighted Average Remaining Contractual Term (years) | |||||||||
Outstanding at December 31, 2018 | $ | |||||||||||
Granted | ||||||||||||
Exercised | ( | ) | $ | |||||||||
Forfeited / Expired | ( | ) | ||||||||||
Outstanding at June 30, 2019 | $ | $ | ||||||||||
Vested, June 30, 2019 | $ | $ | ||||||||||
Vested or expected to vest, June 30, 2019 (1) | $ |
(1) | Represents total outstanding stock options as of June 30, 2019, adjusted for estimated forfeitures. |
Number of Shares | Weighted Average Fair Value | |||||
Outstanding at December 31, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Outstanding at June 30, 2019 | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Contractual coupon interest | $ | $ | $ | $ | |||||||||||
Accretion of debt discount | |||||||||||||||
Amortization of debt issuance costs | |||||||||||||||
Capitalized interest | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest expense, net of portion capitalized | $ | $ | $ | $ |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||
(in thousands) | Total | Total | |||||||||||||||||||||||||||||
Contractual coupon interest | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Amortization of debt discount and issuance costs | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
(in thousands) | Total | Total | |||||||||||||||||||||||||||||
Contractual coupon interest | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Amortization of debt discount and issuance costs | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
• | U.S. Omnipod revenue of $98.1 million, an increase of 26%; |
• | International Omnipod revenue of $62.7 million, an increase of 120%; and |
• | Drug Delivery revenue of $16.3 million, a decrease of 8%. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(in thousands) | 2019 | 2018 | Change $ | Change % | 2019 | 2018 | Change $ | Change % | |||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
U.S. Omnipod | $ | 98,074 | $ | 78,047 | $ | 20,027 | 26 | % | $ | 184,177 | $ | 148,319 | $ | 35,858 | 24 | % | |||||||||||||
International Omnipod | 62,736 | 28,509 | 34,227 | 120 | % | 119,624 | 66,913 | 52,711 | 79 | % | |||||||||||||||||||
Total Diabetes Revenue | 160,810 | 106,556 | 54,254 | 51 | % | 303,801 | 215,232 | 88,569 | 41 | % | |||||||||||||||||||
Drug Delivery | 16,326 | 17,706 | (1,380 | ) | (8 | )% | 32,890 | 32,608 | 282 | 1 | % | ||||||||||||||||||
Total revenue | 177,136 | 124,262 | 52,874 | 43 | % | 336,691 | 247,840 | 88,851 | 36 | % | |||||||||||||||||||
Cost of revenue | 60,718 | 42,190 | 18,528 | 44 | % | 113,577 | 89,953 | 23,624 | 26 | % | |||||||||||||||||||
Gross profit | 116,418 | 82,072 | 34,346 | 42 | % | 223,114 | 157,887 | 65,227 | 41 | % | |||||||||||||||||||
Gross margin | 65.7 | % | 66.0 | % | 66.3 | % | 63.7 | % | |||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Research and development | 32,264 | 18,801 | 13,463 | 72 | % | 64,218 | 39,068 | 25,150 | 64 | % | |||||||||||||||||||
Sales and marketing | 47,401 | 36,575 | 10,826 | 30 | % | 89,017 | 69,624 | 19,393 | 28 | % | |||||||||||||||||||
General and administrative | 29,150 | 22,371 | 6,779 | 30 | % | 55,011 | 44,870 | 10,141 | 23 | % | |||||||||||||||||||
Total operating expenses | 108,815 | 77,747 | 31,068 | 40 | % | 208,246 | 153,562 | 54,684 | 36 | % | |||||||||||||||||||
Operating income | 7,603 | 4,325 | 3,278 | 76 | % | 14,868 | 4,325 | 10,543 | 244 | % | |||||||||||||||||||
Interest expense and other, net | (5,719 | ) | (5,604 | ) | (115 | ) | 2 | % | (8,280 | ) | (11,840 | ) | 3,560 | (30 | )% | ||||||||||||||
Income (loss) before income taxes | 1,884 | (1,279 | ) | 3,163 | 247 | % | 6,588 | (7,515 | ) | 14,103 | 188 | % | |||||||||||||||||
Income tax expense | 482 | 412 | 70 | 17 | % | 808 | 745 | 63 | 8 | % | |||||||||||||||||||
Net income (loss) | $ | 1,402 | $ | (1,691 | ) | $ | 3,093 | 183 | % | $ | 5,780 | $ | (8,260 | ) | $ | 14,040 | 170 | % |
Issuance Date | Coupon | Principal Outstanding (in thousands) | Due Date | Initial Conversion Rate per Share of Common Stock | Conversion Price per Share of Common Stock | ||
September 2016 | 1.250% | $ | 344,992 | September 2021 | 17.1332 | $58.37 | |
November 2017 | 1.375% | 402,500 | November 2024 | 10.7315 | $93.18 | ||
Total | $ | 747,492 |
Six Months Ended June 30, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Cash provided by (used in): | ||||||||
Operating activities | $ | 20,277 | $ | (10,395 | ) | |||
Investing activities | (31,793 | ) | (117,103 | ) | ||||
Financing activities | 17,747 | (8,172 | ) | |||||
Effect of exchange rate changes on cash | (270 | ) | (661 | ) | ||||
Net increase (decrease) in cash and cash equivalents | $ | 5,961 | $ | (136,331 | ) |
• | risks associated with our dependence on our principal product platform, the Omnipod; |
• | risks associated with our ability to design, develop, manufacture and commercialize future products; |
• | our ability to reduce production costs and increase customer orders and manufacturing volumes; |
• | adverse changes in general economic conditions; |
• | impact of healthcare reform laws; |
• | our ability to raise additional funds in the future on acceptable terms or at all; |
• | supply problems or price fluctuations with sole source or third-party suppliers on which we are dependent; |
• | the potential establishment of a competitive bid program for conventional insulin pumps; |
• | failure to retain supplier pricing discounts and achieve satisfactory gross margins; |
• | failure to retain key suppliers; |
• | international business risks; |
• | our inability to effectively operate and grow our business in Europe following the expiration of an agreement with our former European distributor on June 30, 2018; |
• | regulatory, commercial and logistics risks associated with selling our products in Europe in light of the uncertainty related to the timing and terms of the separation of the United Kingdom from the European Union (Brexit); |
• | our inability to secure and retain adequate coverage or reimbursement from third-party payors for the Omnipod or future products and potential adverse changes in reimbursement rates or policies relating to the Omnipod or future products; |
• | failure to retain key payor partners and their members; |
• | adverse effects resulting from competition; |
• | technological change and product innovation adversely affecting our business; |
• | changes to or termination of our license to incorporate a blood glucose meter into the Omnipod or our inability to enter into new license or other agreements with respect to the Omnipod's current or future features; |
• | challenges to the future development of our non-insulin drug delivery business; |
• | our ability to protect our intellectual property and other proprietary rights; |
• | conflicts with the intellectual property of third parties, including claims that our current or future products infringe or misappropriate the proprietary rights of others; |
• | adverse regulatory or legal actions relating to the Omnipod or future products; |
• | failure of our contract manufacturers or component suppliers to comply with the U.S Food and Drug Administration's quality system regulations; |
• | the potential violation of the Foreign Corrupt Practices Act or any other international, federal or state laws prohibiting "kickbacks" or protecting the confidentiality of patient health information or other protected personal information, or any challenge to or investigation into our practices under these laws; |
• | product liability lawsuits that may be brought against us, including stemming from off-label use of our product; |
• | breaches or failures of our product or information technology systems, including by cyberattack; |
• | reduced retention rates of our customer base; |
• | unfavorable results of clinical studies relating to the Omnipod or future products, or the products of our competitors; |
• | future publication of articles or announcement of positions by diabetes associations or other organizations that are unfavorable to the Omnipod; |
• | the concentration of substantially all of our manufacturing operations at a single location in China and substantially all of Insulet's inventory at a single location in Massachusetts; |
• | our ability to attract and retain personnel; |
• | our ability to manage our growth; |
• | fluctuations in quarterly results of operations; |
• | risks associated with potential future acquisitions or investments in new businesses; |
• | our ability to generate sufficient cash to service all of our indebtedness; |
• | the expansion of our distribution network; |
• | our ability to successfully maintain effective internal control over financial reporting; |
• | the volatility of the trading price of our common stock; |
• | risks related to future sales of our common stock or the conversion of any of our convertible debt; |
• | potential limitations on our ability to use our net operating loss carryforwards; and |
• | anti-takeover provisions in our organizational documents. |
Number | Description | |
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer. | ||
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer. | ||
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer. | ||
101 | The following materials from Insulet Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 formatted in iXBRL (Inline eXtensible Business Reporting Language), as follows: | |
(i) Consolidated Balance Sheets (Unaudited) as of June 30, 2019 and December 31, 2018 | ||
(ii) Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018 | ||
(iii) Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018 | ||
(iv) Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Six Months Ended June 30, 2019 and 2018 | ||
(v) Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2019 and 2018 | ||
(vi) Condensed Notes (Unaudited) to Consolidated Financial Statements | ||
* | This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
INSULET CORPORATION (Registrant) | ||
Date: | August 5, 2019 | /s/ Shacey Petrovic |
Shacey Petrovic | ||
Chief Executive Officer (Principal Executive Officer) |
Date: | August 5, 2019 | /s/ Wayde McMillan |
Wayde McMillan | ||
Chief Financial Officer (Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects 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 defined in 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial 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 conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | 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 are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Shacey Petrovic | ||
Shacey Petrovic | ||
Chief Executive Officer | ||
Date: | August 5, 2019 |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects 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 defined in 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial 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 conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | 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 are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Wayde McMillan | ||
Wayde McMillan | ||
Chief Financial Officer | ||
Date: | August 5, 2019 |
/s/ Shacey Petrovic | ||
Shacey Petrovic | ||
Chief Executive Officer | ||
Date: | August 5, 2019 | |
/s/ Wayde McMillan | ||
Wayde McMillan | ||
Chief Financial Officer | ||
Date: | August 5, 2019 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 4,098 | $ 3,610 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 60,149,926 | 59,188,758 |
Common stock, outstanding (in shares) | 60,149,926 | 59,188,758 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Statement [Abstract] | ||||
Revenue | $ 177,136 | $ 124,262 | $ 336,691 | $ 247,840 |
Cost of revenue | 60,718 | 42,190 | 113,577 | 89,953 |
Gross profit | 116,418 | 82,072 | 223,114 | 157,887 |
Operating expenses: | ||||
Research and development | 32,264 | 18,801 | 64,218 | 39,068 |
Sales and marketing | 47,401 | 36,575 | 89,017 | 69,624 |
General and administrative | 29,150 | 22,371 | 55,011 | 44,870 |
Total operating expenses | 108,815 | 77,747 | 208,246 | 153,562 |
Operating income | 7,603 | 4,325 | 14,868 | 4,325 |
Interest expense, net of portion capitalized | (7,642) | (7,290) | (14,257) | (15,208) |
Other income, net | 1,923 | 1,686 | 5,977 | 3,368 |
Income (loss) before income taxes | 1,884 | (1,279) | 6,588 | (7,515) |
Income tax expense | 482 | 412 | 808 | 745 |
Net income (loss) | $ 1,402 | $ (1,691) | $ 5,780 | $ (8,260) |
Net income (loss) per share: | ||||
Net income (loss) per share: basic (in dollars per share) | $ 0.02 | $ (0.03) | $ 0.10 | $ (0.14) |
Net income (loss) per shares: diluted (in dollars per share) | $ 0.02 | $ (0.03) | $ 0.09 | $ (0.14) |
Weighted average number of shares outstanding, basic (in shares) | 59,844,991 | 58,833,498 | 59,601,365 | 58,659,111 |
Weighted average number of shares outstanding, diluted (in shares) | 61,486,325 | 58,833,498 | 61,332,451 | 58,659,111 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,402 | $ (1,691) | $ 5,780 | $ (8,260) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustment, net of tax | (359) | (741) | (1,174) | (1,059) |
Unrealized gain (loss) on available-for-sale debt securities, net of tax | 615 | (109) | 1,250 | (834) |
Total other comprehensive income (loss), net of tax | 256 | (850) | 76 | (1,893) |
Total comprehensive income (loss) | $ 1,658 | $ (2,541) | $ 5,856 | $ (10,153) |
Nature of the Business |
6 Months Ended |
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Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | 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.
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Basis of Presentation |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 six months ended June 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 $2.3 million and $1.4 million for the three months ended June 30, 2019 and 2018, respectively, and were $4.9 million and $2.5 million for the six months ended June 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. Adoption of the lease standard had a material impact on the Company's consolidated balance sheet, which is disclosed in Note 11. 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 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 $0.7 million and $2.0 million of cloud computing implementation costs for the three and six months ended June 30, 2019, respectively.
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Revenue and Contract Acquisition Costs |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Contract Acquisition Costs | Revenue and Contract Acquisition Costs The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2019 and 2018:
Revenue for customers comprising more than 10% of total revenue were as follows:
* 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:
Revenue recognized during the three and six months ended June 30, 2019 included in deferred revenue at the beginning of 2019 was $0.2 million and $1.1 million, respectively. Revenue recognized during the three and six months ended June 30, 2018 included in deferred revenue at the beginning of 2018 was $1.1 million and $2.4 million, respectively. No revenue was recognized during the three and six months ended June 30, 2019 and 2018 from performance obligations satisfied or partially satisfied in previous periods. Contract acquisition costs, representing capitalized commissions costs related to new patient starts, net of amortization, were included in the following consolidated balance sheet accounts in the amounts shown:
The Company recognized $2.1 million and $4.1 million of amortization of capitalized contract acquisition costs during the three and six months ended June 30, 2019, respectively.
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Investments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 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 June 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 8 days to 23 months as of June 30, 2019. The Company’s investment portfolio included approximately 40 available-for-sale debt securities that had insignificant unrealized loss positions as of June 30, 2019 and December 31, 2018. The Company's investments had insignificant realized gains or losses for both the three and six months ended June 30, 2019 and June 30, 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 June 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 June 30, 2019 and December 31, 2018:
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Convertible Debt, Net |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt, Net | Convertible Debt, Net The Company had outstanding convertible debt and related debt issuance costs on its consolidated balance sheet as follows:
The carrying amount and the estimated fair value of the Company's convertible debt, which is based on the Level 2 quoted market prices as of June 30, 2019 and December 31, 2018 were as follows:
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Net Income (Loss) Per Share |
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Disclosure Potential Common Shares Excluded From Computation Of Diluted Net Loss Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period, excluding unvested restricted common shares. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and, when dilutive, potential common share equivalents from outstanding stock options and restricted stock units (using the treasury-stock method), and potential common shares from the Company's convertible debt (using the if-converted method). The table below sets forth the components used in the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2019. Because the Company reported a net loss for the three and six months ended June 30, 2018, all potential dilutive common shares have been excluded from the computation of the diluted net loss per share for three and six months ended June 30, 2018, as the effect would have been anti-dilutive.
For the three and six months ended June 30, 2019, certain potential outstanding shares from stock options, restricted stock units and convertible debt were excluded from the computation of diluted net income per share because the effect of including these items was anti-dilutive. Additionally, certain performance-based restricted stock units were excluded from the computation of diluted net income per share because the underlying performance conditions for such restricted stock units had not yet been met. The number of potential common share equivalents excluded from the computation of diluted net income (loss) per share for the three and six months ended June 30, 2019 and 2018 are as follows:
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Inventories |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories At the end of each period, inventories were comprised of the following:
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Goodwill and Other Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets, Net | oodwill and Other Intangible Assets, Net The changes in the carrying amounts of goodwill for the six months ended June 30, 2019 were as follows:
The gross carrying amount, accumulated amortization and net book value of intangible assets at the end of each period were as follows:
Amortization expense for intangible assets was $0.6 million and $0.4 million for the three months ended June 30, 2019 and 2018, respectively. Amortization expense for intangible assets was $1.2 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively. Estimated future amortization expense by year is as follows:
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Accrued Expenses and Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Current Liabilities | ccrued Expenses and Other Current Liabilities The components of accrued expenses and other current liabilities were as follows:
Product Warranty Costs The Company provides a four-year warranty on Personal Diabetes Managers (“PDMs”) sold in the United States and Europe and a five-year warranty on PDMs sold in Canada and may replace Pods that do not function in accordance with product specifications. The Company estimates its warranty at the time the product is shipped based on historical experience and the estimated cost to service the claims. Since the Company continues to introduce new products and versions, the anticipated performance of the product over the warranty period is also considered in estimating warranty reserves. Warranty expense is recorded in cost of goods sold in the consolidated statements of operations. Cost to service the claims reflects the current product cost. A reconciliation of the changes in the Company’s product warranty liability is as follows:
Product warranty liability was included in the following consolidated balance sheet accounts in the amounts shown:
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | ommitments and Contingencies Legal Proceedings Between May 5, 2015 and June 16, 2015, three class action lawsuits were filed by shareholders in the U.S. District Court, for the District of Massachusetts, against the Company and certain individual and former executives of the Company. Two suits subsequently were voluntarily dismissed. Arkansas Teacher Retirement System v. Insulet, et al., 1:15-cv-12345, (“ATRS”) alleged that the Company (and certain executives) committed violations of Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 by making allegedly false and misleading statements about the Company’s business, operations, and prospects. On February 8, 2018, the parties executed a binding stipulation of settlement, under which all claims were released and a payment was made into an escrow account for the plaintiffs and the class they purport to represent. On August 6, 2018, the Court issued an order approving the settlement. The Company had previously accrued fees and expenses in connection with this matter for the amount of the final settlement liability that was not covered by insurance, the amount of which was not material to the Company's consolidated financial statements. In addition, on April 26, 2017, a derivative action (Walker v. DeSisto, et al., 1:17-cv-10738) (“Walker”) was filed, and on October 13, 2017, a second derivative action (Carnazza v. DeSisto, et al., 1:17-cv-11977) (“Carnazza”) was filed, both on behalf of the Company, each by a shareholder in the U.S. District Court for the District of Massachusetts against the Company (as a nominal defendant) and certain individual current and former officers and directors of the Company. The allegations in the actions are substantially similar to those alleged in the securities class action. The actions seek, among other things, damages, disgorgement of certain types of compensation or profits, and attorneys’ fees and costs. On July 11, 2018, the parties executed a binding stipulation of settlement, under which all claims were released and a payment of attorneys’ fees and reimbursement of expenses will be paid to plaintiffs’ counsel, subject to the Court’s approval. On July 13, 2018, the plaintiffs filed a motion for preliminary approval of the settlement, which is pending. The Company expects that such fees and expenses payable to plaintiff's counsel will be covered by the Company's insurance. 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, the Company believes that none of these currently pending matters will have an outcome material to its financial condition or business. Fees To Former European Distributor Following the expiration of an agreement with a former European distributor on June 30, 2018, the Company was required to pay a quarterly per-unit fee for Omnipod sales to certain customers of the former European distributor for a one-year period through June 30, 2019. The Company recognized a liability and an associated intangible asset for this fee as qualifying sales occurred. The methodology applicable for determining the total fee under under the distribution agreement is subject to an active arbitration proceeding in Switzerland. The final amount of the fee could vary significantly depending on the number of customers who count for purposes of calculating the fee under the terms of the agreement. The Company estimates that the final aggregate fee is in the range of $5 million to $55 million. As of June 30, 2019, the Company had recognized $7.8 million for fees related to Omnipod devices sold to qualifying customers during the period from July 1, 2018 through June 30, 2019.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases As discussed in Note 2, ASC 842 requires lessees to recognize ROU assets and lease liabilities on the balance sheet for those leases classified as operating leases. In accordance with ASC 842, the Company determines if an arrangement is a lease at inception. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate in determining the present value of future payments since most of its leases do not provide an implicit interest rate. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. On January 1, 2019, upon the adoption of ASC 842, 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 is primarily attributable to a former cease-use liability. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company leases approximately 100,000 square feet of laboratory and office space in Billerica, Massachusetts. The lease expires in November 2022 and contains escalating payments over its life. Additionally, the Company leases approximately 29,000 square feet of warehousing space in Billerica, Massachusetts under a lease expiring in September 2019. The Company also leases international and certain other U.S. facilities. These operating leases expire at various dates through 2026, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases at certain times within the lease term. In the normal course of business, it is expected that these leases will be renewed. The Company's total operating lease cost, which is recorded in general and administrative expenses in the consolidated statements of operations, was $0.9 million and $1.8 million for the three and six months ended June 30, 2019, respectively. Cash paid for amounts included in the measurement of lease liabilities was $0.8 million and $1.6 million for three and six months ended June 30, 2019, respectively. The future minimum undiscounted lease payments under operating leases as of June 30, 2019 are as follows:
As of June 30, 2019, ROU assets and operating lease liabilities were included in the following consolidated balance sheet accounts in the amounts shown:
As of June 30, 2019, the weighted average remaining lease term for operating leases was 3.7 years and the weighted-average discount rate used to determine the operating lease liability was 6.7%.
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | tock-Based Compensation The following table reflects the Company's stock-based compensation expense related to share-based awards for the three and six months ended June 30, 2019 and 2018:
The following summarizes stock option activity for the six months ended June 30, 2019:
The following table summarizes activity for the Company’s restricted stock units during the six months ended June 30, 2019:
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Interest Expense |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense | Interest Expense Interest expense, net of portion capitalized was as follows:
Interest expense related to convertible debt for the three and six months ended June 30, 2019 was as follows:
Interest expense related to convertible debt for the three and six months ended June 30, 2018 is as follows:
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Income Tax Expense |
6 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | Income Tax Expense The Company's effective tax rate for the three and six months ended June 30, 2019 was a positive rate of 25.6% and 12.3%, compared with a negative rate of 32.2% and 9.9% for the same periods of 2018. The negative effective tax rate in the 2018 periods resulted from recording state income and foreign taxes in jurisdictions with taxable income, mainly the United Kingdom and Canada. Income tax benefits have not been recorded for losses in jurisdictions where valuation allowances exist against net deferred tax assets; primarily in the United States. As of June 30, 2019 and December 31, 2018, the Company maintained a full valuation allowance against its U.S. net deferred tax assets based on the determination that it is not more likely than not these future benefits will be realized before expiration.
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Basis of Presentation (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
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 six months ended June 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.
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Reclassification of Prior Period Amounts | 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.
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Recently Adopted and Not Yet Adopted Accounting Pronouncements | 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. Adoption of the lease standard had a material impact on the Company's consolidated balance sheet, which is disclosed in Note 11. 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 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 $0.7 million and $2.0 million of cloud computing implementation costs for the three and six months ended June 30, 2019, respectively.
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Product Warranty Costs | Product Warranty Costs The Company provides a four-year warranty on Personal Diabetes Managers (“PDMs”) sold in the United States and Europe and a five-year warranty on PDMs sold in Canada and may replace Pods that do not function in accordance with product specifications. The Company estimates its warranty at the time the product is shipped based on historical experience and the estimated cost to service the claims. Since the Company continues to introduce new products and versions, the anticipated performance of the product over the warranty period is also considered in estimating warranty reserves. Warranty expense is recorded in cost of goods sold in the consolidated statements of operations. Cost to service the claims reflects the current product cost.
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Revenue and Contract Acquisition Costs (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2019 and 2018:
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Schedule of revenue from major customers | Revenue for customers comprising more than 10% of total revenue were as follows: * Represents less than 10% of consolidated revenue.
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Summary of Deferred Revenue | Deferred revenue related to unsatisfied performance obligations was included in the following consolidated balance sheet accounts in the amounts shown:
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Summary of Contract Acquisition Costs | Contract acquisition costs, representing capitalized commissions costs related to new patient starts, net of amortization, were included in the following consolidated balance sheet accounts in the amounts shown:
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Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule investments | 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 June 30, 2019 and December 31, 2018:
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Convertible Debt, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Convertible Debt and Related Deferred Financing Costs | The Company had outstanding convertible debt and related debt issuance costs on its consolidated balance sheet as follows:
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Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | The carrying amount and the estimated fair value of the Company's convertible debt, which is based on the Level 2 quoted market prices as of June 30, 2019 and December 31, 2018 were as follows:
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Net Income (Loss) Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Potential Common Shares Excluded From Computation Of Diluted Net Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The table below sets forth the components used in the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2019. Because the Company reported a net loss for the three and six months ended June 30, 2018, all potential dilutive common shares have been excluded from the computation of the diluted net loss per share for three and six months ended June 30, 2018, as the effect would have been anti-dilutive.
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Potential Common Shares Excluded from Computation of Diluted Net Loss per Share | The number of potential common share equivalents excluded from the computation of diluted net income (loss) per share for the three and six months ended June 30, 2019 and 2018 are as follows:
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventories | At the end of each period, inventories were comprised of the following:
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Goodwill and Other Intangible Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Carrying Amounts of Goodwill | The changes in the carrying amounts of goodwill for the six months ended June 30, 2019 were as follows:
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Components of Other Intangible Assets | The gross carrying amount, accumulated amortization and net book value of intangible assets at the end of each period were as follows:
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Amortization Expense Expected for Next Five Years | Estimated future amortization expense by year is as follows:
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Accrued Expenses and Other Current Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accrued expenses and other current liabilities | The components of accrued expenses and other current liabilities were as follows:
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Reconciliation of Changes in Product Warranty Liability | A reconciliation of the changes in the Company’s product warranty liability is as follows:
Product warranty liability was included in the following consolidated balance sheet accounts in the amounts shown:
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Undiscounted Lease Payments | The future minimum undiscounted lease payments under operating leases as of June 30, 2019 are as follows:
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Summary of ROU Assets and Operating Lease Liabilities | As of June 30, 2019, ROU assets and operating lease liabilities were included in the following consolidated balance sheet accounts in the amounts shown:
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity | The following table reflects the Company's stock-based compensation expense related to share-based awards for the three and six months ended June 30, 2019 and 2018:
The following summarizes stock option activity for the six months ended June 30, 2019:
(1) Represents total outstanding stock options as of June 30, 2019, adjusted for estimated forfeitures.
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Summary of restricted stock units | The following table summarizes activity for the Company’s restricted stock units during the six months ended June 30, 2019:
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Interest Expense (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and Other Expense | Interest expense, net of portion capitalized was as follows:
Interest expense related to convertible debt for the three and six months ended June 30, 2019 was as follows:
Interest expense related to convertible debt for the three and six months ended June 30, 2018 is as follows:
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Basis of Presentation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Significant Accounting Policies [Line Items] | ||||
Cost of revenue | $ 60,718 | $ 42,190 | $ 113,577 | $ 89,953 |
Shipping and Handling | ||||
Significant Accounting Policies [Line Items] | ||||
Cost of revenue | 2,300 | $ 1,400 | 4,900 | $ 2,500 |
Accounting Standards Update 2018-15 | ||||
Significant Accounting Policies [Line Items] | ||||
Hosting Arrangement, Service Contract, Implementation Cost, Capitalized | $ 700 | $ 2,000 |
Revenue and Contract Acquisition Costs - Summary of Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 177,136 | $ 124,262 | $ 336,691 | $ 247,840 |
U.S. Omnipod | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 98,074 | 78,047 | 184,177 | 148,319 |
International Omnipod | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 62,736 | 28,509 | 119,624 | 66,913 |
Diabetes | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 160,810 | 106,556 | 303,801 | 215,232 |
Drug Delivery | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 16,326 | $ 17,706 | $ 32,890 | $ 32,608 |
Revenue and Contract Acquisition Costs - Summary of Revenue from Customers - Concentration Risk (Details) - Customer concentration risk - Sales revenue |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Amgen, Inc. | ||||
Significant Accounting Policies [Line Items] | ||||
Total revenue, percentage | 14.00% | 10.00% | 13.00% | |
Ypsomed | ||||
Significant Accounting Policies [Line Items] | ||||
Total revenue, percentage | 17.00% | |||
Cardinal Health Inc. | ||||
Significant Accounting Policies [Line Items] | ||||
Total revenue, percentage | 12.00% | 13.00% | 11.00% | 12.00% |
Revenue and Contract Acquisition Costs - Summary of Deferred Revenue (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Accrued expenses and other current liabilities | $ 1,374 | $ 1,184 |
Other liabilities | 986 | 931 |
Total deferred revenue | $ 2,360 | $ 2,115 |
Revenue and Contract Acquisition Costs - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||||
Revenue recognized | $ 200,000 | $ 1,100,000 | $ 1,100,000 | $ 2,400,000 |
Revenue recognized from performance obligations satisfied in previous periods | 0 | $ 0 | 0 | $ 0 |
Amortization of capitalized commission costs | $ 2,100,000 | $ 4,100,000 |
Revenue and Contract Acquisition Costs - Summary of Contract Acquisition Costs (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Prepaid expenses and other current assets | $ 8,452 | $ 7,277 |
Other assets | 18,183 | 15,988 |
Total capitalized contract acquisition costs, net | $ 26,635 | $ 23,265 |
Investments - Narrative (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
security
|
Dec. 31, 2018
USD ($)
|
|
Debt Securities, Available-for-sale [Line Items] | ||
Restricted cash and cash equivalents | $ | $ 2.7 | $ 2.7 |
Number of positions | security | 40 | |
Minimum | ||
Debt Securities, Available-for-sale [Line Items] | ||
Derivative maturity date range | 8 days | |
Maximum | ||
Debt Securities, Available-for-sale [Line Items] | ||
Derivative maturity date range | 23 months |
Convertible Debt, Net - Outstanding Convertible Debt and Related Deferred Financing Costs (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Unamortized debt discount | $ (129,616) | $ (143,616) |
Debt issuance costs | (10,525) | (11,898) |
Total convertible debt, net | $ 607,351 | $ 591,978 |
1.25% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Debt, interest rate | 1.25% | 1.25% |
1.375% Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt, interest rate | 1.375% | 1.375% |
Convertible Debt | 1.25% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Principal amount of Senior Notes | $ 344,992 | $ 344,992 |
Convertible Debt | 1.375% Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Principal amount of Senior Notes | $ 402,500 | $ 402,500 |
Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 17,960 | $ 10,347 |
Work-in-process | 26,979 | 30,222 |
Finished goods | 40,170 | 30,845 |
Total inventories | $ 85,109 | $ 71,414 |
Goodwill and Other Intangible Assets, Net - Summary of Changes in Carrying Amounts of Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill at December 31, 2018 | $ 39,646 |
Foreign currency translation | 93 |
Goodwill at June 30, 2019 | $ 39,739 |
Goodwill and Other Intangible Assets, Net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of other intangible assets | $ 0.6 | $ 0.4 | $ 1.2 | $ 0.8 |
Goodwill and Other Intangible Assets, Net - Components of Other Intangible Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 21,306 | $ 17,371 |
Accumulated Amortization | (8,266) | (6,988) |
Net Book Value | 13,040 | 10,383 |
Customer and Contractual Relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 9,850 | 6,109 |
Accumulated Amortization | (2,326) | (1,880) |
Net Book Value | 7,524 | 4,229 |
Internal-use software | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,581 | 11,262 |
Accumulated Amortization | (5,940) | (5,108) |
Net Book Value | 4,641 | 6,154 |
Intellectual property | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 875 | 0 |
Accumulated Amortization | 0 | 0 |
Net Book Value | $ 875 | $ 0 |
Goodwill and Other Intangible Assets, Net - Amortization Expense Expected for Next Five Years (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Expected Amortization Expense [Line Items] | |
2019 (remaining) | $ 1,405 |
2020 | 2,547 |
2021 | 2,043 |
2022 | 1,460 |
2023 | 1,021 |
Thereafter | 4,564 |
Net Book Value | $ 13,040 |
Accrued Expenses and Other Current Liabilities - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Payables and Accruals [Abstract] | ||
Employee compensation and related costs | $ 34,348 | $ 37,822 |
Professional and consulting services | 12,856 | 14,925 |
Supplier purchases | 3,089 | 7,742 |
Value added taxes payable | 3,527 | 8,463 |
Accrued expenses and other current liabilities | 2,906 | 2,701 |
Other | 27,201 | 21,205 |
Accrued expenses and other current liabilities | $ 81,021 | $ 90,157 |
Accrued Expenses and Other Current Liabilities - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
United States | |
Product Warranty Liability [Line Items] | |
Product warranty term for PDMs | 4 years |
CANADA | |
Product Warranty Liability [Line Items] | |
Product warranty term for PDMs | 5 years |
Accrued Expenses and Other Current Liabilities - Product Warranty Liability (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||||||
Product warranty liability at beginning of period | $ 6,283 | $ 5,386 | $ 6,379 | $ 5,337 | ||
Warranty expense | 3,147 | 1,529 | 5,366 | 3,501 | ||
Warranty claims settled | (2,791) | (1,412) | (5,106) | (3,335) | ||
Product warranty liability at end of period | 6,639 | 5,503 | 6,639 | 5,503 | ||
Composition of balance: | ||||||
Accrued expenses and other current liabilities | $ 2,906 | $ 2,701 | ||||
Other liabilities | 3,733 | 3,678 | ||||
Total warranty balance | $ 6,283 | $ 5,386 | $ 6,379 | $ 5,337 | $ 6,639 | $ 6,379 |
Commitments and Contingencies - Narrative (Details) $ in Millions |
1 Months Ended | |
---|---|---|
Jun. 16, 2015
lawsuit
|
Jun. 30, 2019
USD ($)
|
|
Loss Contingencies [Line Items] | ||
Number of class actions filed (in legal matters) | lawsuit | 3 | |
Number of class actions dismissed (in legal matters) | lawsuit | 2 | |
Fees To Former European Distributor | Minimum | ||
Loss Contingencies [Line Items] | ||
Commitment due in next twelve months | $ 5.0 | |
Accrued liabilities | 7.8 | |
Fees To Former European Distributor | Maximum | ||
Loss Contingencies [Line Items] | ||
Commitment due in next twelve months | $ 55.0 |
Leases - Future Minimum Undiscounted Lease Payments (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 (remaining) | $ 1,659 |
2020 | 2,955 |
2021 | 2,899 |
2022 | 2,575 |
2023 | 269 |
Thereafter | 561 |
Total future minimum lease payments | 10,918 |
Less: imputed interest | (1,089) |
Present value of future minimum lease payments | 9,829 |
Other current liabilities | 2,333 |
Other long-term liabilities | $ 7,496 |
Leases - Summary of ROU Assets and Operating Lease Liabilities (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Other assets | $ 8,020 |
Accrued expenses and other current liabilities | 2,333 |
Other liabilities | 7,496 |
Present value of future minimum lease payments | $ 9,829 |
Stock-Based Compensation - Summary of Restricted Stock Units (Details) - Unvested restricted stock units |
6 Months Ended |
---|---|
Jun. 30, 2019
$ / shares
shares
| |
Number of Shares | |
Beginning balance (in shares) | shares | 752,207 |
Granted (in shares) | shares | 311,950 |
Vested (in shares) | shares | (307,217) |
Forfeited (in shares) | shares | (51,645) |
Ending balance (in shares) | shares | 705,295 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 55.02 |
Granted (in dollars per share) | $ / shares | 93.79 |
Vested (in dollars per share) | $ / shares | 45.36 |
Forfeited (in dollars per share) | $ / shares | 63.77 |
Ending balance (in dollars per share) | $ / shares | $ 75.73 |
Income Tax Expense - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 25.60% | (32.20%) | 12.30% | (9.90%) |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 20,349,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 20,349,000 |
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