Insulet Reports Fourth Quarter and Full Year 2011 Results

BEDFORD, MA -- (Marketwire) -- 02/09/12 -- Insulet Corporation (NASDAQ: PODD), the leader in tubeless insulin pump technology with its OmniPodreg ; Insulin Management System, today announced financial results for the fourth quarter and full year ended December 31, 2011.

Fourth Quarter Results

Fourth quarter 2011 revenue increased 70% to 47.2 million, compared to 27.8 million in the fourth quarter of 2010. Gross profit for the fourth quarter of 2011 improved by 45% to 20.1 million, as compared to a gross profit of 13.8 million, for the fourth quarter of 2010. The increase in gross profit primarily relates to the additional revenue generated by Neighborhood Diabetes as well as an increase in the Companys OmniPod customer base in both the U.S. and international markets during the fourth quarter of 2011. The financial position and results of operations of Neighborhood Diabetes have been included in the Companys financial results since the acquisition of Neighborhood Diabetes on June 1, 2011.

Operating loss for the fourth quarter of 2011 was 10.5 million, compared to an operating loss of 9.7 million in the fourth quarter of 2010. The increase in the operating loss is a result of an increase in operating expenses including the amortization of acquired intangible assets related to the acquisition of Neighborhood Diabetes.

Net loss for the fourth quarter of 2011 was 14.3 million, or 0.30 per share, compared to a net loss of 20.9 million, or 0.50 per share, for the fourth quarter of 2010.

"In the fourth quarter we advanced our operational and commercial plans to position Insulet to maximize the launch of the next generation OmniPod, which we are confident will set an even higher bar for the patch pump market," said Duane DeSisto, President and Chief Executive Officer of Insulet. "We are working closely with the U.S. Food and Drug Administration on the upcoming 510(k) clearance of the next generation OmniPod. In anticipation, we are in production on the first of our next generation OmniPod manufacturing lines, and we expect the initial international shipments of next generation OmniPods to occur in the coming months. In addition, we are continuing to expand our commercial organization and infrastructure, including Neighborhood Diabetes, to drive and support the top line growth we anticipate from the launch."

Full Year Results

For the year ended December 31, 2011, revenue increased 57% to 152.3 million from 97.0 million for the year ended December 31, 2010. Gross profit for the year ended December 31, 2011 was 66.7 million, an improvement of 53%, as compared to a gross profit of 43.7 million, for the year ended December 31, 2010.

Operating loss for the year ended December 31, 2011 was 42.5 million as compared to an operating loss of 38.6 million in the year ended December 31, 2010. Total operating expenses were 109.2 million for the year ended December 31, 2011, compared to 82.4 million for the year ended December 31, 2010. The increase in operating expenses was primarily related to the acquisition of Neighborhood Diabetes as the Company absorbed Neighborhood Diabetes operating expenses, amortization expenses for intangible assets and one-time transaction fees, as well as additional expenses incurred as the Company continued to work towards 510(k) clearance of its next generation OmniPod. Net interest expense was 14.6 million for the year ended December 31, 2011, compared to 22.5 million for the year ended December 31, 2010. The decrease is mainly due to the 7 million non-cash interest expense recorded in 2010 to write-off the remaining debt discounts and issuance costs in conjunction with the Companys early repayment of its facility agreement with Deerfield Partners in 2010. Net loss for the year ended December 31, 2011 was 57.2 million, or 1.22 per share, compared to 61.2 million, or 1.54 per share, for the year ended December 31, 2010.

As of December 31, 2011, the Company had cash and cash equivalents of 94.0 million compared to 113.3 million at December 31, 2010.

Guidance
For the year ending December 31, 2012, the Company estimates that revenue will be in the range of 210 to 225 million. The Company expects an operating loss of 25 to 35 million for the year ending December 31, 2012.

Conference Call
Insulet will host a conference call on Thursday, February 9, 2012 at 5:00PM Eastern time to discuss the Companys fourth quarter and full year 2011 results and present information concerning its business, strategies and outlook. To listen to the conference call, please dial (877) 300-1783 for domestic callers and (832) 412-1780 for international callers. The passcode is 50146784. A replay of the conference call will be available two hours after the start of the call through February 16, 2012 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international), passcode 50146784. An online archive of the conference call will also be available by accessing the Investor Information section of the companys website at http://investors.insulet.com.

About Insulet Corporation
Insulet Corporation is an innovative medical device company dedicated to making the lives of people with diabetes easier. Through its OmniPod Insulin Management System, Insulet seeks to expand the use of insulin pump therapy among people with insulin-dependent diabetes. The OmniPod is a revolutionary and easy-to-use tubeless insulin pump that features just two parts and fully-automated cannula insertion. Founded in 2000, Insulet Corporation is based in Bedford, Mass. For more information, please visit: http://www.myomnipod.com.

Forward-Looking Statement
The 2011 financial results contained in this news release are subject to finalization in connection with the preparation of the Companys Annual Report on Form 10-K for the year ended December 31, 2011. This press release contains forward-looking statements concerning Insulets expectations, anticipations, intentions, beliefs or strategies regarding the future, including those related to its expected revenue and operating losses, the integration and future operations of the recently-acquired Neighborhood Diabetes business, planned expansion in the U.S. and abroad, particularly with respect to its agreement with Ypsomed, product demand, the impact of the OmniPod System on the insulin pump market, regulatory matters and financial performance. These forward-looking statements are based on its current expectations and beliefs concerning future developments and their potential effects on Insulet. There can be no assurance that future developments affecting Insulet will be those that it has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond its control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: risks associated with the Companys dependence on the OmniPod System; Insulets ability to increase customer orders and manufacturing volumes; adverse changes in general economic conditions; impact of healthcare reform legislation; Insulets inability to raise additional funds in the future on acceptable terms or at all; potential supply problems or price fluctuations with sole source or other third-party suppliers on which Insulet is dependent; international business risks; Insulets inability to obtain adequate coverage or reimbursement from third-party payors for the OmniPod System and potential adverse changes in reimbursement rates or policies relating to the OmniPod; potential adverse effects resulting from competition with competitors; technological innovations adversely affecting the Companys business; potential termination of Insulets license to incorporate a blood glucose meter into the OmniPod System; Insulets ability to protect its intellectual property and other proprietary rights; conflicts with the intellectual property of third parties, including claims that Insulets current or future products infringe the proprietary rights of others; adverse regulatory or legal actions relating to the OmniPod System; failure to obtain timely regulatory approval for the sale of the next generation OmniPod System; failure of Insulets contract manufacturers or component suppliers to comply with FDAs quality system regulations, the potential violation of federal or state laws prohibiting "kickbacks" or protecting patient health information, or any challenges to or investigations into Insulets practices under these laws; product liability lawsuits that may be brought against Insulet; reduced retention rates; unfavorable results of clinical studies relating to the OmniPod System or the products of Insulets competitors; potential future publication of articles or announcement of positions by physician associations or other organizations that are unfavorable to Insulets products; the expansion, or attempted expansion, into foreign markets; the concentration of substantially all of Insulets manufacturing capacity at a single location in China and substantially all of Insulets inventory at a single location in Massachusetts; Insulets ability to attract and retain key personnel; Insulets ability to manage its growth; failure to integrate successfully the Neighborhood Diabetes business; intense competition among distributors of diabetes supplies impairing Neighborhood Diabetes business; loss by Neighborhood Diabetes of an opportunity to sell insulin pumps supplied by Insulets competitors; failure by Neighborhood Diabetes to retain key supplier and payor partners; failure by Neighborhood Diabetes to retain supplier pricing discounts and achieve satisfactory gross margins; failure by Neighborhood Diabetes to retain and manage successfully its Medicare and Medicaid business; existence of unanticipated liabilities arising in connection with the Neighborhood Diabetes business; fluctuations in quarterly results of operations; risks associated with potential future acquisitions; Insulets ability to generate sufficient cash to service all of its indebtedness; the expansion of Insulets distribution network; Insulets ability to successfully maintain effective internal controls; and other risks and uncertainties described in its Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 10, 2011 in the section entitled "Risk Factors," and in its other filings from time to time with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of its assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Insulet undertakes no obligation to publicly update or revise any forward-looking statements.

                            INSULET CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



                            Three Months Ended            Year Ended
                               December 31,              December 31,
                         ------------------------  ------------------------
                             2011         2010         2011         2010
                         -----------  -----------  -----------  -----------
                                             (Unaudited)
                           (In thousands, except share and per share data)

Revenue                      47,192      27,767     152,255      96,966
Cost of revenue               27,112       13,941       85,543       53,240
                         -----------  -----------  -----------  -----------
Gross profit                  20,080       13,826       66,712       43,726
Operating expenses:
 Research and
  development                  5,804        5,459       21,863       16,566
 General and
  administrative              12,498        6,288       44,083       26,667
 Sales and marketing          12,290        8,394       43,233       34,695
 Impairment of assets              -        3,410            -        4,431
                         -----------  -----------  -----------  -----------
  Total operating
   expenses                   30,592       23,551      109,179       82,359
                         -----------  -----------  -----------  -----------
Operating loss               (10,512)      (9,725)     (42,467)     (38,633)
Other expense, net            (3,785)     (11,133)     (14,576)     (22,526)
                         -----------  -----------  -----------  -----------
Net loss before income
 taxes                       (14,297)     (20,858)     (57,043)     (61,159)
Income tax expense               (40)           -         (127)           -
                         -----------  -----------  -----------  -----------
Net loss                    (14,337)    (20,858)    (57,170)    (61,159)
                         ===========  ===========  ===========  ===========
Net loss per share basic
 and diluted                  (0.30)      (0.50)      (1.22)      (1.54)
                         ===========  ===========  ===========  ===========
Weighted average number
 of shares used in
 calculating basic and
 diluted net loss per
 share                    47,424,738   42,050,678   46,689,880   39,607,899
                         ===========  ===========  ===========  ===========


                            INSULET CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEETS


                                                             As of
                                                         December 31,
                                                       2011         2010
                                                   -----------  -----------
                                                   (Unaudited)
                                                     (In thousands, except
                                                          share data)
ASSETS
Current Assets
Cash and cash equivalents                              93,955     113,274
Accounts receivable, net                                23,190       16,841
Inventories                                             11,838       11,430
Prepaid expenses and other current assets                2,802          912
                                                   -----------  -----------
  Total current assets                                 131,785      142,457
Property and equipment, net                             19,422       12,522
Intangible assets, net                                  29,002            -
Goodwill                                                26,647            -
Other assets                                             2,727        1,254
                                                   -----------  -----------
  Total assets                                        209,583     156,233
                                                   ===========  ===========

LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts payable                                       11,418       4,895
Accrued expenses                                        13,064        9,808
Deferred revenue                                         2,582        4,247
Other current liabilities                                  931            -
                                                   -----------  -----------
  Total current liabilities                             27,995       18,950
Long-term debt                                         108,540       69,433
Other long-term liabilities                              1,652        1,619
                                                   -----------  -----------
  Total liabilities                                    138,187       90,002
Stockholders Equity
Preferred stock, .001 par value:
 Authorized: 5,000,000 shares at December 31, 2011
  and 2010. Issued and outstanding: zero shares at
  December 31, 2011 and 2010, respectively                   -            -
Common stock, .001 par value:
 Authorized: 100,000,000 shares at December 31,
  2011 and 2010. Issued and outstanding:
  47,504,131 and 45,440,839 shares at December 31,
  2011 and 2010, respectively                               48           45
Additional paid-in capital                             512,371      450,039
Accumulated deficit                                   (441,023)    (383,853)
                                                   -----------  -----------
  Total stockholders equity                            71,396       66,231
                                                   -----------  -----------
  Total liabilities and stockholders equity          209,583     156,233
                                                   ===========  ===========