10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Insulet Corp. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

18 followers
Insulet Corp. (PODD) filed Quarterly Report for the period ended 2010-06-30.

Insulet Corp. has a market cap of $569.55 million; its shares were traded at around $15.01 with and P/S ratio of 8.63. PODD is in the portfolios of RS Investment Management, Manning & Napier Advisors, Inc, Pioneer Investments, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Since our inception in 2000, we have incurred losses every quarter. In the three and six months ended June 30, 2010, we incurred net losses of $13.7 million and $28.2 million, respectively. As of June 30, 2010, we had an accumulated deficit of $350.9 million. We have financed our operations through the private placement of debt and equity securities, public offerings of our common stock, a private placement of our convertible debt and borrowings under certain debt agreements. In October 2009, we issued and sold 6,900,000 shares of our common stock at a price to the public of $10.25 per share. In connection with the offering, we received total gross proceeds of $70.7 million, or approximately $66.1 million in net proceeds after deducting underwriting discounts and offering expenses. As of June 30, 2010, we had $85.0 million of convertible debt outstanding and $32.5 million of outstanding debt relating to a Facility Agreement entered into March 13, 2009 and amended on September 25, 2009 and June 17, 2010.

In September 2009, we entered into an Amendment to the Facility Agreement whereby we repaid the $27.5 million of outstanding debt and promptly drew down the remaining $32.5 million available under the Facility Agreement. The lender eliminated all future performance milestones associated with the remaining $32.5 million available on the credit facility and reduced the annual interest rate on any borrowed funds to 8.5%. In connection with the Amendment to the Facility Agreement, we entered into a Securities Purchase Agreement with the lenders whereby we sold 2,855,659 shares of our common stock to the lenders at $9.63 per share, a $1.9 million discount based on the closing price of our common stock of $10.28 on that date. We recorded the $1.9 million as a debt discount which is being amortized as interest expense over the remaining term of the loan. We received aggregate proceeds of $27.5 million in connection with the sale of our shares.

We incurred deferred financing costs related to this offering of approximately $3.5 million, of which $1.1 million has been reclassified as an offset to the value of the amount allocated to equity. The remainder is recorded as other assets in the consolidated balance sheet and is being amortized as a component of interest expense over the five year term of the 5.375% Notes. We incurred interest expense related to the 5.375% Notes of approximately $2.5 million and $5.0 million for the three and six months ended June 30, 2010, respectively. Of the $2.5 million recorded in the three months ended June 30, 2010, approximately $1.4 million relates to

amortization of the debt discount and deferred financing costs and $1.1 million relates to cash interest. Of the $5.0 million recorded in the six months ended June 30, 2010, approximately $2.7 million relates to amortization of the debt discount and deferred financing costs and $2.3 million relates to cash interest. For the three and six months ended June 30, 2009,we incurred interest expense related to the 5.375% Notes of approximately $2.2 million and $4.4 million, respectively. Of the $2.2 million recorded in the three months ended June 30, 2009, approximately $1.1 million relates to amortization of the debt discount and deferred financing cost and $1.1 million relates to cash interest. Of the $4.4 million recorded in the six months ended June 30, 2009, approximately $2.2 million relates to amortization of the debt discount and deferred financing cost and $2.2 million relates to cash interest.

As of June 30, 2010, the outstanding amounts related to the 5.375% Notes of $67.0 million are included in long-term debt in the consolidated balance sheet and reflect the debt discount of $18.0 million. As of December 31, 2009, the outstanding amounts related to the 5.375% Notes of $64.5 million are included in long-term debt and reflect the debt discount of $20.5 million. The debt discount includes the equity allocation of $25.8 million (which represents $26.9 million less the $1.1 million of allocated financing costs) offset by the accretion of the debt discount through interest expense from the issuance date over the 5 year term of the notes. We recorded $1.2 million and $2.5 million of interest expense related to the debt discount in the three and six months ended June 30, 2010, respectively. We recorded $1.1 million and $2.2 million of interest expense related to the debt discount in the three and six months ended June 30, 2009, respectively. As of June 30, 2010, the 5.375% Notes have a remaining term of 3 years.

We received net proceeds of approximately $81.5 million from this offering. Approximately $23.2 million of the proceeds from this offering were used to repay and terminate our then-existing term loan, including outstanding principal and accrued and unpaid interest of $21.8 million, a prepayment fee related to the term loan of approximately $0.4 million and a termination fee related to the term loan of $0.9 million. We are using the remainder for general corporate purposes. In connection with this term loan, we issued warrants to the lenders to purchase up to 247,252 shares of Series E preferred stock at a purchase price of $3.64 per share. The warrants automatically converted into warrants to purchase common stock on a 1-for-2.6267 basis at a purchase price of $9.56 per share at the closing of our initial public offering in May 2007. At June 30, 2010, warrants to purchase 62,752 shares of common stock remain outstanding and exercisable at a price of $9.56 per share.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 5.0/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK